“In 2021, we basically had no life at all,” Yu, a 34-year industry veteran who works at US Bancorp, said by phone. “Recent business is almost totally gone. Business in the first three months of this year was still OK, but starting from April, it was totally dead. It’s like vacation time.”
Intensified competition among lenders is fueling pressure. Last month, Yu said she lost almost every loan to a major international bank because their rates were lower than her bank’s.
“You only have a small pie, and you have 30-, 40-, 50,000 agents trying to compete to get this tiny pie,” Yu said. “Some banks have become very, very aggressive.”
The real estate industry is used to cyclical changes in the economy and a crash similar to 2008 is unlikely.
Owners have experienced massive gains in home equity in recent years. Plus, the US faces an affordable housing shortage that could help buoy demand. Certain parts of the industry such as construction could benefit if builders continue to replenish inventory. Construction job openings climbed to a record high in April, according to the latest Bureau of Labor Statistics data.
“We are in a very different spot today — in a very, very different spot,” Gudell said. “And this will look much more like a — if there is such a thing — a plain vanilla recession, than what we experienced as part of the Great Recession.”
For some lenders who have been in the business for more than a decade, the current downturn may not be such a bad thing.
“Everybody and their mother was getting into mortgages because it was the hot thing to do,” said Ben Cohen, a managing director at Guaranteed Rate. “I love times like this because it weeds out people that shouldn’t be doing what we do anyways, because there’s a lot of bad lenders out there. It right-sizes everything.”
This article was provided by Bloomberg News.