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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Maybe this topic has been discussed before, but I think it was goonie who posted this yesterday, and I wanted to thank him because I have a better understanding of the investor/players in the rental market. For example, I have seen rental properties listed under “Invitation Homes” and had no idea it was Blackstone’s unit.
http://www.bloomberg.com/news/2013-08-29/wall-street-s-rental-bet-brings-quandary-housing-poor.html
“As the companies seek thousands of tenants to fill newly renovated properties, their decision whether to lease to low-income Americans with Section 8 vouchers stands to affect both their profitability and poor residents who have been longtime renters.”
First of all, if you troll the rentals on Zillow in this neck of the woods, you’ll find that Invitation Homes, Waypoint Homes and American Homes 4 Rent are quite active, meaning they have rental listings in the $150,000 + property range. Quite a number of them, in fact. Sitting there.
Will opening them up to Section 8 help rent them? I could see where this would be a real dilemma for the investor-owned home. Most would probably rent to Section 8 tenants in a heartbeat, however, they have to weigh if that would bring down the values in the area where they own the homes and while it might provide cash flow in the short term, in the long term it could affect the price they would get for the home when they went to sell it.
I also had one of those “conspiracy thoughts” about these companies and the recent push by HUD called “Affirmatively Furthering Fair Housing”.
http://www.huduser.org/portal/affht_pt.html
Would not surprise me to see some unholy “public-private” housing partnership develop here, maybe even to the point of “reverse block-busting”. And you can bet if it does develop, it will be because once again, the government supported it with $$$ for the “investors”.
sounds realistic, not a conspiracy.
i wasn’t alive yet when forced busing to integrate public schools was started, but hud’s proposal sounds like a continuation of that kind of ’social justice’.
this would of course only affect working-class and middle-class neighborhoods, the 1 percenters and 0.1 percenters would only let them move close enough to commute in as nannies, landscapers, etc.
cue up the ‘our differences only make us stronger’ propaganda for this.
“sounds realistic, not a conspiracy.”
Conspiracy doesn’t mean tin foil, although it has come to mean that to many people. For example, the alliance between the NSA and the tech companies IS a conspiracy, in that they’re working together (conspiracy comes from the Latin which mean “to breathe together”). The NSA actually paid off Goog, Microsoft, FB, etc. for information on their users. Think about that.
And in the interest of “Affirmatively Furthering Fair Housing”, it would not surprise me to see HUD pay off these investors, above and beyond the rent reimbursement, to rent to Section 8 and even other “disadvantaged” tenants. It will be part of the “program” to further the “fair” housing. Fair to whom?
Y’know, the whole point of being poor is you’re not supposed to be able to live in expensive neighborhoods, or drive expensive cars or have expensive stuff. You’re supposed to have an incentive to reach toward that sort of thing and move upward.
Team Obama Steps Up Racial Standards for Neighborhoods
By Chris Stirewalt
Published July 23, 2013 •
FoxNews.com
“Make no mistake: this is a big deal. With the HUD budget alone, we are talking about billions of dollars.”
– Shaun Donovan, Secretary of Housing and Urban Development, in a July 16 speech to the NAACP about a new regulation and database aimed at adding “protected classes” into predominantly white neighborhoods.
The federal government is getting serious about pushing racial and ethnic diversity into America’s neighborhoods–and is using big data and big money to achieve its aims.
A new interactive database will help regulators, local housing officials and individuals take action on a newly proposed regulation that would require agencies to “affirmatively further” the inclusion of minority residents in white neighborhoods.
Housing and Urban Development Secretary Shaun Donovan announced the database and regulation at last week’s NAACP convention, saying the Obama administration was battling “a quieter form of discrimination” that was “just as harmful” as long-outlawed segregationist practices, like racially restrictive property covenants.
The problem now, Donovan said, is that prospective minority buyers are not being encouraged to move into predominantly white neighborhoods with top-notch schools, government services and amenities like grocery stories, etc.
The goal here then is to continue to prosecute at a high rate incidences deemed proactively segregationist – Donovan touted 25,000 individuals in the past 3 years being paid damages under cases reported to the agency or independently investigated by HUD – but to add in a mandate for diversifying neighborhoods.
The old way was to punish exclusion. The new way is to punish lack of inclusion.
The punishment is also different. Rather than fines and prosecutions for those who sought to keep minorities out, the new penalty would be a withholding of federal funds from local and state government agencies dependent on HUD grants if they fail to push greater diversity. The way those agencies interact with developers, realtors, homeowners associations and others would need to reflect the federal push for diversity.
The old way was to punish exclusion. The new way is to punish lack of inclusion.
The report card comes in the form of the new maps, which use Census data to score communities on their racial and ethnic concentrations, as well as income and community services. Check out the Atlanta suburbs. South of Dekalb Avenue, the dots are mostly green – black residents – and north of Dekalb Avenue, the dots are mostly blue – white residents.
HUD wants a more even distribution of blue and green dots in the city and if you are planning a new subdivision or a realtor looking to sign potential buyers up for FHA loans, the dot distribution is something the Obama administration wants you to be mindful of. And your local zoning board, county commission or state real estate licensing bureau ought to be mindful too, since their funding could depend on it.
As for what happens if you live in a place like Brooke County, W.Va. where every dot is blue? Would the local housing authority have to recruit non-blue dots to the county in order to not risk federal funds? What if no holders of green dots want to come to live on Apple Pie Ridge Rd.?
What about all the green dots at the intersection of West MLK Blvd. and Crenshaw in Inglewood, Calif.? It will not presumably be necessary for local city planners to recruit blue dots for that map.
And what about the fact that the real estate purchases increasingly begin on the color-blind Internet? Would one need to declare the color of their dot before entering the search terms?
At a time when Americans are on high alert about government snooping and databases, and we have still unfolding before us at the IRS a story about how readily power can be abused for political aims, it would seem like a strange moment to put the federal government in the dot distribution business.
http://www.foxnews.com/politics/2013/07/23/team-obama-steps-up-racial-standards-for-neighborhoods/ - 27k -
Are U.S. mortgage lending standards already headed back towards subprime, so soon after the subprime-caused Fall 2008 financial collapse?
Previously, the typical house listed on MLS would indicate it was a foreclosure or not. Not anymore. This is getting obscured too. Discovered this last week.
Now not only do they need you to buy a house, but it’s also important you not get too good of a deal. The REIC needs your whole paycheck, not just a portion. But we’re reaching the point where that won’t even be enough…
Are you liberating your jumbo loan home equity wealth gains on vacations and expensive toys?
Aug. 30, 2013, 6:02 a.m. EDT
Home equity financing some fun
By Anya Martin, MarketWatch
Jumbo borrowers just want to have fun.
The real-estate rebound has boosted the value of luxury homes. As a result, many borrowers are taking out home-equity lines of credit to seek the thrills they missed during the housing bust.
“The jumbo borrower is more likely to pull out money for a recreational purchase—a boat, a third car, a sports car, improvements on a second home,” said David Hall, president of Troy, Mich.-based Shore Mortgage.
…
Or an all-cash purchase of a rental house!
Most current Z.1 (2013Q1) shows household debt continues to decline, both YoY and QoQ, with mortgage debt falling $200B YoY.
Seems more to me like this guy is saying it is happening in hopes people will actually start doing it.
I’ll believe this is happening on a significant scale, once household debt outstanding starts climbing again. In the boom, household mortgage debt was increasing $1T a year ($7.9T end of 2003 and $10.9T end of 2006).
Falling $200B a year? Doesn’t look like widespread MEW to me.
“Doesn’t look like widespread MEW to me.”
The article was about JUMBO LOAN buyers — i.e. the guys borrowing amounts in excess of the conforming loan limit ($729,750 in San Diego the last time I checked) to buy million dollar homes.
Apparently this is not a large slice of the overall market, and hence not widespread.
“Jumbo borrowers just want to have fun.”
+1 Those strawberry pickers are entitled to the good life.