| Last week it was mortgage lenders deservedly fretting about the future of their industry; this week it’s HELOC and home equity loan originators.
As Bram Berkowitz reports elsewhere in this issue, the Trump administration’s tax reform removed the taxpayer’s ability to deduct HELOC interest, which could cause the product’s popularity to take a nosedive. It could also cause an uptick in borrowers refinancing to wrap home equity loans into their mortgages, which are still at historically low rates.
HELOCs were just starting to take off again as home values rose after the recession (and in some places rose to higher heights than they achieved before the crash). Equity is up in a lot of Massachusetts’ communities and HELOCs can be a good cash-flow option for a lot of people. The lost deduction may make them less attractive to some borrowers.
The option to roll an existing HELOC into an existing mortgage is a good one for the lending industry; refis have waned in recent years as most homeowners have already taken advantage of falling interest rates. A refi boost is welcome, even if it is a minimal bump.
Realtors and agents are also worried about the state of their industry. It’s official: the beginning of 2018 saw the lowest number of homes for sale since MLS began tracking that data. It’s not that houses aren’t being listed, quite to the opposite; 2017 looks to close with near-record high sales totals in addition to record high median prices. The homes that are listed don’t linger on the market, but rather go under agreement in a matter of days as hungry buyers fight for the scraps the market has to offer.
Also concerned about the state of the real estate industry – FINALLY – is the Massachusetts Legislature. Acting Senate President Harriette Chandler, who has throughout her political career been an advocate for housing of all stripes but especially affordable, last week warned that the state is “at risk of losing its reputation as a national leader unless it addresses its longstanding housing affordability problem,” the State House News Service reported.
As of the writing of this editorial, the answer “the housing crisis” was pulling ahead of “Amazon selecting us as the home of H2Q” in Banker & Tradesman’s online poll, “What will be Greater Boston’s biggest challenge in 2018?”
Both would be quite a challenge for Greater Boston and for the same reason – our economy is booming, our population is growing and our prices are rising.
Scott Van Voorhis this week takes a look backwards to look ahead, concluding that we’re likely to see another three or four – or more – years of rising prices before a catastrophic disruption causes a market correction. But a catastrophic disruption doesn’t have to be bad: Maybe, just maybe, it will be an enormous swath of new homes, condos and apartments coming online.
