Housing is hot, and LA mortgage broker sees no sign of a slowdown
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U.S. housing prices rose 12% in February compared to a year earlier, and the housing market in Los Angeles has been booming for months. In California last month, the median time homes were on the market was nearly half what it was a year earlier.
“Marketplace” host Kai Ryssdal spoke with Vivian Gueler, chief financial officer at Pacific Trust Group in Los Angeles, about how business has been going recently. The following is an edited transcript of their conversation.
Kai Ryssdal: So do a quick virtual survey for me, if you would, at the offices at Pacific Trust. Are you busy? Are you keeping your heads above water? What’s going on?
Vivian Gueler: Yeah, barely keeping our heads above water. We thought it was going to slow down by now, but it’s just still crazy busy.
Ryssdal: Why did you think it was gonna slow down? I mean, mortgage rates are superlow, right? There’s not a lot of supply of houses on the market, as we’ve been telling people. You know, you’d have thought that this was going to be sort of boom times for you.
Gueler: Yeah, I mean, we just thought that based on, you know, all the doom that we experienced last year, that we would be slowing down at some point because of the economy. We thought likely that the economy was going to, you know, decline in some form, but it didn’t. And, in fact, it’s picking up significantly. So we’re just keeping really busy. And of course, the Federal Reserve hasn’t increased rates. So we’re just slammed with work still.
Ryssdal: Yeah. And look, [Fed Chair] Jay Powell is not going to raise rates for a good, long while, so you’re gonna keep being slammed. But talk to me about brass tacks. What does this mean for, if I want to buy in this market? And let’s say here, you know, California is a little skewed, and especially Southern California, and it’s not a market that a lot of people can buy into. But I’m gonna ask you to sort of speak to the broader national trend here. Are houses getting snapped up real quick? What’s happening out there, actually, on the ground?
Gueler: Oh yeah, they’re going incredibly quickly. The market is just so busy with demand, certainly here in Los Angeles, and from what I can tell in other parts of the nation as well. I really think it’s the [interest] rates that’s keeping everything moving quickly.
Ryssdal: Amy Scott, who covers housing for us, did a story a week or so ago maybe about people actually so desperate to get into a house, they’re doing things like waiving contingencies. So there’s a risky behavior on consumers’ part here that they’re making to just get into this market.
Gueler: That’s right. In order to, you know, be on the top of the list to have your offer really considered, many people are waiving contingencies. And that includes a loan contingency, appraisal contingency. So basically, what you’re saying to the seller is that you’re going to buy this house, no matter what the house values at. You might be putting down more money if the house doesn’t appraise, which is very likely, at least in Los Angeles, to happen.
Ryssdal: Do a little compare and contrast for me, would you, between the market now and sort of 15-ish years ago, right before the bust.
Gueler: Well, you know, it feels similar in terms of the quantity of transactions we’re doing, but it’s different in that the loans that we’re doing are firm. Back then the loans that were being done were really not quite strong. So I just don’t see what happened 15 years ago happening again, in terms of the quality of the loans and just the overall lack of strength that we had back then.
Ryssdal: I will take that as reassurance. But let me ask you kind of a bigger question and, you know, draw on your experience in this industry, in this economy, for however many years you’ve been doing it. You know, [the S&P CoreLogic Case-Shiller U.S. National Home Price Index] came out on Tuesday. It was up 12%. You know, houses are tough to get. It’s a huge factor in this economy. But what I want to know is, do you think it’s a good thing for this economy?
Gueler: You know, I mean, the economy is just — we know it’s gonna get stronger, especially through the summer. I think the economy can handle what’s going on in the market right now. When rates go up, I think there’ll be a natural decline in demand. And I don’t see things falling anytime soon.
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