Fri Nov 26 8:28:23 EST 2021
Home#COVIDThe Housing Market Daedalus Created

The Housing Market Daedalus Created

NAMFS Requesting $120K For Personal Pay Hikes As The Industry Melts Down

The red hot housing market which was incited by the free money in which the Federal Reserve and both the Trump and Biden Administrations have been throwing at everyone other than the American Public may finally be cooling off. With inflation running out of control and the Fed terrified to put on the brakes, the economy itself may be inserting its own form of control. Currently sitting at 5.39%, inflation is being fanned both by zero percent loans from the Fed in combination with a continuing $120 billion a month in QE purchasing. Moreover, though, Home prices: dipped for fourth month in a row to +5.5% (down from a peak of 6.2% in May); Rent: +9.7% (new record); Food prices: +7.0%; Gasoline prices: +5.9%; Health care: +9.4%; and College education: +5.9%.

No city exemplifies the mania of the Covid-era U.S. housing market better than Boise, Idaho, where prices have surged by more than 30% in the past year. But in a sudden reversal, buyers are now the ones with power.  Asking prices for houses are being slashed. Bidders no longer have to waive inspections to win over sellers juggling multiple offers. Demand has slowed so much it’s like a light switch suddenly turned off, said Dominic Zimmer, a local Realtor.

Many today are comparing stocks on Wall Street to the economy. Nothing could be further from the truth. And the disconnect from the Jobs Report each week reflecting fewer and fewer claims filed does not address those workers. The U.S. Bureau of Labor Statistics recently announced that 4.3 million Americans, or 2.9% of the entire workforce, quit their jobs in August. And yet another whopping FORTY PERCENTthat is not a typoare likely to leave their job in the next 3 – 6 months.

This graphic from Redfin on Bloomberg Business shows precisely how many homes are being reduced in price. It is simply startling!

Metro Listings With Price Cuts
Canyon County, ID Boise City, ID 81%
Utah County, UT Provo, UT 65
Davis County, UT Ogden, UT 64
Box Elder County, UT Ogden, UT 64
Ada County, ID Boise City, ID 61
Salt Lake County, UT Salt Lake City, UT 58
Clear Creek County, CO Denver, CO 56
Bartholomew County, IN Columbus, IN 55
Shelby County, IN Indianapolis, IN 55
Fresno County, CA Fresno, CA 53
Penobscot County, ME Bangor, ME 52
Morgan County, IN Indianapolis, IN 52
Weber County, UT Ogden, UT 51
Cowlitz County, WA Longview, WA 51
Jefferson County, CO Denver, CO 50

Let’s bring this into perspective in a way that only a trained media professional such as myself is capable of doing. First, housing prices are falling and they are going to continue to fall. This, in turn, means valuations are falling. That directly impacts the Cap Rates which investors have been banking on to further leverage yet more borrowing in a catastrophic way. Second, Labor is non-existent — especially so in the Mortgage Field Services Industry. The days of National Association of Mortgage Field Services (NAMFS) members living high on the hog from THREE DOLLAR inspections are done. If people are turning down $18 an hour at Chik-fil-A where they have no investment other than time and are paid every week, who in their right mind would pay for a vehicle, licensing, insurance, fuel, machinery, insurance, landfill fees, and then wait 45 days to be paid — and many are charged back and are never paid! And finally, the latest NAMFS push to have Labor pay $120,000 to get a pay raise for the National NAMFS members is the epitome of lunacy as Labor will never see a single penny of it! Don’t take my word for it, take a look at the new Donate Button Eric Miller, the NAMFS Executive Director rigged up!

Donation? Really? Why not use the monies NAMFS already has to fund the Initiative? I suppose that is an entirely different story which may be best explained by pay raises for Eric Miller and prayers of gullibility on the side of Labor. Or maybe the reality is that NAMFS simply does not have the capital.

To say that even in rough times the Industry is not generating a tremendous amount of profit is an outright lie. Altisource kicked off their Earnings Call on 06 August 2020 with Chairman and Chief Executive Officer William B. Shepro. Shepro clearly defined the value of the distressed asset space by saying,

In a normal market, we estimate that for every 1% increase in delinquency rates, the addressable market for our default related services increases by approximately $700 million. Based on the increase in 30-plus day delinquency, since the beginning of the year, we estimate that the addressable market for our services has grown by over $2.7 billion.

Now, this was during the height of COVID. And with a tremendous amount of distressed assets anticipated in 2022 as the Dodd Frank Regulation X exemption ends on 31 December 2021, the reality is that the math is pretty basic. Another thing which is basic is that unless and until Eric Miller and his NAMFS members choose to fund pay hikes — AS EVERY OTHER INDUSTRY HAS — at best, the National Guard will have to step in as we are now seeing throughout the US.

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Paul Williams
Linux addict buried deep in the mountains of East Tennessee.
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