And so the era of overtly government supported housing markets has come and gone. Amazingly, the world continues to turn.
But after almost two years and billions (if not trillions) of dollars in government support in the form of tax credits and government-sponsored securities purchases, what have we learned, and where do we stand?
Well, if a recent report from Zillow Mortgage Marketplace is any indication, we seem to have learned very little, and we may be worse off than we were when this whole mess began back in 2008.
According to Zillow, borrowers are spending no more time researching a home loan today than they did in 2008, and those who obtained a loan in the past five years are soliciting fewer quotes – an average of three quotes, versus four two years ago.
The survey further concluded that borrowers who obtained a home loan in the past five years typically spent just five hours researching their options, unchanged from March 2008. Nearly one-third (31 percent) spent two hours or less. This is on par with the typical time spent researching a vacation or computer purchase, Zillow found, and half the time consumers typically allocate to research a car purchase.
If, after two years of record-breaking foreclosures and unprecedented federal intervention into private markets on our dime, the average consumer still isn’t getting the message that buying a home is a serious thing, then we’re not convinced we’ll ever be able to pull ourselves out of this mess, government support or not.
Frankly, if Joe Sixpack is only spending five hours browsing loan definitions online or only visiting a handful of lenders before signing the dotted line, we’re shocked the mess isn’t worse than it already is.
Perhaps homebuyers have been coddled in recent years by real estate agents and mortgage brokers so hungry to get a deal done (literally) that they take care of every detail for poor Joe, who clearly has bigger things to worry about, like a fancy new truck or a trip to Tahiti (or La La Land, as the case may be). Certainly, the government did what it could by sweetening complex financial deals with as much as $8,000 up front.
But it’s unrealistic to expect this to continue. Agents and brokers now must busy themselves drumming up new business, absent a federal handout that previously lured buyers to their doors. The government itself now has to worry about paying for all those massive subsidies.
And that leaves Joe to fend for himself. It’s a scary thought.
Clearly, subsidies, handholding and “just sign here and I’ll take care of everything” coddling is no longer the answer. But the solution need not involve still more taxpayer money.
The solution is as simple as plain old education. There used to be such a thing as consumer savvy, an offshoot of that capitalist adage “Caveat Emptor.”
Getting Joe to wake up and smell the loan documents isn’t simply nice policy. It’s essential to our recovery as the government steps out of the ring.
