FICO Survey: Credit Supply Unlikely to Meet Consumer Demand

FICO Survey Indicates Credit Supply Unlikely to Meet Consumer Demand

The survey, conducted in March 2010 found that while bankers generally expected consumers to pursue more new credit as well as spend more against their existing credit lines, most lenders are likely to keep a close eye on risk management.

Of the 127 bank risk professionals surveyed, 92 percent said they don’t expect to see an easing of lending standards in this quarter, 95 percent expected interest rates for consumer credit to stay at current levels or move higher, and 83 percent expected the average credit limit for new credit cards to be lower than in the past.

Why is this especially important in a property market like Hoboken and the new "core" category?
Because there is a total mismatch between local annual incomes (typically around $100,000) and property prices (current median around $750,000).

Single family homes which are typically $1 million+ are completely out of this realm.

Cash buyers are the only qualifiers in such a mispriced situation, but that makes them the next hit from depreciation regardless.

Hoboken's adjustments in price are not yet reflecting the mispricings of the past despite adjustments already underway in Manhattan. The bottom line: prices are simply declining at a slower pace over what will be a longer and more protracted time --> another 20% over the next four years.