As the clock ticks down on dealing with the nation’s debt ceiling, nervous investors speculate on impact the political resolution will have on cheap interest rates that have kept the feeble housing industry on life support. Freddie Mac reports that lending rates are slightly up but steady.
A new study by the Pew Research Center shows that the widening wealth gap between whites and minorities is largely due to the crashed housing market.
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Debt Drama Could Be Another Blow To Housing
By Chris Arnold NPR July 21, 2010
Members of Congress appear closer to reaching a deal in the ongoing drama over raising the nation’s debt ceiling. The economic stakes are high, and top investors and executives at major companies have been putting increasing pressure on lawmakers to strike a deal.
Take the housing market for example: Industry insiders there worry that if the political theatrics continue much longer, that could spook investors, drive up interest rates, push down home prices and hurt the economy.
Right now, interest rates are low, and that means the government can borrow money cheaply to finance its huge debt load. Likewise, many home buyers can get low mortgage rates, which is a rare bright spot for the beaten down housing market.
“Rates are unbelievable, they’ve been unbelievable for a while,” says Patrick Fortin, who runs Century 21 Commonwealth in Boston. “It’s a huge factor, it’s kept the market from being in much worse shape.”
Mortgage rates holding steady, Freddie Mac says
Los Angeles Times July 21, 2011
There’s been little change in home mortgage interest rates this week, with no clear trend in economic and housing data to affect the cost of loans, Freddie Mac says.
The widely watched weekly survey by the government-controlled mortgage finance company showed lenders were offering 30-year fixed-rate loans at an average of 4.52%.
The 15-year fixed mortgage was at 3.66%, Freddie’s survey, released Thursday morning, showed.
That was up from 4.51% and 3.65% a week earlier — a statistically insignificant move.
Borrowers would have needed solid credit and 20% down payments or home equity to obtain the loans, and would have paid 0.7% of the loan amount to the lenders in fees and points, Freddie Mac said.
The survey asked lenders about the terms they were offering for popular loans. Industry participants say solid borrowers who shop around often can negotiate slightly better deals. And of course paying additional points up front can bring down the rate.
Study Shows Racial Wealth Gap Grows Wider
By Pam Fessler NPR July 26, 2011
There’s long been a big gap between the wealth of white families and the wealth of African-Americans and Hispanics. But the Great Recession has made it much worse — the divide is almost twice what it used to be.
That’s according to a new study by the Pew Research Center, which says that the decline in the housing market is the main cause.
The numbers are astounding. The average wealth of a white family in 2009 was 20 times greater than that of the average black family, and 18 times greater than the average Hispanic family. In other words, the average white family had $113,149 in net worth, compared to $6,325 for Hispanics and $5,677 for blacks.
That’s the largest gap since the government began collecting the data a quarter of a century ago, and twice what it was before the start of the Great Recession.
Real Estate Downturn
Rakesh Kochhar, one of the authors of the report, says white households went into the recession in a much stronger position and, as a result, were better able to weather the storm.
One reason was investment in real estate. Minority families had most of their wealth in their homes, so when the housing bubble burst, Kochhar says, those households took a bigger hit.
“Especially Hispanics, for example. Sixty-six percent of their net worth derives from home equity,” Kochhar says. “And they are concentrated geographically in parts of the country such as California, Arizona, Florida and Nevada, where the housing downturn was most severe.”
The result is that the average Hispanic family lost two-thirds of its wealth between 2005 and 2009, according to the Pew report. Black families lost more than half of theirs.
Wells Fargo to pay $85 million to settle charges that it steered people toward risky mortgages
Washington Post July 21, 2011
WASHINGTON — Wells Fargo & Co. has agreed to pay $85 million to settle civil charges that it falsified loan documents and pushed borrowers toward subprime mortgages with higher interest rates during the housing boom.
The fine is the largest ever imposed by the Federal Reserve in a consumer-enforcement case, the central bank said Wednesday.
Wells Fargo, the nation’s largest mortgage lender, neither admitted nor denied wrongdoing as part of the settlement. The bank agreed to compensate borrowers who were steered into higher-priced loans or whose income was exaggerated.
The Fed said Wells Fargo inflated borrowers’ incomes on loan documents to qualify for mortgages they otherwise couldn’t afford from 2004 until 2008. Wells Fargo sales personnel also pushed borrowers toward higher-interest, subprime loans, even though they were eligible for lower-interest mortgages, the central bank said.
Between 3,700 and roughly 10,000 people could be compensated under the settlement, the Fed said. The payments will likely range from $1,000 to $20,000.
Central Texas existing home sales up 9 percent in June; median price still at $205,000
By Shonda Novak Austin American-Statesman July 21, 2011
Sales of existing homes in Central Texas climbed 9 percent in June, while the median price held steady at $205,000 as the local housing market continued to buck the trend of slower sales nationally.
But even with the improved numbers, local experts say the housing market still faces challenges and won’t fully rebound until consumers regain confidence and entry-level buyers have an easier time obtaining mortgages.
Buyers purchased 2,145 previously owned homes in June, compared with 1,962 in June 2010, the Austin Board of Realtors reported Wednesday.
“While (June) still felt the lingering effect of last year’s homebuyer tax credits, we are now able to return to a typical month-to-month comparison to gauge the trends in the real estate market,” said Judith Bundschuh, chair man of the Austin Board of Realtors. “Looking at the results, it’s encouraging to see that the demand for homes is strong and that Austin-area homes continue to hold their value.”
Writing code for more sustainable neighborhoods
A roundtable of interested parties has proposed a series of code changes to make urban density happen faster and with less hassle in Seattle. Here’s the backstory of the evolving package, by one of its architects.
By Chuck Wolfe Crosscut July 19, 2011
A recent joint announcement of recommended regulatory-reform measures for neighborhood development had Mayor Mike McGinn and Seattle City Council President Richard Conlin focusing on creating new jobs. That angle was the attention grabbing headline in the major media.
Ordinarily, reforms of urban land-use regulations come about after a lot of pushing and pulling by consultants and organized pressure groups. These reforms were different. They embraced community input by putting together a roundtable of interested parties to come up with some evolutionary Code updates, deriving from the issues de jour of recent years — including backyard cottages, revised approaches to multifamily development, parking requirements, street-level retail, and other arcane elements of urbanist lore.
This month’s joint announcement is the outcome of a six-month process, discussed in detail below. It meshes with a March 2011 City Council resolution adopting guiding principles for strengthening and growing Seattle’s economy and creating employment opportunities. The recommendations were released for public review and comment, due by July 25.
Why Homes in the Exurbs Aren’t Built to Last
Does it make any sense to buy a disposable house?
By Jeff Jamawat J-Magazine July 20, 2011
The next time you fly into DFW airport, have a look out the window. Somewhere down there—it could be Argyle or Double Oak or anywhere on the periphery of the North Texas sprawl—you’ll see half-built neighborhoods that look as if the assembly line simply stopped rolling. With names like Rambling Meadows, the developments have arbitrarily curved streets lined with tract homes, one after another. Different addresses, same house. What will become of these places in 20 years? How about 50? Quality, or lack thereof, is a major concern. The houses that sprung up near Sun Belt ring roads like algal blooms were not built to last. I have an architect friend named Robb Davis, of Frank Welch & Associates, who specializes in custom-built single-family homes. He tells me that in order to get houses up in three months rather than 12 to 18, builders use stock plans without giving much thought to layout. Rooms are huge because that means fewer walls, and walls cost money. The lumber is full of knots, and it’s softer than the old-growth timbers that were used to build houses 50 or 100 years ago. The result is that much of the tract housing stock in our exurbs won’t be standing in 30 years. And there’s lots of it.
Neighborhoods’ changing faces
Historically black areas in Houston are adapting to Latino growth
By Jeannie Kever Houston Chronicle July 25, 2011
John Branch has spent his life in Independence Heights, testament to his faith in the value of history. But if the past hasn’t changed, the future assuredly will.
So Branch and a dozen of his neighbors, most in their 50s and, like him, lifelong residents of the first incorporated African-American settlement in Texas, are taking Spanish, a recognition that Independence Heights, Sunnyside and other neighborhoods at the heart of African-American life here for more than a century are facing unprecedented demographic change.
“Me llamo Juan Antonio Branch,” he tells teacher Herminia Garcia, demonstrating the basic skills he will need in the coming years.
“I understand the demographics of the city,” said Branch, a self-employed contractor, acknowledging that Latinos soon will make up more than half of Houston’s population. “We have the history of being the first black city, but we’re not going to discriminate.”
$3.5M still in dispute
By Amanda Casanova Galveston County Daily News July 22, 2011
GALVESTON — A restriction on Community Development Block Grants could keep the Galveston Housing Authority from getting $3.5 million of a restricted $25 million allocation from the city. The housing authority, the organization in charge of rebuilding 569 public housing units, is meeting with city staff and others today to determine whether proposed uses of the $3.5 million conflict with a limitation on community development block grants. Previously, the housing authority said it needed the money for “soft costs” to start the rebuild. But the roughly $160 million community development block grant, awarded to the city to help rebuild from Hurricane Ike, allows the city to spend only 10 percent for services related to planning, predevelopment expenses and soft costs, according to the state. The city already has agreed to pay CDM, a consulting company, about $16 million for its work managing the disaster housing recovery program on the island. That 10 percent limitation is flexible, said Jim Suydam, press secretary for the Texas General Land Office, which has taken over management of disaster recovery programs from the Texas Department of Housing and Community Affairs. “It’s not a hard 10 percent,” he said.
Full story at: http://galvestondailynews.com/story/245770
Heat wave: How cities are trying to help the homeless survive
Cities from Lansing, Mich., to Boston are sending out street patrols with water and opening cooling centers to make sure homeless residents are cared for during the heat wave.
By Chloe Stepney Christian Science Monitor July 20, 2011
Boston- With a cooler full of ice and cold drinks in the trunk of her car, Joan Jackson Johnson is heading out onto the streets of Lansing, Mich., to help the homeless cope during the mounting heat wave.
An excessive heat warning might be in effect until 8 p.m. Friday, and the heat index might top 100 degrees, but many on the streets of Lansing “don’t believe that the hot weather can bother them,” says Ms. Johnson, director of human relations for the city.
But Johnson has been around long enough that, she says, “they believe me.”
Johnson’s efforts are just one example of how cities from the Midwest to the Northeast are preparing to help some residents who are at the greatest risk from the heat wave. Many of the states in this region are experiencing heat indices – the summer equivalent of wind chill – above 100 degrees through the weekend.