Market Share Report – December 2014

The 2014 purchase market tried but could not match an Andrew Luck game winning drive.?Instead it ended just short of beating 2013. You will recall that after a frigid first quarter the?purchase market started down over 10% year over year. Fueled by lower interest rates and?stronger consumer confidence the fourth quarter of 2014 was up more than 11% from the?previous year. The strong year end resulted in a year over year difference of only 2.7%?down. Quite the pick me up heading into 2015, don?t you think?

Looking at the deed numbers (see chart page 13), I still think we?re below a normal market. We?haven?t had even 2100 transactions since 2008, a year which due to the subprime mess had?only three quarters of activity. The market prior to 2008 was juiced by the subprime market.?Homebuyer tax credits inflated the market (another football reference in case you missed it) in?2008 and 2009. Assume that a normal market is 2400 or 2500 transactions. That might indicate?a pent up demand of three to four thousand transactions has been created since 2007.?Definitely a nice thought.

I also noticed in the sales disclosure data (charts pages 16 and 17) that the decline in the 2014?market is solely attributable to properties that the buyer indicated would not be their primary?residence. That would be investment, vacant land and commercial transactions in most cases.?Primary residence sales have climbed modestly each of the last four years.

A stronger recovery in the new construction market will be required to reach normal levels. With?a stronger economy and more confident job prospects, the next few years look much?better for the purchase market.

The mortgage side of things however is not so rosy. In fact, mortgage originations are at their?lowest level since possibly the mid-1990?s. Fortunately for the survivors, the number of?mortgage providers is also at a low level compared to eight years ago and before. Those that?are left are sharing what market there is with fewer competitors.

I?m feeling really good about 2015. I think there?s a much better chance that it will exceed our?expectations than fall short. And if that happens, we will be right in the middle of the CFPB?regulatory changes to the loan disclosure and closing processes! Oh joy! Oh rapture!

~John Bethell