Sunday, April 15, 2018

MAJOR CALIFORNIA HOUSING BILL NARROWED BEFORE ITS FIRST LEGISLATIVE DEBATE

Source: The Los Angeles Times


Ahead of its first legislative committee hearing scheduled for next week, a Bay Area lawmaker has narrowed his bill aimed at building more housing near transit across California.

Making sense of the story:Under the newly amended Senate Bill 827 from Sen. Scott Wiener (D-San Francisco), cities would be allowed to restrict building heights to four or five stories, down from a maximum of eight stories, within a half-mile of rail and ferry stops. Wiener also limited changes surrounding bus stops.

The new version of the bill wouldn’t mandate height increases around bus stops, insteadallowing for increased density and lower parking requirements. It also would apply only at bus stops with frequent service throughout the day, rather than just during rush hour.

SB 827 tries to address the state’s longstanding shortage of homes and a push by climateregulators to build near mass transit through dramatically changing development rules,particularly in the state’s largest metropolitan areas. Earlier versions of the bill would haveaffected nearly all of San Francisco and, according to a Times analysis, about 190,000 parcels currently zoned for single-family homes in Los Angeles — roughly half such parcels in the city.

Additional changes to the bill made this week try to address concerns relating to the promotion of gentrification. All projects greater than 10 units will have to set aside a portion for low- income residents. It further restricts the demolition of rent-controlled or formerly rent- controlled properties. And the developers will have to provide monthly recurring transit passes to all residents at no cost.

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DEBT-TO-INCOME RATIOS RISING AMONG BUYERS

Source: Realtor Mag

About one in five conventional mortgage loans issued this winter went to borrowers who spent more than 45 percent of their monthly incomes on their mortgage payment and other debts. This is the highest proportion since the housing crisis, according to CoreLogic, a real estate data firm. Further, that is nearly triple the proportion of such loans issued in 2016 and the first half of 2017.

Real estate professionals told WSJ that they are concerned a growing number of buyers are becoming priced out of the housing market. Besides rising home prices, the average 30-year fixed-rate mortgage has increased to 4.40 percent, compared to 3.95 percent at the beginning of the year, according to Freddie Mac.

Rising mortgage rates “are working against affordability and that’s why you get the pressure to ease credit standards,” says Doug Duncan, Fannie Mae’s chief economist. That's leading mortgage financing giants Fannie Mae and Freddie Mac to test programs aimed at making homeownership more affordable. For example, they’re experimenting with backing loans made by lenders who agree to help pay down a buyer’s student loan debt or programs that ease standards so that self-employed borrowers can get a mortgage more easily. Also, last summer, Fannie Mae and Freddie Mac started to back a greater number of loans from borrowers with debt-to-income ratios of up to 50 percent (45 percent was usually the typicallimit prior). Fannie’s new policy has added 100,000 new mortgages that wouldn’t have otherwise beenmade last year and early this year, according to the Urban Institute.

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WHY BUYING A HOUSE TODAY IS SO MUCH HARDER THAN IN 1950

Source: Curbed

In 2016, millennials made up 32 percent of the homebuying market, the lowest percentage of young adults to achieve that milestone since 1987. Nearly two-thirds of renters say they can’t afford a home.

Even worse, the market is only getting more challenging: The S&P CoreLogic Case-Shiller National Home Price Index rose 6.3 percent last year, according to an article in the Wall Street Journal. This is almost twice the rate of income growth and three times the rate of inflation. Realtor.com found that the supply of starter homes shrinks 17 percent every year

It’s not news that the homebuying market, and the economy, were very different 60 years ago. But it’simportant to emphasize how the factors that created the homeownership boom in the ’50s—widespread government intervention that tipped the scales for single-family homes, more open land for development and starter-home construction, and racist housing laws and discriminatory practices that damaged neighborhoods and perpetuated poverty—have led to many of our current housing issues.

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Friday, March 23, 2018

CALIFORNIA HOUSING MARKET BOUNCES BACK IN FEBRUARY

Source: World Property Journal 

According to the California Association of Realtors, led by the San Francisco Bay region, California home sales registered healthy gains in February 2018 on both a monthly and annual basis after January's weak start.

Making sense of the story: 

• Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 422,910 units in February, according to information collected by C.A.R.

• The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

• February's sales figure was up 3.3 percent from the revised 409,520 level in January and up 5.4 percent compared with home sales in February 2017 of a revised 401,060. The year-to-year increase was the largest since March 2017, and the month-to-month increase was the largest since June 2017.

• "February's solid market performance was likely fueled by rising interest rates, which motivated buyers to rush in and close escrow before rates move even higher as they're anticipated to do in the coming months," said C.A.R. President Steve White. "Despite losing ground in January, February's strong sales gain more than covered the loss, resulting in a 1.1 percent increase so far this year."

• While the statewide median price slipped from January, it continued to grow at a strong year- over-year pace and has remained above the $500,000 mark for a full year. The $522,440 February median price was down 1.0 percent from January's $527,780 and was 8.8 percent higher than the revised $480,270 recorded in February 2017. The year-over-year price gain has been growing at or above 7 percent for eight of the past nine months.

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http://www.worldpropertyjournal.com/real-estate-news/united-states/laguna-beach/california- home-sales-report-2018-median-home-prices-in-california-los-angeles-home-sales-san- francisco-home-prices-california-association-of-realtors-10801.php

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FEDERAL RESERVE RAISES INTEREST RATES FOR FIRST TIME IN 2018

Source: Housing Wire

As expected, the Federal Reserve announced Wednesday that it is increasing the federal funds rate for the first time in 2018. 

Earlier this year, observers placed the likelihood of the Fed increasing rates by 25 basis points at the end of its March meeting at more than 75%.

And Wednesday, that’s just what the Fed did.

Citing the strength of the economy, the Federal Open Market Committee voted to increase the target range for the federal funds rate to between 1.5% and 1.75%.

Previously, the target range was 1.25% to 1.5%.

“Information received since the Federal Open Market Committee met in January indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate,” the Fed said in a statement.

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FREDDIE: ‘ADULTING’ BARRIERS HOLD BACK HOUSING

Source: Realtor Mag

“Adulting” is getting harder for younger generations, which is stymieing the housing market from reaching its full potential, according to Freddie Mac’s latest March Insight report. The report compares young adults to previous generations and the impact to household growth.

“For today’s young adults, ‘adulting’ is hard because the economic environment has been tough in recent years; wage growth has been weak and housing costs have risen rapidly,” researchers note in the report. “On top of that, education and health care costs have skyrocketed.”

Compared to 2000, the average annual expenditures of young adults in 2016 has jumped 36 percent. The average annual expenditures on health care and education have more than doubled, according to the report.

Housing costs and labor market outcomes are the two biggest factors behind the decline in household formation rates among young adults, according to the insight report. From 2000 to 2016, real median home prices rose by 29 percent. However, young adult per capita incomes increased by only 1 percent. Further, the labor force participation rate for young adults has seen a “substantial decline in recent years, particularly for men,” researchers note.

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HOW THE ROLLBACK OF OBAMA-ERA FINANCIAL REGULATIONS COULD AFFECT YOU

Source: Realtor.com

A new banking bill won’t just impact the big banks like Chase and Wells Fargo — if it becomes law, it will impact most Americans too.

The Senate approved a bill last week that will roll back some aspects of the Dodd-Frank banking reform bill, which was passed in 2010 after the financial crisis. It will make many small and midsize banks exempt from parts of Dodd-Frank. The bill was sponsored by Mike Crapo, a Republican senator from Idaho. It will now move to the House, where it could be amended further.

Under the new rules, smaller banks (those with less than $250 billion) won’t have to participate in yearly Federal Reserve “stress tests” that determine where they’re equipped to handle economic and market downturns. Those smaller banks say they would get relief from restrictive rules and that will encourage more lending.

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