There is a strong case pent-up demand building in the economy.
In 2007, demand had been exhausted by lower standards of credit. In 2011, credit standards are tight, credit quality is high.
As time passes, the 2004 to 2008 loan vintages will become a smaller proportion of bank balance sheets. Credit provisions should decline, adding theoretical value to bank balance sheets. The average pre-payment speed is widely assumed to be 5 to 7 years. We can assume the underwater loans will have a longer lifespan, on average. Short sales, deed-in-lieu, third party sales are becoming more commonplace. Outside the District, former homeowners are keeping rental prices high.
There is a strong case for future growth in purchase-money mortgages in boom economies. Declining inventories keep supply limited. Fewer housing starts and strong investor demand contributes to limited supply. Healthy economies will see further migration and increased household formation. According to Census, immigration and minorities play a large role in population growth of boom economies. Those burned by housing during the boom will inevitably put off purchasing for at least a few years to repair their credit.
In 2007, demand had been exhausted by lower standards of credit. In 2011, credit standards are tight, credit quality is high.
As time passes, the 2004 to 2008 loan vintages will become a smaller proportion of bank balance sheets. Credit provisions should decline, adding theoretical value to bank balance sheets. The average pre-payment speed is widely assumed to be 5 to 7 years. We can assume the underwater loans will have a longer lifespan, on average. Short sales, deed-in-lieu, third party sales are becoming more commonplace. Outside the District, former homeowners are keeping rental prices high.
There is a strong case for future growth in purchase-money mortgages in boom economies. Declining inventories keep supply limited. Fewer housing starts and strong investor demand contributes to limited supply. Healthy economies will see further migration and increased household formation. According to Census, immigration and minorities play a large role in population growth of boom economies. Those burned by housing during the boom will inevitably put off purchasing for at least a few years to repair their credit.
