Wednesday, April 25, 2018
Wednesday, April 11, 2018
Why taking the highest offer isn’t always prudent
Source: CNBC
Sales and prices are moving so quickly that appraisals are not keeping up. If the appraisal doesn't match the contract price, the buyer doesn't get the mortgage, and the deal dies. The national median price of a home sold in June hit $263,800, a record, according to the National Association of Realtors. In addition, the average number of days a listing took to go under contract fell to just 28, down from 34 a year ago. "Anytime prices move up fast, the actual appraisal process, because they're looking back in history, not forward into the future, they are lagging behind," said Lawrence Yun, chief economist at the Realtors group. "From the buyer's perspective, it's a tough situation where they want to rely on the value of the home, on the appraisal, yet they know that if they decide to back away there are other buyers waiting to pounce." Lenders are now far more careful with appraisals than they were during the last housing boom. In turn, appraisers are being very cautious with the current price run-up. That history gives today's cash buyers, many of whom are investors flipping homes for a quick profit, a major advantage over mortgage-dependent buyers. Once again, they're pushing prices higher artificially, but this time they are doing it without the banks.
Read the full story
Sales and prices are moving so quickly that appraisals are not keeping up. If the appraisal doesn't match the contract price, the buyer doesn't get the mortgage, and the deal dies. The national median price of a home sold in June hit $263,800, a record, according to the National Association of Realtors. In addition, the average number of days a listing took to go under contract fell to just 28, down from 34 a year ago. "Anytime prices move up fast, the actual appraisal process, because they're looking back in history, not forward into the future, they are lagging behind," said Lawrence Yun, chief economist at the Realtors group. "From the buyer's perspective, it's a tough situation where they want to rely on the value of the home, on the appraisal, yet they know that if they decide to back away there are other buyers waiting to pounce." Lenders are now far more careful with appraisals than they were during the last housing boom. In turn, appraisers are being very cautious with the current price run-up. That history gives today's cash buyers, many of whom are investors flipping homes for a quick profit, a major advantage over mortgage-dependent buyers. Once again, they're pushing prices higher artificially, but this time they are doing it without the banks.
Read the full story
Wednesday, April 4, 2018
Opinion: A better way to solve the housing crisis
Source: Los Angeles Times
To address Los Angeles’ housing crisis, Mayor Eric Garcetti has proposed a “linkage fee” on new development. The city would charge new residential developments of more than five units $12 a square foot, and new commercial developments $5 a square foot, to finance subsidized affordable housing. This proposal is well-intentioned. Given our politics, and the realities of Proposition 13, it might be the best L.A. can do. But it won’t raise much money or build much housing, and it dodges rather than solves the fundamental problem in our housing policy. We should try for better. Linkage fees essentially tax new development, but housing in Los Angeles is expensive because L.A. doesn’t have much development. With little to tax, revenue would stay low, and so would affordable housing production. City Hall predicts that the fee will raise $100 million a year. Affordable housing costs, on average, almost $450,000 per unit to build., That works out to about 225 units annually. Those units would unquestionably change the lives of the people who got them, but the city needs hundreds of thousands, not hundreds, of affordable units.
Read the full story
To address Los Angeles’ housing crisis, Mayor Eric Garcetti has proposed a “linkage fee” on new development. The city would charge new residential developments of more than five units $12 a square foot, and new commercial developments $5 a square foot, to finance subsidized affordable housing. This proposal is well-intentioned. Given our politics, and the realities of Proposition 13, it might be the best L.A. can do. But it won’t raise much money or build much housing, and it dodges rather than solves the fundamental problem in our housing policy. We should try for better. Linkage fees essentially tax new development, but housing in Los Angeles is expensive because L.A. doesn’t have much development. With little to tax, revenue would stay low, and so would affordable housing production. City Hall predicts that the fee will raise $100 million a year. Affordable housing costs, on average, almost $450,000 per unit to build., That works out to about 225 units annually. Those units would unquestionably change the lives of the people who got them, but the city needs hundreds of thousands, not hundreds, of affordable units.
Read the full story
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