Very recently, construction has increased six percent, which is already showing up as a strong 2013 trend. Of course, we aren’t doing as well as we did in the 1990s or the early 00s, it is still a nice surge and may see us back around 2005 levels in the year 2016. For people with capital under 50, the market will be a strong opportunity to capture market share and grow your business. If you are a little older, say are 56 or 57, maybe that means it is time to get in touch with your inner 40-year-old. It is time even for beginners to the market to think aggressively to take advantage of this opportunity.
That being said, new housing sales will take several years to reach peak levels to over one million units where it plunged in 2010 to a just 250,000 units. This drop in units was devastating to the economy and paralyzed families financially as well as leaving many builders to either go out of business or to consolidate. But now, new housing is seeing a rise of 5.7 percent from August and once again optimism is spreading across all housing market segments. We project that 2015 will be bright and that foreclosed property numbers will go down and result in a recovery market, creating a more, well, normal kind of normal.
What is the new normal? Let us break it down for you in a a production forecast report issued by Fannie Mae in January of 2013, that reflects the Mortgage Industry and the Housing Market.
The new normal means:
►Continued contraction in refinances—approximately 25 percent in 2013 and another 10 percent to 15 percent in 2014.
►Modest growth in new purchase production—expect this to fully rebound in 2017-2020 to 2006 levels. The main indicator here are new construction starts which is covered below as well.
►Competition for production will become fierce.
►Mortgage consolidation will continue–Another 30 percent of the existing approximately 3,000 mortgage banks will go out of business, be assimilated or be acquired by 2014. Mortgage brokers will suffer given the Qualified Residential Mortgage (QRM) and the three-point rule on compensation beginning in January of 2014. This is expected to further contract brokers by another 30 percent-plus. These two efforts will drive the consolidation further, while the larger and better capitalized firms will grow significantly.
►Non-depository mortgage banks, with a net worth of $15 million-plus will be the real winners in the forecast below.
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