“…the user-cost of housing is as low as it’s historically been in a quarter-century and is far better than the user-cost of renting.”

But wait, there was also work to be done! Industry leaders and experts in risk, fraud and compliance gathered for the Risk Intelligence Forum.  Highlights included presentations by David Stevens from the Mortgage Bankers Association, and Patria Kunde from Fannie Mae, who discussed the industry benefits of Collateral Underwriter. I was put to work too. The economics team released our new First American Loan Application Defect Index and I opened the meeting on Friday morning with a presentation on the current state of affairs in the housing market.

So, how is the U.S. housing market you ask? In my humble opinion, the anything-but-normal current state of affairs is the new normal.  While the gap between actual existing-home sales and the market capacity for existing-home sales is shrinking, the housing market continues to run under capacity. The gap persists even though the user-cost of housing is as low as it’s historically been in a quarter-century and is far better than the user-cost of renting. 

The market is being held back by three primary forces.  First, Millennials are renting instead of buying because of lifestyle choices more than economic constraints. Second, many existing homeowners remain equity constrained, although this is quickly correcting itself in markets with significant price appreciation.

Finally, credit remains constrained. Most measures of credit access are showing modest improvement, but at levels that remain below historical norms.

I will be taking this story of an anything-but-normal housing market on the road to California next month at the Western Loan Servicing conference and The Mortgage Collaborative summer conference, both in San Diego.

Nashville, the country music, and the Risk Intelligence forum provided the perfect backdrop to tell this emerging story about the current state-of-affairs in housing.