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Brett's 2008 Forecast !

Well, now that 2008 is here I thought it might be time for a look at 2008 and what I think is likely.  First for many people in the real estate industry 2007 was a difficult if not frightening year.   I am fortunate to say it was challenging but good year for me and Southern Hills Mortgage.  While many lenders has difficulties getting fundings completed in the first and second quarter of 2007, we did not miss a single closing date of have a funding issue.   Here's why that may have been an issue for some lenders - Since November of 2006 over 200 wholesale lenders have closed their doors or entered bankruptcy.    I mention this because beginning in the second quarter of last year the guide line requirements began to tighten.   At the beginning of 2007 a credit score of 580 could still get 100% financing.  Now the score must be greater than 620-640.  

The Tulsa economy and Oklahoma in general remain strong at present.  Our good news is also our bad news.  Because the housing market in Oklahoma in general has not appreciated more than about 4% per year for several years we have not been in a condition where people were able to wildly speculate on real estate appreciation.  Consequently we have been largely insulated from the use of various hybrid products which in a speculative market are dependant on appreciation.  Because we have not been prone to speculation we have also been tagged one of the fastest appreciating areas in the country (again about 4%).  So, our normal or recently average condition makes us look very good against the rest of the United States and the areas suffering double digit declines in home price.  Indeed our foreclosure numbers are in about the middle of the pack at present.   According to my sources there are only about 500 properties currently bank owned in the entire state.  However, I was told that more requests for broker price opinions being made by lenders and servicers which might indicate there are more foreclosures coming.

I think that we will see a continuation of tighter underwriting standards by investors, lenders and banks going forward.  What that means to the real estate professional is that more transactions that have borrowers with issues which may be questionable are going to be delayed or perhaps not completed at all.  This will mean that your mortgage professional will have to be very diligent at the qualification stage going forward.  I believe that the fed will continue to lower the fed funds rate in the first half of the year, and most likely at every meeting.  The noise about the credit crisis will continue to be heard though the second quarter.  By the end of the second quarter, most of the major write down on mortgage backed securities should have been done and the decimation of the financial industry on Wall Street should be nearly over.   That doesn't mean that things will suddenly get better, but I believe that in the third and fourth quarters next year we should start to see some easing of the mortgage secondary market and the return of some of the products which have been shelved.   However, if the economy continues to decline with a weak international dollar and high oil, other economic factors may affect any growth in the real estate market nation wide.

In Tulsa and Oklahoma, I believe that we will see some contraction in 2008.  It won't shrink a lot, but it will shrink some.  I believe we will see fewer homes sold monthly and a flattening of price increase.  Again, I don't believe we have a "bubble" in our area, but we might see some stagnation in certain areas.  Overall I believe we will again see an appreciation rate of 3-4% for 2008.