How far out do you all think the ripples will go now that the poo is hitting the fan?
We have two friends who work in separate small mortgage brokerage companies. If I understand correctly they find clients, search for “deals” within lending institutions and make loans to these clients from Countrywide, BofA, etc. taking fees out along the way. So not only have NEW, Fremont, etc. laid off 100’s of people, but with the pool of sub-prime loans drying up so does the pool of lend-ees right? So all these little, mom and pop, middle man brokerage companies will have no more clients either. Then it all flows down stream and title companies lay people off, escrow companies close up, etc. Now there are even more people w/out jobs, unable to pay their mortgages and the cycle seems to spin out of control because you know none of these people who made big bucks the last few years saved any of it…at least not the ones we know who are driving their beemers, buying million dollar homes in Poway and flying first class to Europe once a year.
We’ve all seen the fallout from this housing decline in the retail market, especially with the only .1% gain in retail sales posted today, and now the job losses in the real estate/lending industry seem inevitable.
Where do you all suppose it will end?
Will there be a large population of landlords in a few years? It just seems that even when home prices do come down, lending standards will be so tight as the pendulum swings waaaay to the extreme other side, as seems to happen in corrections of any kind, that only a few people with huge down payments, pristine credit scores and decades of stable employment will qualify for a loan, and let’s face it there ain’t many of us out there. Will we be owning multiple properties in 10 years renting to all the escrow officers, loan processors and real estate agents?
Any speculations on the next industry to absorb all these jobless people?
What’s the surest sign of a bubble? Brainless nincompoops are effortlessly making a boatload of dough.
Think about it… the Daytrading Internuts of 1998/1999… the 0%-down Condo Flippers of 2003/2004… and the Subprime Mortgage Brokers of 2004/2005. Few of these clowns ever really knew what they were doing, but sheer market momentum carried them into temporary riches for some period of time.
Of course it all has to end badly. After all, unless you’re REALLY lucky you can’t outperform your accumulated human capital for a long period of time. It’s just not how markets work.
So the vast majority of these mortgage broker bozos who made $500K – $1MM for a few years and levered up their lifestyles accordingly will soon be back down to their “natural employment habitat”… scrambling for marginal work and liquidating assets…
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