Will eminent domain start affecting Silicon Valley?

Richmond mortgage eminent domain battle expanding

Carolyn Said | SF Gate | December 9, 2013 | link
  • Patti Castillo, Kayla Castillo, reaching for the family dog, Chico, and Robert Castillo live in Richmond. Photo: Michael Short, The Chronicle
    Patti Castillo, Kayla Castillo, reaching for the family dog, Chico, and Robert Castillo live in Richmond. Photo: Michael Short, The Chronicle

For Patti and Robert Castillo of Richmond, using eminent domain to prevent foreclosures boils down to a simple reality.

“We are living paycheck to paycheck just to pay the mortgage,” Patti Castillo said. Reducing their principal through eminent domain “would help keep money in our pockets and let us stay in our house.”

Their mortgage on a modest house now worth half of the $420,000 they paid for it in 2005 is among 624 home loans that the city of Richmond has threatened to seize via eminent domain in an effort to restructure them to be more affordable.

While homeowners like the Castillos welcome the idea, the banking industry loathes the idea of municipalities forcibly seizing mortgages and is vigorously fighting the effort. Last week, the American Civil Liberties Union filed a lawsuit against the nation’s top housing regulator, seeking information on whether it’s been unduly influenced by the banking industry.

The Federal Housing Finance Agency in August threatened possible legal action against localities that pursue eminent domain for mortgages, and said it might bar Fannie Mae and Freddie Mac from backing new home loans in those areas.

Now the ACLU’s lawsuit seeks to uncover “the nature of (the FHFA’s) relationship with the financial industry,” said Linda Lye, a staff attorney at the ACLU of Northern California. “Its unusual and very aggressive stance raises potential questions of governmental integrity.”

An FHFA representative declined to comment.

The eminent domain plan, in which cities would forcibly acquire mortgages at discounts, then help homeowners refinance into smaller, more affordable home loans, is at heart a form of principal reduction, Lye said.

“Principal reduction is very mainstream; there have been calls for it from entities including the secretary of the Treasury,” she said. “Communities like Richmond particularly interested in principal reduction are disproportionately minority. The FHFA should be treading very carefully and looking at whether its conduct has an extra impact on communities of color. The general concern is that they would be effectively red-lined.”

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Muliti-family coming out strong in 2014…

Building Permits Surge is All Multi-Family

Jann Swanson | Mortgage News Daily | Nov 26 2013 | link

The Census Bureau and the Department of Housing and Urban Development are still playing catch-up from the government shutdown that squashed data reports through much of October.  Today they issued a combined September-October report on permits authorized for residential construction but have delayed the information on housing starts and housing completions that is usually a part of their residential construction summary until December 18.

Permits for residential construction issued in September were at a seasonally adjusted rate of 974,000, a 5.2 percent increase from the 926,000 permits reported in August.  The August number was revised upward from the 918,000 permits originally reported.

Permits in October were stronger still, at a seasonally adjusted rate of 1,034,000, an increase of 6.2 percent over September and 13.9 percent above the 908,000 permits issued in October 2012.

Single family permits in September were at a rate of 615,000 compared to 627,000 in August.  Single family permits in October were at a rate of 620,000, an increase of 0.8 percent.  October’s number was 8.8 percent higher than that of a year earlier. Multifamily permitting accounted for all of the gains, with September and October at rates of 359,000  3414,000 units respectively.  October represents a whopping 24 percent increase from a year earlier.

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Why buying yourself a home during the holidays is a great idea…

What You Need to Know About Buying a Home During the Holiday Season

Vera Gibbons | Zillow Blog | November 19, 2013 | link

For sale in winterIf you’re house hunting over the holidays, you’re likely a serious buyer with an immediate need.  Perhaps you have to relocate for a new job opportunity, or there’s been a change in your personal life? Regardless, while you may assume it’s not an ideal time to be looking — namely because there isn’t much to look at — there are some advantages to buying this time of year.

Less competition

Let’s start with the obvious one: less competition. This lowers the chances of multiple offers and bidding wars (something we saw a lot of last spring/summer), and should translate into a bigger discount for you. Know your market! This is where sites like Zillow come in handy. Start your research here for comps in your area and to see what homes are selling for.

Serious home sellers

Why would sellers pick such an inconvenient time — while everyone is busy entertaining family and friends and enjoying the spirit of the holidays  — to list their properties? Probably because they need to sell and may feel compelled to do so before the end of the year for tax purposes. What this means for you: less hassle when it comes to negotiating; a greater willingness, on the part of the seller, to agree to concessions; less chance of the seller waffling; and greater respect for your offer, even if it’s a little lower than the seller was perhaps expecting.

Faster mortgage approval

Lenders aren’t as busy this time of year, and less volume could mean faster approval. Some lenders might even be willing to reduce fees during the off-peak season in hopes of gaining your business. Regardless, don’t just go with the first lender who comes along. It pays to shop around. Get multiple quotes and check out lender reviews on Zillow Mortgage Marketplace.

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All in the family in the same house?

Together Again

Multigenerational Households on the Upswing

Constance Rosenblum | New York Times | December 13, 2013 | link

Danny Ghitis for The New York Times

Tupper Thomas shares a house in Brooklyn with her daughter Phaedra Thomas and her grandchildren Khadija and Teddy Benmakhlouf.

Khadija Benmakhlouf, wearing pink corduroys and a crimson shirt, is perched on a stool poring over her kindergarten math homework. Her grandmother, Tupper Thomas, who is curled up in a nearby armchair, offers encouraging shout-outs from the sidelines.

Around 5 o’clock, Khadija’s mother, Phaedra Thomas, bustles in from her job as a community development consultant in Red Hook with her son, Teddy, 3, whom she has picked up from day care. Within minutes the kitchen is flooded with an intoxicating aroma as lamb chops from the halal butcher down the street sizzle in the oven.

The two women moved into the two-family house in February, dodging workers as their contractor, the M & H Art General Construction Corporation, transformed the century-old home into a dwelling suitable for a 21st-century family.

“I’m a big believer in this sort of arrangement, maybe because it never happened for me when I was a parent,” said Tupper Thomas, a longtime resident of Park Slope who retired three years ago from a three-decade career as the president of the Prospect Park Alliance. “I didn’t have that mom person around.”

With several generations in residence, the Thomas household represents a housing model that social scientists are paying a lot of attention to these days, one that grows out of a phenomenon that economists call “shrinking households” or “missing households.” The terms refer to an arrangement not uncommon today among some ethnic groups and viewed as an encouraging throwback to the way many families lived decades ago.

The challenges of multigenerational families are considerable — witness the flood of recent books on how to navigate the situation — but the financial, practical and emotional benefits can be great.

The impetus for the growing number of such households is the recession that started in late 2007, whose lingering effects persist. During tough economic times, economists say, fewer new households are created than would be expected, because people are more likely to double up than strike out on their own. Statistically, they go missing.

Recent college graduates moving back home — so-called boomerang kids — are only part of the story. Whether prompted by a lost job, a house foreclosed or a sinking pension, grown children and their elderly parents are increasingly coming together under a single roof. Census figures show an uptick in the number of multigenerational families in New York.

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Foreign investors not playing as big a role as we thought…

Foreign Buyers Aren’t Playing A Key Role In The US Housing Recovery For 2 Reasons

Mamta Badkar | Business Insider  | link

Foreign buyers jumped into the U.S. housing market after the bubble burst. Since then it was argued that foreign buyers would help rescue the U.S. housing market.

Now, the National Association of Realtors’ (NAR’s) latest report on international home buying activity, shows that this isn’t the case. Citing their data Paul Diggle at Capital Economics writes:

“The survey covers the 12 months ending in March 2013, during which time foreigners not permanently resident in the US bought $34.8bn of residential property in the country, accounting for 3.2% of all transactions. That’s down from 4.4% in 2012 and a recent high of 4.6% in 2010.

“Moreover, this decline isn’t simply a function of greater activity in the market as a whole. The value of foreign transactions fell outright too, by 16% from $41.2bn in 2012. So why are foreign buyers proving peripheral to the housing recovery?”

And why is this the case? Rising home prices, along with weakening currencies and a slowdown in many of their economies, has curbed major purchases on their part.

“Since the start of 2011, however, currency movements have compounded house price gains to make US housing look more expensive for buyers from most of these countries. Over that period, the dollar has strengthened by 3% against the Mexican peso, 4% against the British pound and the Canadian dollar, 5% against the euro and 23% against the Indian rupee.?”

Diggle points out that China has been an exception with the renminbi rising 6% against the greenback since the start of 2011. And Chinese demand now accounts for 12% of foreign demand for U.S. homes, up from 5% in 2007.

Going forward Diggle doesn’t expect international demand to help the U.S. housing recovery in any significant way. He does however expect Chinese demand to persist, despite the slower pace of growth.

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‘Tis the season to list your home!

Why Sellers Shouldn’t Wait Until After the Holidays to List Homes

Brendan DeSimone | Zillow   | Dec 2nd 2013 | link


christmas cookies house in snow ...

By Brendon DeSimone

With the holidays approaching, sellers often wonder if they should keep their properties on the market or take them off? Or if they haven’t listed their homes yet, should they wait until after the first of the year? Maybe hold off until spring?

Conventional wisdom used to be that you shouldn’t even try to sell your home during the busy holiday season. Potential homebuyers were too preoccupied with attending parties, cooking meals, buying presents or planning vacations. With all that going on, there just wasn’t time to ride around with a real estate agent, looking at properties.

But with the Internet, smartphones, tablets and our always-on lifestyle, that conventional wisdom isn’t relevant anymore. The reality is, the homebuying season is now year-round. Here’s why you should consider listing your home during the holidays, or even in January.

Today’s buyers never stop looking online: Serious buyers are always looking — and the holidays are no exception. They may check out the latest listings in a Zillow Mobile app before bed or while waiting for the kids’ school holiday show to start. Our hectic lifestyles also play a role.

Many serious buyers today work hard. They don’t shift into holiday mode until the last minute. Even during the holiday break, they’re still squeezing in work. There’s no such thing for them as “going off the grid.” So why not continue to monitor real estate listings, too?

The inventory — and the competition — is usually lighter: Despite our always-on lifestyles, many sellers still believe buyers can’t be bothered to look for a home between, say, Thanksgiving and Valentine’s Day. At the same time, sellers who’ve had their homes on the market often take them off during the holidays. The net effect is that the inventory for good homes often tightens this time of year. So there’s less competition for sellers, at a time when motivated buyers are out there looking — and no doubt wishing there were more properties to see.

If you’ve been considering selling, are motivated, are flexible on timing and have a home that truly sparkles, after Thanksgiving there’s still a window of several weeks to get buyers into your home before the end of the year. And those buyers flipping through listings at their kids’ basketball game will be excited to see something new and awesome hit the market — especially if there’s a lack of good inventory in their area. These buyers will be motivated to see your home, regardless of what the calendar says.

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The new Bay Area normal…

Bay Area Housing Market Trending toward Normal

Jann Swanson | Mortgage News Daily | Nov 13 2013 | link

“Ho-hum” is the word DataQuick used to describe the housing market in California’s Bay Area last month.   A total of 7,595 new and resale houses and condos sold in October in the nine county area around San Francisco, an increase of 6.4 percent from 7,141 the month before and 3.9 percent lower than the 7,902 sold in October 2012.

Sales in October have averaged 8,553 in the years since 1988 when DataQuick started keeping records.  Last month was, therefore 11.2 percent below average.  The October range is from a low of 5,486 sales in 2007 and a high of 13,392 in October 2003.  Bay area sales have not exceeded the average in any month in more than seven years.

The median price paid for a home in the area in October was $539,750, up 1.8 percent from $530,000 in September, and up 29.7 percent from $416,000 in October 2012.   DataQuick estimated that about three-quarters of the 29.7 percent annual increase represented an increase in home values while the remainder was a factor of market mix – more mid- to high-end sales and fewer low-cost inland distressed sales.

The peak price in the area so far this year was $562,000 in July.  This was also the highest median price since December 2007.  Prices peaked in June and July 2007 at $665,000 and by March 2009 the median had fallen to $290,000.

“At different times in recent years we’ve had various peaks or troughs when it comes to sales volume, prices, foreclosure activity, cash sales, absentee-owner sales, various home loan options, you name it. All of these market components are now trending toward normal. We are still a ways away, but the market is slowly re-establishing equilibrium,” said John Walsh, DataQuick president.

“A lot of market drag can be attributed to skittish market participants, especially buyers and lenders. Comfort levels do rise with more stability and predictability – factors that could contribute to increased activity well into next year and beyond,” he said.

The number of homes sold for less than $500,000 dropped 26.4 percent year-over-year, while the number sold for more increased 15.9 percent, DataQuick reported.

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