I occasionally get invitations to speak at mortgage industry events (in addition to chairing our own SourceMedia conferences). My reaction is always bifurcated. On the one hand I'm always flattered people think my outlook on the business is worth listening to. On the other hand I'm always worried I will say something exquisitely stupid. (In this context it's wise to remember what one of the aging rock stars of This Is Spinal Tap says: “There's a thin line between being clever and being stupid.”)
This week, for the third time, I participated in a panel discussion on the “post-bubble” housing environment at the American Enterprise Institute in Washington, DC. I've enjoyed all three, and if I've said anything stupid, it was graciously tolerated. Before my first appearance I was a bit worried that I was the token liberal at the conservative think tank's panel, but the discussions, though lively, have always been quite collegial. (Besides, I don't believe in soaking the rich. I just think they should get as damp as the rest of us.)
Our host, AEI fellow and former head of the Federal Home Loan Bank of Chicago Alex Pollock, was obviously hoping that after six gloomy years there would be signs that this bust cycle is coming to an end. If so, he was disappointed, as many of the panelists were pessimistic about the three bubbles that were the context of the panel: residential mortgages, commercial mortgages, and European sovereign debt.
In fact I may have been the most optimistic of the panelists. I pointed out that in the commercial mortgage arena, the Mortgage Bankers Association is predicting increases in both originations and portfolios over the next several years. CRE collapsed about a year after mortgages did, but this appetite for lending would seem to be a harbinger either of a recovery on the way, or “irrational exuberance.” (CMBS delinquencies, however, remain quite high.)
In the end, though, following the Churchillian frame of the session, I had to opine that I thought it was the end of the beginning currently rather than the beginning of the end, especially on the residential side.