Of the 50 states, California always seems to be in a class by itself. To understand the unique housing-related challenges that face this distinctive market, we recently spoke with Brian Moggan, Northern California regional manager for Mortgage Master Inc.
Q: How would you categorize the overall state of the Northern California housing market?
Brian Moggan: Although parts of the country continue to struggle with a slow economic recovery, Northern California, and the Bay Area in particular, is charging ahead with rapid growth in tourism, export-related businesses and of course, technology. Several counties are statistically at full employment and others are not far behind. Tech-industry hiring has raised the liquidity in the region and encouraged a steady stream of young first-time buyers, helping to push home prices higher. According to a CoreLogic report released in early June 2014, California home prices jumped 15.6% in April year over year, while other regions of the country saw more moderate growth. CoreLogic forecast calls for these trends to continue.
Q: There has been a lot of attention given to the lack of affordable housing in this region, especially in the Bay Area. What impact will this shortage have on the economic health of the region?
Brian Moggan: Northern California housing stock spans a broad spectrum in price and affordability. The more densely populated urban areas have seen steady increases in home values but those increases have largely been met with corresponding wage increases, particularly in the tech sector. Affordability remains a key concern for market participants, and with tighter underwriting standards, affordability will remain a concern. The less populated areas have seen more modest increases in values, keeping the median price of a home within the reach of buyers.
However, housing affordability will remain an issue in 2014, especially in the Bay Area where prices rose precipitously over the last couple of years and, unlike the rest of the state, have not yet slowed down. With low interest rates and tight housing inventories, it’s a competitive but healthy market.
Q: Mortgage Master is looking to expand into this region. How will you be able to differentiate yourself from the well-entrenched lenders that have been serving this region for years?
Brian Moggan:Northern California originators can look forward to having a best in class mortgage lending platform that delivers on-time closings often paired with competitive industry pricing. Bigger is not better, better is better. Mortgage Master already distinguishes itself by having the highest salesforce percentage on the Scotsman Guide Magazine’s Top Originators list. We ranked 12th nationally in overall volume and 4th nationally in retail volume. Introducing Northern California to this platform is an exciting opportunity.
Q: You have been in the mortgage business for 14 years. Over this period, do you believe that the business has changed for the better?
Brian Moggan: The industry serves many masters, so it’s difficult to answer this question without conflicting viewpoints. Finding a balance between regulation and free market practices has been the main driver of change in our industry. The 2000’s brought a steady decline in underwriting standards which lead in part to the mortgage meltdown. Recent years have brought an avalanche of regulation which has stymied product innovation and has left some buyers on the sidelines. Regulation has increased the overhead for lenders and added frustration for home buyers.
On the other hand, there have been positive changes for the industry and the consumer, such as a barrier to entry in the NMLS system for licensing that did not exist in the past. Loan officer compensation has been regulated and for the most part originators are glad for the changes. Consumer trust in the lending industry has been damaged over the recent past, but responsible lenders who have made it through the crisis are well poised to earn that trust and prosper in our new reality.
One thing that has not changed is that a career as a loan officer is still a challenging and rewarding path, home to individuals who have an entrepreneurial spirit and a can do attitude. If you have these traits, the mortgage business can be a fun and satisfying choice. I am looking forward to introducing Northern California originators to the best mortgage lending platform in the country!
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