Monday, December 28, 2015

RE 101 6 Secrets For Selling A Home In Winter Team Thayer #realestate #housing #market #realtor #news

Whether you’re listing your home for sale in New York, NY, or Birmingham, AL, the winter months can prove difficult for listing and showing your house. Between the rainy season in the Pacific Northwest, ice storms down South, and heavy snow in the Northeast and Midwest, just about every region of the country is affected by subpar weather during the winter.
And while everyone enjoys a good snow day, trying to attract buyers in dangerous conditions can melt your home’s chances of a sale quicker than Frosty the Snowman in a greenhouse. Here’s how to sell your house in the winter — from prelisting to closing — plus steps to take so you’re prepared if inclement winter weather strikes.
Appeal to the snow bunnies
Snow may be a hassle when you’re de-icing your car or taking out the dog at 6 a.m., but buyers often become snow worshipers when they see the words “within driving distance to ski slopes.” Even adding that a home is within walking distance to the grocery store or pharmacy can be a selling point if your area experiences heavy snow. Play up your home’s cold-weather allure by including information about how buyers will be able to take advantage of the season.
Capture photos from all seasons
Wouldn’t it be perfect if every open house occurred on a breezy, sunny, 75-degree day? If you can’t wait until springtime to list your home for sale, you can still help buyers visualize what your home looks like during all seasons.
Do you have a cherry tree in the front yard that’s absolutely beautiful during the spring, or an oak out back that turns magnificent colors in October? Be sure to include photos from every season in your home’s online listing and highlight each season’s best features.
Promise cozy
Even if your home has been on the market since August, you’ll need to tailor the listing description for wintertime. Play up the amenities that are desirable during the winter: an attached garage, a new water heater or HVAC components, and skylights, for example.
Mentioning that your home is close to a gym or fitness center can also encourage buyers during winter months, when they’re less likely to be able to exercise outside (and more likely to be making New Year’s resolutions).
Price it right
Don’t ignore market trends during the winter. Work with your real estate agent to ensure that you’re not overpricing. Wintertime usually means fewer homes are on the market, and a properly priced home can lead to a bidding war between buyers, which can ultimately increase the price you get for your home. On the other hand, an overpriced home can sit for months and months on the market, which is not something you want when spring rolls around and your competition spikes.
Winterize your open house
Remember, potential buyers have battled wind, rain, and snow to arrive at your winter open house. Make sure your driveway, walkways, and front porch are clear of snow and ice, and the heat is on in your home. Set out a doormat so they can wipe their feet before entering — the attention to detail will show that you care about your house, which potential buyers will appreciate.
Undecorate
With the holidays approaching, you don’t want to overdo the decorations. Keep them minimal and tasteful. An inflatable Santa on the roof will be nothing but a distraction to buyers, and a 10-foot Christmas tree crammed into a living room with 9-foot ceilings is only going to make your room look puny.
However, it’s OK to spread some cheer tastefully. Set out some hot apple cider or tea for visitors to sip as they browse the rooms. Plus, the drink gives the entire house a welcoming, inviting smell, and it’s never a bad thing for your chilled, shivering buyers to linger in the kitchen before heading back into the cold.


HUD’s Distressed Asset Program Give Borrowers More Protection Team Thayer #realestate #housing #market #News

delinquent-noticeThe U.S. Department of Housing and Urban Development (HUD) on Friday announced significant changes to its Distressed Asset Stabilization (DASP) program meant to offer more protections to borrowers facing foreclosure and increase non-profit participation in purchasing distressed loans.
Under the new rules, loan servicers are required to delay foreclosure on a home for a year and evaluate all borrowers facing foreclosure for participation in the government's Home Affordable Modification Program (HAMP) or a similar loss mitigation program. Loan servicers could previously foreclose on a home six months after they received the loan and were not required to evaluate borrowers for loss mitigation programs, though they were encouraged to do so.
The improvements to the Neighborhood Stabilization Outcome (NSO) sales portion of DASP include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a pool of loans for non-profits only.
"These changes reflect our desire to make improvements that encourage investors to work with delinquent borrowers to find the right solutions for dealing with the potential loss of their home and encourage greater non-profit participation in our sales," said Genger Charles, Acting General Deputy Assistant Secretary, Office of Housing. "The improvements not only strengthen the program but help to ensure it continues to serve its intended purposes of supporting the MMI Fund and offering borrowers a second chance at avoiding foreclosure."
The changes come with stronger reporting requirements that include tougher penalties for non-compliance of quarterly reporting requirements, along with a new requirement of those who purchase loan pools to report on borrower outcomes even if a note is subsequently sold after the original purchase.
FHA's single-family note sale program resumed in 2010 as a pilot program allowing pools of loans headed for foreclosure to be sold to qualified bidders that will help bring the loans out of default through some type of loss mitigation. An FHA-backed loan can be included in a pool for sale if the loan is at least six months delinquent and if all loss mitigation options have been exhausted. DASP began in 2012 as a way for FHA to greatly increase the number of seriously delinquent loans for sale and at the same time encourage investment in the communities that were hardest hit by the crisis. Many of the loans are offered for sale as part of geographically-targeted "Neighborhood Stabilizing Outcome" pools, requiring that 50 percent of the loans within a pool that is purchased achieve a neighborhood-stabilizing outcome – which may include holding the property for rent for at least three years if the borrower and servicer are not able to avoid foreclosure.
DASP sales are typically broken into two or more sales – a "National Sale" which consists of loans from across the country, and a "Neighborhood Stabilizing Outcome" in which loans from geographically-targeted areas are sold.
In an update on HUD's single-family loan sale program in mid-March, the Department said that about half of the approximately 79,000 loans sold through the program since 2010 had been resolved via paying the loans current, forbearance agreements, paying the loan in full, a short sale, a third-party sale, or a deed-in-lieu of foreclosure.

Tight Supply Driving Home Prices Up but Don’t Expect Another Boom unboxing-houseThe low housing inventory cont

unboxing-houseThe low housing inventory continues to drive developments in the market, which will ultimately lead to more house price appreciation, according to the Q4 Housing Market Analyst released by Capital Economics on Thursday.
The tight housing supply amid recovering demand has constrained sales and put upward pressure on housing prices. But don’t expect another house price boom, the report said.
“With the months’ supply of homes having been under five since May of this year, it is not surprising that house price growth is picking up,” Capital stated in the report. “But there are a sizeable number of vacant homes being held off the market. As these are gradually listed for sale or rent, that will ease supply conditions to some extent. And with banks not set to repeat the rapid credit loosening of the mid-2000s, another house price boom will be avoided.”
The lack of inventory is holding back existing home sales, and Capital Economics said it does not expect those conditions to improve in the next couple of years. But slow existing home sales will mean good news for new home sales, since builders are able to complete their homes and sell them more quickly—and as a result, they are increasing production of new homes. In November, housing starts for single-family homes increased to their highest level in seven years, and as a result of the increase in production, new home sales are expected to increase substantially.
The expected Fed rate hike occurred on Wednesday up to a range of 1/4 to 1/2 amid a positive jobs report that showed an average monthly job gain of about 218,000 for the three-month period from September to November. Despite the Fed raising the federal funds target rate, housing affordability is expected to remain favorable for some time, according to Capital.
“For one, mortgage interest rates will stay sub-5 percent until at least early-to-mid 2017,” the report stated. “Moreover, earnings growth is also finally set to rise. So although mortgage payments as a share of income will go up, they will remain under the historically normal level of 20 percent over the forecast horizon. An increase in earnings will also ensure that homes do not become overvalued.”



Sunday, December 27, 2015

Does the CFPB Really Understand Non-Judicial Foreclosures? Team Thayer #realestate #foreclosure #market #housing #news

Counsel's Corner
Angela Kleine
Angela Kleine
Angela Kleine is a partner with Morrison & Foerster's San Francisco office. She is member of the firm's Financial Services Litigation Group and her practice focuses on complex civil litigation and enforcement.She has experience litigating and advising on matters under the Fair Housing Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act and state equivalents, Real Estate Settlement Procedures Act, Truth in Lending Act, and state unfair practices statutes. In 2014, she was named to MReport magazine’s “Thirty-five Under 35” list, recognizing 35 women under the age of 35 as rising stars in the mortgage banking industry.
Angela recently spoke with DS News about the Consumer Financial Protection Bureau (CFPB) filing an amicus curiae brief in the Ninth Circuit case of Ho v. ReconTrust; the brief argued that a trustee is engaging in debt collection by sending consumers notices stating that non-judicial foreclosure will occur if the borrower does not pay off his or her debt. The U.S. District Court for the Central District of California ruled in favor of ReconTrust that trustees who regularly foreclose non-judicially on deeds of trust in California should not be defined as debt collectors subject to the entire Fair Debt Collection Practices Act (FDCPA); plaintiff Vien-Phuong Thi Ho appealed the verdict and the case is currently pending in the Ninth Circuit Court of Appeals.
What is the CFPB's stake in this issue?
The FDCPA is a very powerful statute. It touches a lot of areas of consumer protection. The CFPB is really just exploring it and flexing its muscles in that area. It's working on rule-making for the statute, which it is in power to do under Dodd-Frank, and it's taking its time doing that. The CFPB recently put up a complaints database and has been trumpeting data that it received about complaints, which not surprisingly was largely one-sided. Consumers complain about debt collection a lot because it's a difficult situation to be in. In the meantime, the FTC has really continued to dominate the enforcement in this area. So I think in the long term, we see the CFPB moving more aggressively into the space and wielding the tool that is powerful, especially once it implements rules, in part because the penalties that are available under the FDCPA can be significant.
So how does that relate to the more specific issue and technical issue of a trustee in a non-judicial foreclosure? The specific issue could arguably be seen as relatively minor in comparison by trustee, because the CFPB has targeted lenders and servicers more forcefully. But it's an important position statement because the CFPB has taken a broad approach that has broad impacts for other entities. Also, (the CFPB's filing of the amicus brief) reflects a lack of understanding of state foreclosure law that is somewhat disturbing and doesn't bode well for the CFPB's rule-making and enforcement efforts in that area.
Has there ever been any question as to whether this violates the FDCPA prior to the CFPB filing this amicus brief, or is this the first time this issue has come up?
On the specific question of trustees' provision of notices in non-judicial states, the trustee practice is very standard. Many state laws, including California, have very specific requirements about what the trustee under the deed of trust must send out and when. The law has been relatively clear that trustees aren't within the purview of the FDCPA, especially when they're the original trustee under the deed of trust, as the trustee was here. Otherwise, it really doesn't make sense in the context of the statute that is aimed at debt collectors and not trustees that are enforcing security interest in the way that trustees are.
"...what the CFPB is advocating for puts trustees and servicers in non-judicial foreclosure states in an impossible position. They have to choose between violating state law or violating the FDCPA as interpreted by the Bureau."
There is a second and related issue that is trickier, which is that many courts have held that anyone conducting a non-judicial foreclosure, whether you're a trustee or someone else, is in debt collection under the statute. There is a carve-out for security interest in the FDCPA that is written in an unclear way. So there's some debate about whether foreclosure in the non-judicial foreclosure is or is not covered. I think the right answer in California is that it shouldn't be, because non-judicial foreclosure is completely distinct from collecting on the loan. So for example, if you go bankrupt and your loan is extinguished, the security interest remains, and if you conversely go through non-judicial foreclosure, you can't seek a deficiency judgment, so whatever you owe on your loan is wiped out. So it's really very distinctly different from debt collection in California. The CFPB is looking at states and cases that involve judicial foreclosure, which is a completely different scenario, and again I think misinterprets the law that applies in California.
If the Ninth Circuit Court reverses the district court's decision as the CFPB is asking for and rules that trustees are defined as debt collectors under the FDCPA, what affect will it have on the mortgage industry in non-judicial foreclosure states?
This might sound like a niche-technical issue, but it's not, because what the CFPB is advocating for puts trustees and servicers in non-judicial foreclosure states in an impossible position. They have to choose between violating state law or violating the FDCPA as interpreted by the Bureau. That was pointed out by amici, who submitted very well-written and cogent briefs, and the CFPB's response was that to the extent that it conflicts, state laws are pre-empted. That is a convenient position for them to take, but I somewhat doubt that state regulators would necessarily agree, and it's certainly not a settled issue of law. So you're really between a rock and a hard place. And I don't think it really solves the problem because it doesn't appreciate the really fundamental conflicts that would be created. You're grafting requirements of a federal statute about debt collection onto a non-judicial foreclosure in a way that makes the process untenable. For example, all of the initial communications that you have to send out under the FDCPA are inconsistent with what's required in California. You're then prohibited from communicating with third parties, whereas California law requires that you send a notice at various stages to third parties. It goes on and on and on. . .every single step of the process is inconsistent. So the really complex compliance and operational programs businesses have in place to comply with the state law of every state, and every state is different, wouldn't work. Of course, either way, whichever law you to not comply with, you face stiff penalties and private causes of action for failure to comply.
Editor's note: Click here to view a copy of the CFPB's amicus brief.

Foreclosure Starts Plunge to Lowest in Nearly a Decade Team Thaywser #realestate #foreclosures #housing #market #ne


Some foreclosure metrics have long been approaching or below pre-crisis levels. Foreclosure starts reached a new low in November, however, falling to their lowest level in nearly 10 years, according to Black Knight Financial Services’ First Look at Mor
foreclosure-keys
tgage Data for November 2015 released Wednesday.
November’s total of 66,600 foreclosure starts was the lowest total for one month since April 2006, about two and a half years before the beginning of the housing crisis. The total represents a 9 percent decline from October and nearly a 10 percent decline from November 2014, according to Black Knight. Foreclosure inventory was also way down in November, falling by about 185,000 properties year-over-year down to about 698,000—or approximately 1.38 percent of all residential mortgages in the U.S.
While foreclosure starts were steadily declining, however, the number of both 30- and 90-day delinquencies experienced seasonal upticks. The total of mortgage loans that were 30 days overdue but not in foreclosure increased by about 76,000 over-the-month up to about 2.49 million, or 4.92 percent of all mortgages. Despite the monthly increase, that total fell by more than half a million (546,000) year-over-year, according to Black Knight. Concurrently, the number of mortgages that were 30 days or more overdue or in foreclosure rose by about 53,000 from October to November, up to 3.2 million. Despite the monthly increase, that number represented a year-over-year drop of nearly three-quarters of a million (732,000)/
12-22 BK GraphThe number of residential mortgage loans 90 days or more delinquent but not in foreclosure ticked up from October to November by about 7,000 properties, up to about 827,000, according to Black Knight. That total declined year-over-year by more than a quarter of a million, however (293,000).
The monthly pre-payment rate, which is normally a good indicator of refinance activity, inched upward year-over-year by 0.4 percent but took a substantial tumble from October to November of about 16 percent, down to 0.92 percent, according to Black Knight.


The Slowdown in Existing-Home Sales Team Thayer Real Estate #realestate #housing #market #news

home-for-sale-eightThe National Association of Realtors (NARreported on Tuesday that existing-home sales dropped off in November to an annual rate of about 4.76 million, the slowest pace in 19 months.
November’s decline represented a 10.5 percent drop from October’s downwardly revised total of 5.32 million, and the sales pace for November was the lowest since it was reported at 4.75 million in April 2014. November’s pace is now 3.8 percent lower than November 2014, marking the first time the existing-home annual sales pace declined year-over-year since September 2014.
One of the major drivers of November’s dropoff in the pace of existing-home sales is likely the implementation of the “Know Before You Owe” mortgage rule, commonly known as the TILA-RESPA Integrated Disclosure (TRID) rule, which went into effect on October 3. According to the Realtors Confidence Index in November, 47 percent of respondents said they were experiencing longer closing times compared to last year—up from 37 percent in October. NAR Chief Economist Lawrence Yun said the longer closing times caused by TRID may be delaying transactions until the following month, making the slowdown in existing-home sales for November temporary.
“It’s possible the longer timeframes pushed a latter portion of would-be November transactions into December,” says Yun. “As long as closing timeframes don’t rise even further, it's likely more sales will register to this month's total, and November's large dip will be more of an outlier.”
“Realtors worked hard to prepare for Know Before You Owe, and we knew there would be some near-term challenges as the industry continues to adapt,” said NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “Nonetheless, an early trend of longer lead times to closings is cause for concern. As Realtors report issues with their transactions, we will continue to work with the Consumer Financial Protection Bureau to ensure as little disruption as possible to the business of real estate.”
NAR graphAccording to Auction.com EVP Rick Sharga, it was issues surrounding TRID and not changes in underlying housing fundamentals that caused the slowdown in existing-home sales.
“Nothing changed enough in the underlying fundamentals of the housing market to cause this kind of precipitous drop in sales,” Sharga said.  “The 3.8 percent year-over-year decrease in existing home sales is the first time that’s happened since September 2014. Cash purchases increased to 27 percent —more due to fewer buyers with loans than due to more cash buyers, but an indication that the dropoff wasn’t due to investors leaving the market. The most likely cause for the weak sales numbers is a delay in processing loans due to the new TRID mortgage requirements imposed by the CFPB. This is the biggest change in mortgage document processing in many years, and there have been numerous reports within the industry of problems implementing the process and the new documentation that comes with it. It’s very likely that if this is the main reason for the drop in sales, it will have an effect on existing home sales for the next few months, as lenders work through the backlog of delayed loans.”
Realtor.com Chief Economist Jonathan Smoke stated, “The abrupt change in the pace of sales is out of sync with demand indicators on Realtor.com and point to other likely factors causing a unique short-term disruption to closings, which the sales data represent. The good news is that we should see the closing disruptions dissipate over December and January as the delayed closings turn into an increase in sales for subsequent months.”
“The good news is that we should see the closing disruptions dissipate over December and January as the delayed closings turn into an increase in sales for subsequent months.”
Jonathan Smoke, Chief Economist, Realtor.com
TRID wasn’t the only factor driving November’s slowdown, however. Inventory remains an issue, declining by 3.3 percent to 2.04 million existing homes for sale—1.9 percent lower than in November 2014. The current unsold inventory is at a 5.1-month supply at the current pace of sales, which is an increase from October’s 4.8-month supply. Meanwhile, the median existing-home price rose by 6.3 percent year-over-year in November up to $207,200, marking the 45th consecutive month the median existing-home price has risen over-the-year.
“Sparse inventory and affordability issues continue to impede a large pool of buyers' ability to buy, which is holding back sales,” Yun said. “However, signed contracts have remained mostly steady in recent months, and properties sold faster in November. Therefore it's highly possible the stark sales decline wasn't because of sudden, withering demand.”
All-cash sales for November totaled 27 percent, their highest share since January, up from 25 percent from November 2014. Individual investors purchased 16 percent of homes in November, also the largest share since January, up from 15 percent from the previous November. NAR reports that 64 percent of investors paid cash in November.
Distressed sales, which include foreclosures and short sales, rose from 6 percent in October to 9 percent in November, though they remained unchanged year-over-year. That 9 percent breaks down to 7 percent for foreclosure sales and 2 percent for short sales. Foreclosed homes sold for an average of 15 percent below market value in November, compared to 18 percent in October. The short sale discount went the other direction, according to NAR; short sales in November were discounted by 15 percent compared to 8 percent in October.

Tax Relief Bill. Omnibus Appropriations Bill Team Thayer Real Estate #realestae #housing #market #News

short-sale-fourThe omnibus appropriations bill, which is a $600 billion bipartisan spending bill that includes the extension of several tax relief provisions, has passed in the House of Representatives and the Senate and is expected to go before President Obama on Friday.
The bill includes a standalone proposal sponsored by U.S. Rep. Tom Reed (R-New York) known as the Mortgage Relief Assistance Act that extends a provision allowing homeowners to exclude forgiven mortgage debt (the remaining mortgage loan balance when a borrower’s principal residence is sold in a “short sale” to avoid foreclosure) from their gross income when filing tax returns. According to the National Association of Home Builders (NAHB), the forgiven mortgage debt exemption is expected to save homeowners about $3.3 billion for the tax year 2015.
The President is expected to sign off on the bill. He signed off on a similar bill last year on December 19 that retroactively extended 55 tax provisions, including the one that provides tax relief for forgiven mortgage debt.
“We want to make sure that families who are trying to stay on their feet aren’t kicked while they are down,” Reed said. “Many times they have tried to do everything right, but still run up against tough financial times and the Federal government shouldn’t add insult to injury by levying a tax bill that could cost their homes.”
“We want to make sure that families who are trying to stay on their feet aren’t kicked while they are down.”
Rep. Tom Reed (R-New York)
The exclusion of forgiven mortgage debt provision is an extension of the Mortgage Forgiveness Debt Relief Act of 2007, originally signed into law by President George W. Bush, which relieved distressed homeowners from having to pay taxes on forgiven mortgage debt for the three calendar years of 2007 through 2009. That tax exemption was extended three more years until the end of 2012 with the Emergency Economic Stabilization Act of 2008, and it was extended until the end of 2013 with the American Taxpayer Relief Act of 2012. Last December president Obama extended the tax exemption for forgiven mortgage debt until the end of 2014.
Another provision of the omnibus bill allows homeowners to consider mortgage insurance premiums paid as mortgage interest, thus allowing them to include the paid premiums as a tax deduction (same for FHA, RHA, and VA insurance premiums paid in addition to private mortgage insurance premiums). NAHB says this deduction is expected to save homeowners approximately $1.3 billion for the tax year 2015.
Both the exclusion of forgiven mortgage debt provision and the premium deduction for mortgage insurance will be extended through the end of 2016.

Monday, December 21, 2015

Tight Supply Driving Home Prices Up but Don’t Expect Another Boom #housing #house #housingmarket #news

unboxing-houseThe low housing inventory continues to drive developments in the market, which will ultimately lead to more house price appreciation, according to the Q4 Housing Market Analyst released by Capital Economics on Thursday.
The tight housing supply amid recovering demand has constrained sales and put upward pressure on housing prices. But don’t expect another house price boom, the report said.
“With the months’ supply of homes having been under five since May of this year, it is not surprising that house price growth is picking up,” Capital stated in the report. “But there are a sizeable number of vacant homes being held off the market. As these are gradually listed for sale or rent, that will ease supply conditions to some extent. And with banks not set to repeat the rapid credit loosening of the mid-2000s, another house price boom will be avoided.”
The lack of inventory is holding back existing home sales, and Capital Economics said it does not expect those conditions to improve in the next couple of years. But slow existing home sales will mean good news for new home sales, since builders are able to complete their homes and sell them more quickly—and as a result, they are increasing production of new homes. In November, housing starts for single-family homes increased to their highest level in seven years, and as a result of the increase in production, new home sales are expected to increase substantially.
The expected Fed rate hike occurred on Wednesday up to a range of 1/4 to 1/2 amid a positive jobs report that showed an average monthly job gain of about 218,000 for the three-month period from September to November. Despite the Fed raising the federal funds target rate, housing affordability is expected to remain favorable for some time, according to Capital.
“For one, mortgage interest rates will stay sub-5 percent until at least early-to-mid 2017,” the report stated. “Moreover, earnings growth is also finally set to rise. So although mortgage payments as a share of income will go up, they will remain under the historically normal level of 20 percent over the forecast horizon. An increase in earnings will also ensure that homes do not become overvalued.”
Justin Lee Thayer
Justin Lee Thayer

Here’s Why the Nation’s Housing Policy Must Grow Beyond Traditional Homeownership #teamthayer #housing #house

home-key
The higher demand for single-family rental properties, primarily due to low vacancy rates, has put upward pressure on rents. In turn, rising rents have prevented many would-be first-time homebuyers from entering the housing market. The national homeownership rate fell to a 48-year low in the summer of 2015 to 63.6 percent.
All of these factors have prompted the question as to whether or not housing policy should continue a focus on traditional homeownership or concentrate its efforts on a broader definition of what constitutes “shelter.” According to CoreLogic’s SVP of Government Affairs, Faith Schwartz, in the company’sDecember 2015 MarketPulse released Friday, data points make a case that it’s time for the federal government to consider expanding its focus.
For one, according to the National Association of Realtors (NAR), first-time buyer share is at an all-time low of 32 percent. NAR Chief Economist Lawrence Yun said the “normal” first-time buyer share is around 40 percent. The increase in home sales in the last year has been driven by repeat buyers with dual incomes rather than first-time buyers; potential first-timers have been shut out of the market by high rents which prevent them from saving for a down payment. Student debt has also prevented would-be first-timers from buying homes.
While the low homeownership rate, low first-time homebuyer share, and rising rent costs may not necessarily constitute a crisis, it is at the very least a call for the federal government to act in order to do something to help those who are either not able to buy a home because they are paying too much for rent—or those who rent but may not be interested in owning but are struggling to make ends meet because the cost of rent is so high.
HUD Secretary Juli├ín Castro addressed the topic of expanding the focus of housing policy this week at theCenter of American Progress (CAP), which simultaneously released a report titled “An Opportunity Agenda for Renters” on Wednesday. CAP suggests a two-pronged approach to achieve to help housing policy achieve the goal of finding “decent and affordable housing in neighborhoods that offer safety, stability, and opportunity.” That approach includes promoting residential mobility and a deconcentration of poverty, while supporting reinvestment in neighborhoods that are racially segregated and/or economically impoverished.
Among the recommendations CAP proposes are more effectively preserving affordable rental housing and maintaining single-family rentals as an affordable source of housing. Since nearly 15 million families live in single-family homes today, which account for one-third of renters, CAP states that “If we are to make progress in ensuring that more households have an affordable place to live, it is critical not to ignore the single-family market.” CAP suggests making two- to four-unit structures a particular point of focus, since they are considered single-family properties and are a large source of affordable housing that is an “underappreciated segment of the housing market.”
CAP also suggests promoting affordable single-family rental housing through the federal government’s sales of non-performing single-family mortgage loans; the Federal Housing Administration and the GSEs have auctioned off nearly 150,000 deeply delinquent loans in the last three years. In March 2015, the GSEs’ conservator, the Federal Housing Finance Agency, announced an enhanced set of borrower requirements in order to improve outcomes for struggling borrowers and stabilize neighborhoods, since most of the loans auctioned are either in some stage of loss mitigation or are in foreclosure.
“While these agencies have taken some important steps to ensure that the sales benefit homeowners and stabilize neighborhoods, more needs to be done, especially to encourage loan purchasers to offer these properties as affordable rentals if they are not owner-occupied,” CAP stated in the report. “Specifically, the federal government should prioritize sales to nonprofit entities and place more requirements on loan buyers that push them to convert these units to affordable rentals when appropriate.”
“Ownership is often perceived as always superior but there are many reasons it may not be.”
CoreLogic Deputy Chief Economist Sam Khater
According to the Census Bureau, the median asking price for a vacant rental property was $802 in the third quarter; it was below $700 as recently as 2011. A recent report from the Wells Fargo Economics Group noted that the “millennial” generation is spending less on healthcare than their older counterparts, and an upswing in wages in the last year has helped to offset some of the cost of high rents.
“There’s no question that stagnant wage growth amidst faster paces of home prices and rents have created an affordability crunch in many markets,” said Adam DeSanctis, Economic Issues Media Manager with NAR. “Paying increasing rental costs and repaying student loan debt makes it difficult for young households to save for a down payment—especially in higher cost areas. What’s exacerbated the problem even further is the lack of new and existing supply coming on the market. This in turn is leading to faster price appreciation and declining affordability.”
As more multifamily units are built, rental costs are predicted to slow—but continued wage growth and an increase in single-family construction are needed to preserve affordability, particularly for the younger generation, when they are ready to buy, according to DeSanctis. According to NAR’s Housing Opportunities and Market Experience Survey released this week, 93 percent of renters under age 34 would like to buy a home at some point.
According to Schwartz, the data suggests that the federal government’s housing policy focus—which to this point has largely been on supporting Fannie Mae and Freddie Mac, the FHA, and mortgage tax deductions—has “become less effective in helping many younger Americans as they begin to form households.” Schwartz proposes a much stronger conversation around multifamily housing supply that is available in the same geographies as jobs in order to help the millions of renters.
“Ownership is often perceived as always superior but there are many reasons it may not be,” CoreLogic Chief Economist Sam Khater said. “Moreover, it implicitly exposes the fact that subsidies are not just tilted to ownership but are demand side subsidies not supply side where the issue is most dire.”
Justin Lee Thayer
Justin Lee Thayer