Here's how predicting housing cycles improves mortgage lending
Mar 29, 2018
If your favorite weather forecaster warns that a storm is coming, you can be fairly sure you're going to get wet. Only a few decades ago, such confidence was impossible. But, thanks to technology, the Internet, and a deeper understanding of our climate, we take it for granted today.
Although Property Value Forecasts are unlikely to have dedicated reports on the evening news, gauging which way the housing winds are blowing is of daily concern to lenders and stakeholders in U.S. financial services. For that reason, HousingWire invited my firm, Veros Real Estate Solutions, to provide a weekly column that looks out at various time horizons to check the ebb and flow of housing valuations.
For lenders, having reliable data-driven predictions is essential for a range of decisioning: determining reliable loan-to-value (LTV) thresholds; examining risk at origination; understanding at-risk portions of a portfolio for acquisition or loss-mitigation purposes; improving servicing strategies in situations of default, REO or short sale; and understanding and identifying suitable loan modification options to avoid additional risk for troubled homeowners.
For the past decade and a half, Veros has been refining the tools and methodologies that it uses to drive the forecasting data in its proprietary VeroFORECAST platform. VeroFORECAST uses more than 50 macro- and micro-level "key predictor variables" to realistically forecast residential home prices and market stability, up to 24 months into the future, for use in a majority of U.S. zip codes. A few of the more significant and dependable predicators include the rate of population growth, the current unemployment rate, and housing supply. The system analyzes single-family residence and condominium/townhouse property data, in three price tiers, across all the key predictors. [Read more]
VeroFORECAST Report: VeroFORECAST Predicts Continuing Strength in Housing Market With Top Markets Rising 10 Percent Over The Next 12 Months
HousingWire REwired: Here's how predicting housing cycles improves mortgage lending