Our Account Executives are often asked, “Where is the market going?” First, we always try to figure out which market the person asking about since there are so many: housing markets, bond markets, stock markets, and so on. Let’s talk about housing & credit markets!
According to a recent survey of economists and real estate experts, it will end up taking more than ten years for U.S. home values to gain back all the losses sustained during the meltdown. The experts reported that home values in many areas where JMAC lends were up nicely by the end of 2015, but that value appreciation will level off beginning in 2016 through 2019. This would result in home prices rising above the April 2007 peak of $196,400 in October 2017 and exceed $200,000 in April 2018.
One thing impacting values—since it impacts lending to our broker’s borrowers—is mortgage credit access. In recent surveys, respondents said credit is too restrictive although many said that mortgage credit access is just about where it should be. Over the next year, 60 percent of respondents said they expect to see looser credit standards but remain at “sustainable and sensible” levels, and 4 percent said they think credit will ease too much and become too laidback.
JMAC’s brokers know that the rental market drives many of their clients, and the experts were asked if growth in renter households will continue to increase and growth in owner households will continue to flatten. Less than half of respondents stated that the current trend will continue with renter-occupancy increasing at a faster rate than owner-occupancy. But a sizeable portion of respondents said they thought owner-occupancy would rebound and renter occupancy would slow and 11 percent believed both owner and renter occupancy would increase at significant rates. Interestingly many economists predict that annual gains in rents will outpace gains in home values.