The Nike shoe brand’s slogan, “Just Do It,” defines a hard-charging at- titude that is not risk-averse. Likewise, a slogan popularized by the baseball movie “Field of Dreams” — and often repeated in the real estate world — reminds us that, “If you build it, they will come.” It,
too, is meant to inspire confidence.
In the homebuying market, it’s this same kind of confidence that is helping to
drive an incredible run-up in home prices. It also is an opportunity for mortgage
originators to continue to rebuild confidence in the homebuying experience
and the industry in general.
Confidence keeps us believing that this boom market will only get better,
even when we know naturally that what goes up, must come down. We don’t
look backward at cyclical housing dips or historic defaults, however. Instead, we
look forward to something new and hopefully better.
Today, loan originators are playing a pivotal role in building homebuyer confidence and instilling this sense of safety. If a potential borrower does not trust
the person they are working with or feel safe about the loan product offered,
the transaction could be doomed from the onset. That is why, especially in an
increasingly commoditized mortgage market, it is imperative for originators to
become trusted advisers and educate consumers about all of their options.
Nearly a decade after the 2008 housing crisis and the Great Recession that
brought foreclosures and job losses to many well-meaning and hard-working
families, Americans appear to be bullish on becoming homeowners again.
In ValueInsured’s latest quarterly Modern Homebuyer Survey, 79 percent of
millennials who don’t currently own a home want to buy one, and 75 percent
would buy a home now if they could afford it.
So, they really do want to buy. The emotional rollercoaster that is homebuying,
however, may be getting the best of them.
<< Homebuyers continued from Page 81
“Confidence keeps us believing
that this boom market will only
get better, even when we know
naturally that what goes up,
must come down.”
This is where originators play a key role: by effectively educating homebuyers
and guiding them through the process so they will not make a mistake before
they get to closing. If existing homeowners have regrets around their current
homes, originators can help them properly access equity or suggest a home
equity line of credit to make improvements, for example.
For the most part, this is an ideal time for originators to consider what they
have to offer borrowers that will encourage and boost their confidence in buying a home right now. For some enthusiastic homebuyers, buying now seems
to have taken on a more urgent appeal, especially in this feverish housing climate with record-low inventories and interest rates that are still low by historical
standards, but rising.
A 2017 Redfin’s survey found that one homebuyer in three made a sales offer
without visiting the prospective home. The most common sight-unseen buyers
— 41 percent — were millennials, not experienced homebuyers. There also
are reports of eager buyers waiving home-inspection contingencies in an
attempt to boost their chances in a bidding war. After all, this is among the
strongest seller’s markets ever, according to some industry observers. With
interest rates rising and the latest tax reforms affecting particularly the
expensive coastal real estate markets, there are loud whispers that momentum
could be shifting, however.
Just how long can the seller’s market and record home prices stay hot?
It’s hard to tell. What has been somewhat overshadowed by the recent positive
jobs reports is the fact that while the unemployment rate and job growth are
trending positively, wage growth still continues to be described as sluggish
some nine years into our economic recovery. Annualized wage growth
currently sits at 2.5 percent. The inflation rate is trending near the 2 percent
level, with gross domestic product growth last year coming in only slightly
higher than the rate of inflation. Eventually, these three key economic indicators
will need to go up to sustain home prices at the current trajectory.
These important economic health benchmarks, while in plain sight, are easy
to ignore by exuberant homebuyers, however, especially those high on bidding-war-induced adrenaline. Our long tradition of American confidence is further
complicated in this contemporary era by the information buffet and social
media overload. If you need reassurance that the financial risks ahead are worth
taking, you can always find something online.
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