then I started making money again. I don’t even rehab any more. I demolish and I build a new home.” Two to Four Years Left Schemmel, whose typical deal takes nine to 12 months from purchase of existing home to sale of new home, said he’s still sees plenty of runway left in the Denver housing boom. “I keep hearing all these naysayers saying there’s a bubble. I agree that there are cycles, but we’re not there yet. … I think we still got two to four Housing Risk #9: Regulation For all the complaints about “Washington” and “regulation” the bottom line is very simple: in 2016 FDIC- insured institutions had profits of $171.3 billion versus $87.5 billion in 2010, the year Dodd-Frank was passed. According to the Institute for Local Self- Reliance, giant banks had a 32 percent market share in 2000 versus 59 percent in 2014. As to smaller banks the news is less thrilling, the 2016 Republican platform noted there are now fewer than 2,000 small banks left, down from 13,000 in 1985. The Bubble Danger: Regulation has worked very well for the nation’s largest banks and yet there are endless calls to dump Dodd-Frank, de-fang the Consumer Financial Protection Bureau, and privatize Fannie Mae and Freddie Mac. The worry is that by tinkering with the system now in place bad things might happen. David Stevens, CEO of the Mortgage Bankers Association, told USA Today in 2013 that “you have to assume that almost in any future model being drafted,

years,” he said, noting that he thinks the tax cuts proposed by President Trump could extend the boom longer by pumping more money back into the economy. “You got Google coming here, Amazon, building these huge monster facilities … you’ve got marijuana … and it means jobs, and they’re well-paying jobs. …People don’t like it, but it sure is helping this economy in Colorado.” Still Schemmel does expect the music to stop at some point in the future, and he wants to be ready when it does. loans will be more expensive.” Higher mortgage costs, of course, are a sure formula for fewer loans and greater risk. Housing Risk #10: The Robot Revolution The job market is now in flux. With new technologies the nature of employment is rapidly changing and the result is that millions of jobs – and millions of mortgages and homes – may be at risk. The last revolutions of similar scope took place a century ago when cars replaced carriages and light bulbs outshined candles. Not only were the new technologies better, they also created enormous numbers of new jobs and vastly increased productivity. But with artificial intelligence, robotics, and a data-based economy we know that productivity will improve while portions of the current job base will contract. What we don’t know is how many replacement jobs will be created. The Bubble Danger: “A ballooning freelance workforce, said Time in

“I think you’re going to have another crisis. …. I think it’s going to be something else other than mortgages,” he said, “Two years from now I’m going to start backing off. I do 25 to 30 homes a year right now, in two years I’m going to probably cut it in half … because I want to have a chair when the music stops.”

2015, “means a permanent state of non-permanent wages, adding more uncertainty to an economic environment saddled by stuck income.” But maybe not. Entire new industries with new jobs are being created such as Tesla’s Gigafactory in Sparks, Nevada. Will new and better jobs replace the lost jobs of the old economy? Will mortgage applications standards change to accommodate changing income patterns? The housing sector in most areas is now doing great with strong sales, rising prices, low mortgage rates, and plenty of pent-up demand. But looking toward the future how will real estate respond to traditional hurdles such as rising mortgage costs, steeper home prices, and reduced affordability? And most curious of all, how will the housing market fare in the coming era, a time of massive and quick-moving change throughout the economy? Buckle up, this should be an interesting ride, regardless of who – or what -- is driving.



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