I have read dozens of predictions of various sorts over the last month, so I thought I’d add a few of my own.
HIGHER RATES
While many pundits like Barry Habib (owner of MBS Highway) think there will be a recession next year, resulting in sharply lower rates (b/c all of our economic indicators have “peaked” and can only go down now), it seems very likely that rates will continue to trend upwards at least over the next several months simply b/c the U.S. economy is so strong.
Rates are currently 1/8% higher than they were a few weeks ago and about 1/4% higher than they were in September.
TECH DISRUPTIONS – LOWER COSTS & LESS FRICTION
Lenders and agents alike will start to embrace technology at a faster and faster pace that will both reduce costs and improve client experiences.
Tech-centric lenders are experimenting with all kinds of AI solutions that will significantly reduce turn-times and labor costs, allowing them to offer much lower rates.
Lenders are also employing tech to make the entire mortgage experience simpler and easier. Lenders that don’t embrace these changes will not survive.
Tech is playing out similarly on the real estate front.
FIGHT FOR EYEBALLS
The fight for eyeballs and clicks is something every one of us should worry about.
The big players in both mortgages and real estate are getting more and more skilled at garnering leads through click-bait, ad targeting, valuable information and just great offers in general.
As a result, it will be more difficult to retain our existing clients and to garner new clients.
On the real estate side, the likes of Redfin, Compass, Zillow, Opendoor, Offerpad and numerous other firms are capturing more eyeballs and leads than ever before.
It is very similar on the mortgage side with the likes of Bankrate, Lending Tree, Quicken, Better Mortgage and Zillow (once again) fighting viciously for qualified leads.
COLLAPSE OF MORTGAGE INDUSTRY
It may not happen in 2020, but it will happen. This is b/c 60% to 70% of the industry is devoted to refinances currently. When rates go up even 1/4%, those refi’s will dry up and so will much of the mortgage industry.
There are about 500,000 licensed loan officers nationwide and another few hundred thousand unlicensed loan officers working for big banks (that don’t require licensing).
There are a similar number of underwriters, funders, doc drawers, shippers, etc. The majority of these people will be instantly superfluous when rates go up.
START OF A BOOM IN REAL ESTATE
I recently blogged about this and will repeat it again – 2020 will be the start of the perfect demographic convergence that will likely start one of the biggest real estate booms in history.
An enormous bubble of millennials is just now hitting peak homebuying age while an equally large bubble of baby-boomers will be vacating their homes, creating a surge in inventory to feed millennial demand.
This boom is all but a certainty at some point, and its overall potential makes sticking it out well worth it.
Happy New Year from all of us at JVM Lending
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167
