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On the May 9 episode of my Lykken on Lending podcast, we had the opportunity to interview Mark Fleming, chief economist at First American. During our conversation, we learned that based on the most current estimates, the market size in the mortgage industry is 5.8 million homes. Despite the potential, however, the industry is underperforming the market. So, why is this happening? Why are we leaving money on the table?
According to Mark, the thinking typically revolves Millennials. Young adults are living with their parents instead of starting families and getting their own homes. Therefore, the parents aren't downsizing like they would have done in previous generations. So transactions that would have taken place in the past are no longer taking place now.
While children did seem to be living with their parents for a longer period of time during the recession, that trend seems to be much less that case now than it was a few years ago. The problem is, as Millennials find work and leave their parents' homes, those Millennials are moving into rentals. And, coming out of the recession, it seems that older generations are reluctant to sell for fear that they won't be able to find something they want to buy.
In other words, it would appear that we are underperforming our potential simply due to the residual effects of the recession. This is encouraging because, if it is true, we can expect things to improve naturally as time goes by. As with many things, the secret to success going forward is patience. As they say, good things come to those who wait.
David Lykken, a 43-year veteran of the mortgage industry, is president of Transformational Mortgage Solutions (TMS), a management consulting firm that provides transformative business strategies to owners and “C-Level” executives via consulting, executive coaching and various communications strategies. He is a frequent guest on FOX Business News and hosts his own weekly podcast called “Lykken On Lending” heard Monday’s at 1:00 p.m. ET at LykkenOnLending.com. David’s phone number is (512) 759-0999 and his e-mail is [email protected].