As we saw last month, the downtrend in application numbers is finally starting to significantly impact endorsement numbers. That trend has continued in April, with overall industry numbers down to 5,511 units, dropping 5.3% from March.
Thankfully (if you’re among the survivors), there was an even greater decline in active lenders (down 7%) that translates to an almost imperceptible uptick in average loans per lender. It’s nothing to write home about, but at least it’s helping keep some heads above the water.
- Several regions saw modest volume increases in April, including the Mid Atlantic region that includes Baltimore. If you missed our prior newsletters about what’s occurring in the Orioles’ city and what might be driving the numbers, check out our prior pieces here and here)
- Midwest and Great Plains also showed strength, but their relatively low volumes couldn’t make up for significant declines in Pacific/Hawaii and NY/NJ
- Pacific/Hawaii in particular is struggling, as volume has dropped 44% since December
- Of all 82 metros we track, just 2 show positive volume growth year to date vs. last year: Houston and New Orleans. We’ve talked about the relative strength in Texas before, and perhaps New Orleans is simply doing its best to welcome all of us to town for NRMLA’s annual convention later this year…
The story is similarly stark (and no that’s not an Iron Man 2 reference, even though we are excited to see the movie next week) among lenders, as you might expect given the broad industry decline in recent months. On a year to date basis, only 2 of the top 10 lenders show positive volume growth:
- Urban Financial (recently purchased by Knight Capital) saw retail volume grow 48%, perhaps benefiting from relative strength in the Midwest where they’re based, despite their top volume state continuing to be Florida
- Genworth is seeing positive trends in their retail business, up 41% vs. 2009
The full report is available by clicking the image below. Enjoy!
In any other circumstance, we wouldn’t be bidding a fond farewell to 2009 since it was the first decline in overall industry volume in recent memory. However, in light of what is shaping up to be a significantly tougher 2010, we’re almost nostalgic about the year just ended.
Here’s an update on our running application trend chart to illustrate what we’re looking at for 2010 omens. The only thing that could be more disturbing than the slow recovery we saw in November and December is the double dip back down in January. Apps were all the way back down to 5,805, below even October’s reading of 5,892.
If you’re looking for good news, we are finally hearing optimistic anecdotes from many of our clients about activity levels picking back up in February. Of course, we’re also hearing a lot of examples of small reverse brokers who are opting out of the new licensing tests and either fleeing the industry entirely as the volume declines or joining up with larger firms where licensing (and corporate profitability) is someone else’s problem. And of course, there are plenty of federal bank subsidiaries out there that are marketing their exclusion from individual loan officer licensing pretty heavily these days…
Connecting the dots, we can see from this month’s report that the number of lenders dropped 11% in December. We suspect that many of those that are jumping out of the business are likely in areas like San Bernardino/Riverside/Fresno in California, Las Vegas, NV and Miami, FL where penetration is highest and home price declines have been most severe, as areas with these characteristics continue to see steep declines in loan volumes.
?Penetration Rank by Geographic Area
Rank State Penetration Rank City State Penetration
1 DC 7.3 % 1 Opa Locka FL 17.0 %
2 NV 3.9 % 2 Compton CA 14.1 %
3 CA 3.8 % 3 Hialeah FL 12.0 %
4 MD 3.7 % 4 Apple Valley CA 8.9 %
5 UT 3.7 % 5 Hesperia CA 8.9 %
6 OR 3.4 % 6 Sun City CA 8.7 %
7 CO 3.3 % 7 Moreno Valley CA 8.4 %
8 FL 3.2 % 8 Portsmouth VA 8.1 %
9 CT 3.0 % 9 Detroit MI 8.0 %
10 AZ 2.9 % 10 Miami FL 7.9 %
Take a look at the flip side of this trend though, and we can see that many of the higher value urban areas are seeing large increases in activity as the loan limit increases continue to work their way through. Lenders that want to survive are learning to adapt to where the business is today, getting much more local than ever before.
Of course, if you’ve been reading this report for a while you already know all this. For our new readers, you can find these facts on page 2 of the report below and plenty more food for thought as well.
Click the image below for this month’s Industry Trends report.
The end of August is near, and that means it’s time for the monthly Industry Trends report. We’ve mentioned a couple times already that endorsement volume for the year is running almost neck and neck with last year – it’s a virtual dead heat as 2009 numbers trail 2008 by 21 units. But what makes this interesting is when we begin looking at things on a geographic basis (State, County, and even Zip Code). This is where we see the divergent growth patterns that make a market a market, and why some of you are seeing weakness while others are seeing strength for the year.
- Of the top 10 states by volume, California, Texas, New York, Illinois, Virginia and New Jersey are experiencing growth this year, with New York leading the way at 47.1%. Heading up the down states, FL has slid 29% vs. last year. (Not on this report, but falling sharply, are Nevada, Michigan and West Virginia)
- From a competitive standpoint, Florida looks a little oversaturated at the moment. 7 of the top 10 zip codes in terms of competition are in Florida. If you are primarily in the 33012, 33155, 33147, 33165 or 33175 zip codes, you are probably finding it hard to find new business these days – particularly with the refinance boom largely behind us.
- Market penetration is moving up, in some cases significantly: DC is now at 6.7%, CA 3.6%, MD 3.5%, FL and OR at 3.0%. At the city level, in Opa Locka, FL over 16% of the eligible homeowner households have taken out a reverse mortgage. In Compton, CA, the number is up to 14%. Take a look at the top 10 cities by market penetration on page 2 – all of these areas have been hit hard by the recession and home price declines.
We get asked all the time by readers how they can use our reports to make more money. It’s the right question to ask given the scarcity of risk capital these days and we’re sure each of you are thinking hard before committing resources toward anything. Compare your company’s state volume changes over the past year against our table on page 1. If you’re in any of these 10 states, are you performing better or worse than the industry average?
We see many lenders start utilizing better information as a tool to understand where opportunities are being missed, and manage their sales and marketing efforts to ensure that they don’t miss a rising tide as the market changes. A great example is found just outside our front door here in Orange County, CA, where loan unit volume is up 147% so far year to date and total MCA is up an astonishing 229%!
If you’re licensed in California and missing out on this opportunity that’s a lot more expensive than any report we sell. Check out our Retail reporting solutions and stay on top of your game as the market changes!
