Tuesday Report, December 28, 2010
Special to the Texas Low Income Housing Information Service
Housing sales are slightly up, prices are down, and the construction industry is left struggling within a dormant economy. The lingering recession has seen the retirement and exit of many skilled construction workers leaving builders without a sufficient workforce should the industry revive.
Meanwhile, shabby paperwork and pressured timetables that fueled the foreclosure debacle are now being laid at the feet of Fannie Mae and Freddie Mac.
For a pdf version of the full stories, plus contextual articles in social, environmental and legal areas, contact Bo McCarver at bmccarver@austin.rr.com
Rush to foreclose by Fannie, Freddie helped feed problems with legal paperwork
By Zachary A. Goldfarb and Ariana Eunjung Cha Washington Post December 23, 2010
As the housing market came crashing down in 2008, the giant mortgage company Fannie Mae took an unprecedented step to help tackle the rising tide of foreclosures. It named an exclusive group of law firms that would help rapidly carry out the unsavory task of filing legal paperwork to remove homeowners from their homes.
Today, problems with documents handled by firms on Fannie’s list – and a similar one created by its smaller rival Freddie Mac – are at the heart of federal and state probes over faulty foreclosure practices that now threaten to further undermine the housing market.
Fannie and Freddie, the largest mortgage companies, shaped the practices being challenged in courtrooms around the country. They picked law firms that could foreclose fast and paid them based on how many foreclosures they could process. Speed was essential because delays cost the companies money – and, after they were taken over by the government two years ago, meant losses for taxpayers, too.
Full story at: http://www.washingtonpost.com/wp-dyn/content/article/2010/12/22/AR2010122205828.html
Home sales jump: Might rising mortgage rates help, not hurt?
Home sales revived in November, but mortgage rates have been edging up. Some analysts say that might prompt more potential buyers to take the plunge now, before rates go even higher.
By Mark Trumbull Christian Science Monitor December 22, 2010
The US housing market showed signs of new life in November, with sales of previously owned homes rising 5.6 percent following several slack months after a special tax credit for home buyers expired.
Sales rose to an annualized pace of 4.68 million homes, up from 4.43 million in October, the National Association of Realtors reported Wednesday.
But even as sales improved, mortgage interest rates were edging up. That trend has continued since November, so a central question now is: Can the housing market keep recovering if mortgage rates are rising?
Full story at: http://www.csmonitor.com/Business/2010/1222/Home-sales-jump-Might-rising-mortgage-rates-help-not-hurt
October home prices down for 4th straight month
Reuters December 28, 2010
Prices of single-family homes fell almost double the expected pace in October, the fourth straight decline, data from a closely watched survey showed on Tuesday, fresh evidence the housing market continues to struggle.
The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas declined 1.0 percent in October from September on a seasonally adjusted basis, faster than the 0.6 percent drop expected by economists polled by Reuters.
The drop followed a seasonally adjusted decline of 1.0 percent in September.
S&P, which publishes the indexes, also said home prices in the 20 cities index fell 0.8 percent from October 2009.
Unadjusted for seasonal impact, the 20-city index fell 1.3 percent in October after a 0.8 percent decline in September.
[End of story: http://www.reuters.com/article/idUSTRE6BR1O720101228]
New home sales rise 5.5 percent in November
By Martin Crutsinger Associated Press December 28, 2010
WASHINGTON — More people purchased new homes in November, though not enough to signal better times are ahead for the battered housing industry.
Sales of new homes rose 5.5 percent last month to a seasonally adjusted annual rate of 290,000 units, the Commerce Department reported Thursday. That’s less than half the rate that economists consider healthy. And the increase follows a dismal October sales pace that nearly matched the lowest level in 47 years.
Economists believe it could take three years to get back to a more normal rate of 600,000 sales per year given a continued glut of unsold homes and falling prices.
The median price for a home sold in November fell to $213,000, 2.7 percent lower than a year ago.
Sluggish sales mean fewer jobs in the construction industry, which normally helps power economic recoveries. On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Full story at: http://www.statesman.com/news/nation/new-home-sales-rise-5-5-percent-in-1142024.html
Construction sector still in dumps, but readying for future
By Kevin G. Hall McClatchy Newspapers December 28, 2010
WASHINGTON — The construction sector has been hit harder than perhaps any other in the U.S. economy, suffering the near-collapse of residential and commercial building since 2007. So it might seem strange that builders fear a coming shortage of skilled labor, but they do.
They’re taking steps to solve that problem by working proactively with school systems to teach kids how to use math on the work site, in an effort to spark interest and boost skills.
Employment in construction peaked in August 2006, just before home prices burst and nearly sank the U.S. financial system. Since then, 2.1 million jobs have disappeared, a 27 percent decline from the 7.7 million construction jobs at that peak. One in four construction workers employed a the peak is now either jobless or making a living some other way.
Even as the national economy recovers, the construction sector continues to suffer. Over the 12 months from November 2009 to 2010, California lost 36,900 construction jobs, Nevada shed 16,600, Florida 12,900 and North Carolina 9,400.
There should be plenty of demand for construction workers once the sector revives with the economy, but Ken Simonson, the chief economist for the Associated General Contractors of America, isn’t optimistic that rising demand can be filled with skilled labor.
“What’s important about this recession is that because it has gone on so long, many of the experienced people have retired, or if they’re lucky, have gone on to other jobs,” Simonson said. “When the demand for workers comes back, we’re not going to have the skilled, experienced workers to train the new ones.”
Full story at: http://www.mcclatchydc.com/2010/12/27/105842/hard-hit-construction-sector-helps.html
In Westchester, Mixed Progress on Affordable Housing
By Elsa Brenner New York Times December 23, 2010
MORE than a year after Westchester County settled a federal lawsuit with a promise to create 750 below-market-rate homes in wealthy, predominantly white communities, at least one element of a housing plan is moving ahead.
Last month, James E. Johnson, the federal monitor overseeing Westchester’s compliance with the settlement, accepted a model ordinance — a template for obtaining land use approvals — that local governments can follow.
But that did not keep the federal Department of Housing and Urban Development, which brokered the settlement, from announcing last week that another element of the plan, the county’s “analysis of impediments” to fair housing, was “incomplete and unacceptable.” In a letter to the county, H.U.D. said Westchester had failed to set forth strategies to overcome exclusionary land-use approval processes and zoning ordinances. The agency gave the county until April 1 to revise its analysis.
The settlement signed in August 2009 calls for Westchester to spend $51.6 million over seven years to create the homes. Norma Drummond, the county’s deputy commissioner for planning, said the model ordinance accepted last month could help municipalities streamline some aspects of preparation for new housing.
Full story at: http://www.nytimes.com/2010/12/26/realestate/26zone.html?_r=1
Insurance claims from Ike still expected in 2011
By Amanda Casanova Galveston County Daily News December 28, 2010
More than two years after Hurricane Ike, insurance claims from the storm are expected to continue to be reported into the new year. As of Dec. 20, 48,603 claims were reported from Galveston County to the Texas Windstorm Insurance Association, totaling an estimated $2.3 billion in losses, Jim Oliver, windstorm association general manager, said. TWIA policyholders could have four years from the date of a denial letter to file a lawsuit because there is no homeowners policy provision that would cap the deadline at two years. “It is crazy that someone would wait two and a half years to file a claim,” said Mark Hanna, public relations and membership manager for the Insurance Council of Texas. “In some instances where this is a second home, you might wait awhile and possibly find damage you didn’t know you had, but to wait this long is incredible.
Full story at: http://galvestondailynews.com/story/201178
Vacation rentals limited by code, critics say
As city studies short-term stays, opponents call for faster action.
By Juan Castillo Austin American-Statesman December 28, 2010
When the city Planning Commission voted in July to explore how to possibly regulate the fast-booming business of short-term, or vacation, rental homes in Austin, city officials said there is nothing in the current code that addresses the length of a residential lease.
But some who don’t want rental homes in their neighborhoods increasingly are disputing the city’s contention.
Opponents say that the city’s Land Development Code already prohibits rental homes in neighborhoods zoned for single-family homes, and they want the city to enforce the rules now. They cite a section in the code that allows two types of uses in single-family zoned neighborhoods: residential and bed-and-breakfast. And they cite Section 25-2-3 in the code, which says, “Residential uses include the occupancy of living accommodations on a nontransient basis.”
Full story at: http://www.statesman.com/business/vacation-rentals-limited-by-code-critics-say-1149671.html
Homeless man chooses his dogs over housing
By Jenny Platenburn Victoria Advocate December 23, 2010
Delmar Litchfield knows all too well that home is where the heart is, even if that home is a red, 1992, single-cab Toyota truck.
Since moving to Texas from Mexico in March, the homeless Litchfield can’t find employment or housing that he can afford on his Social Security check and that will allow him to live with his two large dogs.
As a result, Litchfield, 69, said he and his dogs have no choice but to live in his truck.
“Of course things would be easier without them, but I wouldn’t want to be without them,” said Litchfield, whose voice began to slightly tremble underneath his white Yosemite Sam-like beard as he discussed his pets. “I’d go nuts without these dogs.”
Litchfield, who rescued Roja, a 5-year-old Doberman pinscher, and Duke, a 4-year-old mastiff and chow mix, when they were puppies, refuses to give up the dogs in exchange for better living accommodations.
Full story at: http://www.victoriaadvocate.com/news/2010/dec/23/gp_hardtimes_122410_123133/?news
