With all the homes for sale around here, I thought that it might be easier to place "NOT for sale" signs in front of the homes that aren't for sale. Getting rid of the unsightly for sale signs would certainly reduce the clutter along the streets. Besides, who wants to move into a neighborhood with for sale signs as far as you can see down the street. That doesn't say much for the neighborhood, does it?

The title business has been slow around here, so we have had time to ponder the issue. We began to speculate at how long the market would remain soft. What will it take to see busy days like we had a couple of years ago?
 

There just wasn't a great answer to that question. My prediction was that it would be at least a few years before we see that kind of activity again. A lot has to happen, and none of it good, to set the stage for another refinance boom. Rising home values and falling interest rates cannot happen again until we see homes become undervalued and interest rates high enough to start dropping again.

Even in the current market there will be some home sales, but there won't be a lot of people "upgrading" to bigger and better homes because they won't have the extra down payment from the appreciation of their current home and they won't be able to borrow as much money as interest rates rise. Those who are buying will mainly be doing so because of change in circumstances: e.g. moving to new area for a better job, out growing their home due to a growing family, etc. That will generate some activity, but it won't be like the good old days we had in the late 90's.

Refinancing activity, which was a large part of the business a few years ago, will be pretty much stagnant. If you consider the reasons people refinance, such as to get a lower rate, consolidate bills, or send kids to college, you have to admit that there won't be much of that going on now. The lower rates have come and gone... they have to go back up before they can come back down again. Bill consolidation requires that borrowers have equity in their homes and not many do anymore. They have either already refinanced it away, or they bought their home with little or no money down. Because home prices are actually falling now, it will take considerable time before the equity is there to draw out. As for sending kids to college, student loans are cheaper and they don't require any home equity.

There will still be some refinancing, though, for those who have rising variable rate loans. Many of those people will still be in need of refinancing, but they may not be able to afford it. Many homeowners have already financed the maximum amount they could afford and thus cannot qualify for a higher fixed rate.

So, what will take to see the busy days we used to enjoy? Its going to take a whole lot of getting worse and some pretty lean days ahead. I think we will see interest rates getting close to double digits again before we see the flurry of activity we had in the late 90's. That will obviously take time. Interest rates cannot rise too sharply with out devastating consequences to our national economy. Likewise, home prices cannot continue to experience the rates of appreciation we have seen the past decade or so; especially when interests rates are rising, making it more difficult for people to afford more expensive homes. So... we will have to be patient and wait it out.

If you haven't already done so, this would be a good time to think about self-preservation. What can you do to weather the slow months, or years, ahead? Have you managed to save for a rainy day? There is no doubt that we have a glut of title people after the refinance boom and some will not be here in another year, or two. Will you?

If you are curious, the "not for sale" sign shown above was a part of a marketing campaign in London nominated for a Construction Marketing Award. See more at onislife.com.

We wanted to juxtapose a notorious medium with an unusual message: “Not For Sale”. The signs appear in the front garden of recent customers. Where neighbours expected to see a "for sale" sign, we erect a "not for sale" sign. The idea being that you are so proud of your house and your new refurbishment that you are happy for your neighbours to know that your place is not for sale.

As the conversation turns to who helped you refurbish your house, Onis is mentioned and we benefit from the single best bit of marketing ever created: word of mouth. Because we know that someone will only recommend a supplier if they had a positive experience and are prepared to put their name to it.

The campaign also stands for something much bigger. Moving home has a financial and social cost. Recent figures from Barclays Bank shows people are spending in the region of £25,000 each time they move house. And there is the social cost in uprooting years of friends, local customs and amenities, moving schools and so on. It’s not just the house that is Not For Sale; the fabric of the community is Not For Sale too.

At Onis, we make it easier for you to refurbish your home. And in doing so, we also help families realise a little extra intangible value.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com