The Wild West Housing Market

The Wild West Housing Market


Older homeowners are sitting on a goldmine

It’s not boom or doom when it comes to the housing market. While Americans are getting priced out of the housing market millions of savvy older homeowners are sitting on a goldmine. Not just a motherlode of equity but a potential source of cash flow that could be mined to help temper the impacts of inflation and as a hedge against financial shocks.

Low interest rates and government stimulus are akin to the 19th-century expansion of the railroads that helped create boomtowns. While the property values surged in such an environment history has taught us such ideal conditions are transitory.

Last spring as the Covid-19 emerged began HECM application activity as measured by case number assignments began to surge. While one could argue such an expansion shows more homeowners are seeking to tap into their record home values the data doesn’t support such a conclusion. Case numbers for

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2 comments

The Positive Realist August 16, 2021 at 12:11 pm

Saying the pledge of allegiance to the American flag does not make everyone a “loyal” American. It is no different when we hear that so and so is for HECM penetration into the senior market for those who do not have reverse mortgages. Let us look at the breakdown that HUD provides on HECM CNAs (Case Number Assignments).

Using HUD’s latest posted data on HECM CNAs (June 2021), HECM Refi CNAs for the twelve month period ended June 30, 2021 are up 16,908 over the HECM Refi CNA count for the 12 month period which ended June 30, 2020. Comparing the total Traditional HECM CNAs for the same two periods, Traditional HECM CNAs are down 4,303. Total H4P CNAs are about unchanged when comparing the same two time periods. Total HECM CNAs in the two same time periods are up just 11,781.

Look at any time period of 12 months or less that end in November 2020 through June 30, 2021 and the story is the same for CNAs. The increase in total volume is up but the increase in HECM Refi volume is up even more.

So if everyone is taking the HECM penetration pledge, who is accounting for the loss in Traditional HECM CNA volume? Who are the “traitors?”

Reply
The Cynic August 16, 2021 at 1:56 pm

What is “anecdotal refinance business?” Anecdotal is defined by Google as follows:

adjective
(of an account) not necessarily true or reliable, because based on personal accounts rather than facts or research.
“while there was much anecdotal evidence there was little hard fact”

There is plenty of hard facts on a national level as posted by HUD in its monthly FHA Production Reports.

Reply

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