How is purchase going to grow at 10.5% if inventory is cut in half from 2020?
LendingLife Crew:
It is currently 19 degrees in Dallas and there's snow on the ground – a lot of snow… by Texas standards at least. Texas is not built for this type of weather. But to find a silver lining – a "snow day" does give me some extra time to dig into housing data.
According to the MBA's most recent Mortgage Finance Forecast report, we wrapped up 2020 with $1.42 trillion in purchase volume and $2.15 trillion in refi volume. And in 2021, the MBA forecasts $1.57 trillion in purchase and $1.15 trillion in refi volume. So purchase is projected to grow 10.5% in 2021.
Over the weekend, Mike Simonsen at Altos Research shared some eye-popping metrics. According to Altos, there are currently only 344,415 houses on the market in the whole country. This is wild. Last year at this time there were 722,187 homes listed.
So, you might ask, how is purchase going to grow at 10.5% if inventory is cut in half from January 2020? One factor is the speed at which properties go under contract. Simonson highlights that thousands of homes go under contract so quickly they bypass active inventory numbers altogether. The factor that can't be ignored is demographics. HousingWire Lead Analyst Logan Mohtashami has repeatedly shined a light on the fact that 2020-2024 has the "best housing demographics ever."
And as lenders gear up for what should be a record year for purchase volume, many are sharpening their product toolkits. Jumbo has been a high-demand product for most of the last year. Lending options for self-employed borrowers have also been the topic of many conversations in originator circles. Angel Oak shared with HousingWire that there are around 18 million potential self-employed borrowers in the U.S. And a recent Angel Oak poll demonstrated that 73% of originators haven't closed a bank-statement loan in the last 12 months.
From my vantage point, it's safe to coin 2021 as the "Year of Purchase." And this crowning achievement will only be accomplished if originators have a full product suite to serve borrower and referral partner needs.
Even with total credit risk transfers (CRT) and non-QM lending trending down due to seasonality, some observers are predicting a strong beginning to 2021.
HousingWire recently sat down with Tom Hutchens, Angel Oak EVP of production, who shared how non-QM lending could be an effective way for lenders to replace lost business in the event of a refi boom slowdown. Presented by Angel Oak
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