Forecast scorecard: 2016 housing market defied predictions


It’s time to review the predictions I made one year ago on this very website about the year 2016. Here’s what I predicted and how it really went.

1) Prediction: Mortgage rates will not go up, averaging 3.75 percent in 2016. For reference, rates averaged 3.85 percent in 2015. Result: According to Freddie Mac, rates averaged 3.63 percent in 2016. Nailed it.

2) Prediction: The Federal Reserve will not raise rates in 2016. Result: I was thinking of calling Chairperson Yellen and asking her to hold off another couple of weeks on her quarter point rate hike that was announced Wednesday. Wrong.

3) Prediction: Loan volume will drop to $1.4 trillion. Result: Wrong. Nationally, loan volume is tracking at $1.8 trillion for 2016, according to Guy Cecala, CEO and Publisher of Inside Mortgage Finance.

4) Prediction: Orange County home sales volume will drop by 5 percent. Result: Wrong. I was thinking the economy would soften (hence the lower Fed rate prediction). Sales for the year so far actually increased 2.3 percent from January through October to 31,641 transactions, according to CoreLogic.

5) Prediction: Median O.C. home prices will drop 1 percent from 2015’s January through October average of $602,050. Result: Home prices went up 6.1 percent, with the median averaging $638,900 this year so far. Double whiff!

6) Prediction: Nationally, mortgage broker market share would increase by 5 percent over its 9.7 percent 2015 market share. Result: Currently, market share is 10.3 percent, according to Cecala. While mortgage brokers are gaining, I’m going to call my prediction too optimistic for what really happened. Wrong again.

7) Prediction: The Consumer Finance Protection Bureau will create an outright ban on payola called Marketing Servicing Agreements or MSA’s. Real estate vendors like mortgage lenders, escrow companies and the like receive exclusive access to the realty agents’ clients for a monthly stipend. Result: The CFPB goes after these nefarious activities but there was no written order.

8) Prediction: Regulatory and disclosure requirements would create havoc in the securitization market for jumbo loans because loan buyers will be nervous that jumbo loans won’t comply with the rules. As a result, portfolio lenders (big national banks) will dominate the market. Result: Big banks were typically a half percent lower than loan originators that did not have access to those cheap funds. Prime jumbo securitization dropped 24.5 percent for the first nine months of 2016, according to Cecala. Got it right!

9) Prediction: No major change to the stupidly long rescission periods for purchase and refinance borrowers or required qualifying ratios which are known as the qualified mortgage rule. Result: Nothing did change. Right twice in a row!

10) Prediction: Fannie and Freddie stay in conservatorship. Result: Indeed they did.

So that’s four right, six wrong. Let’s see how I do next year. Stay reader ready for next week’s 2017 predictions.

If you have questions or comments, please contact Jeff Lazerson by clicking here.

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Jeff Lazerson - Mortgage Columnist since 2011