Monday, April 30, 2007
Affluent Urban Markets Evading Subprime Slump
Subprime borrowers are rare in affluent markets because affordable homes are in short supply, says a recent Reuters article.
While home prices are falling in several sectors, properties in many desirable neighborhoods are still selling at astronomical levels, because housing stock is small while demand from affluent buyers is persistently high.
Even so, the article states that now, people are "buying for the long run."
Source: Reuters
While home prices are falling in several sectors, properties in many desirable neighborhoods are still selling at astronomical levels, because housing stock is small while demand from affluent buyers is persistently high.
Even so, the article states that now, people are "buying for the long run."
Source: Reuters
Thursday, April 19, 2007
About Where We Live
Home choices include:
Currently, says author Witold Rybczynski, about 90% percent of single-family houses in the United States are detached. He points out their advantages, including:
Rybczynski points out that "houses are not only investments, they are homes, and hence sources of personal pleasure and pride" and states that the decision to buy a house is emotional as well as financial.
He adds that people become richer, they spend more money on their homes. By 1970, four out of five new houses were either ranchers or splits. Today, in contrast, than one-third of new houses exceed 2,400 square feet.
- a free-standing house
- a house sharing common walls with its neighbors (such as a townhouse or "row house")
- and a courtyard house (often found in Spain and Asia)
Currently, says author Witold Rybczynski, about 90% percent of single-family houses in the United States are detached. He points out their advantages, including:
- light and air from all sides
- greater acoustic and visual privacy
- less danger of fire from neighboring buildings
- being able to pass from the front yard to the backyard without going through the interior
Rybczynski points out that "houses are not only investments, they are homes, and hence sources of personal pleasure and pride" and states that the decision to buy a house is emotional as well as financial.
He adds that people become richer, they spend more money on their homes. By 1970, four out of five new houses were either ranchers or splits. Today, in contrast, than one-third of new houses exceed 2,400 square feet.
Wednesday, April 18, 2007
Is Relief in Sight?
Three-fourths of the $600 billion of subprime mortgages in 2006 were sold by lenders and repackaged into bonds, says USA Today.
Federal Deposit Insurance Corp. (FDIC) Chair Sheila Bair is, to use her own words, "hold[ing] the [loan] servicers' and investors' feet to the fire," since it should have been clear that the loans were high-risk. The FDIC, Federal Reserve and other regulators asked lenders to work with homeowners, promising they will not face regulatory penalties for reasonable workouts. It urged them to work with consumer groups and to help borrowers avoid predatory restructuring scams.
But to do this requires working through complex tax and accounting rules that limit what servicers can do. For example, some bonds have a 5% cap on loan restructuring or are crafted in a way that some investors win and others lose if loans are changed.
Fannie Mae said yesterday that it will help borrowers refinance out of adjustable-rate mortgage (ARM) products or other loans. Consumers could move into loans that meet Fannie's standards without first having to clear unpaid bills on credit reports. Also, the maximum loan term could be stretched to 40 years from 30. (The firm estimates that as many as 1.5 million borrowers could be eligible for its loan options.)
Source: USA Today
Federal Deposit Insurance Corp. (FDIC) Chair Sheila Bair is, to use her own words, "hold[ing] the [loan] servicers' and investors' feet to the fire," since it should have been clear that the loans were high-risk. The FDIC, Federal Reserve and other regulators asked lenders to work with homeowners, promising they will not face regulatory penalties for reasonable workouts. It urged them to work with consumer groups and to help borrowers avoid predatory restructuring scams.
But to do this requires working through complex tax and accounting rules that limit what servicers can do. For example, some bonds have a 5% cap on loan restructuring or are crafted in a way that some investors win and others lose if loans are changed.
Fannie Mae said yesterday that it will help borrowers refinance out of adjustable-rate mortgage (ARM) products or other loans. Consumers could move into loans that meet Fannie's standards without first having to clear unpaid bills on credit reports. Also, the maximum loan term could be stretched to 40 years from 30. (The firm estimates that as many as 1.5 million borrowers could be eligible for its loan options.)
Source: USA Today
Why Do We Live in Houses?
Because it's what people want, says author Witold Rybczynski. (i.e., it's a "cultural thing".)
Rybczynski traces back to the medieval town dwelling, "which combined living space and workplace, and was occupied by a mixture of extended families, servants, and employees."
This started to change in 17th-century Europe, he says, when people "began to live and work in separate places; children grew up with their parents (rather than being apprenticed to strangers, as before); and the home, securely under the control of what we would now call the "housewife," was restricted to the immediate family."
17th-century Dutch cities and towns were composed almost entirely of houses built in rows, side by side. The tradition of "row houses" then spread to England and Wales, and other countries, including the United States.
Today, 75% of Americans live in houses. But what kind of home do they prefer according to Rybczynski? Tomorrow, we'll look at the choices....
Source: Slate
Rybczynski traces back to the medieval town dwelling, "which combined living space and workplace, and was occupied by a mixture of extended families, servants, and employees."
This started to change in 17th-century Europe, he says, when people "began to live and work in separate places; children grew up with their parents (rather than being apprenticed to strangers, as before); and the home, securely under the control of what we would now call the "housewife," was restricted to the immediate family."
17th-century Dutch cities and towns were composed almost entirely of houses built in rows, side by side. The tradition of "row houses" then spread to England and Wales, and other countries, including the United States.
Today, 75% of Americans live in houses. But what kind of home do they prefer according to Rybczynski? Tomorrow, we'll look at the choices....
Source: Slate
Tuesday, April 17, 2007
Is Now the Time?
If home values are falling, can this really be a great time to buy or sell? After all, The New York Times recently concluded that "people who chose renting over buying in the last two years made the right move. What's more, tightening mortgage requirements are making it tougher for borrowers to get the financing they want, so there's a smaller pool of buyers to buy sellers' homes.
In an article published today, Realty Times stated that not everyone should own real estate... if they did, reasoned the publication, then who would rent investment properties?
People who shouldn't buy, it adds, include:
The article also quotes the NAR (National Association of Realtors), who offers good reasons why someone should buy or sell:
In an article published today, Realty Times stated that not everyone should own real estate... if they did, reasoned the publication, then who would rent investment properties?
People who shouldn't buy, it adds, include:
- individuals who will be short-term residents in a given community
- those with small, declining, or uncertain incomes and
- individuals who live in areas where both jobs and people are leaving
The article also quotes the NAR (National Association of Realtors), who offers good reasons why someone should buy or sell:
- interest rates are near historic lows
- overall, prices are stabilizing (with some communities even seeing price increases)
- there's a positive economic outlook, and
- during the past decade, real estate has been a great investment
Friday, April 13, 2007
Boston Housing Activist to Aid Subprime Borrowers
The Boston Globe reports that an organization run by Boston housing activist " will provide $1 billion in mortgage refinancing to homeowners nationwide who are struggling with high-cost subprime loans".
Bruce Marks, says the newspaper, "is a colorful figure who successfully used guerrilla tactics in the 1990s to pressure major US banks to fund mortgages for low- and middle-income workers".
Through Marks' organization, borrowers can replace their high-interest subprime loans with traditional 30-year fixed-rate mortgages at below-market levels. The new loans will be made available regardless of whether borrowers are in foreclosure.
As a condition of receiving a loan from his organization, borrowers are required to participate in housing activism in their communities. This will enable Marks to "lead mass protests of borrowers with high-cost mortgages at company headquarters and the homes of their executives."
Source: The Boston Globe
Bruce Marks, says the newspaper, "is a colorful figure who successfully used guerrilla tactics in the 1990s to pressure major US banks to fund mortgages for low- and middle-income workers".
Through Marks' organization, borrowers can replace their high-interest subprime loans with traditional 30-year fixed-rate mortgages at below-market levels. The new loans will be made available regardless of whether borrowers are in foreclosure.
As a condition of receiving a loan from his organization, borrowers are required to participate in housing activism in their communities. This will enable Marks to "lead mass protests of borrowers with high-cost mortgages at company headquarters and the homes of their executives."
Source: The Boston Globe
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