A report from Mother Jones on California. “By the time Dominique Walker started squatting in an Oakland home with her five-year-old daughter and one-year-old son, she’d exhausted all other options. Walker, who had fled domestic violence in Mississippi, knew it would be hard to find a place, amidst the housing crisis, in the city where she’d grown up.”
“Walker started looking into the causes of homelessness in her community. And that’s when she began to notice the ‘for rent’ signs, vacant lots, and new, unoccupied high rises everywhere. Then she came across an empty house on a quiet block on Magnolia street in West Oakland (the ‘only eyesore on the block,’ she says).”
“She did some research and found out it was owned by Wedgewood Property Management, which labels itself as a ‘leading acquirer of distressed residential real estate.’ The house had sat empty for about two years. In November, Walker, another mother, and their kids moved into the vacant home.”
“Traditionally, we think of vacant houses as an issue in weak housing markets and struggling economies suffering the lingering effects of the foreclosure crisis. But places with hot real estate markets have been wrestling with the problem, too. Public outcry over vacancies in cities desperate for more housing has spurred policy makers to try and tackle the issue.”
The Auburn Examiner in Washington. “The conventional conforming loan limit is going from $484,350 to $510,400, and the conforming high balance limit is going from $726,525 to $741,750. For King, Pierce, and Snohomish Counties, the conforming loan limit is rising 2.09%. For all other counties in the state, the loan limit is rising 5.38%. The reason Fannie, Freddie, and Ginnie do this is to keep conforming loan limits relatively in line with housing market appreciation. This keeps buyer mortgage-eligibility in line with the local housing market’s median house price.”
“Technically, any loan above $510,400 is considered a jumbo loan. But because houses are so dang expensive in the Tri-County area, we get the opportunity to finance a home through Fannie, Freddie, and Ginnie all the way up to $741,750. This means most people whose loan amounts are below that ceiling will be able to take advantage of Fannie, Freddie, and Ginnie mortgage underwriting guidelines. This is important because those guidelines are much easier to meet than jumbo loan guidelines. This opens the door of homeownership possibility to more people.”
“In 2015 the conventional conforming loan limit was $417,000, and the conforming high balance loan limit was $517,500 for King/Pierce/Snohomish. In the last four years, the conventional conforming loan limit has risen 22.39% (+$93,400), and the high balance loan limit has risen 43.33% (+$224,250). These loan limit increases have supported the buyer pool, and its mortgage eligibility and purchasing power. This has helped support the Puget Sound Housing market.”
“Without these increases, the buyer pool would have been much dryer at the higher purchasing prices, and our housing market would not have appreciated like it has since 2015. Median home price in King County per the NWMLS in January 2015 was $390,000 – this is a combined number including Single-Family Residents and Condos. Today, that same metric has a median home price of $605,000 in King County. That’s a 55.13% appreciation growth rate over that timespan.”
“This isn’t necessarily front-page news, but this move is literally one of the top 3 supporting vertebrae in the Puget Sound Housing Market’s backbone. The other two most important vertebrae being the local job market and mortgage interest rates. These moves by the FHFA are invaluable to supporting our local housing market and clear the way for home prices to inch higher in 2020.”
From CNN. “You’ve probably seen home prices shoot up in your neighborhood over the past few years, but not as much as in Fort Lauderdale. In 2010, the average home there sold for $106,000. Now, it will set you back 161% more or a whopping $278,000. Meanwhile, in Las Vegas, housing prices rose about 14% each year. But at the same time, salaries crashed at an annual rate of 0.4%.”
“As for the largest gain in pure dollars, you guessed it, that prize goes to San Francisco. You could grab a home there for just under $700,000 in 2010. Today, it would cost $1.4 million!”
From Realtor.com. “The past year has been filled with plenty of highs and lows, no matter your perspective. And housing was no different, closing out 2019 with a mixed scorecard. ‘The big takeaway is, it was a somewhat disappointing year for housing,’ says Javier Vivas, director of economic research at realtor.com. ‘The low mortgage rates should have propelled home sales much higher than we saw. [But] prices just got to levels that were just too high for buyers.’”
“So what are buyers to do? Well, they may want to head to one of the most affordable housing markets in the nation. The financially savvy probably want to get into places where their home’s value is sure to grow fast. Maybe they’re still figuring out whether it’s better to rent or buy. Or they may want to join their peers and buy in a millennial mecca, Gen X hot spot, or boomer boomtown.”
“Not surprisingly, these are far from the biggest, most expensive coastal cities. Many of these places are former manufacturing hubs that have struggled economically and with higher unemployment. And they tend to be in the Rust Belt and Midwest, where prices are the lowest. Buyers in these markets will want to act fast—before they’re priced out. The metros with the highest appreciation are still relatively affordable (although not for long!) and are often alternatives to more expensive, biggest cities.”
From DS News. “According to Fitch Ratings, the 2017 Tax Cuts and Jobs Act (the Act), which limits state and local tax (SALT) deductions and reduces the amount of housing debt eligible for interest deduction, may have exacerbated slowing home price growth in certain areas. Fitch’s rating analysis for residential mortgage backed securities takes into account these declines in both its base case and stress scenarios.”
“Rising mortgage rates at YE 2018 and a larger inventory of high-priced homes are contributing factors to slowing home price growth; however, these two factors alone cannot fully explain the slowing price growth and price declines observed in the areas where SALT deduction amounts and usage was highest prior to the tax code change.”
“‘Since early 2018, states with higher property taxes have seen acute home price appreciation slowdown and even price declines in several metropolitan areas,’ sayd Fitch. ‘Congressional district level data shows that districts where the real estate SALT deduction was more often pursued and the deduction amount averaged higher in the tax year of 2017, prior to the change in SALT deductibility, have seen more noticeable slowing in home price growth over the past year.’”
“Fitch notes that the rising mortgage rates toward YE 2018 and the larger inventory of high-priced homes are significant factors in slowing home price growth. The available supply of higher-priced homes rose due to both an increase in construction of luxury homes and slower sales. Lower interest rates this year may provide for a bump in sales but it is not clear if this will offset some of the recent declines in home prices.”
From WIBV in New York. “New York municipalities were handed a new tool, this week, to try to put the brakes on ‘zombie’ properties. A new state law, banks are required to take control of properties they have foreclosed, or give up their financial stake in the property altogether.”
“Housing officials generally blame certain bank foreclosure practices for creating zombie homes. The bank, or loan servicer, forecloses on a property, the homeowners move out, but the bank often fails to follow through on the foreclosure, and the property is abandoned. Gov. Andrew Cuomo signed the Zombie Property Remediation Act of 2019, which Jordan Zeranti, an attorney for the Western New York Law Center, said empowers cities, towns, villages, and counties to force a bank to either complete a foreclosure on an abandoned property, or dismiss the mortgage.”
“But the municipalities bear the burden of determining when the property is abandoned, and Erie County Clerk Michael Kearns has assembled a task force, the Zombies Initiative, to help local officials locate those vacant properties and write them up. Banks that fail to comply with the state’s zombie laws can be fined up to $500 a day. In any case, Kearns urges homeowners who are faced with foreclosure to stay in their home, because–as he points out–the banks often fail to follow through.”
From CNBC. “The banking industry underwent evolutionary change in the 2010s following the financial crisis and the Great Recession. Sanford Weill, the father of the financial supermarket, shocked Wall Street in 2012 when he called for the breakup of the sprawling institutions that were made possible by his vision. Weill, as CEO of Citigroup in the late 1990s, used the bank as the vehicle to shatter the rules of banking.”
“Weill walked back those remarks a year later, but the debate still rages over how to make sure that banks, or any companies for that matter, are never again so important to the American economy that the government would have no choice but to save them.”
“ Weill told CNBC, in a July 2012 interview, ‘What we should probably do is go and split up investment banking from banking; have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail.’”
“‘If they want to hedge what they’re doing with their investments, let them do it in a way that’s going to be mark-to-market so they’re never going to be hit,’ Weill added at the time. ‘I think the earlier model was right for that time. I think the world changed with the collapse of the real estate market and the housing bubble and what they did in leverage in certain institutions. So I don’t think it’s right anymore.’”