A better bargain for middle class homeownership
On Tuesday, August 6, 2013, President Obama laid out a the foundation for what the White House entitled “A Better Bargain for Middle Class Homeownership in America.” In this 30-minute speech made at a high school in Arizona, the President urged the winding down of Fannie Mae and Freddie Mac, the mortgage-giants bailed out by the government in 2008, as part of a strategy to buffer taxpayers from future housing market downturns.
President Obama called for transitioning the business model of Fannie and Freddie into a system, which focuses on private capital and involves government intervention much less significantly, while still promoting the concept of the 30-year mortgage. According to a White House Fact Sheet,
The current housing finance system, where the government guarantees more than 80 percent of all mortgages through Fannie Mae and Freddie Mac and Federal Housing Agency, is unsustainable. A reformed system must have a limited government role, encourage a return of private capital, and put the risk and rewards associated with mortgage lending in the hands of private actors, not the taxpayers.
As you may recall, Fannie and Freddie were nationalized during the 2008 financial collapse and bailed out with $187 billion in taxpayer-funded loans. These Government-sponsored enterprises don’t directly make loans, but buy mortgages from lenders, package them as bonds, guarantee them against default, and sell them to investors. Fannie and Freddie currently own or guarantee half of all U.S. mortgages and back nearly 90 percent of new ones.
In the President’s housing speech, he also made references to immigration reform. He argued that immigration reform could stimulate the housing market, as immigrants accounted for 40 percent of new homeowners nationwide between 2000 and 2010.
Three Reasons to End Fannie Mae and Freddie Mac
While President Obama’s housing speech of early August clearly noted the winding down of Fannie Mae and Freddie Mac, pundits and politicians have offered many opinions on this plan. Many argue that winding down Fannie Mae and Freddie Mac means the end of the 30-year mortgage, yet the President’s speech “A Better Bargain for Homeownership,” clearly advocates a continued path to homeownership by means of the 30-year mortgage.
Consider the following benefits of the end of Fannie Mae and Freddie Mac:
- Home loans could fall in number because private capital may tighten lending guidelines. Yet, the reduction in qualified borrowers could make the economy more stable.
- The winding down of GSEs would take the taxpayers off the hook for the kind of emergency bailouts required after 2008, when the U.S. Treasury pumped in nearly $200 billion to keep the two entities operating.
- If the Government were not bankrolling Fannie Mae and Freddie Mac, there would be more funds available for other important political and social issues, such as education and job growth.
The President’s housing speech also mentioned the importance of oversight through Consumer Protection Financial Bureau, a Government agency that will seek to continue to encourage the American Dream of homeownership by working to provide equitable 30-year mortgage programs. Many folks believe that it is exactly this oversight that will be required as we transition into a new phase in housing.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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