March 29, 2013
Buyer Interest High, But Checks On Market Remain (Banker & Tradesman)
By Colleen Sullivan

A strong buyers market is bringing a sense of renewed confidence to the mortgage industry, but coping with heavy regulation is still a huge concern for lenders, industry leaders agreed today at a conclave sponsored by the Mortgage Advisory Board.

A panel discussion on the reemergence of the real estate market, featuring Carol Bulman, CEO of Jack Conway, Realtor; Charlie Ferraro, President of William Raveis Mortgage, Mark Lippolt, senior vice president of operations for Hammond Real Estate, and Ed McDonald, president of Salem Five, found plenty to be cheerful about in the current state of the market. Buyer's interest is so strong in certain markets that bidding wars don't even begin to cover it --- Bulman said one of her agents nearly had a fist fight break out at an open house in Hull last weekend. That resugence of buyer interest has helped buoy volumes at mortgage lenders even as refinance activity has begin to ebb, said Ferraro. He said his firm was experiencing slightly lower volumes at this time of year compared to 2012, but that the ratio of the loans has switched from 50-50 purchase to refi to more like 75:25. Buyer interest was high at all price points, with tight inventory just starting to drive up prices and push purchasers from the most desirable towns into neighboring markets which have struggled in the recovery, with Bulman saying that her firm has begun to see increasing median prices in gateway cities like Brockton and New Bedford and Lippolt saying that multiple bids were prevalent in Dorchester as well as the Back Bay.

Some checks on market activity do remain, however. Lippolt said that while the $1 to $1.5 million market was thriving in towns like Wellesley and Newton with good schools, excellent amenities and proximity to the city, the upper end of the market at $3 million and above was not as brisk and further-out suburbs like Sherborn and Dover had not seen such a renewal of interest, with high-end purchasers unwilling to deal with longer commutes or more remote amenities.

A far bigger check on the market was increasing cost of regulatory compliance. Several members of both the panel and the audience expressed concerns about the industry's ability to hire and recruit qualified personal to cope with compliance requirements. "There's no question that we need some new blood in this industry," said McDonald.

Lenders also said that troubled loans from the 2006-2007 vintage are still weighing down their portfolios. On the plus side, lenders expressed confidence that the jumbo loan market would experience considerable improvement this year as more lenders enter the secondary market.

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