Reverse Market Insight’s Jon McCue brings us the latest HECM origination trends for…
Continue readingHere’s where you can expect deflation instead of inflation
While inflation rips through the U.S. economy, deflation is about to appear here…
Continue readingHome Prices Dropping as Demand Softens
Today’s insane home prices have pushed many home buyers out of the market. Fewer buyers are reducing demand and asking prices…
Continue reading6 Proposed HECM Changes You Should Know
HUD has proposed 11 changes to the HECM program- here are the six most notable
Continue readingDefining an eligible surviving non-borrowing spouse
Unable to use the embedded player? Listen here.
EPISODE #717
What is an eligible surviving non-borrowing spouse?
Dan Hultquist reveals one overlooked or misunderstood policy for eligible non-borrowing spouses…
Other Stories:
-
Truehold- a sale-leaseback alternative?
-
The Street: More Signs of a Troubled Housing Market Emerge
US Treasury Yield Inverts: Is a Recession Coming?
The US Treasury Index Inverted last week. Is this a sign of a coming recession?
Continue readingMan takes a reverse mortgage for cancer treatment
Why a man diagnosed with prostate cancer was forced to take a reverse mortgage…
Continue readingMarch Top 100 HECM Lenders Report
A summary of HECM endorsements recorded in March 2022.
Continue readingA Reversion to the Mean
The Math proves it.
The time to use an inflated asset to offset inflation is ending
If there’s one word that comes to mind when describing home prices today it’s inflated. Today’s inflated home values are primarily a product of two things: years of cheap money (low interest rates), and a long-term shortage of housing inventory.
Reflecting on the current state of the housing market many may say, “something has to give”, meaning this cannot possibly last forever. They’re right.
What’s likely to happen is a reversion to the mean.
Not a nasty person or a ‘mean’ housing market, but a return to the historic norm. Let’s take home appreciation. Just like gravity eventually pulls an object back to earth, economic forces eventually exert enough resistance to pull back home appreciation rates back to their historical mean.
The reversion of home price appreciation is the natural result of a highly speculative, abnormal, and highly-inflated market. It’s also extremely painful for those who may have lost the opportunity to restructure their debt while tapping into some of their home’s value.
The impact of repeated interest rate hikes would generally be offset if home values miraculously continued to appreciate by 15-20% a year. The fact is such daydreams never materialize; especially not when potential homebuyers have fewer dollars to invest in a home thanks to historically-high inflation that shrinks their dollar each day.
Despite a historically-established record of housing booms, busts, or deflations, many homeowners choose instead to believe the myth that home values will never fall. Of course, they will and do. The question is what happens to those who don’t secure some of their home’s value only to see it drop by ten, fifteen, or twenty percent?
For those who are not cash strapped despite the spike in the cost of living the answer is ‘very little’. However, for many, the regret and anguish will feel as real as the bricks in their home. They missed the opportunity to leverage an inflated asset (their home) to offset the inflation of the costs of goods and services during retirement. That’s when a reversion to the mean in home values can feel quite nasty.
Foreclosure starts surge 700%
Foreclosure starts are up 702% from December to January with 32,900 loans. What does this mean for the housing market and reverse mortgage lenders?
Continue reading