Click here: Realtor survey – scroll down to page 14 for comments from agents about the market.
Here are the garphs from page 10 – the realtors surveyed say that most homes sold have languished on the market for more than three months – which shows how bad realtors are with pricing correctly:
An excerpt from Yun – he is trying to bully the mortgage industry into making riskier loans:
Consider the following loan performance after one year from the time of origination on Fannie Mae and Freddie Mac backed mortgages.
Loan default rates were 0.3 to 0.4 percent in the more “normal” housing years of 2002 and 2003 – before the housing boom, before all those exotic mortgage products (subprime, no-doc loans) and well before the developments of any housing bubble. In the immediate years after the bubble burst – 2007 and 2008 – default rates rose to 2 and 3 percent.
Now examine the performance for those loans originated in 2009 and 2010.
The default rates came in at 0.1 and 0.2 percent after one year of seasoning. Those are exceptionally low figures – in fact, even lower than those for the normal housing years. The data for 2011 is not yet available, but several indications point towards possibly an even better loan performance than we saw in 2009 and 2010. While the headline mortgage default data are driven by the souring loans from the bubble years, the default rates among recent borrowers have been at historic lows.
Banks and the regulators need to understand this important distinction and permit more loans to flow into the market.
My estimation based on credit scores of those who are being approved for mortgages today vs. those who were approved 10 years ago suggests that home sales could easily rise by 15 to 20 percent if the underwriting standards were to go back to normal.
That would be a sizable gain in home sales and would result in a commensurate decline in inventory. A decline in inventory and increased sales would help bolster home price appreciation. If underwriting standards return to normal, the housing market will approach a more normal state as well.
A normal housing market would help fuel a continuing economic recovery, help bolster household wealth, spur consumer spending, spawn more job creation (thus providing more fuel to the economy). It would, in effect, be a win-win situation. This is what we aim for. This is what we hope for. This is what NAR continues to work towards for its members and America’s homeowners.
How Yun manages to stay employed is one of life’s greatest mysteries.
His job performance is no better than that of a weather forecaster.
He’ll have a job for life.
He says what they want to hear, and he looks more like an economist than the last guy.
That’s an insult to weather forecasters.
How do we define “normal underwriting standards?” We did a refi last year, and the process and documentation requirements seemed to me to be pretty much what I remember from the before the bubble. How are today’s standards different from what they were 10-15 years ago?
The underwriting standards are identical to 10-15 years ago.
The Yunnies of the world want to go back to no-doc, which is fine as long as Yunnie is funding the loans, not the taxpayers.
In the realtor comments, there was one whining that her buyer couldn’t get approved with 35% down. Yes, just because you have a down payment doesn’t mean you get approved for Fannie/Freddie loans, but there are other sources – with a few of them funding big mortgages at attractive rates.
Good agents know that, and use them when needed. But you don’t see those quotes.
Chuck
I love the fact that Yun has totally ignored FHA defaults post-bubble.
http://tinyurl.com/7tze7ds
His remarks from Planet NAR seem so out of touch with the realtors’ comments.