Looking for a New Normal

Consumers’ actions will be key to the future mortgage marketplace

by Karen Bankston

The impact of evolving consumer behavior will determine to what extent mortgage lending returns to its traditional cyclical patterns, suggests David Tuyo, CCE, VP/solutions with Lending Solutions Consulting, Inc., Elgin, Ill.

The typical cycle of mortgage lending traditionally started when people got married and bought a starter home. Then they moved around to pursue career advances, had kids and moved up to a bigger home, and moved up again before trading their home for a condo in middle age and retirement.

“A lot of people have postponed taking that first step into the housing market,” Tuyo notes. “That pent-up demand will start to unwind, but it could be a slow process. This is a bigger step than ever for first-time homebuyers. It’s hard to gauge the damage (done by the bursting of the real estate bubble) to the consumer psyche and the trust factor” in real estate as a safe investment and in the wisdom of making such a substantial financial commitment.

When Work Comes Home

Another variable is the degree to which American workers will continue their nomadic quest for better jobs. “Historically, people moved to where the jobs were, but now employers are moving to where the talent is and, with home-based employment, people don’t have to move,” he says.

Tuyo cites a personal example: He works for a company based in Illinois but lives in Florida, and he was searching this winter for a virtual assistant who could be located anywhere. The rise of independent contractors who make their living in “crowd-sourcing,” or collaborating on far-flung teams bidding and working on projects without geographic constraints, alleviates the need for job relocation.

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