Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
Over the holiday break, I was speaking with a friend about the real estate market. This guy is financially savvy and has an excellent understanding of the economy. He also happens to be in the market to buy his first house. While he didn’t have “real time market stats” at his discretion, he made a compelling argument as to why he is in no rush to buy a house at the moment. I told him that he didn’t need to “convince me” about softening real estate housing prices, I have been forecasting it for several months.
It’s always nice to say, “I told you so” when you can actually send people links of recent articles that I wrote that literally told-you-so. Market data is starting to support my sentiment. CoreLogic, the nation’s premier real estate market analysis company has released several statistics pointing to a slowdown in housing and a decline in home prices. CoreLogic has also lowered their outlook on market prices for 2019.
“A strong economy helps homeowners feel confident about the value of their property,” said Frank Martell, president, and CEO of CoreLogic. “If recent declines in the stock market shake consumer confidence in the national economy, we may see homeowners’ perception of home value change and a subsequent buyer’s market emerge in 2019.”
According to a recent CNBC analysis, more than half of the nation’s 50 largest housing markets were considered “overvalued,” last spring, meaning prices were at least 10 percent higher than their long-term sustainable levels. Last month, that number dropped substantially.
What was interesting about my conversation with “Bob Borrower” was that he had a keen understanding of the economy, rates, and real estate prices, but he wasn’t necessarily saying the right things about why he should or shouldn’t be buying a house. I think this is a critical point of understanding for both homeowners who are looking to sell and home buyers who are looking to buy.
The typical home buyer, who I was very much speaking to on new year’s, believes that they will “catch a deal” in the spring, after tax season, when homeowners become desperate to sell their house. Many of these home buyers have a misconception that rates are high when they actually hit ten-month lows by 2018 year-end. Many buyers are also looking at 2006-2008 market statistics and anticipating a similar real estate decline.
Sellers are in a sensitive position as they are battling with the winter housing market, and are torn as to whether to wait or weather the storm, pun intended. It might be a catch-22 trying to anticipate the perfect timing of putting a home on the market while gauging a new crop of home buyers in the spring who are different than those who have seen their house previously.
My advice, of course, is to continue to have candid conversations with Bob Borrowers, Realistic Realtors, and Logical Lenders as to the best way to navigate this transitioning market. As we have announced and will continue to publish, Approved Funding is offering many different seminars and workshops that will help buyers and sellers learn more about how they can maximize their financial objectives, despite the changing marketplace.
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