Look Out Below...
Sonoma Home Sales
On Their Way Down...
...but new listings popping up literally overnight.
2005 Total Units Sold 1/01-2/27: 89
2006 Total Units Sold 1/01-2/26: 70
2006 Unit volume: Down 21.3%
2005 Total Sales 1/01-2/27: $61,813,000.00
2006 Total Sales 1/01-2/26: $58,920,500.00
2006 Total Sales Volume: Down 4.68%
MLS Listings - Sonoma (95476, Boyes Springs & Glen Ellen)
2/25/06 GMAC MLS: 200+ (results exceeded search limit)
Same search ran on 2/24/06 yielded: 193 listings
Houses for Sale are at record numbers, and the length of time on the market has tripled and buyers have dwindled. The mortgage industry is already feeling the pain and cutting their workforce as the demand for mortgages has nosedived...
"A major transition is underway in the U.S. mortgage lending industry, with consolidations and lay-offs at the forefront as companies try to deal with waning demand for home loans."
"VOLUME IS EBBING
The U.S. housing market surged for five years, shattering sales and construction records and sending home prices up more than 55 percent on average nationwide."
"But now the market has taken on a "survival-of-the-fittest" atmosphere, said Celia Chen, director of housing economics at Moody's Economy.com, a consulting firm."
Washington Mutual Inc. said it plans to close 10 home-loan support offices around the country and lay off 2,500 employees as the Seattle-based consumer bank and mortgage company continues a corporatewide effort to cut costs.
"Countrywide Financial Corp. (NYSE:CFC - news), the largest U.S. mortgage lender, recently announced it plans lay-offs for sometime this year, partly in response to lower profits on sales of mortgages."
"On its fourth-quarter earnings conference call in late January, the company's chief executive, Angelo Mozilo, said intense competition should force some smaller lenders out of the market."
"Employment in the real estate and mortgage industry peaked at 504,000 in October of last year but fell to 501,000 in December, according the Bureau of Labor Statistics."
"That is a noteworthy shift, given that the sector has been gaining jobs over the past five years. Employment stood at 283,000 in March of 2001."
"Waterfield Mortgage Co. recently announced that it will sell its mortgage banking business."
"Irwin Financial Corp. (NYSE:IFC - news) said last month it hired JPMorgan (NYSE:JPM - news) to look at selling its conventional first mortgage unit, Irwin Mortgage."
"They just couldn't get the revenue per loan that the big guys were getting," he said. Even the larger firms are poised for a downturn.
"There are some very important signals emerging in that we have seen some pretty good companies go on the block for sale or have been sold recently, which is a clear sign that consolidation is seriously underway," said Douglas Duncan, chief economist at the Mortgage Bankers Association, an industry trade group.
"According to Duncan, lenders have been holding "slowdown" meetings with their employees, a move he said historically coincides with a turn in employment. Duncan said developments at two mid-sized "good performing" companies may hint to a wider trend."
"Mortgage rates are expected to continue ratcheting upward from their historic lows, and that will limit lending and refinancing activity, putting more pressure on firms to find new efficiencies, said Duncan."
"Mortgage lending is an opportunistic business and when business declines, the instinct is to consolidate to become more efficient, and that is what we are seeing," said Chen.
"This shift is expected to pick up steam in 2006 if the housing market, as widely expected, cools off from its record-breaking five-year run."
Just a little prick, this won't hurt a bit....