The Evidence Is Clear: Housing Market Headed Back Downward
JUL 15, 2014 3:04pm ET
With mounting indicators clearly showing that the so-called housing recovery was just an illusion, and many housing industry pundits who formerly touted the validity of said recovery now recanting their views,
there should be no doubt that we are headed for another/further housing downturn.
With over three decades of housing and mortgage servicing experience in a variety of management positions behind me, I have witnessed first-hand several housing cycles in my lifetime. In fact my father was a builder
and real estate broker for many, many years. I literally grew up in this business. I am not only a keen observer but also an active participant in this vital industry. With respect to the headline above I offer the following:
According to an article published in a recent Inman News story, "A majority of North American mortgage bankers fear another real estate bubble is forming," a recent study conducted by FICO found that 56% of Canadian
and American respondents who were polled who are directly involved in mortgage lending "expressed concern that an unsustainable real estate bubble is inflating." The article pointed out that the housing market is "bifurcated" because there is strong price
growth in many markets pushing "total homeowner equity in the U.S. to its highest level since late 2007, even as 6 million people struggle with underwater loans."
I concur, of course, that this doesn’t feel like a housing market "in recovery." To be sure, there is mounting concern by many lenders about the growing risk associated with residential mortgages.
On top of this you can add the contraction of the U.S. economy in 2Q of nearly 3%, clearly demonstrating the weakness of the American economy. There is a growing majority of people in our country today who believe
there is no leadership in Washington on either side of the aisle who are either capable of dealing with economic issues such as the housing market, or they are simply preoccupied with getting reelected.
Because of this dearth of leadership, the gap is continuing to widen between the beleaguered middle class and the top income earners in this country. And more and more of the tax burden is befalling their shoulders
to support a growing list of entitlements bestowed on non-producers. Many see this situation as becoming intolerable, much the same as it did in the days leading up to the signing of the Declaration of Independence. This does not bode well for our Nation.
That is no illusion.
Lynn Effinger is a veteran of more than three decades in the housing and mortgage servicing industries. He currently serves as executive vice president of ZVN Properties Inc.