And One More Thing . . .

I’d like to re-visit an issue I alluded to in one of my previous posts.  It has to do with a large residential lender, in classic rhetoric, proclaiming it was time to beef-up staff in anticipation of a significant CoreLogic Home Price Index Reporthousing recovery.

Well, their timing was good.  Home prices in the U.S., including distressed sales, increased 12.1% in April 2013 compared to April 2012, according to CoreLogic’s Home Price Index.  This was the biggest year-over-year gain since February 2006.  Give credit where credit is due.

This time, however, permit me to ask a couple of rhetorical questions:

  1. With an abysmal U.S. public debt picture ($16.8 trillion including intragovernmental obligations), is this momentum somewhat artificial or shortlived?

[Reading a little further into CoreLogic’s report, home prices remain 22.4% below their peak (Florida’s prices are still down by more than 40%, and Nevada by 47% – these percentage examples are not insignificant)]

  1. Were staff increase announcements made solely in preparation for a recovery, or perhaps to offset previous announcements that they were exiting the wholesale lending business?

[Wholesale lenders are fed loans exclusively by the mortgage brokerage community.  Lenders exiting this kind of business really have no choice but to find a way to source lending business on their own – therefore they MUST hire]

Yes – things have picked up, but I see little evidence of other banks aggressively increasing staff right now.  I hope I’m wrong, but I still say we have a ways to go.  Be prudent.  Be cautious.

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Dick Cantner - June 8, 2013 Reply

Another good call Mike. Too much hype, but no lasting history to back it up.
I am with you, it would be nice for these predictions but I do not see them happening yet.

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