As critics blast the Obama Administration for neglecting foreclosed homeowners, Fannie and Freddie Mac begin to forgive some homeowners who have faithfully serviced “underwater loans.” Meanwhile, various major newspapers report strong housing sales and increased building activities that offer a bright spot in the US economy.
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President Obama’s Unfinished Business on Housing
By George Goehl Huffington Post January 26, 2013
During his inauguration speech, President Obama gave an inspiring speech about his vision for a country that works together for the betterment of all. From climate change to human rights, President Obama sketched out a progressive agenda, but he neglected a crucially important element: finally ending the foreclosure crisis which continues to uproot families and blight communities.
We won’t achieve a healthy economy by ignoring the millions of homeowners who are still struggling through the economic crash caused by Wall Street. But the single largest barrier to getting our housing market on track and pumping millions of dollars back into our economy currently works for President Obama. Edward DeMarco, Acting Director of the Federal Housing Finance Administration (FHFA), a holdover Bush appointee, is blocking policies that could help get our economy back on track.
Fannie, Freddie to let some walk away
San Francisco Chronicle January 29, 2013
Fannie Mae and Freddie Mac will let some borrowers who kept up payments as their homes lost value erase their debts by giving up the properties, helping Americans escape underwater loans while adding to losses at the mortgage giants bailed out with $190 billion of taxpayer money.
Nondelinquent borrowers with illness, job changes or other reasons they need to move will become eligible in March to apply for a deed-in-lieu transaction that erases the shortfall between a property’s value and the size of its mortgage. It follows a change in November that lets on-time borrowers sell properties for less than they owe, known as short sales, wiping out the remaining mortgage debt. Normally, the lenders could pursue people to recoup their losses.
Previous foreclosure-prevention programs were designed to help only borrowers on the verge of losing their homes, in effect penalizing those who kept paying.
Housing emerges as economic bright spot after years in the dark
By Ylan Q. Mui Washington Post January 29, 2013
The nation’s housing market is surging again after years of historic declines, and the unique forces powering its return could last well into 2013.
The number of homes for sale is at its lowest level since before the recession, sparking competition among buyers that has led to 10 straight months of price increases. The volume of activity is the highest since 2007.
Builders broke ground in December on the most new housing developments in four years. And interest rates on mortgages are expected to remain near all-time lows through much of the year, galvanizing once-skeptical buyers.
Together, those factors have helped the beleaguered housing market regain its footing and emerge as one of the economy’s bright spots this year.
D.R. Horton has best quarter in six years
By Sandra Baker Fort Worth Star-Telegram January 29, 2013
FORT WORTH — Fort Worth-based homebuilder D.R. Horton saw profits more than double in its fiscal first quarter as the nation’s housing market recovered.
Horton reported Tuesday that income for the quarter ended Dec. 31 was $66.3 million, or 20 cents a diluted share, an increase of 139 percent from a year ago when it reported income of $27.7 million, or 9 cents a diluted share.
Horton said it closed sales on 5,182 homes between October and December, a 26 percent increase from the year-ago quarter.
The company’s stock (ticker: DHI) surged nearly 10 percent in morning trading, jumping $1.97 a share to $23.28.
“This quarter was our most profitable first quarter since 2007,” Chairman Donald Horton said in a statement. “We experienced broad improvement in demand in most of our markets this quarter, and we significantly increased our investments in homes under construction, finished lots, land and land development to capture this increasing demand. D.R. Horton is the best positioned it has been in its 35 year history. We are looking forward to the spring selling season with optimism.”
US economy gets lift from housing, other tailwinds
Associated Press January 28, 2013
The U.S. economy is a study in contrasts.
The housing, banking and auto industries are surging back to health and that has helped push the stock market to a five-year peak. Higher prices for homes and stocks tend to make people feel wealthier and spend more.
Yet unemployment remains high and hiring modest. The end of a Social Security tax cut is shrinking already flat pay. Federal budget fights have put businesses and consumers on edge.
Balanced between those tailwinds and headwinds, the economy is struggling to accelerate. By the end of this year, though, many analysts think the tailwinds will succeed in boosting growth and fueling a more robust economy in 2014.
“There is some underlying momentum,” says Paul Edelstein, U.S. economist at IHS Global Insight. “It’s not as strong as we would like, but it’s there and it’s building.”
Uncertainty about government spending cuts could be defused by summer, and any spending cuts that do take effect will likely be phased in over several years. Also, for the first time since the recession ended 3½ years ago, several key areas of the economy are simultaneously driving growth, which means the strength is more broadly based:
The nation has finally worked off the excesses of the housing bubble. Once there were too many homes for sale; now, there are too few to meet demand. That is pushing up home prices, construction and hiring — trends that could accelerate U.S. economic growth in 2013 by a full percentage point, economists say.
Home prices rose 7.4 percent in the 12 months that ended in November, according to CoreLogic. It was the largest 12-month gain in six years.
Housing starts will reach 970,000 this year, according to Patrick Newport, an economist at IHS, a 24 percent jump from 2012. That’s far above the 554,000 homes started in 2009 after the housing bust, though still below the roughly 1.5 million associated with a healthy market.
Construction companies will add 140,000 jobs this year, Newport forecasts, up from a scant 18,000 last year.
U.S. home prices show strong growth in November
By Alejandro Lazo Los Angeles Times January 29, 2013
A leading measure of home prices in the biggest American cities posted strong year-over-year growth in November.
The S&P/Case Shiller 20-city index rose 5.5% from the same month a year earlier, rising in 19 out of the 20 metro areas tracked by the gauge.
According to the index, from October to November, prices declined 0.1% — a normal seasonal slowdown. The data are the latest indication that home prices continued to rise through the end of last year as housing inventory dwindled and demand surged.
“Housing is clearly recovering,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Prices are rising, as are both new and existing home sales.”
The data indicate that the once hard-hit Sunbelt is resurgent.
Lenders gain on mortgages
San Francisco Chronicle January 23, 2013
Mortgage revenue at the four largest U.S. lenders is surpassing the costs of faulty home loans and foreclosures from the housing boom as Federal Reserve and government policies help fuel the recovery.
Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp. and U.S. Bancorp reported $24.4 billion from home lending in 2012 and expenses of more than $21.7 billion for settlements and loan repurchases, according to data compiled by Bloomberg.
For all the money the government is collecting from banks tied to the worst housing slump since the Great Depression, lenders are still making record profits, thanks to policies that are driving the accelerating rebound. Loan originations totaled $1.75 trillion in 2012, the highest since 2009, according to the Mortgage Bankers Association.
Sales of existing homes drop
San Francisco Chronicle January 23, 2013
Sales of existing homes unexpectedly dropped in the U.S. in December as the lowest supply in more than a decade cut into the industry’s best year since 2007.
Purchases fell 1 percent to a 4.94 million annual rate last month, figures from the National Association of Realtors showed Tuesday. The reading was still the second-highest since November 2009.
Even with December’s setback, 4.65 million homes were sold for all of 2012, the most in five years and a sign the housing market is taking steps toward recovery. The median price of an existing home rose to $180,800 last month, up 11.5 percent from $162,200 in December 2011. It was the biggest year-over-year gain since November 2005.
Austin Fastest Growing U.S. City . . . Again
RECON January 27, 2013
AUSTIN (Austin Business Journal) – Texas cities have dominated Forbes’ list of fastest growing cities, with one city taking the top spot for the third straight year.
With a 2012 population growth rate of 2.8 percent, Austin is America’s fastest growing city, according to Forbes and data from the U.S. Census Bureau.
Houston came in second behind the capital city with a 2 percent growth rate. Dallas took third, with San Antonio trailing at ninth.
Other top U.S. cities on the list include Raleigh, N.C. (4), Salt Lake City (5) and Seattle (6).
Can $86 Million Save a Neighborhood?
Fifteen years ago, Lands’ End founder Gary Comer embarked on a wildly ambitious project to improve the struggling South Side neighborhood where he grew up.
By Elly Fishman Chicago Magazine January 23, 2013
O n a mild September day in 1999, Gary Comer drove from his Gold Coast apartment to a neighborhood on Chicago’s Far South Side. Known as Pocket Town, it’s a small triangular “pocket” of Greater Grand Crossing bordered by Oakwood Cemetery to the north, the Norfolk Southern tracks to the west, and the Metra tracks to the east.
Like many parts of the South Side, Pocket Town had become overrun with drug dealers and gang violence in the 1970s. Block after block was blighted. The local school was failing. Fifteen percent of residents lived below the poverty line, and unemployment topped 25 percent.
Comer, a diminutive 70-year-old in khakis and a crewneck sweater, got out of his car and walked into the two-story red brick Paul Revere Elementary School. “This little guy, who barely reached my shoulder, came up to me and tapped me,” recalls Shelby Taylor, the principal at the time, a tall man with a deep voice. “He asked to take a tour of the school.”
Days later, Comer wrote a check for $68,000 to fix an electrical problem in the aging building that prevented computers from being used in the computer lab. A grateful Taylor asked Comer what he could do for him in return. Comer responded, “Well, Shelby, I would like a good soul food lunch.” Over greens, grits, and cornbread, Comer told him: “I will use all of my resources to help turn Revere around.”
Dumbstruck, Taylor learned that the unassuming senior citizen was the billionaire founder of the mail-order clothing empire Lands’ End. Comer had graduated from Revere more than half a century before. And it turned out that helping the school was only the beginning.