Thursday, June 3, 2010

Post Tax Credit Subterranean Homesick Blues: Purchase Demand in Freefall, Industry Unravelling

The expiring home buyer's credit appears to have done well to create a surge of taxpayer funded house buying activity, which was highly touted by the media as 'good news for housing' in April. The MBA (Mortgage Bankers Assoc) released the weekly applications survey which shows that the month of May will be quite a different story with respect to any new green shoots for the housing market.

Purchase applications have absolutely plummeted off a cliff from activity levels in April, and are now groping at levels not seen since the mid 1990s.

Even the usually spin happy RE-pro bubble crowd at Mortgage News Daily cannot deny the grim reality that greets the summer selling season:

"The true barometer of the health of housing rests in May housing data..not April. If the recent downtrend in purchase apps holds any clue as to what sort of results we'll see in May, it won't be pretty. Anecdotal evidence is highly supportive of this theory. Heck, besides the drastic decline in purchase demand we've seen, pull-through on refi apps is poor thanks to the vast variety of hoops that must be jumped through before a loan can be cleared to close.

Working in this industry is no fun right now. Borrowers don't trust loan officers. Originators are losing deals for a measly $250 processing fee. Underwriters and appraisers are annoying each other to protect their own behinds. Meanwhile, secondary is fronting the bill and processors (a generally "testy" group to begin with) are stuck in the middle of it all. To make matters worse...Realtors are pointing the finger at mortgage professionals for the slowdown. I feel like my world is unraveling in front of me. Can't we all just get along?"

Note the jaded RE pros in the comments section of the MND article for some much needed comedy relief. One RE-pro commenter even suggests that short sales and foreclosures shouldn't be included in any appraisal comps "so as not to further pollute the non-distressed seller/builder market"!
After our now 20th straight day of grey skies and rain in Portland -anything resembling humor (however misguided) can only help at this point.