April 28, 2015

More Interested In Revenue Than Affordable Housing

Bloomberg reports on Texas. “Millennials overwhelmingly prefer western cities such as Houston and Denver, according to William H. Frey. a demographer at Brookings. The New York City region lost 20,369 millennials from 2010 to 2012, Census Bureau data show. In Austin, millennials have been migrating to the East Side to escape soaring housing prices downtown, displacing black families, said Bo McCarver, board chair of the Blackland Community Development Corporation, which builds low-income housing. ‘We’re inundated with speculators,’ McCarver said. ‘A lot of the new shops aren’t affordable to low-income families.’”

The Tampa Bay Times in Florida. “Under-the-radar rentals have existed in Tampa Bay for decades, but they really started catching fire during Florida’s housing bust. That’s when the practice gained popularity as an income stream for homeowners drowning in mortgage debt. There’s also a proliferation of websites that make it easier than ever to rent out your home for cash. Most violators appearing before the code board say that they had no idea they were doing anything wrong, and that the Realtor who sold them the house told them that they could rent it out weekly. Many of these homes have gone up for sale right after officials summoned their owners to City Hall for a hearing.”

“‘We’ve got a whole lot of people who are trying to skirt the law,’ said Mike Riordon, a member of the code board. ‘The odds of finding people who will rent for a month on a regular basis is not realistic. But the pool of people looking for weekly rentals is huge.’”

The Williston Herald in North Dakota. “Williston has been the fastest growing micropolitan in the country for the past three years, driven largely by the vast reserves of oil trapped in the rocky shale of the Bakken. The slump in oil prices has the energy sector, but a drop from insane growth to only a little bit crazy is something community leaders would welcome. There are 100 new homes, for example, going up north of Williston in spite of the oil price slump, one of many projects still underway. The 100 homes are being built by Mike Dolbec, who says he still sees huge demand for single-family homes. He feels comfortable moving ahead with the investment and doesn’t believe this will be a reprise of the 80s bust.”

“‘I’ve been in North Dakota all my life, so I’ve seen the up and down cycles,’ he said. ‘I don’t think it’s anything like what we’ve faced in the past. There’s too much infrastructure. It’s not going away. Things might slow down for a short period, but I feel it’s going to be crazier than it ever was in a short amount of time.’”

The Arizona Republic. “Some of the 530 property owners in Glendale’s 85302 ZIP code who sold their houses in 2014 may have welcomed a sale price close to what their homes were worth 10 years ago. But that sale price only matches up to the 2004 value on paper. When the effects of inflation are considered, last year’s sellers actually got about 20 percent less for their home. ‘Someone who has seen their income go up 30 to 35 percent won’t find housing more expensive, but those who haven’t seen big income gains will,’ said Mike Orr, director of the Center for Real Estate Theory and Practice at Arizona State University’s W. P. Carey School of Business.”

“Inflation is ‘a factor in individual consumer decision-making. It’s a factor in forecasting. It’s a factor in business planning,’ said Dennis Hoffman, director of the L. William Seidman Research Institute at the W.P. Carey School of Business at Arizona State University. ‘If you’ve got low and falling prices, why buy today when it’s going to be the same or even cheaper next year? So why buy at all? That’s the recipe for a slow economy.’”

The News & Observer in North Carolina. “When Destinee Paez and her husband moved back to the Triangle from Seattle four months ago, they did so in part because they assumed housing would be much more affordable in the Raleigh area. ‘We thought everything would be more affordable. We thought we were going to be able to find a home in the area we really, really were searching for,’ said Paez, 24. ‘The houses here are expensive. They’re nothing compared to when we left three years ago.’”

“That affordable housing hasn’t been a top priority for city officials in recent years isn’t surprising to Lew Schulman, CEO of Builders of Hope, a Raleigh nonprofit that refurbishes homes for low-income families. He said as local governments have emerged from the recession, they have been primarily concerned with raising revenue by broadening the tax base. The federal government, which acquired huge portfolios of distressed real estate when it took over the mortgage giants Fannie Mae and Freddie Mac, has also been focused on getting back the money spent bailing out those entities.”

“‘We really lost a huge opportunity when there was a resetting of market values because the federal government was more interested in recouping revenue than essentially promoting affordable housing,’ Schulman said.”

The Columbus Dispatch in Ohio. “As Ohio spends the last of $570 million in federal money to fight foreclosures, a key question lingers: Did the program work? The program, called the Hardest Hit Fund, helped fewer than half the number the state originally projected and barely made a dent in the foreclosure numbers. ‘It hasn’t worked, and there’s a good reason,’ said Douglas Holtz-Eakin, a former director of the Congressional Budget Offic. ‘Seven billion dollars overall isn’t that much money in a housing market with trillions of dollars in losses.’”

“And, with the program winding down, its most significant potential problem might be emerging: A growing number of homeowners who benefited are slipping into foreclosure as the coverage expires, raising fears that some of the money merely delayed the inevitable.”

“Sandra Mahan, a 73-year-old retired state worker, thought the program would cover the mortgage on her East Side condominium through December of last year, when a car payment expired. Last March, the Hardest Hit Fund spent more than $15,000 to bring Mahan’s mortgage up to date but did not cover her mortgage payments thereafter. Mahan fell behind again and, in December, faced foreclosure on the condo. Although Mahan hopes to work out a settlement with her bank, for now, she said, ‘I’m back where I was.’”

“Almost all homeowners received help in two ways: by having a delinquent mortgage brought into balance and by having a mortgage paid while they searched for a job. Homeowners didn’t see any of the money; it went directly to their banks.”

Bits Bucket for April 28, 2015

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