THE BLOG
10/08/2014 01:59 pm ET Updated Dec 08, 2014

What Your Broker Won't Tell You About the Housing Recovery?

Remember this maxim, when it comes to residential mortgages, they are fantastically complicated, and most people, including those that think they know what they're talking about, quite often don't.

The best fairy tale truism to explain this: The Emperor Wears No Clothes. Which is to say, just because someone says so, doesn't make it true. This of course speaks to prideful behavior, wherein sometimes no one really knows what's going on. Such as the 2008 subprime implosion and how mortgages really or really didn't play a part of the financial meltdown. (If I'm moving too fast for you, let me know and I'll tap the brakes.)

But let's talk about mortgage brokers (either they be real estate or mortgage), all of whom are borne of the same cesspool and who truly never saw a mortgage they didn't like, or think wasn't fundable.

So here goes the contrarian verbal acrobats, and why most everyone hated economics in high school --- and that is (drum roll please, because I'm not slowing down on this one, so keep up): In the backwards world of mortgage and bonds, in which bad news is good, bad news pushed up long-term rates this past week, which is good.

Thus, when you hear good news about the economy, you can bet that means bad news for interest rates. And that's the news your broker doesn't want you to hear. Either it be the real estate or mortgage one, since both act as succubae (but in a positive way), to prod the non-prodable, or simply those that need a little encouragement to buy that house or sign those refi loan application docs. There's a reason they're called salesmen. And consequently, converting the non-believers has always been an occupational job hazard for salesmen.

The $64,000 Question?

This begs the question: Is it a bad time to buy a house? And the answer is maybe, since many economists have predicted for some degree of depreciation to occur in the housing market over the next several months. Why? Higher interest rates and tougher mortgage rules. Simply as that.

Logically speaking, people don't buy homes if they cost more to maintain, which is what happens when interest rates go up. And forget about the millennials, their 'tapped out' and 'freaked out' when it comes to their mounting student loan debt. As for seniors, count them out too. They're still freak'in over the shrinkage of their social security checks. There's no amount of calcium pills that can cure that malady. And oh yah, remember those new mortgage rules that Congress passed several years ago, they're still percolating up through the economic market place and have yet to fully blossom. And although some have said that the Dodd-Frank Act has more holes in it then swiss cheese, the CFPB has been the caulk to fill up some of the holes that Congress overlooked (or maybe didn't).

And just when you thought there couldn't be anymore existential issues that might put a hiccup in your real estate mortgage deal, how about the following in terms of actual and perceived issues: non-cash buyers are impeding the market place, less inventory, sellers demanding higher deposits, buyers demanding more concessions, longer escrow times with nervous appraisers, etc, etc, etc.

The Econ Pundits

When asked recently on CNBC if housing prices might go down, Robert Shiller, Professor of Economics at Yale University conceded the point with the following statement:

"If it doesn't go down, it might be an ok investment," Shiller said. "We are living in a world of disappointing investments. I say the same thing about the stock market. It's overpriced, [yet] it's not a bad investment all things considered."

And the most quoted man from the National Association of Realtors, Chief Economist, Lawrence Yun, who is not noted for his dry sense of humor, stated recently on the NAR website when asked about the housing slump outlook:

"On the positive side, first-time buyers have a better chance of purchasing now that bidding wars are receding and supply constraints have significantly eased in many parts of the country."

If you're dazed and confused about all the seeming contradictions for all things real estate and mortgage related --- which is like watching a ping pong match in reverse, you'll be relieved to know that former Federal Reserve Chairman Ben Bernanke got turned down on a home mortgage refi for his Washington DC home. When asked to comment on the loan denial, which he admitted during a Q & A session at a recent conference that economist Mark Zandi from Moody's hosted:

"I'm not making that up......I think it's entirely possible" that lenders "may have gone a little bit too far on mortgage credit conditions," he said.