Category Archives: Housing

The Evolution Of Mortgage Policy, 1970-1999

“A Crack in The Foundation?” Part 2: Three Decades of Red Flags — Mortgage Policy & Praxis, 1970-1999

Welcome to “A Crack in the Foundation?”, a four-part series in which Maxwell Digital Mortgage Solutions will examine the evolution of the mortgage industry and homeownership in America, with an eye on government policies and how GSEs can promote (or prohibit) periods of economic growth.

Part 2 begins at the start of the 1970s and follows the uneasy path of government policy and economic turmoil as we creep towards the end of the century. (Missed Part 1? Read it here).  This section will follow the astronomical growth in the secondary market, the mounting government pressure put on Fannie and Freddie to increase their offerings to lower- and moderate-income borrowers, as well as a widespread shift towards deregulation in the market that (spoiler alert) will prove to have disastrous consequences as the new millennium begins.

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California’s Housing Bubble’s So Bad, 100s Forced To Live On Boats

California’s housing affordability crisis is getting worse. Affordability in San Francisco is now at 10-year lows, and only one in five households can afford to purchase a median-priced single-family home in the Bay Area. The crisis has driven many people onto the water, living on makeshift boats, outside marinas, and wealthy communities.

Sausalito officials and other agencies have been stepping up efforts to manage ‘anchor out’ mariners and floating debris in Richardson Bay. (Robert Tong/Marin Independent Journal)

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The Evolution Of Mortgage Policy, 1930-1960

“A Crack in The Foundation?” Part 1: Fannie & Friends — The Evolution of Mortgage Policy from 1930-1960

Welcome to “A Crack in the Foundation?”, a four-part series in which Maxwell Digital Mortgage Solutions will examine the evolution of the mortgage industry and homeownership in America, with an eye on government policies and how GSEs can promote (or prohibit) periods of economic growth.

Part I starts at the turn of the 20th century and traces the establishment of the Federal Housing Administration (FHA), as well as the birth of Fannie and Ginnie, to look at the inception of the modern mortgage and its impact on home ownership.

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Attention Millennials: You Can Now Buy Tiny Homes On Amazon

One of the main goals of the Federal Reserve’s monetary policies of the past decade was to generate the “wealth effect”: by pushing the valuations of homes higher, would make American households feel wealthier. But it didn’t. Most Americans can’t afford the traditional home with a white picket fence around a private yard (otherwise known as the American dream), and as a result, has led to the popularity of tiny homes among heavily indebted millennials.

Tiny homes are popping up across West Coast cities as a solution to out of control rents and bubbly home prices, also known as the housing affordability crisis.

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Amazon has recognized the hot market for tiny homes among millennials and has recently started selling DIY kits and complete tiny homes.

One of the first tiny homes we spotted on Amazon is a $7,250 kit for a tiny home that can be assembled in about eight hours.

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A more luxurious tiny home on the e-commerce website is selling for $49,995 +$1,745.49 for shipping. This one is certified by the RV Industry Association’s standards inspection program, which means millennials can travel from Seattle to San Diego in a nomadic fashion searching for gig-economy jobs.

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Those who want a 20 ft/40 ft expandable container house with solar energy, well, Amazon has that too. This tiny home has it all: a post-industrial feel using an old shipping container, virtue signaling with solar panels, full bathroom, and a kitchen to make avocado and toast.

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With almost two-thirds of Millennials living paycheck to paycheck and less than half of them have $500 in savings, we’re sure this lost generation could afford one of these trailers tiny homes with their Amazon credit card. Nevertheless, the tiny home craze among millennials is more evidence that living standards are collapsing.

Source: ZeroHedge

Gavin Newsom Wants To Fix California’s Housing Crisis. So What Are His Options?

Gov. Gavin Newsom says California’s housing affordability crisis is so severe that he wants a bit of everything to solve it.

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California Governor Gavin Newsom and Megan Colbert compare notes on raising toddlers as she shares her struggles as a single parent while talking about affordable housing issues on Tuesday, March 26, 2019 in Sacramento. Newsom held a round table discussion to address housing affordability and rising rents. Renée C. Byer rbyer@sacbee.com

That means seeding construction for millions of new residences, opening the door to a new rent control law and finding ways to protect low-income families from eviction.

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Where Home Prices Are Rising the Fastest (Slowest) In America

Since the end of the great recession, home prices in America have rebounded substantially. Since the dark days of 2009, prices have steadily climbed and are up over 50% on average from the lowest point.

This is great news for homeowners whose homes may be worth more than their pre-recession values, but less great news for homebuyers who can afford less house for the dollar. What’s more is that in some places, home prices have spiked much faster than average, while in other places, home prices have remained depressed.

So where in America are home prices increasing the fastest and the slowest? In light of fluctuating mortgage interest rates, tax reform that’s limited many homeowner deductions, and an affordability crisis in many urban areas, along with Priceonomics customer RefiGuide.org thought we’d dive deeper into the home price data published, aggregated and made available by Zillow.

Over the last year, the median home prices increased the fastest at the state level in Idaho, where prices increased by a staggering 17.2%. In just two states did home prices actually fall last year (Alaska and Delaware). The large cities with the fastest home appreciation were Newark, Dallas, and Buffalo where prices increased more than 15% in each place. The large city where prices decreased the fastest was Seattle, where home prices actually fell 2.4%.

Lastly, we looked at the expensive markets (where homes cost more than a million dollars) that had the highest price appreciation. St. Helena, CA, Quogue, NY and Stinson Beach, CA all had prices increase over 20% last year.

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For this analysis, we looked at data from the beginning of March 2019 compared to prices one year earlier. We looked at Zillow’s seasonally adjusted median price estimate as published by Zillow Research Data.

Nationally, home prices increased 7.2% last year or about $15,000 more than the year before. However, in some states prices spiked much more than that.

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Idaho leads the country with home prices increasing by 17.2% last year, driven by strong demand in the Boise market. In Utah the impact of a thriving economy and growing population is that prices increased 14% in just one year. Nevada, likewise is seeing strong home price growth as people migrate from California and the state’s low taxes are more favorable under the most recent tax reform. Alaska and Delaware have the distinction of being the only states where home prices fell over the last year.

Next, we looked at home prices in the top one hundred largest housing markets, as measured by population. Which cities were experiencing rapid home equity appreciation and which ones are not? 

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At the city level, home prices have increased the fastest in Newark, NJ where prices have increased more than 17% as buyers who are priced out of New York City have purchased in this area. Dallas, a city with a strong economy and low taxes has seen home prices increase nearly 17% as well.

Notably, some of the most expensive and desirable cities like Seattle, Oakland and Portland have seen their prices decrease in the last year. Each of these locations has experienced price appreciation during this decade, however.

Were there any smaller cities and towns that experienced home prices rising faster than the big cities? Below shows the fifty places in the United States where home prices increased the most this last year:

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Across the Midwest and South, numerous smaller cities experienced price appreciation much greater than 25% last year. In Nettleton, MS prices increased 49% in just one year! Notably, almost none of these high-price growth cities are located on the coasts.

Lastly, what are expensive places to buy a home in America that are just getting more expensive? To conclude we looked at locations where the median home price was over one million dollars and the prices keep rising:

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In this rarefied group, prices increased the most in Saint Helena, CA. In this tony town in Napa Valley, prices increased over 25% last year. In second place was Quogue, NY a town in the Hamptons. In fact, 9 out of the top 10 expensive cities with high price appreciation are in California or New York. More specifically, many of these locations are in the vicinity of San Francisco and New York City, the two very large economic engines that are driving home prices.

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After nearly a decade of vibrant stock market and real estate returns, this year home prices have continued to climb at a steady clip. In only two states in America did prices actually fall, and in five states prices grew more than 10% in a year. As the economy has continued roaring, places that were once known for being affordable like Idaho, Utah, and Nevada have seen home prices spike. While expensive cities like Seattle, Portland and Oakland have seen prices level off in the last year, and places like Newark, Dallas and Buffalo have become less affordable. In this stage of American economic expansion, the once affordable places are seeing their prices escalate.

Source: ZeroHedge | by Priceonomics

Mapped: The Salary Needed To Buy A Home In 50 U.S. Metro Areas

Over the last year, home prices have risen in 49 of the biggest 50 metro areas in the United States.

At the same time, mortgage rates have hit seven-year highs, making things more expensive for any prospective home buyer.

With this context in mind, today’s map comes from HowMuch.net, and it shows the salary needed to buy a home in the 50 largest U.S. metro areas.

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The Least and Most Expensive Metro Areas

As a reference point, Visual Capitalist’s Jeff Desjardins points out that the median home in the United States costs about $257,600, according to the National Association of Realtors.

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With a 20% down payment and a 4.90% mortgage rate, and taking into account what’s needed to pay principal, interest, taxes, and insurance (PITI) on the home, it would mean a prospective buyer would need to have $61,453.51 in salary to afford such a purchase.

However, based on your frame of reference, this national estimate may seem extremely low or quite high. That’s because the salary required to buy in different major cities in the U.S. can fall anywhere between $37,659 to $254,835.

The 10 Lowest Cost Metro Areas

Here are the lowest cost metro areas in the U.S., based on data and calculations from HSH.com:

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After the dust settles, Pittsburgh ranks as the cheapest metro area in the U.S. to buy a home. According to these calculations, buying a median home in Pittsburgh – which includes the surrounding metro area – requires an annual income of less than $40,000 to buy.

Just missing the list was Detroit, where a salary of $48,002.89 is needed.

The 10 Most Expensive Metro Areas

Now, here are the priciest markets in the country, also based on data from HSH.com:

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Topping the list of the most expensive metro areas are San Jose and San Francisco, which are both cities fueled by the economic boom in Silicon Valley. Meanwhile, two other major metro areas in California, Los Angeles and San Diego, are not far behind.

New York City only ranks in sixth here, though it is worth noting that the NYC metro area extends well beyond the five boroughs. It includes Newark, Jersey City, and many nearby counties as well.

As a final point, it’s worth mentioning that all cities here (with the exception of Denver) are in coastal states.

Notes on Calculations

Data on median home prices comes from the National Association of Realtors and is based on 2018 Q4 information, while national mortgage rate data is derived from weekly surveys by Freddie Mac and the Mortgage Bankers Association of America for 30-year fixed rate mortgages.

Calculations include tax and homeowners insurance costs to determine the annual salary it takes to afford the base cost of owning a home (principal, interest, property tax and homeowner’s insurance, or PITI) in the nation’s 50 largest metropolitan areas.

Standard 28% “front-end” debt ratios and a 20% down payments subtracted from the median-home-price data are used to arrive at these figures.

Source: ZeroHedge