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