Mortgage Challenge

Market Matters

State bill proposes fee to deal with affordable housing issue Source: KPCC A bill addressing affordable housing is going before the State Assembly this week. If passed by legislators, it would add a $75 fee to some real estate transfers and put that money into a fund for development of below-market-rate properties. Assembly Speaker Toni Atkins (D-San Diego), who introduced the bill along with a package of affordable housing proposals, said the bills would produce a combined $300-$500 million annually for low-income developments. After negotiations, the CALIFORNIA ASSOCIATION OF REALTORS® is supporting the bill. C.A.R. lobbied to cap the fees at $225 per transaction, add an oversight board to the fund that includes REALTORS®, and setting aside 20 percent of the fund for owner-occupied developments. Read the full story   2015 SCE Housing Survey Shows Optimism about Housing Market Source: Federal Reserve   Households expect home price growth to continue at a similar pace as they did a year ago, according to the results of the Federal Reserve Bank of New York’s 2015 SCE Housing Survey. Attitudes toward housing as a financial investment remain overwhelmingly positive, and most renters express a preference for owning over renting if they had the necessary financial resources. In addition, the survey finds households expect mortgage rates to increase in coming years, but at a moderate pace. Read the full story Housing Bubble? Despite Rising Prices, Most Economists Still Say No Source: Wall St. Journal   The relentless rise in housing prices has led many economists to question whether another housing bubble is forming. Housing prices have been climbing for 35 consecutive months, according to the latest S&P/Case-Shiller Home Price Index. However, while prices keep rising, the rate of growth has slowed, thereby giving economists reason to believe a bubble is not a concern. Also, far fewer new homes are being built than a decade ago, so oversupply will not be an issue related to a price bubble. Read the full story      Fewer Homes for Sale Makes U.S. Housing Recovery Painstaking Source: Bloomberg   High prices and low inventory have made the recovery of the U.S. housing market painstaking for many potential buyers looking to enter the market. Contract closings on previously owned properties unexpectedly dropped 3.3 percent to a 5.04 million annualized rate in April after a 5.21 million pace that was the strongest in almost two years, according to figures from the National Association of REALTORS®. Bloomberg notes that “The rebound in residential real estate has been stop-and-go as small wage gains and lingering concerns about taking on more debt offset the benefits of historically low mortgage rates.” Read the full story

The Deep Roots of America's Housing Affordability Crisis Source: The AtlanticWharton real estate economist Todd Sinai argues in a new policy brief that the current manifestation of the country’s housing affordability crisis is a long-running trend. His research shows that the roots of the current affordability crisis date back to at least the 1990s. During that era, six cities saw rents dramatically outpace inflation, growing around 3.5 to 4.5 percent per year. Since then, rents have actually grown much more modestly, especially in recent years. Sinai states, “It is true that, in many cities, rental costs are higher now than they were 10 years ago. But 10 years ago, rental costs were higher than they were 10 years before that. Likewise, ownership costs have followed the same pattern.” He adds that buying a home may offer a way to sidestep this cycle of ever-rising housing prices and rents. Read the full story Realtor.com: Waiting to buy a home could cost tens of thousands Source: HousingWire  The financial penalties of delaying or forgoing a home purchase in today’s market have become very steep. After all, interest rates and home prices are expected to climb in the next year, and according to realtor.com, the estimated wealth an average buyer would accumulate over a 30-year period based on today’s dollars totals $217,726. National data shows homeowners see significant financial benefits as compared to lifetime renters. In 88 percent of markets, buying a home produces a financial benefit of at least $100,000 over 30 years. Read the full story

Market Matters

Housing Waits–and Waits–on Millennials Source: Wall St. Journal Prior to a major plunge in housing starts in February, single-family housing starts were running less than half the levels seen during the housing boom and are 37 percent below their average of the 1990s. A major factor being blamed is the absence of younger home buyers. Research has found that the share of households headed up by someone 25 to 34 years old has fallen far more than other age groups since 2006. Overall, housing markets will depend on the labor markets, especially the hiring and paychecks of millennials. Read the full story   Southern California housing market is poised for a stronger spring Source: L.A. Times   Market watchers and real estate agents say they're starting to see more sellers as prices remain relatively high, interest rates stay low and fewer borrowers owe more on their houses than they're worth. Selma Hepp, senior economist at the CALIFORNIA ASSOCIATION OF REALTORS®, says measures of buyer interest — online real estate searches and open-house traffic — have jumped in recent weeks. If that activity translates into sales, it could put a new round of pressure on pricing, she said. “The fundamentals are good," Hepp said. "But affordability is going to stare us right in the face again." Read the full story The U.S. Cities Where It Takes the Longest to Be Able to Afford to Buy a Home Source: The Atlantic   Americans are set to spend nearly $10 trillion on housing over the next five years but the question remains: Where are we spending the most, especially when compared to our incomes, to purchase homes? According to a new metric evaluating housing costs, the metros where households have to devote the most years of income to housing are mostly on the West and East Coasts, in California, Washington State, Oregon and Arizona, and across the Boston-Washington corridor. Nine of the ten most expensive areas are in California. In these locations, the price of a home is equivalent to about seven years of income. In the top three metros, the price of a home equals roughly nine years of income. Read the full story      Housing starts see biggest collapse since January 2007 Source: HousingWire   Harsh winter weather has a big impact on housing starts, as a devastating 17 percent drop hit the industry in February. Overall, privately owned housing starts in February plummeted to an annualized 897,000 from the revised January estimate of 1,081,000, with drops in the Northeast, Midwest and West leading the collapse. Single-family housing starts in February were at a rate of 593,000; this is 14.9 percent below the revised January figure of 697,000. Notably, weather was not to blame in the west but starts still dropped 18.2 percent. Read the full story Worst Case Housing Needs: 2015 Report to Congress Source: Housing and Urban DevelopmentIn a report to Congress, the U.S. Department of Housing and Urban Development (HUD) finds that worst case housing needs decreased during the 2011-to-2013 period but persist at high levels across demographic groups, household types, and regions. Substantial unmet needs for affordable rental housing remain even as economic conditions are improving. The unmet need for decent, safe, and affordable rental housing continues to outpace the ability of federal, state, and local governments to supply housing assistance. Worst case needs are defined as renters with very low incomes—below 50 percent of the Area Median Income (AMI)—who do not receive government housing assistance and who pay more than one-half of their income for rent. Read the full story.

California’s Housing Costs Hurt Economy, Increase Poverty, Report Finds Source: Wall St. Journal  A new state report finds that California’s high housing costs decrease economic productivity, increase poverty rates, lower homeownership, increase crowding, and lengthen commute times. The report states, “The state’s high housing costs make California a less attractive place to call home, making it more difficult for companies to hire and retain qualified employees, likely preventing the state’s economy from meeting its full potential.” It urges the legislature to pass laws that would promote more density in urban areas. It also advises the legislature to consider changes to the state’s environmental review process for new development. Read the full story

Staged Homes

a very interesting video on increasing home values

Barry Habib Sheds Light on Recent Housing Data

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