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Carl Webb's blog about housing

By Carl Webb | Renter in Austin, TX
  • Under One Roof, Part Four: The Politics

    Posted Under: Quality of Life in Austin, Home Buying in Austin, Financing in Austin  |  June 9, 2013 10:48 PM  |  2,547 views  |  1 comment
    For many, Election Night 2012 was a great night.

    At the Driskill Hotel, Travis County Democrats toasted President Obama’s victory. But Walter Moreau with Foundation Communities, one of Austin’s largest affordable-housing providers, wasn’t celebrating.

    “All the other bonds passed, so it’s hard to say why …” Moreau began.

    Austin voters had been asked to approve seven bond propositions, totaling $385 million. Voters ended up approving most of the package. Except for Prop 15, which was nearly $80 million in bonds for affordable housing.

    “That’s really home repair for seniors, that’s housing for folks that are homeless, that’s programs for veterans and disabled and people that are really vulnerable in our community that need help,” Moreau said.

    Fast forward about five months. David Butts, a veteran Austin politico, has had a hand in helping elect every current member of the Austin City Council. He also helped head up the campaign for Prop 15.

    He’s had plenty of time to dissect what went wrong: He starts with the ballot language itself, which said nothing about affordable housing.

    “It was extremely abbreviated, by even comparison to the others,” Butts said.
    Another problem was a lack of resources -- cash -- poured into the campaign. “Our own polling showed it losing,” he said. “And that was conveyed to people, but the money that was necessary to communicate to voters didn’t come until very late.” (Click here for a map showing how Prop 15 lost.)

    But the Prop 15 campaign failed in an even more basic way, Butts says: communicating affordable housing’s benefits to voters, or, maybe even more fundamentally, what affordable housing is.

    “There’s a lot of connotations in people’s minds about, ‘What does that mean?’” Butts said. “Now, some people think it means Soviet-style architecture, or something like ‘We’ll have thousands of people living right next door to you in these gigantic complexes.’ Well, that’s not what we’re doing.”

    Regardless of the reason for Prop 15’s defeat, it blew a hole in Austin’s affordable-housing plans. And the scramble for funding in the wake of its defeat also raised a question: Is the city leaving money on the table?

    Let’s say you’re a developer, looking to build more densely than zoning allows on a piece of land downtown.

    For years, you’ve had two options: You can apply for central urban redevelopment, or CURE, zoning. That’s a category for projects that supposedly rise to a special standard.  But it doesn’t require developers to include affordable housing.

    Your other option is to apply for that extra density under the Downtown Density Bonus Program. But you’d be required to include affordable housing. (Here's a list of city zoning types.)

    To date, downtown developers have used CURE zoning every time. The Downtown Density Bonus Program hasn’t been used once.

    “That’s just not right,” said City Council member Laura Morrison. She has lead the push to phase out CURE zoning.

    “The loss of the bonds -- it puts a laser focus on this responsibility, that we do everything we can to make sure that we’re leveraging and ensuring as much affordability in this town as we can,” Morrison said. “That’s our job as council.”
    Elizabeth Mueller, who was on the affordable housing task force that created the downtown density bonus program, sees it as “a matter of political will.”

    Mueller says the zoning debate may obscure a more fundamental issue: Most of the time, the most affordable housing is the stuff that’s already built.  

    She points to the city’s rezoning of East Riverside as an example. (She co-authored an award-winning report studying East Riverside.) It’s great in theory: in line with the Imagine Austin Comprehensive Plan, it even includes some affordable housing.
    “And that will also increase the tax base for the city, so the city has an interest in that because they’ll get more property tax revenue,” she said. “And developers will also get more return on their investments there. So those two things are aligned.”

    But there’s a downside. “Those things then, also, are raising the value of properties in ways that can raise rents, other things that make it harder then to serve those goals of maintaining them as affordable to existing residents,” Mueller said.

    The council recently passed a resolution from Morrison incorporating some of Mueller’s ideas, such as offering incentives to keep older, existing buildings affordable.
    “We’re losing more and more on the ground,” Morrison said. “Because old buildings that provide affordable housing get knocked down, and existing buildings that might provide affordable housing are just getting more expensive.”

    Preserving existing affordable units could increase housing options. Other ideas include creating a homestead preservation district. There, property taxes from new developments would offset taxes for longtime residents in danger of being pushed out. Another idea is to use the city-owned land more aggressively: Open more city land to developers and require them to build at deep affordability levels.

    Any of these initiatives could reduce reliance on future bond funding for affordable housing. But Moreau of Foundation Communities says it will still require voter-approved cash.

    “I think we can do a lot through the land development code, through zoning, through density bonuses, through other policy-oriented things,” he said. “But we also are going to have to come up with capital funding, especially to serve the lowest-income folks. Otherwise, they’ll  be priced out of Austin, and I think that hurts us a community.”
    To that end, a group of affordable-housing advocates is calling for another go at a bond election. The City Council could vote later this summer to put a question on the November ballot.

  • The Texas House approved a bill that prohibits private transfer fees on real estate transactions

    Posted Under: Market Conditions in Texas, Home Buying in Texas, Financing in Texas  |  May 3, 2012 12:04 AM  |  1,803 views  |  No comments
    The Texas House approved a bill that prohibits private transfer fees on real estate transactions.

    Developers often include the fees, typically 1 percent of the purchase price, as a deed restriction or covenant for new homes that many times are not discovered until the deal closes. Homeowners then do not have a choice but to pay the fee, so the developer continues to collect on every sale within the subdivision for a certain amount of time, usually 99 years, while adding no real value. More than 80 state representatives signed on as co-authors to the legislation, House Bill 8, that seeks to restrict the transfer fee practice. At least 20 states have already passed, or are considering similar laws.

    “Private transfer fees have no place in Texas real estate,” Texas Association of Realtors Chairman Dwight Hale said. “Private transfer fees are simply a scam. They serve no public purpose and provide no benefit to buyers or communities while decreasing housing affordability.”

    HB 8 implements disclosure and transparency requirements on existing property transfer fees and prohibits future fees. The bill includes an exemption for homeowners associations and nonprofit organizations.

    The bill now heads to the Senate for consideration. 
  • Tiny Texas Houses & Pure Salvage Living - 'Sustainablity through salvage'

    Posted Under: Quality of Life in Austin, Financing in Austin, Tech Tips in Austin  |  March 7, 2012 8:45 PM  |  1,645 views  |  2 comments

    Tiny Texas Houses & Pure Salvage Living

    Tuesday, Mar 13 6:30p to 8:30p

    Austin Public Library - Yarborough Branch 
    2200 Hancock Dr.
    Austin, TX 78756
    (512) 847-0371 

    Eco-visionary and builder Brad Kittel will discuss his Pure Salvage Living movement at a meeting of the Austin Noetic Sciences group. Details at http://bit.ly/tth-psl

    Expanding on our theme of thriving in 2012 and beyond, we welcome environmental visionary and salvage expert Brad Kittel, builder of Tiny Texas Houses and founder of the Pure Salvage Living Movement.

    Brad Kittel came to Austin 30 years ago with plans to write a novel and ended up buying and restoring condemned houses instead. Rather than use new materials, he harvested pieces and parts from old structures and soon had an extensive collection. In 1997, he started an architectural antique business inGonzales that now has over 130,000 square feet of inventory, which he utilized to start building “tiny houses” outside of Luling. The success of that project led to his concept of a “pure salvage living movement” involving salvage mining expeditions, coops, and an alternative currency system. Kittel’s inspired vision and the work it fuels cut across several of the areas addressed in the THRIVEmovie, including liberty, economy, ecology, and society. The movement he is starting is an exciting example of consciousness in action—of “spirit mattering.”

    Brad Kittel, who has developed an entire philosophy around the concept of “sustainability through salvage,” builds “Tiny Texas Houses” that are as much as 99% “pure salvage. Some as small as 120 square feet, the houses come wired for electricity and outfitted for plumbing, and include a shower and toilet and a loft for sleeping. Kittel, who trains people to do “salvage mining,” says “we have the power to create solutions to our global problems by the simplest of choices we make each day.” —Thorne Dreyer, Rag Blog editor and Rag Radio host, forTruth-out.org, February 26, 2012

  • One million homeowners may get mortgage writedowns: U.S.

    Posted Under: Market Conditions, Home Buying, Financing  |  January 22, 2012 12:15 AM  |  1,803 views  |  No comments

    By Margaret Chadbourn and Aruna Viswanatha

    WASHINGTON | Wed Jan 18, 2012 5:22pm EST

    (Reuters) - About one million American homeowners would get writedowns in the size of their mortgages under a proposed deal with banks over shady foreclosure practices, U.S. Housing and Urban Development Secretary Shaun Donovan said on Wednesday.

    The deal, which could be struck within weeks, would mark the largest cut in the mortgage load since the start of the credit crisis.

    "We're very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help," Donovan said at a U.S. Conference of Mayors meeting in Washington.

    Talks between federal officials, state attorneys general and major banks to resolve allegations of "robo-signing" and other misconduct in foreclosures have dragged into their second year.

    Donovan's announcement came the same day that two big regional U.S. banks disclosed they had set aside funds related to mortgage servicing matters, a sign that lenders beyond the five largest mortgage servicers may join the expected settlement.

    In exchange for between $20 billion to $25 billion in relief to distressed homeowners, the banks - Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup and Ally Financial Inc - will put behind them potential government lawsuits about improper foreclosures and abuses in originating and servicing the loans.

    Using Donovan's estimate, the settlement could provide roughly a $20,000 reduction each for the one million borrowers.

    Prior administration efforts to jumpstart the housing recovery have fallen short of how they were promoted.

    Some states, including California and New York, have criticized negotiators as being too lenient on the banks and suggested the proposed settlement would not provide enough relief to the housing market.

    The Obama administration has seen the broader foreclosure settlement as an opportunity to help reach more borrowers struggling financially as the five-year collapse in home prices persists. Currently, banks have granted at-risk borrowers principal reductions on a limited basis.

    "Principal reduction can have a substantial impact on the housing market nationally," Donovan said.

    With more than a 30 percent decline in home prices since 2007 and a huge number of vacant, foreclosed homes flooding the market, the housing sector has struggled to rebuild itself.

    About 22 percent of U.S. homes have negative equity totaling about $750 billion, according to CoreLogic.

    Donovan said the deal would be "far and away the largest principal reduction of the crisis" and a number families would also "get direct compensation as a result of the settlement."


    Any settlement would not apply to mortgages owned by Fannie Mae or Freddie Mac, which together own or guarantee most of the U.S. mortgage market. The regulator that controls the two government-sponsored enterprises has resisted cutting their loans, arguing it would cost U.S. taxpayers more money than other options would.

    But lawmakers and top administration officials have pushed for a broader principal reduction program, and this settlement could lay the groundwork for that if Fannie Mae and Freddie Mac are swayed to test it out themselves as an alternative to the costly process of foreclosing on struggling borrowers.

    Earlier on Wednesday, House Democrats sought to force the housing regulator, the Federal Housing Finance Agency, to explain its calculations in deciding not to offer principal reductions.

    In addition, the Federal Reserve said in a rare 26-page white paper delivered to Congress this month that lawmakers need to do more to stabilize the housing market. But it stopped short of endorsing any plans to have Fannie and Freddie slash borrowers' loan balances.


    The Obama administration in coming weeks will step up its efforts to help the ailing housing market by expanding current policies aimed at helping communities plagued by high unemployment and widespread foreclosures, the housing secretary said.

    "You will hear a president who is going to be aggressive on housing, on the issues of refinancing and principal write-down," Donovan said.

    The White House will lay out a strategy that includes pilot programs to test new initiatives, such as a government plan to convert foreclosures into rentals.

    Donovan said the White House is aiming to get more creative in how it contends with the excess inventory of unsold foreclosed homes on the books of government-run Fannie Mae and Freddie Mac.

    Regulators have been seeking ways to reduce the number of foreclosed properties by pooling them together for bulk sales to investors. The goal is for investors to then rent them out.

    The administration also wants to move ahead with a plan dubbed "Project Rebuild," which is a piece of Obama's American Jobs Act that aims to get construction workers to rehabilitate vacant properties.

    Donovan said the $15 billion neighborhood stabilization program would create 200,000 jobs and be used to renovate thousands of vacant homes and properties around the country.

    (Reporting By Margaret Chadbourn and Aruna Viswanatha in Washington, D.C. and Rick Rothacker in Charlotte; Editing by Neil Stempleman and Dan Grebler)


  • A good credit score did not protect Latino and black borrowers

    Posted Under: Financing, Foreclosure, Credit Score  |  January 22, 2012 12:11 AM  |  1,956 views  |  No comments

    ECONOMIC SNAPSHOT | Race and Ethnicity

    A good credit score did not protect Latino and black borrowers

    By Algernon Austin | January 19, 2012

    In recent years, Latino and African American consumers with good credit scores of 660* and higher have too often ended up with high interest rate mortgages, mortgages which are supposed to go to risky borrowers. These higher-rate mortgages increased the likelihood of foreclosure among Latinos and blacks. The higher foreclosure rates of these groups help explain why Latinos and blacks have seen such dramatic declines in wealth.

    From 2004 to 2008, only 6.2 percent of white borrowers with credit scores of 660 and above ended up with higher-rate mortgages. Latinos and blacks with good credit scores, however, were three times as likely to end up with higher-rate mortgages.

    Borrowers of all races suffered from the anything-goes attitude of the housing boom. The Wall Street Journal has reported that more than half of high interest rate loans during the peak years of the boom went to borrowers who should have qualified for prime mortgages. The data also suggests that Latinos and blacks with good credit were especially at risk for ending up with higher-rate mortgages.

    Discriminatory housing practices are one reason why our country needs a strong Consumer Financial Protection Bureau. A powerful CFPB helps make sure that everyone is treated equally and fairly by the financial services industry.

    *The Fair Isaac Corporation—the company that created the FICO score—classifies scores of 660 and above as “good.”


  • When a 30-Year Mortgage is a 30-Year Prison Sentence

    Posted Under: Market Conditions, Home Buying, Financing  |  October 20, 2011 1:06 AM  |  2,239 views  |  No comments

    Don’t Be Suckered Into Buying a House Now


    Don’t even think about buying a house for the next year or so. Not unless you can afford to flush tens of thousands of dollars down the toilet, because that’s what you’ll be doing.

    Here’s what’s happening. As everyone knows,  housing is driven by the same supply-demand dynamics as every other market. The problem is, the banksters have gamed the system so it looks like there’s less inventory then there really is, so prices are higher than they should be. By keeping millions of homes off the market the banks are protecting themselves from bigger losses. Unfortunately, it’s the buyer who ends up being the victim in this market-rigging scam.

    Now take a look at this goofy article in Monday’s Wall Street Journal and I’ll try to explain what’s really going on:

    “The housing market, which has struggled with an oversupply of homes for years, is facing a new problem: a lack of attractive inventory.

    There were more than 2.19 million homes listed for sale at the end of September, down 20% from a year earlier, according to a new report from the real-estate website Realtor.com. That is the lowest level since the company began its count in 2007.

    The report is the latest sign of how the U.S. housing market can’t seem to catch a break. While falling inventories are typically a sign of health, because reduced competition can boost prices, that isn’t the case right now.

    Instead, real-estate agents say, people are pulling their homes off the market rather than try to sell them at today’s discounted prices. At the same time, banks have been more slowly moving to take back properties through foreclosure ever since processing irregularities surfaced last fall, temporarily reducing the supply of foreclosed properties. The shrinking supply isn’t driving up prices because demand is soft.

    Yet there is still a substantial “shadow” supply of foreclosures and other distressed homes, estimated to be more than one million, that is likely to stream onto the market in the coming years. The pent-up supply is another constraint on any of the price gains that might normally occur when supply falls.” (“Slim Pickings Are Latest Headache for Home Sales”, Wall Street Journal)

    Excuse me? Shadow inventory is around “one million” homes? You’ve got to be kidding?

    There’s so much wrong with this article, it’s hard to know where to begin. First of all, the reason why people aren’t scarfing up homes at current prices has nothing to do with the “lack of attractive inventory”. That’s a load of malarkey. It’s because they no longer have confidence in the system. And why would they? After all, they’ve just seen their family and friends just get reamed in the biggest mortgage fraud scam in history. Are they supposed to go rushing back in to the market with money-in-hand so they can get fleeced too? Not likely. Besides, owning a house isn’t what it used to be. Not by a long shot. It used to be the cornerstone of the American dream and entre’ into the middle class. No more. Owning a house today means that one is shackled to a sinking asset that limits one’s options and mobility. Let’s face it, that 5-bedroom McMansion with the marble countertops is the albatross that keeps people toiling-away in the cube-farms until the day they get carted off to Potter’s Field. A 30-year mortgage is a 30-year prison sentence.

    Also, the whole “falling inventories” story is pure bunkum. The housing backlog has mushroomed in recent years eclipsing anything in the history of the industry. The banks are just keeping homes off-market to save their own bacon. The whole thing is a joke. The only reason the charade goes on is because the government is in bed with the banks–concealing the details–so the rip off can continue without pause. It’s just more  industrial-scale collusion.

    Now check out this clip from an excellent report by McClatchy News:

    “The housing market’s ballooning shadow inventory — buoyed by a yearlong foreclosure slowdown — stands as the most menacing obstacle to the recovery of the residential real estate market….

    A McClatchy analysis of four years of foreclosure data and thousands of property records found record-high levels of shadow inventory in several housing markets across the nation.

    In the supply-and-demand-reliant real estate market, the national supply of homes is officially listed at about 3.5 million, or about nine months’ worth; sales are on track to reach about 5 million this year. But once shadow inventory is added, that supply more than doubles, to at least 7.5 million…..(“Millions of homes lurk on bank inventories, casting doubts of rebound”, McClatchy News)

    Got that? The real supply of homes is actually “double” the amount that’s being reported. So that means that the $400,000 rambler Mr Jones is planning to buy with his hard-earned money is probably worth about, uhm, $200,000. So, Mr.Jones is basically getting bent-over by the bankers while Uncle Sam sits in the bleachers applauding. Isn’t that what’s going on? And everyone wonders why public confidence is so low?

    More from McClatchy:

    “In the aftermath of the largest home-repossession campaign in history, mortgage lenders are holding properties off the market as a matter of strategy. …. a growing number of vacant homes have sat idle on banks’ balance sheets for several years.

    According to the data firm CoreLogic, which has one of the more conservative estimates of shadow inventory, mortgage debt outstanding in the shadow inventory is about $336 billion. Liquidating REO homes through the sales process usually leads to significant write-downs on bank balance sheets.

    Wary of seeing such large losses appear in earnest on their books, lenders have been reluctant to deal with bad loans head-on, said Ira Rheingold, the executive director of the National Association of Consumer Advocates.

    “They’re afraid,” he said. “They don’t want to take those paper losses. Their books show that they have these assets that are worth ‘X’ amount of money. But those values are not real.”…”

    “Afraid?” The banks are afraid?

    The banks may be broke, busted, underwater, insolvent, and kaput, but “afraid”?

    No, they’re not afraid. Why would they be? They have powerful friends in Washington who will bail them out whenever they get into a jam. Just look at the Fed’s balance sheet; $2 trillion and rising. And every dollar spent was gifted to some shifty Wall Street bankster who got caught up in his own crooked Ponzi-swindle.

    McClatchy again:

    “The outlook for shadow inventory has worsened considerably over the last year because of lender paperwork problems that have gummed up the foreclosure system….

    More than a million foreclosures that were supposed to be completed this year have been pushed into the future, prolonging the housing crisis, RealtyTrac found….

    Nationwide, there are 2.2 million homes stuck somewhere in the foreclosure process, and many of those cases have completely stalled….

    Additionally, banks aren’t selling homes fast enough to justify more aggressive foreclosure filings. Even at the currently slowed pace, foreclosure starts are three times higher than foreclosure sales are, meaning that properties are being loaded onto the conveyor belt much faster than they’re being taken off.

    “It’s kind of like a pig in a python,” Blomquist said. “As you start to see more of foreclosure sales and that inventory is cleared out, then you’ll begin to see more new filings.” (“Millions of homes lurk on bank inventories, casting doubts of rebound”, McClatchy News)

    Okay. So, housing sales have stalled, foreclosures are stacked up from here to kingdom-come, and Obama and his GOP cohorts are determined to cut public spending and shave entitlements. Doesn’t that sound a bit like a deflationary spiral to you?

    Bottom line: Prices have only one way to go; down, down, DOWN.

    Still thinking about buying a house?

    Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com

    Exclusively in the new print issue of CounterPunch

  • Texas reports second-highest mortgage closing costs in U.S.

    Posted Under: Market Conditions in Texas, Financing in Texas, In My Neighborhood in Texas  |  July 20, 2011 1:39 AM  |  1,702 views  |  No comments

    Austin Business Journal - by Candace Carlisle, Dallas Business Journal Staff Writer

    Date: Tuesday, July 19, 2011

    A new survey ranks Texas as having the second-highest mortgage closing costs in the nation — following New York — at $4,944 for origination and title fees on a $200,000 mortgage.

    Bankrate Inc.bizWatch(NYSE: RATE) reported New York leading the nation in mortgage closing costs at $6,183. The average origination and title fees in the nation is $4,070, which is 8.8 percent higher than last year, according to the survey.

    Other areas in the top five most-expensive areas for mortgage closing costs include Utah, San Francisco and Idaho. Arkansas is the least expensive area to close on a house, with the average $3,378 fee.

    So, why the rise in closing costs? Most of those increased costs are tied to fees charged by the lenders, according to the survey. Lenders charge an average of $1,614 in origination fees — such as underwriting and processing — this year, which increased 10.3 percent compared with last year.

    It's important for consumers to compare lending fees when shopping for a mortgage loan, said Greg McBride, a senior analyst for Bankrate.

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