At CoreLogic’s EPIQ client conference held this last month, the company’s CEO and President Frank Martell and Managing Director of Property Intelligence and Risk Management Olumide Soroya shared their collective vision concerning the primary forces driving change and disruption in the housing market today and beyond.
Here is a summary of 5 disruptive and industry changing forces:
- The Changing Needs of Buyers: The Millennial demographic is now at the center of the housing market. Millennials as a whole represent the largest consuming demographic as they’ve grown into the peak age of first-time buyers. It is imperative that real estate professionals cater to and understand this demographic.
- Millennials have grown up and into a world of instant data accessibility. They expect that data information and accessibility from every person and source.
- The immediacy of online transactions is already apparent in mortgage transactions…50% of all mortgage transactions are now online.
- Millennials may buy a house in a hot market sight unseen.
- All real estate professionals need to strive towards end-to-end digital experiences that ensure precision and accuracy, as well as consumer ease.
- Affordability and the Housing Supply: The consistent shortfall in home production in relation to demand, particularly among entry-level homes, has been apparent in the last 10 years.
- This inventory – demand mismatch is continuing into 2020.
- Older generations are choosing to “age in place” rather than trading up or downsizing. The result…fewer homes entering the market.
- Builders are facing the challenges of local regulations, costly materials and labor shortages. The result…even fewer homes entering the market.
- Cost Pressures on Lenders: Profit margins on mortgage originations are becoming slimmer and slimmer.
- The average originated loan is now netting less than $300 in profit.
- The average cost of an originated loan is now $9,000.
- The Growing Impact of Natural Disasters: The average cost of a natural disaster is now reaching almost $200B, quadruple the average cost of a natural disaster in the 1980’s.
- Half of the losses in natural disasters are uninsured.
- This uninsured-ness causes havoc in the lending world, drives up prices in both the “hit” area and in non-disaster struck communities
- There is no relief in sight.
- Housing Finance Reform: There are several “unresolved” issues in housing finance that will have “tectonic ramifications” for all financial systems and providers.
- The future of GSE (Freddie Mac and Fannie Mae) conservatorship is uncertain.
- The impending end to QM patch is very much related to the future of the GSEs.
Depending upon the outcomes of these two things, the Federal Housing Authority needs to “embrace” tech advances in the industry as well as issues that affect the Fair Cl
Also read: https://timandjulieharris.com/2019/08/29/nine-month-inventory-climb-ended-in-july.html, https://timandjulieharris.com/2019/09/03/nimbyism-blocks-affordability.html