Apr 182014
California home sales hit six-year low

Despite the happy-talk from realtors, the housing recovery flounders on low volume, sustained only by low inventory.

Most housing analysts expected sales to increase in 2014. They believed an increase in sales and an increase in price would represent “escape velocity,” a virtuous circle where ri…

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Dec 202013
Bankers are the biggest and worst slumlords in US history

Landlords profit by charging high rents and spending little on maintenance. Good landlords charge reasonable rents to avoid excessive turnover, and they spend wisely to maintain the quality of their property. Slumlords charge unreasonable rents, and spend only what they are forced to by regulation and code. Landlords maintain properties to the quality of the neighborhood whereas slumlords deteriorate neighborhoods through deferred and avoided maintenance of their properties. Lenders behave as slumlords. Technically, lenders are not true slumlords; most often they stay off title to avoid any direct responsibility. However, borrowers who are on title but owe more than the [Read More...]

Dec 192013
Investors purchase fewer homes as housing market momentum wanes

House prices carry price momentum. Once prices start moving up — or down — they tend to continue in the same direction for long periods; however, sustainable house price momentum propels on job and income fuel. The only viable source of sustainable housing demand springs from owner-occupants who gain new jobs and increase their incomes. Job creation drives housing demand because new employees relocate to areas near work and bid up prices of available housing stock, both rental and resale. Irrespective of what may happen with financing costs or supply availability, the relentless push of increased housing demand caused by [Read More...]

Dec 182013
Will Mel Watt reflate the housing bubble?

Mel Watt now runs the Federal Housing Finance Agency (FHFA). As FHFA director, Mel Watt establishes policy for Freddie Mac and Fannie Mae, the government sponsored entities (GSEs). This responsibility gives Mr. Watt tremendous influence over mortgage qualification standards, the secondary mortgage market, and ultimately house prices. As new agency leader, Mel Watt replaces Edward DeMarco, and many housing experts anticipate changes in key policies that may reflate the housing bubble. My disdain for Mel Watt roots in his public statements and policies as a US Representative. While in Congress he steadfastly supported lending quotas to unqualified borrowers, and after [Read More...]

Dec 172013
Short sales detered as tax forgivness terminates

Borrowers will pay taxes on forgiven mortgage debt starting next year. Ordinarily, the IRS considers forgiven debt a form of income, which it is. In 2007 Congress passed the Mortgage Foreclosure Debt Forgiveness Act which allowed borrowers who short sell their houses to avoid taxation on forgiven debt. Many borrowers availed themselves of this tax break and extricated themselves from a bad housing situation. In the future, borrowers in similar circumstances will owe enormous tax bills if they receive any mortgage debt forgiveness. End of mortgage-fix break could mean big tax bills By Les Christie @CNNMoney December 6, 2013: 10:14 [Read More...]

Dec 162013
Coastal California housing markets whacked by lower FHA loan limits

Late Friday afternoon, in an attempt to bury an important story, the department of Housing and Urban Development (HUD) directed the Federal Housing Administration (FHA) to lower loan limits in high-priced markets. On January 1, 2014, borrowers will be limited to $625,500 loans in Coastal California. This surprise move will affect houses priced in the $650,000 to $800,000 price range. Borrowers looking to borrower more than $625,500 must use jumbo financing, which usually requires at least 20% down and higher FICO scores. Previously, a potential buyer of a $765,000 home only needed a $35,250 down payment to complete the sale. [Read More...]