Archive for 2014

Mel Watt receives criticism from both political parties, demonstrating he balances the competing ends, a competent replacement for Ed DeMarco. I was wrong about Mel Watt. Despite my concerns he would use his position to advance a left-wing agenda, at least so far, he's proven a capable administrator of the GSEs. I am a big fan of Ed DeMarco, the man Mel Watt replaced, and perhaps I was not open to change at the GSEs because of my admiration for Mr. DeMarco, but so far Mel Watt has surprised me. Prior to taking over as head of the Federal Home Finance Agency (FHFA), the overseer of the GSEs, Mel Watt pandered to left-wing constituents, promoting principal reductions and other destructive…[READ MORE]

Many borrowers spent their home equity during the housing bubble, and now they want income tax relief on the money they spent as income. Mortgage equity withdrawal feels like free money. When this money comes from home-price appreciation on a primary residence, the borrower did nothing to earn this money, and since a primary residence has a large capital gains tax exclusion, the borrower won't pay any taxes, income or capital gains, on free money they extract from their house. Obviously, this makes mortgage equity withdrawal a very desirable source of spending money. Of course, borrowed money is not free money, and it must be repaid. Most HELOC abusers expected the house to pay off this bill for them, but…[READ MORE]

Shevy Akason, exclusive agent for OC Housing News, is named a Top Producer for his great work with OC Housing News customers and others. FOR IMMEDIATE RELEASE Shevy Akason, exclusive agent for OC Housing News, is named a Top Producer in Orange County, California, real estate sales. Shevy Akason earned Top Producer status at his 1,200 agent brokerage through representing OC Housing News clients and many others. This is the sixth consecutive year Mr. Akason has been awarded this prestigious and coveted award. IRVINE, Calif., November 24, 2014 – Shevy Akason consistently delivers results for his many clients. Starting from scratch in 2007, he quickly developed a growing group of satisfied clients by delivering more than expected and always putting…[READ MORE]

Historically, properties in this market sell at a 18.5% discount. Today's discount is 21.8%. This market is 3.2% undervalued. Median home price is $291,500 with a rental parity value of $375,000. This market's discount is $83,500. Monthly payment affordability has been improving over the last 4 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis declined from $166/SF to $165/SF. Resale prices have been falling for 2 month(s). Over the last 12 months, resale prices rose 13.7% indicating a longer term upward price trend. Median rental rates increased $0 last month from $1,696 to $1,697. The current capitalization rate (rent/price) is 5.6%. Rents have been rising for 5 month(s). Price momentum signals rising rents over the next three…[READ MORE]

Plagued by affordability problems, the Western US endured a 5% decline in home sales in October 2014. Ever since mortgage interest rates suddenly and unexpectedly rose from 3.5% to 4.5% in May of 2013, the market has been weak. For almost a year prices were flat while sales volumes declined. The spring rally of 2014 pushed prices a little higher, driven mostly by rising rents, but resale volume was very low, suggesting the gains do not represent fundamentally strong demand from an improving economy. For the housing market to really improve, the fundamentals underpinning the market must improve because manipulating inventory and interest rates are short-term market props, not fundamental drivers of demand. The house price rally in 2012 and…[READ MORE]

Fannie Mae attempts collection on old bad debts, which were often associated with robo-signed foreclosures. Many people borrowed money to buy a house and quit making payments. Lenders attempted to foreclose on these properties and found the volume overwhelming and their bubble-era paperwork lax. Many lenders contracted with firms that automated the foreclosure filing process -- robo-signers -- and these firms routinely created bogus paperwork to facilitate processing the foreclosure. This fabrication of paperwork infuriated judges who didn’t want to see the public record inundated with forged documents. Nobody at the Robo-signing law firms was ever charged with or convicted of any crime, and the people who lost their homes in foreclosure were all guilty of failing to pay their…[READ MORE]

Renters who save and invest can acquire wealth just as well as homeowners who rely on their house as their biggest asset. Over the long term, home ownership is superior to renting because homeowners fix their housing costs whereas renters pay an ever-increasing housing cost. In fact, I believe owning a home without a mortgage is the best retirement savings plan available because it provides the opportunity to permanently and dramatically lower an owner's housing costs. In addition to the fixed cost of ownership, an amortizing mortgage serves as a forced savings account, providing financial discipline that may otherwise be lacking. Of course, lenders pervert this benefit by offering mortgage equity withdrawal, but the forced savings benefit is still significant,…[READ MORE]

The financial media perpetuated the fantasy that the foreclosure crisis is past. Now, can-kicking ends and foreclosures rise once again. The foreclosure crisis never ended, it was merely delayed by lender can-kicking. Bankers designed policies to promote loan modification over foreclosure, specifically to drive down the reported delinquency rates. Further, HUD sold off non-performing loans to hedge funds that don’t report their delinquencies, which also lowers the reported rate. Lowering delinquency rates should be a big plus; however, lowering delinquency rates through methods that don’t permanently cure the loan (can-kicking) is a farce designed to influence public perception. Lenders want to report better delinquency rates to improve confidence in the housing market to encourage buyers to bid up prices to aid lenders in…[READ MORE]

Mel Watt's announcement of 3% down loans pandered to left-wing constituents, but credit standards haven't changed, and some lenders won't offer it. Whenever home sales slow down, people who depend on transactions to make a living cry and complain about tight lending standards. Lending standards are not tight today -- they appear tight compared to the complete lack of enforced standards of the housing bubble -- but compared to what preceded the housing bubble, credit standards have merely reverted to the normal and prudent standards of the 1990s. Prior to the housing bubble, lenders verified borrower income and applied rational debt-to-income ratios to ensure repayment, a practice lenders embrace again today. The notion of “tight” lending standards stems from the…[READ MORE]

Historically, properties in this market sell at a 9.5% discount. Today's discount is 12.1%. This market is 2.6% undervalued. Median home price is $475,700 with a rental parity value of $548,500. This market's discount is $72,800. Monthly payment affordability has been improving over the last 6 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $386/SF to $387/SF. Resale prices have been rising for 8 month(s). Over the last 12 months, resale prices rose 13.7% indicating a longer term upward price trend. Median rental rates increased $17 last month from $2,465 to $2,482. The current capitalization rate (rent/price) is 5.0%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[READ MORE]

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