Where The Rubber Hits The Road
Readers suggested a topic on the current housing bubble issues. “How will the standoff between Treasury and FHFA resolve? And will the Romney camp catch wind of this and take a stand? I have no idea where he stands on housing issues, and I tend to pay attention.”
One asked, “How about discussing how divergent our experiences are in the R/E arena, as it relates to our world(s). 1) How much do you and significant other (if any) make (AGI). 2) How much tax (as a %) did you pay last year vs. the Romney’s 13.9%. 3) (Optional) What kind of work you do and physical location. Number and type of deductions?”
“For example, I am retired, my wife is an invoicing specialist. We are both around 60. Our AGI last year was a paltry $43K, yet we paid more than Romney at 15%+. We are in SoCal and our house is paid off. Nothing left to itemize.”
Another question, “I wonder if the fiscal cliff will effect the housing market? I also wonder if the bottom has been reached in places like Detroit, Phoenix, and Cleveland. Is it time to invest in a vulture REIT? If you wait to long, you could pay a much higher price, and no I’m not a troll. When the housing bubble starts again, and you know it will, how much smaller will it be after an entire generation has been burned?”
The Idaho Statesman. ” Tony Koonce, 25, bought a home in Twin Falls three years ago because his parents said it was a good idea. ‘Then about a year later I had a job change, and I had to figure out what to do with the house,’ said Koonce, who is single.”
“Koonce, director of marketing for a Boise property management firm, says he’s renting out his Twin Falls home but has no desire to buy another. ‘It comes down to flexibility versus stability,’ he says. ‘As opportunities arrive, I don’t want to be bolted to the ground by an asset.’”
“Koonce reflects what may be a national trend. People in their 20s and 30s have made up the majority of home buyers for decades. But some economists say today’s Millennials may have cooled to the idea of homeownership because of the recession, a slow recovery, uncertainty about the future and financial burdens such as student loans.”
“Tim Cornwell, a partner in the San Francisco office of the Concord Group, a national real estate consulting firm, says Millennials may be delaying home buying, but most still believe in homeownership. When it comes to settling down, Millennials want to own homes where their children can be safe and amenities like parks are nearby, he says. That means Boise and similar places with high quality of life and a low cost of living could capture younger home buyers, especially if there are jobs to support them, he said.”
“‘At the end of the day, people are saying now is the time to buy in this generation,’ he said. ‘We know this is the cheapest housing is going to be for our foreseeable future.’”
Public News Service. “Oregon’s new Foreclosure Avoidance Mediation Program went into effect last week - maybe just in time to keep a few older homeowners from losing their property. A new report from AARP’s Public Policy Institute says more young homeowners may be delinquent on their mortgages - but the delinquency rate has increased faster among people 50 and older. The study says nationwide, three million of these older owners are still at risk of losing homes.”
“Angela Martin, executive director of Economic Fairness Oregon, says adjustable-rate mortgages can take much of the blame. ‘These were loans that were inappropriate for their financial place in life, and when it came time to adjust to that higher mortgage payment, they didn’t have the income to sustain it. And the promises of, ‘Don’t worry about it, you’ll refinance when that time comes…’ fell through.’”
“Martin says lack of home equity limits a person’s ability to fix their financial problems - and can change their plans to move, downsize or retire. ‘You now owe more on your home than it was worth, so you can’t sell it without permission from your bank. So, you’re tied to your home, unlike Americans have ever been tied to that home. It’s no longer your nest egg, and it’s no longer something you can liquidate when the time comes.’”
The Crookston TImes. “Kjell Thompson has long dreamed of owning her own home, but until recently she thought it out of her reach. Her life changed about a year and a half ago, when she bought a four-bedroom rambler, financed with a U.S. Department of Agriculture Direct Home loan that gave her a 30-year mortgage at 1 percent interest. The loan covered all of her costs, with no down payment required.”
“Thompson, 38, qualified because of her low income and her need for safe housing. A single mother, she works three jobs and earns about $25,000 a year. ‘I just believed that we would wake up that next morning in our own home, and they would have a different perspective on life, and they did, and they do, and they’re proud of me,” she said. “And every day we pull in this driveway it’s a dream come true, and every night I climb in my bed and know this is mine. … And I am so thankful.’”
“There are almost 24,000 active USDA mortgages in Minnesota. That’s up 52 percent since 2009. The popularity of USDA home loans has exploded in just the past three years, doubling to nearly 1 million.”
From KPCC. “Edward DeMarco, the acting director of the Federal Housing Finance Agency, isn’t backing down when it comes to his long-held view that the two government mortgage giants, Fannie Mae and Freddie Mac, shouldn’t reduce loan principal for underwater borrowers. As the FHFA points out, ‘more than 50 percent of the Enterprises’ — that’s Fannie and Freddie — ‘underwater borrowers are located in five states, and more than 70 percent of the Enterprises’ underwater borrowers are located in ten states. In contrast, these five states account for 29 percent of the U.S. population, and the ten states account for 39 percent of the U.S. population.”
“To the FHFA, this means that underwater loans are not “evenly distributed.” Essentially, it doesn’t want to sign on to principal forgiveness nationally when the problem of underwater loans is isolated in states that have been disproportionately affected by the financial and housing crises. DeMarco is also reluctant to get the FHFA into the business of rewriting mortgage contracts, especially in states like California and Florida — which together account for a third of Fannie and Freddie’s underwater inventory: ‘Whether homeowners live in areas where house prices have fallen dramatically, perhaps fueled by extensive housing speculation or the collapse of the local economy; purchased homes at the top of the market with little or no money down; or refinanced, extracting equity that had been built up over many years; they are not responsible for the drop in house prices that has caused them to be underwater, but they are responsible for the contractual commitment to pay their mortgages.’”
“This is where the rubber hits the road. The FHFA is concerned that if it offers a national plan of principal reduction, it would encourage underwater homeowners, located in relatively few states, to give in to a moral hazard and look for ways to reduce their loans, even if they’re current or could benefit just as effectively from principal forbearance.”
From Forbes. “By Steve Berkowitz, CEO of Move, Inc., operator of Realtor.com. Millions of Americans, myself included, applauded when the nation’s five largest lenders and attorneys-general from 49 states reached a landmark $25 billion settlement last March. While the settlement was good news for distressed borrowers, the processing of foreclosures slowed dramatically during the 18 months of negotiations. The slowdown created a shadow inventory of more than 1.5 million shuttered homes ─ nearly twice the number of foreclosures sold last year and representative of about 39% of the 3.6 million+ foreclosures completed nationally since the start of the housing crisis in September 2006.”
“If this wave of foreclosures is released into local markets without concern for their impact on home values, many of our local real estate markets could be threatened. Thus, the long-awaited recovery, so critical to restoring value and equity back to our real estate economy and American homeowners, could saddle several major markets with foreclosures for years. A survey Realtor.com recently conducted found that more than half of all Americans (55.7%) are concerned that backlogged foreclosures will lower home values in their markets.”
“Our nation’s lenders and real estate leaders must work together to preserve the price stability gained over the past 18 months by controlling the flow of foreclosures back into for-sale inventory. By working together, lenders and real estate leaders can maintain the stability of our local markets by keeping another wave of foreclosures from sending America’s real estate markets under water.”
The Island Packet. “The Hilton Head area real estate market is considerably healthier than it was one year ago, according to a report by South Carolina Realtors. Sales of homes, condominiums and villas in June were up more than 60 percent over June 2011 and are up about 23 percent overall year to date. June’s surge — the highest increase of any of the state’s 16 regions for the month, according to the report — was accompanied by a 21-percent decrease from June 2011 in the average number of days homes spent on the market.”
“Hilton Head Realtor Charles Sampson partly attributed the spike in sales to banks’ placing distressed properties back on the market. ‘Sellers are saying, ‘I’ve waited long enough,’ he explained.”
