When will the housing market turn around in California? No one knows for sure – but according to the President of the California Mortgage Brokers Association, it could be at least another 18-24 months.
From the San Diego Union Tribune:
Ed Smith Jr., president of the California Mortgage Brokers Association, considers himself an optimist. But even as he mingles with convention-goers in Las Vegas, he’s not jumping on any bandwagon predicting an imminent turn in the housing market.
Smith, a 26-year industry veteran who operates a mortgage referral business in Spring Valley, estimates that it could take at least until the dawn of 2012 for the market to settle. In the meantime, the mortgage industry continues to go through tough times.
Independent brokers, who once held an estimated 60 percent to 70 percent of the mortgage market in California, now represent only 15 percent of the market. The nation’s three top banks — Citigroup, Wells Fargo and Bank of America — dominate more than 50 percent of the market, Smith said.
“It’s not good for the consumers if there’s only three choices of lenders,” he said. “It doesn’t give them a lot of latitude to shop around for the best deal.”
In the meantime, Smith said, one of the big topics of discussion among brokers is whether to merge with mortgage banking operations so that they can build stronger competition to the big banks.
When asked for a timeframe on when he sees the housing market turning:
QUESTION: One of the major questions these days is whether the housing market may be approaching a bottom, now that the economy appears to be stabilizing. What do you think?
ANSWER: I usually try to be as optimistic as possible, but I think it could take another 18 to 24 months for the real estate market to settle. There’s a huge “shadow inventory” out there of homes that have not yet been foreclosed upon. Some people say the shadow inventory may total as many as 7 million homes. Those homes are being slowly dribbled back into the market, but if it comes onto the market much faster, it will destabilize the market much faster than it is right now.
In San Diego, I’m not sure how long it will take for property values to get back to the place they were. And that’s not bad, because at the peak of the market, property values were so out of whack that the average person couldn’t pay for a loan. At the top of the market, I wouldn’t have even bought my own house if it was on the market.
