The rumor this week in the mortgage market was that the mega-retailer Amazon had hired a mortgage executive to lead the company’s new venture into mortgage banking. Amazon knows more about consumers than any other company and they are experts in streamlining processes. One would have to believe that if Amazon wants to be in the mortgage business, they would become pretty good at it over time. Those of us in the real estate business know better than anyone how much inefficiency there is. Two decades ago, when the internet was first emerging as a platform for commerce, companies like E-loan were popping up pontificating that within a few years everyone would be applying for their mortgages online. That didn’t happen – in part because mortgages are complex, highly regulated, and mired in legal documentation. Most people don’t know enough about real estate finance to be able to navigate through the process without the guidance of an expert. For purchase transactions, real estate agents control the process and have tremendous influence over where their clients ultimately receive their financing. However, in the last 10 years, the percentage of people who begin the mortgage process online have been skyrocketing. Amazon is the behemoth who currently scares everyone. Grocery store stocks tanked the day it was announced that Amazon was purchasing Whole Foods. I’m not convinced that Amazon will have the patience to deal with the local dynamics and regulatory headaches that come with mortgage banking, but if it’s not them it will be someone else. Change is inevitable – and in the housing market change is long over due.
It has been long understood that a nation of stakeholders makes for a strong union, and for that reason, closing the minority homeownership gap has been a goal and a topic of discussion for decades.
Between 2008 and 2012, more than six million people lost their homes to foreclosure, property values lost almost 40%, and non-distressed home sales fell to all-time lows. It was, without question, the worst real estate market since the great depression. Not surprisingly, the historic dip in the market was followed by a decade-long bull market, the likes of which we have never seen before. Residential real estate is a cyclical market. The...
There is a saying that goes “when the tide rolls back, you can see who is swimming naked”. When the market is strong, it covers a lot of weaknesses. With interest rates moving up, inflation on the rise, and the economy heading towards a possible recession, we’ll find out soon how solid the foundation of the real estate market has been, and more importantly, which companies and agents have built a strong, recession-proof business.