Category Archives: Real Estate

San Diego jarred by latest development on housing

Posted on May 21, 2021 | Leave a comment

These are days of high anxiety and potential opportunity on the housing front in San Diego.

Some recent turns of events have energized discussions over high housing prices, low housing stock and whether too many homes are being allowed in certain neighborhoods.

Add to that the increasing concerns about corporations dominating the homebuying market.
Here’s what has surfaced in just the past two weeks:

• The Navy is considering building up to 10,000 housing units in high-rises and major commercial and office space at its current NAVWAR site along Coast Highway on the edge of the Midway District.

• Blackstone Group, the private equity giant, purchased some 5,800 apartments from the Conrad Prebys Foundation.

• The county Board of Supervisors is considering assessing fees in “car-centric” areas in a continuing effort to channel development into more urbanized areas that have shorter commutes and accessible transit.

• Mid-City residents are protesting policies encouraging additional dwelling units, often called granny flats, that could double or triple — or more — the number of housing units in neighborhoods designed for single-family homes.
The latter may be the housing version of big things coming in small packages. That’s good or bad, depending on one’s point of view.

The latter may be the housing version of big things coming in small packages. That’s good or bad, depending on one’s point of view.

Additional dwelling units (ADUs), sometimes called casitas, have dotted San Diego’s neighborhoods for generations. They’ve seemed relatively benign because there weren’t that many of them and they had a historic, even cute, familiarity as granny flats, a name housing advocates are trying to phase out.
The steady increase of the small homes largely has gone under the radar in the housing wars, which tend to focus on massive developments and legislative proposals in Sacramento to essentially upzone the entire state in an effort to get more housing built. Not too long ago, government regulations made them difficult to build, if not discouraged entirely

Is the housing market a bubble

Posted on April 27, 2021 | Leave a comment

When the Federal Open Market Committee begins its two-day meeting on Tuesday, it ought to consider whether its policies aimed to bolster housing may be having negative side effects.

With the market for new and existing homes red hot, the rationale for subsidizing the mortgage market has largely passed. Indeed, the Fed’s policies may be hurting home affordability as much as they’re helping.

Strong housing and mortgage activity argues against the Fed effectively subsidizing a sector that is near bubble territory. According to the Home Price Appreciation Index from the American Enterprise Institute, prices are up 12.6% in the 12 months through March, a doubling of the pace from a year ago. Among various markets, Phoenix was up 17.7% while the smallest gain was in the New York metro area with a 7.0% rise.

“Monetary policy that supports the extension of easy money when house prices are rising at record rates makes no sense. It’s one thing to misread the tea leaves of an asset bubble, but it’s another thing to be the enabler,” Carson writes.

One way to stop inflating home prices would be for the Fed to reduce its purchases of mortgage-backed securities. If that suggestion sounds familiar, it’s because Peter Boockvar made it in this column back in December.

Read entire article: https://www.barrons.com/articles/the-housing-market-looks-like-a-bubble-its-time-for-the-fed-to-worry-51619524804?siteid=yhoof2

Where are home prices going? 3 areas of possible trouble in the housing market

Posted on April 21, 2021 | Leave a comment

Here’s what to worry about

Because of our extensive work as the largest quality control provider for lenders and others, we have a window on factors that all market participants should keep an eye on. Having performed post-close quality reviews on thousands of loans in the past year, we are seeing an increase in errors and a general sloppiness in the application, documentation and approval process.

These errors may be due to the accelerated speed at which originators are processing loans, as they try to capitalize on the refinance opportunity created by record-low interest rates. The tenure of loan underwriting personnel also may be a factor. Well over half — 60% — of mortgage underwriters have been in their current position for two years or less. The average experience of a loan underwriter has plummeted, in large part a hangover from the last housing crisis, when many mid- and senior-level employees fled to other industries.

A second concern is the large number of people seeking to buy a home for investment purposes or who already own an investment property. If interest rates stay low, even more investors may be attracted to the housing market. There may also be a greater incidence of fraud, as some borrowers claim that their properties are owner-occupied to qualify for lower rates, while planning to rent the units. When the banks discover the fraud, borrowers will be faced with significantly higher interest rates.

Alternatively, if the rental income expected by these owners (whether legitimate or not) fails to materialize, their mortgages could be headed for default.

Finally, while the Federal Reserve and other market experts believe inflation will remain well-controlled, a material spike in inflation, pushing mortgage rates toward the high single digits mortgage rates toward the high single digits, could have a devastating impact on housing. The bond market would be the first to react to inflation, as it erodes bondholders’ future cash flows. The resulting increase in bond yields would then be reflected in mortgage loan rates.

Still, it will be important to watch for alternative data – such as quality-control lapses or a rise in loan applications for investment properties – that may raise concerns that the air is escaping from the housing market. It would be especially worrisome if there were to be higher-than-expected inflation at the same time that forbearance ends and properties came flooding onto the market.

read entire article: https://www.marketwatch.com/story/i-review-mortgages-and-i-see-3-areas-of-possible-trouble-in-the-housing-market-11619010993?siteid=yhoof2