Matrix Blog

Read my latest Bloomberg View column Income Inequality Hits the Housing Market.

This article turned out to be my most-commented on piece so far. The topic of affordability generates a hotbed of conversation.

Here’s an excerpt…

There’s been plenty of talk recently about signs of recovery in the housing market. Rather than think about housing as a single market, it might be helpful to look at housing as many markets based on everything from geography to price to new versus existing…

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Tags: New Home Sales, U.S. Census

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Read my latest Bloomberg View column Do First-Time Homebuyers Need Help?.

Please join the conversation over at Bloomberg View. Here’s an excerpt…

To bring more first-time buyers into the housing market, Fannie Mae and Freddie Mac recently said they would offer certain mortgage programs that require down payments of as little as 3 percent, down from 5 percent. Because first-time buyers already make up a large share of the housing market, the wisdom of this policy change should be open to question…

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Tags: Fannie Mae, First-Time Buyers

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Read my latest Bloomberg View column Credit Crunch Lives on in Housing. Please join the conversation over at Bloomberg View. Here’s an excerpt…

Don’t be fooled by low mortgages rates, which once again are below 4 percent: Credit for buying a home or refinancing an existing mortgage has almost never been tougher to get.

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Tags: mortgage interest rates, financial crisis, CoreLogic, credit crunch, Housing Credit Index, Mortgage

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Read my latest Bloomberg View column Only Brooklyn Is Over the City’s Housing Bust. Please join the conversation over at Bloomberg View. Here’s an excerpt…

Housing prices in four of New York’s five boroughs still haven’t reached their pre-crash highs. The outlier? Brooklyn.

Housing prices in Brooklyn now are more than 8 percent above the peak reached in 2007. The other four boroughs, meanwhile, are all more than 10 percent below their highs, with the Bronx still down by almost a quarter….

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Tags: median sales price, financial crisis

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Read my latest Bloomberg View column When $7 Million Is Average for Manhattan. Please join the conversation over at Bloomberg View. Here’s an excerpt…

It’s pretty much universal knowledge that Manhattan real estate is expensive. What isn’t so well known is what’s happening at the top of the market: Price increases have been crazy.

Ever since the financial crisis, housing prices for the most-expensive 10 percent of the Manhattan market have increased more than 15 percent. Compare that with the modest 2.5 percent gain for the remaining 90 percent of the market….

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Tags: financial crisis

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Read my latest Bloomberg View column Giant Condo Tower Needs More Billionaires. Please join the conversation over at Bloomberg View. Here’s an excerpt…

In post-crash Manhattan’s high-end real estate, few projects loom larger or more visibly than the 1,004-foot-high One57, the tallest residential-hotel building in New York. This is a rarefied market, with two penthouse units selling for more than $90 million each, including one to hedge-fund baron Bill Ackman.

Amid all the hyperventilating about the tower, including complaints that it’s out of scale with the neighborhood, it’s poorly reviewed design and that it casts an afternoon shadow on Central Park in the winter, the little known fact is that the 92-unit building seems to be less of a hit with buyers than one might glean from the PR machine….

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Tags: One57, Contracts, Extell, Billionaires Row, alternative financing, construction financing

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Read my latest Bloomberg View column Housing’s New Wealth Effect. Please join the conversation over at Bloomberg View. Here’s an excerpt…

It was a busy week for housing market reports. The U.S. Census published its new home-sales results for August, showing an 18 percent gain from the prior month and a 33 percent increase from August 2013. News headlines relied on words such as “surged” and “soared” to describe the results.

Only a few days earlier, the National Association of Realtors released its existing home-sales report for August, which showed month-over-month sales falling for the first time in four months. The inventory of unsold properties was 4.5 percent higher than a year earlier. I recently addressed the market slowdown in “Understanding Housing’s Dog Days.”

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Tags: Existing Home Sales, Inventory, New Home Sales, Absorption, Wealth Effect, U.S. Census, NAR, National Association of Realtors

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Read my latest Bloomberg View column Guess What’s Holding Back Housing. Please join the conversation over at Bloomberg View. Here’s an excerpt…

During the U.S. housing boom, real-estate appraisers acted like deal-enablers rather than valuation experts. Indeed, inflated appraisals were a key ingredient in the erosion of mortgage-lending standards that led to the housing bust. Now we are seeing the opposite — low appraisals — with unwelcome consequences for the housing market.

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Tags: HVCC, Dodd-Frank, Housing, low appraisals, Andrew Cuomo, Home Valuation Code of Conduct, Federal Reserve Bank of Philadelphia, hit the number

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Was asked to guest host this morning for the 7-8am hour on Bloomberg TV’s Surveillance. Tom Keene, Scarlet Fu and Adam Johnson team up for a must-watch show every morning.

In the first clip we talk Manhattan Luxury market problems and records. In the second clip we banter about the bendable iPhone Plus and housing as an investment. These two articles likely prompted my invite:

NYC Luxury-Condo Buyers Await New Towers as Sales Slow [Bloomberg News]
NYC’s Most Expensive Condo to Be Listed at $130 Million [Bloomberg News]

Tags: Tom Keene, Bloomberg TV, Scarlet Fu, Bloomberg Surveillance, Adam Johnson, iPhone, Apple, Stocks

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[Source: WSJ]

I really like the way this chart illustrates the 20 year decline in the homeownership rate. A few thoughts on what it shows:

Under 35 – Lowest in 20 years – record student debt and tepid economy plays a significant role in falling rate.

35-44 – most volatile, has overcorrected – large gain during credit boom and fell well below 1994 levels.

45-54 – fell below 1994 levels but didn’t rise as much during credit housing boom.

55-60 – higher than 45-54 group but followed a similar arc – fell below 1994 levels but didn’t rise as much during credit housing boom.

65 and above – only category to finish higher than 1994 levels – not heavily influenced by credit bubble.

Overall – is currently higher than 1994 levels. Coming down from artificial credit bubble high – probably won’t stop declining until credit begins to normalize.

Tags: homeownership, Josh Mitchell

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The National Association of Real Estate Editors just held their annual conference and one of the experts was Lawrence Yun, the chief economist of the National Association of Realtors.

Admittedly he has always seen the real estate world through different lenses than I so I am often thrown for a loop when I come across some of the rationale for the current state of the housing market.

A local media outlet recapped his NAREE speech but since I didn’t attend and there is no transcript, I’ll go with the following paraphrasing:

Mortgage rates reached record lows in 2012 and 2013 of around 3.3 percent for 30-year home loans. Homeowners don’t want to let go of those once-in-a-lifetime bargain mortgages, says Lawrence Yun, chief economist for the National Association of Realtors. So homeowners avoid putting their homes on the market in order to keep those low mortgage rates and that has resulted in super low inventories of home for sale. Although rates are still low (less than 5 percent) many people are opting to rent out their houses so they can hang onto great mortgages, Yun says.

Here’s another way to look at what he says is happening:

Yun – Home sales are not rising (year-over-year) because mortgage rates are so low that would-be sellers won’t sell. They simply love their low mortgage rate more than moving.

My view – Home sales are not rising (year-over-year) because of a combination of rapidly rising home prices that reduces affordability and historically tight mortgage lending standards that resulted record low inventory. Tight credit keeps the roughly 40% of home owners with low or negative equity from selling because they don’t qualify for the next mortgage. Hence, sales fall.

There is clearly way too much emphasis on mortgage rates in our housing economy.

Tags: Existing Home Sales, Lawrence Yun, EHS, NAREE, mortgage interest rates, NAR, National Association of Realtors

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Wlliam Black, a former bank regulator, made a TED Talk last fall that I wish I had made (but I couldn’t be as eloquent although I have a cooler tie). It should be required viewing by anyone who is connected with the housing industry.

Black’s presentation lays out the financial crisis in the proper context. He provides the recipe for disaster for all to see and it is NOT complicated to understand. Change the perverse incentives and a lot of this goes away. So many opportunities to avoid this crisis were missed.

And this is the first time I’ve heard someone talk about the unrelenting pressure that banks (and mortgage brokers) placed on appraisers, essentially forcing our industry to either make the number of get out of town. By 2007, 90% of appraisers said they were coerced by banks to make the number. That seems low to me. It had to be 100% or else those 10% of appraisers were living in a cave.

I’ll be returning to this video periodically for the foreseeable future as a reminder.

Tags: Alan Greenspan, Ben Bernanke, OCC, TED, OTS, William Black, Regulators

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