Team Taylor REMAX Southern Homes December 2019



Dispelling Fears of Another Recession NOTHING TO WORRY ABOUT

No …This is not 2008 all over again (not even close).

As we can see, the index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, the MCAI fell below 100, and mortgage money became almost impossible to secure.

Some are afraid the real estate market may be looking a lot like it did prior to the housing crash in 2008. One of the factors they’re pointing at is the availability of mortgage money. Recent articles about the availability of loans with low down payments and down payment assistance programs are causing concerns that we’re returning to the bad habits of a decade ago. Let’s alleviate the fears about the current mortgage market. The Mortgage Bankers’ Association releases an index several times a year called The Mortgage Credit Availability Index (MCAI). According to their website, “The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is … a summary measure which indicates the availability of mortgage credit at a point in time.”

Thankfully, lending standards have eased since. The index, however, is still below 200, which is half of what it was before things got out of control.

Additionally, buyer demand across the United States was up at the beginning of the fall season according to the national data given by Showing Time (an app the majority of Realtors use to schedule property showings). The regions that realized the largest increase in traffic were the Western U.S. (up 8.9% YOY) and the Southern U.S. (up 6.4% YOY). Typically, fall is a slower time for home buyer activity, so this increase only reaffirms that home buyer sentiment and demand will remain strong through the fourth quarter of 2019 and into 2020.

Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available the mortgage credit.

Bottom Line

Here is a graph of the MCAI dating back to 2004, when the data first became available:

It is easier to get a mortgage today than it was immediately after the market crash, but it is still difficult. The difference in 2006? At that time, it was difficult not to get a mortgage. Couple this with record fall home buyer activity, and the real estate segment of the economy looks to remain strong through 2020.

—Drew Taylor (205) 283-1602


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