Monthly Archives: July 2016

Equal bad news for housing

In fact, even his website changed in regards to its immigration focus. Now, instead of telling stories of illegal immigrants who were rapists and the lives they destroyed, which is what it said before, it simply puts down his plan and outlines what he will focus on as president.

Still, 2 to 3 million people is no small amount to remove from the economy, and could have disastrous consequences. Since the election, Trump’s focus has been on those who have a criminal history, he never said he wouldn’t deport others.

From his website:

All immigration laws will be enforced – we will triple the number of ICE agents. Anyone who enters the U.S. illegally is subject to deportation. That is what it means to have laws and to have a country.

A mass deportation of this kind could greatly increase the foreclosure rate, at a time when it was just getting back to pre-crisis levels.

During the housing crisis, Hispanics had a higher foreclosure rate than any other race, partially due to the sudden increase in deportation, more than 3 million undocumented immigrants, from 2005 and 2013, according to an article by Emily Badger for The New York Times.

A study from Migration Policy Institute, Pew Research Center, Warren and Warren and Goldman Sachs Global Investment Research shows that during those years illegal immigration stopped and even reversed as more left the country that came in during some years.

From the NYT article:

New research now suggests that the deportations helped exacerbate foreclosures. Counties that collaborated with ICE in what became a large-scale deportation sweep experienced a surge in foreclosures of homes owned by Hispanics, according to a study by Jacob Rugh and Matthew Hall published Thursday in the journal Sociological Science. They argue that the roundups help explain why Hispanics faced the highest foreclosure rates during the housing crash — even among households with legal residents and American citizens.

Actually, it makes sense. About 85% of those deported were working males. Taking them out of the picture would cause the rest of the household to struggle to make mortgage payments.

From the article:

Such sizable effects are possible because of an often-overlooked dynamic in Hispanic households: Many undocumented immigrants live in — and contribute income to — households with legal residents. In those 42 counties [counties that signed on to the 287(g) program from 2005 to 2012], for example, the researchers estimate that nearly three-quarters of the 1.2 million households with at least one undocumented adult immigrant also contained a documented adult household member. And about a third of all undocumented immigrants in those counties lived in owner-occupied homes.

But foreclosures aren’t the only area that would be affected. The construction sector shows the second-highest number of undocumented workers at 1.1 million.

While I am not making a case for or against undocumented workers being allowed to stay in the country, as with all major economic decisions, this is a policy that should be considered carefully, with attention placed in all possible outcomes and consequences of the actions taken.

Flipping of home are comes down

A home flip is a house sold in an arm’s length sale for the second time within a 12-month period based on publicly recorded sales deed data collected by ATTOM Data Solutions in more than 950 counties accounting for more than 80% of the U.S. population.

The number of homes flipped decreased from a six-year high of 53,892 in the second quarter this year and from 49,305 homes last year to 45,718 in the third quarter.

“While the macro trends of low housing inventory and rising home prices are favorable for flippers, they are also a double-edged sword, attracting more competition and reducing the availability of deals — particularly in the most fundamentally sound local markets,” ATTOM Senior Vice President Daren Blomquist said.

“This is chasing some investors into markets and neighborhoods that may be less fundamentally sound but also offer more value-add opportunities for flippers in the form of aging housing inventory,” Blomquist said.

Of the homes flipped in the third quarter, 67.9% were purchased with cash, down from 68.2% last quarter and from 69% last year. In fact, the number of home flippers buying in cash reached its lowest level since the third quarter of 2008.

The biggest rent hikes

In previous reports, the Sun Belt dominated the list, especially Florida and California. But in this report, RentRange identified a new emerging rental rate trend in the Rust Belt in areas like Pittsburgh, St. Louis and a trio of Ohio markets: Cleveland, Cincinnati and Canton.

“The emergence of rental rate increases in several Rust Belt markets is creating a unique opportunity for single-family rental market investors to pursue both property value increases and high yields,” said Wally Charnoff, CEO of RentRange Data Services.

“For years, the Rust Belt has produced strong yields, but tepid property price appreciation has kept rents relatively flat, forcing investors to choose between property appreciation or yield,” Charnoff said.

But now, he explained that strengthening economies in those markets combined with below average inventory and home-buying challenges, such as home buyers struggling to obtain mortgages, are creating the perfect environment for rental investors.

Millennials are helping fuel the single-family rental market since many are prolonging buying a home.

According to Mark Fleming, chief economist for First American Financial Corporation, since the beginning of the recession, the amount of rental households has increased by 22%, meaning there are 8.4 million new rental households.

As the biggest demographic group in American history, Millennials, finishes their education and gets jobs, they are naturally doing what so many generations before them have done, renting a place to live, he noted.

They won’t stay renters forever though as surveys suggest that the dream of homeownership is far from tarnished, just possibly delayed.

Home sales increase

However, home sales in the Bay Area increased in November by 10% from last year. While they still decreased 6% from October to November, this is compared to the four-year average decrease of 16% during that time.

Sales of homes priced between $2 million and $3 million saw substantial growth of 38% from last year. Home sales of those priced between $1 million and $2 million saw the second-highest jump of 26% annually.

However, the median home price of $785,000 in the Bay Area remained unchanged from last month, but did increase 8% from last year. Some counties, Napa, Marin and San Francisco, saw annual decreases of 4%, 5% and 1% respectively. However, Napa’s home prices peaked in November 2015, which is part of the reason for the annual decline.

November also reversed the downward spiral of the number of listings sold above asking price with an increase of four percentage points in some areas. Homes priced above $3 million saw the most increase in homes sold over asking price with an increase of 10 percentage points from last month.

However, this increase does not seem to be permanent, but rather, a reaction to higher interest rates.

“The spike in activity was in large part due to increasing mortgage rates following the election and anticipation over further hikes — particularly in light of the belief that the Fed is going to raise interest rates at its December meeting,” Selma Hepp, Pacific Union chief economist and vice president of business intelligence, said in her analysis. “Buyers may continue to feel pressure to take advantage of current rates ahead of future increases.”

Borrowers facing foreclosure

The state of New York is taking the next step in its fight against abandoned foreclosures and neighborhood blight by unveiling a consumer bill of rights for borrowers facing foreclosure.

The consumer bill of rights is part of series of “sweeping” new laws announced by the state earlier this year designed to reform the state’s foreclosure process and address the state’s issues with abandoned foreclosures, also called zombie homes. New York has one of the longest foreclosure timelines in the nation, averaging 1,070 days to foreclose in the third quarter.

According to the office of New York Gov. Andrew Cuomo, the new laws combat the blight of vacant and abandoned properties by expediting the rehabilitation, repair and improvement of these properties, and enable the state to assist homeowners facing foreclosure.

Additionally, the new laws also impose a pre-foreclosure duty on banks and servicers to maintain zombie homes, create an electronic registry of abandoned properties, and expedite foreclosure for vacant and abandoned properties to get those houses back on the market.

Included among the tenets of New York’s new laws is the establishment of a bill of rights for consumers facing foreclosure, which Cuomo and the New York Department of Financial Services introduced Wednesday.

The consumer bill of rights, which can be read in full here, reminds consumers of the various rights they have before, during, and after the foreclosure process.

First and foremost, the bill of rights tells consumers that they can and should seek the assistance of a lawyer or a housing counselor if they are facing a foreclosure in New York.

The bill of rights also tells borrowers that they have the right to stay in their home during the foreclosure process.

“You have the right to stay in your home and the duty to maintain your property unless and until a court orders you to vacate,” the bill of right states.

“If you abandon your home, the plaintiff (bank or mortgage servicer) may be able to foreclose on your property through an expedited process in court,” the bill of rights continues. “To prevent this outcome, stay in your home and carefully review and respond to documents you receive from the plaintiff or the court in your foreclosure case. A failure to respond or appear in court when required to do so could make it easier for the plaintiff to show that your property is vacant and abandoned, which could put you at risk of an expedited foreclosure.”

The bill of rights also walks borrowers through the various steps of the foreclosure process and their rights throughout, including their legal options and their right to seek “loss mitigation” options.

Again, click here for the full consumer bill of rights.

“These reforms help ensure New Yorkers at risk of foreclosure know their rights, that banks and mortgage servicers are held to their obligations, and that neighborhoods across the state are protected from the blight of zombie properties, which threaten property values, as well as public safety,” Cuomo said. “These steps will help protect the quality of life in our communities and preserve the American Dream in New York.”

Additionally, the New York Department of Financial Services finalized the new regulations it proposed earlier this year as part of the state’s new foreclosure laws.

Under the state’s new laws, lenders and mortgage servicers must complete an inspection of a property subject to delinquency within 90 days and must secure and maintain the property where the bank or servicer has a reasonable basis to believe that the property is vacant and abandoned, in addition to other requirements.

“DFS is proud to put this vital legislation, signed by Gov. Cuomo, into action with this final regulation and new Consumer Bill of Rights,” NYDFS Superintendent Maria Vullo said. “Homeowners will now be armed with the information they need to better navigate the foreclosure process and entire communities will be provided assistance and protection with this final regulation in place.”