The problem is – we are having a jump in interest rates now too. That does not bode well for the mortgage industry.
In fact, in the last few days Wells Fargo has been busy cutting nearly 3,000 jobs in their mortgage divisions.
J.P. Morgan will be cutting 19,000 jobs over the next two years in states like California, Texas, New York, New Jersey, and Florida because their income from mortgage banking has dropped 14% from a year ago.
Bank of America had it the worst of the big banks. Their mortgage income declined nearly 22%, so they now have a plan to fire 2,100 people and close 16 offices by the end of next month.
An article posted yesterday at the Wall Street Journal lists a myriad of troubles for the mortgage industry in the year ahead. $1.65 Trillion in mortgages this year – which is down from 1.75 last year. But pay attention to this – They expect next year to drop and bottom out at $1.46 Trillion.
You can find the article posted at http://online.wsj.com/article/SB10001424127887324094704579064863415657936.html
You will often hear me make fun of myself for being a C student. But these numbers combined with rosy home price forecasts are not adding up. Strong housing markets are driven by a healthy mortgage industry.
I am buckling up for a tough year. I plan on being cautious with where I buy houses, and even more cautious with when I buy. I think we are in for a period of time when prices will not be rocketing up, but will not be dropping like a stone either. Quite frankly, I think we are in for a period of time when prices just stagnate and stabilize…..
Like the housing market in the 90’s.
And that my friends, is just fine by me. A stable market is good for everyone because no one has the upper hand. Buyers can negotiate a decent deal, and sellers can sell if they want to.
You can plainly see with these two charts – a very obvious period in the 90’s when prices stabilized for nearly a decade.
The first chart shows prices across the entire US market.
So that is what I am hoping Santa brings me for Christmas this year – The 90’s.
I hope I see you on Monday night at our September WREIA meeting. It’s going to be a great night discussing Real Estate Marketing. We plan on showing some successes we have had over the last few months and a few of our colossal failures from earlier in the spring.
Register now and join us on Monday night.
Let me know if there is anything I can do to help your business,
Washington REIA Network, President