3 reasons a mortgage default disaster is NOT right around the corner
There’s a vicious rumor going around town that Prince Harry and Meghan Markle created a GoFundMe to pay off their mortgage. This is a lie. A fan of the formerly royal couple created the pay, and it’s since been taken down.
There’s also plenty of chatter about that a sizable population of Americans will are facing default and may
never be able to return to regular mortgage payments once the forbearance period ends.
In fact, mortgage and housing stock analyst Gary Gordan notes that the stocks of mortgage insurance companies MGIC, Radian, Essent, and National Mortgage are trading as if a mortgage default disaster is right around the corner.
Gordon doesn’t think so and gives 3 reasons why.
A default disaster is unlikely because of a housing shortage. Home prices will continue to appreciate, Gordon predicts.
More than a decade of conservative mortgage lending practices. Mortgage underwriting standards have been conservative for over a decade and tightened even further over the past three years.
“The Federal Reserve's frantic money printing,” Gordon says. “A healthy portion of that new money is ending up as housing inflation.”
“The Federal Reserve’s commitment to keeping interest rates very low for at least the next three years gives increased confidence that the Fed will also keep printing money,” Gordon writes. “And some portion of that new money will find its way into home price inflation. Added to the housing shortage and excellent lending standards, it is increasingly unlikely that mortgage defaults will climb significantly. In turn, MI cash flows are increasingly likely to grow rather than take a hit.”
[Related read: Existing home sales fell sharply in February, as supply dropped by the largest amount on record]
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Too… Many… Real estate agents.
There are more real estate agents than homes for sale in the U.S. right now.
According to the WSJ (metered paywall), at the end of January, there were 1.04 million homes for sale. That is down 26% from a year earlier and the lowest on record going back to 1982, according to the National
Association of Realtors. Also in January, the NAR had 1.45 million members, up 4.8% from a year earlier.
So, what’s making the real estate profession so popular right now?
“It is easy to understand why so many people would sign up for the real-estate profession: The pandemic eliminated millions of jobs, especially in service industries such as restaurants and hospitality,” write Nicole Freidman.
“The booming housing market suggests there is a lot of money to be made selling homes. And in most states, it doesn’t take much more than taking a course and passing an exam to get a residential real-estate license,” she adds.
Most real estate agents struggle as a result. In their first year, most don’t clear $10k a year. But that figure rises with more years on the job: The median gross income for all NAR agents in 2019 was $49,700, up from $41,800 in 2018, the association said.
🔥 Rise&Shred EP 012 – Share Hope 🔥
With Josh Pitts, Jacob Gaffney, Molly Dowdy, & Chris Griffith
Appraising haunted houses is a thing and this is the guy who does it
Sandy Grice, 71 and a third-generation property appraiser out of Virginia, who spent decades specializing “in the big stuff, the historic stuff, the weird stuff.”
He worked in all corners of the commonwealth and then some, calculating values on everything from airports to the ruins of a house that belonged to the Witch of Pungo.
It’s an art that Grice refers to as “Appraising the Supernatural,” in this bittersweet tale.
And it’s an art that doesn’t have many days left in it.
His firm, AP Grice & Son, the oldest real estate appraisal firm in southeastern Virginia, is fading away.
Automated valuation models are changing the industry, pushing humans aside, the article states. And Grice adds he’s the “end of the line” anyway — still licensed but largely retired, with no children to take the reins of the family business.
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