Fueled by record-low interest rates, housing sales surge beyond supply and send builders scrambling to restart and expand their operations. Meanwhile, the Obama Administration presses banks to use FHA programs reaching buyers with weaker credit records.
In Texas, a lemon law to hold builders more accountable for flawed structures runs into opposition from the homebuilders’ lobby and the scope is reduced to veterans’ housing.
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Obama administration pushes banks to make home loans to people with weaker credit
By Zachary A. Goldfarb Washington Post April 3, 2013
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Full story at: http://www.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html?tid=pm_pop
Analysis: Supply crunch to take steam out of home sales
By Lucia Mutikani Reuters April 3, 2013
A shortage of properties could take some edge off home sales during the spring selling season, but the housing market recovery should remain intact.
The stock of houses for sale has declined rapidly in recent months as both investors and ordinary Americans rush to take advantage of near record low mortgage rates.
The surge in demand for houses, thanks to an improving labor market and the Federal Reserve’s very accommodative monetary policy, is putting a firmer foundation under the economy as it deals with the headwinds from belt tightening in Washington.
In February, there were 1.94 million previously owned homes on the market, representing 4.7 months of supply. The inventory of new single-family homes available for sale during the same period was about 150,000, or 4.4 months’ worth.
A six months’ supply is normally considered as a healthy balance between supply and demand. With the busy spring selling season around the corner, realtors and economists are worried about the supply squeeze.
“If we don’t see more people listing their properties, I don’t think we will see the home sales volume increase that we are accustomed to seeing,” said Glenn Kelman, chief executive officer of online real estate group Redfin, based in Seattle.
Home prices rising, but troubles for housing market not over, poll says
Home prices notched their biggest year-over-year gains since before the recession. But tight credit and ‘under water’ mortgages constrain the market, a Christian Science Monitor poll finds.
By Mark Trumbull Christian Science Monitor April 3, 2013
As real as the housing recovery is, a new poll finds that home buying is still hampered significantly by challenges such as tight credit and a constrained supply of homes for sale.
And those hurdles are mirrored on the side of would-be home sellers. The poll finds that many are restrained by “under water” mortgages that make it hard to exit from their current home.
The Christian Science Monitor/TIPP survey, conducted last week, comes as home prices have been rising and as mortgage interest rates remain at historic lows.
Home prices in February were up 10.2 percent compared with 12 months earlier, according to a CoreLogic index released Wednesday. That’s the biggest year-over-year price gain since March 2006, prior to the recession.
Meanwhile, the average interest owed on new 30-year fixed-rate mortgages is just 3.76 percent, the Mortgage Bankers Association reported Wednesday in its weekly mortgage index report. That’s for loans with a 20 percent down payment, conforming balances ($417,500 or less), and “points” or fees equal to 0.43 percent of loan value.
US home prices rose in February by most in 7 years
By Christopher Rugaber Associated Press April 3, 2013
WASHINGTON — U.S. home prices jumped in February by the largest amount in seven years, evidence that the housing recovery strengthened ahead of the all-important spring-buying season.
Home prices rose 10.2 percent in February compared with a year earlier, CoreLogic, a real estate data provider, said Wednesday. The annual gain was the biggest since March 2006. Prices have now increased on an annual basis for 12 straight months, underscoring the recovery’s steady momentum.
The gains were broad-based. Prices rose in 47 of 50 states and in all but four of the nation’s 100 largest metro areas. Delaware, Alabama and Illinois were the only states to report price declines.
CoreLogic’s measure of national prices also rose 0.5 percent in February from January. That’s a solid increase during the winter months, when sales typically slow.
Proposed ‘lemon law’ for new homes would only cover vets
By Zeke MacCormack San Antonio Express-News April 9, 2013
Proponents of a statewide lemon law for new houses have lowered their sights, pushing legislation limited to honorably discharged veterans whose homes are defective.
House Bill 1887, the Texas Veteran Homebuyer Protection Act, would require builders to buy back their homes at full price if major problems are reported within 10 years of the original purchase and cannot be remedied in three repair attempts.
Legislators in several previous sessions have declined to make Texas the first state in the nation with a lemon law on new homes. State Rep. Joe Farias, D-San Antonio, who co-authored HB 1887, “felt that narrowing it to veterans would give it a better chance … because there is a lot of opposition out there,” from the home-building industry, said his chief of staff, Julianna Gonzaba.
A hearing is set for Tuesday in the House Business and Industry Committee.
The measure enjoys support among residents of Schertz and Cibolo, where foundation problems with dozens of relatively new homes — attributed largely to expansive soil — have caused heartaches for homeowners and headaches for municipal officials.
By Becky Nicolaides and Andrew Wiese New York Times April 6, 2013
A little pocket of Los Angeles County tucked into the foothills of the San Gabriel Mountains reflects a crucial facet of suburban life. There’s tiny, wealthy Bradbury, a town that prides itself on having one of the richest ZIP codes in Los Angeles, where a house is on the market for $68.8 million. A couple of miles to the east is Azusa. This modest suburb is more than two-thirds Latino, a town of working families whose incomes and home values are a sliver of the wealth nearby.
These towns represent extremes of social inequality, but in Los Angeles and other areas, they reflect a defining pattern of contemporary suburban life. Nationwide, rich and poor neighborhoods like these house a growing proportion of Americans, up to 31 percent compared with 15 percent in 1970, according to a recent study by Sean F. Reardon and Kendra Bischoff. Meanwhile, iconic middle-income suburbs are shrinking in numbers and prospects.
Today’s suburbs provide a map not just to the different worlds of the rich and the poor, which have always been with us, but to the increase in inequality between economic and social classes.
From the historian’s perspective, these patterns also reveal another truth about suburban places: their tendency to sustain and reinforce inequality. Bradbury and Azusa have maintained their spots in the top and bottom tiers of the Los Angeles suburbs for decades. The sociologist John
Developers Sarwal, Yeo get prison time for bank fraud in project at former Concordia site
By Shonda Novak Austin American-Statesman April 4, 2013
Austin developers Andy Sarwal and Fred Yeo will serve time in federal prison after admitting they conspired to commit bank fraud in connection with a $39 million loan to build an office building at the former Concordia University site.
On Wednesday, U.S. District Judge Barbara M. G. Lynn in Dallas sentenced Sarwal to 57 months in federal prison and Yeo to 42 months, according to an announcement by U.S. Attorney Sarah Saldaña of the Northern District of Texas. In addition, Lynn ordered Sarwal, 39, and Yeo, 51, to pay nearly $13.5 million in restitution. The two men must surrender to the Bureau of Prisons by 2 p.m. June 4.
Sarwal and Yeo pleaded guilty to conspiring to defraud U.S. Bank and Texas Capital Bank in connection with obtaining a construction loan for an 8-story office building at Interstate 35 and East Avenue, part of what Sarwal hoped would one day become a $750 million a large mixed-use development called University Park.