A bullish report on the mortgage industry says that the greatest opportunity for lenders lies in the exurbs-communities beyond the suburbs of big cities.
A strong economy and the absence of major regional housing recessions should result in brisk sales "for the foreseeable future," according to SMR Research Corp., Hackettstown, N.J.
Analyzing county-level origination data, the research firm's annual Giants of the Mortgage Industry study found that purchase mortgage originations per capita were highest in counties that lie 20 to 50 miles away from city centers.
In Forsyth County, Ga.-an exurb of Atlanta-there were 43.2 purchase mortgage originations for every 1,000 residents, the report said. The national average is 14.4 mortgages per 1,000 residents.
This finding is in line with recent findings by Harvard University's Joint Center for Housing Studies that counties with medium- and low-density population grew the most from 1990 to 1996.
The Harvard report suggests that population growth in distant suburbs would continue to outpace growth in center cities.
To tap into these outlying markets, SMR Research suggests, lenders need to set up more satellite offices, or work with mortgage brokers who cater to these fast-growing areas.
The report also says regional recessions hit Texas, New England, New York, New Jersey, and California in quick succession in the 1980s, but that the last of these-the collapse of the California housing bubble-is finally receding.
The recessions have cleared the way for more growth in New England and California by eating into inflated home prices, the research firm says.
"In a society where jobs and people are mobile, you cannot sustain an environment where homes in some states are so much more expensive than in others," Stuart A. Feldstein, president of SMR Research, said in a release outlining the report.
Average California home prices, which were 2.47 times higher than average national prices in 1990, were just 1.53 times higher in 1996.