A Vote for Homeownership
Four former secretaries of the Department of Housing and Urban Development recently told the Urban Land Institute’s fall conference that whoever wins the race for the White House should pursue policies that do not scale back the American Dream of homeownership. “The American Dream is to own a home. I’m not foolish enough to believe that every person ought to own one. But if they aspire to that dream, we should do everything we can to help them,” said Alphonso Jackson, who stepped down as HUD secretary in April. “To tell people they don’t have the opportunity — and they are working hard every day at it — that is just wrong.” Henry Cisneros, who served as HUD secretary in President Clinton’s cabinet from 1993 to 1997, was the man at the helm when the President announced a goal of putting a record percentage of Americans into their own homes. He said he does wrestle with the questions “did we push too hard” and “did we go too far?” “Some will ascribe the seeds of the current problems to this policy,” he said. “I don’t accept that. But there is the shadow of a question that does hang over this drive for homeownership.” The homeownership rate peaked at just under 70% in the late 1990s, but has fallen off since. “The policy…was right. But it got hijacked,” Cisneros said. He blamed mortgage brokers and start-up funding companies — which leaped into the no-documentation, no-money-down, subprime market and carved up those loans into mortgage securities that fed worldwide demand for the 12% returns or more they paid — for the bulk of the problem. “They crossed a common-sense line. To blame that on a candidate for homeownership isn’t right," he said. (www.marketwatch.com)
MarketWatch (10/29/08); Steve Kerch
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Polls Show Optimism About Housing
Recent surveys show continued turmoil in housing and financial markets have many Americans postponing decisions to buy or sell a home, but that they remain optimistic about the near-term prospects of a recovery and still consider a home to be a good investment. In a survey of 1,023 home owners conducted from Oct. 23-25 by Ipsos Public Affairs for Realogy Corp., 91% said they believed owning a home is still the best long-term investment they can make. To jump-start home buying, Realogy is calling for the government to buy down 30-year, fixed-rate mortgage rates to 4.5% or lower for homes up to $1 million. “We think the pent-up consumer demand for housing, if encouraged, is more than sufficient to stabilize housing,” said Richard A. Smith, the company’s president. “In our view, substantially lower mortgage rates will stimulate both existing- and new-home sales, reduce home inventory levels, stabilize home prices and, ultimately, help the overall economy.” “People are looking for a signal that it’s OK to move forward,” said Realogy spokesman Mark Panus. Many are waiting on the outcome of the November elections and to see what additional stimulus programs Congress puts forward. “You wait until you see what all your options are, and until then, you may not act.” A survey of 2,112 adults conducted by J. Walter Thompson from Sept. 11-19 found that homeownership ranked as one of the most important elements of achieving the American Dream. Although financial security, finding happiness, personal independence, “fulfilling my potential” and freedom of speech ranked higher, those surveyed said that homeownership was a bigger component of achieving the American Dream than “a better life for my children,” freedom from fear of oppression, and a comfortable lifestyle. The survey found that homeownership was important to all age groups, but slightly more important to baby boomers than any other group. (www.inman.com)
Inman News (10/30/08); Matt Carter
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‘Good Samaritan’ Saves Crying Woman’s Foreclosed Home
Tracy Orr sat in the back of the room and prepared to watch her foreclosed home go up for auction. That’s when a pesky stranger sat down beside her and struck up a conversation. “Are you here to buy a house?” Marilyn Mock asked. Orr couldn’t hold it in. The tears flowed. She pointed to a home in the auction brochure that didn’t have a picture. “That’s my house,” she said. Within moments, the four-bedroom, two-bath house in Pottsboro, Texas, went up for sale. People up front began casting their bids. Behind Orr, Mock got into the action. “She didn’t know I was doing it,” Mock said. “I just kept asking her if [her home] was worth it, and she just kept crying. She probably thought I was crazy, ‘Why does this woman keep asking me that?’” Mock bought the home for about $30,000. Mock, who is known as the “Rock Lady” for her small business selling flagstone and other rocks in Rockwall, Texas, said she went to the auction with her 27-year-old son to help him buy his first home. He bought his home, and soon afterward Mock came across Orr. Mock said she’s using one of her business dump trucks as collateral for the $30,000 sale price. “I can’t afford to just give [the house] to her,” she said. As for Orr’s payments, Mock said, “We’ll just figure out however much she can pay on it. That way, she can have her house back.” (www.cnn.com)
CNN.com (10/29/08)
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City Moves Forward on First Responder Housing Help
With most of its firefighters and police officers living outside the city, Mountain View, Calif. is eyeing a program to increase the number of local first responders. Only 3% of Mountain View’s firefighters and 19% of its 97 sworn police officers live in the city. According to a report presented to the city council, a home buying assistance program for first responders could strengthen those numbers. Financial incentives such as low-interest loans and $40,000 housing stipends could be used to encourage emergency workers to buy homes in the city, according to the report; it also pointed out that such a program might improve retention rates. “We need more first responders living in the city,” said council member Jac Siegel, speaking in support of the idea. (www.mercurynews.com)
San Jose Mercury News (10/29/08); Joshua Melvin
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Tulsa a ‘Shining Star’ in the Nation’s Gloomy Housing Market
To NAHB Chairman-elect Joe Robson, today’s national housing crisis seems a mirror image of the near-depression Oklahoma experienced in the 1980s. Fortunately for Tulsa, real estate remains a local business — and in Tulsa, that’s still comparatively good. A report by Veros Real Estate Solutions of San Francisco pegged Tulsa as the nation’s fifth strongest market for home value growth, which is estimated to rise 2.5% over the next 12 months. This is a continuation of trends seen in Tulsa’s average home price growth since 2005. “The U-Haul trucks are still piling up in Tulsa, and that is a good thing,” said Robson. With the “wholesale change” now evidenced in the U.S. economy, Robson projects home builders will not see a national turnaround until the end of next year, after the housing market bottoms out. “The long-term outlook for housing is good,” he said. “Once the oversupply of homes is absorbed, we’re going to be really at a much more stable housing market.” But Robson said that will coincide with Fannie Mae, Freddie Mac and other lenders getting back to basics, requiring buyers and developers to have some cash upfront and show solid cash flow. “There will be no more lending on asset value alone,” he said. (www.journalrecord.com)
Journal Record (10/31/08)
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Some Regret Locking in Price for Oil
Those who tried to outsmart the oil and gas market by signing contracts this summer at peak prices to lock in rates for delivering home heating oil through the winter will most likely end up paying more than their neighbors to heat their homes and apartments. There are no accurate figures on how many people across the nation are stuck in unfavorable contracts. But in one indication of how widespread the problem may be locally, the New York Public Interest Research Group (NYPIRG), which negotiates with oil companies on behalf of consumers, said 8,000 of the 20,000 members of its buyers group signed contracts this summer to deliver fuel at fixed rates, at prices between $3.80 and $4.20 per gallon. “Customers who signed fixed contracts have a major problem,” said Larry Faria of NYPIRG’s fuel-buyers group. “They’ll be hurting because prices are coming down.” The degree of their pain depends on when the contracts were signed. The most acute is for those who signed deals in July, when home heating oil prices peaked at $4.78 a gallon. An additional 8,000 of NYPIRG’s buyers signed deals that cap the maximum price they can pay, but allow them to pay less if prices drop. (www.nytimes.com)
New York Times (10/23/08); Ken Belson
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