Monday, October 3, 2011
Here's a property story from my local paper. Heiress Emma Watts grew up in creepy-looking mansion in Richmond, Kentucky. During her life, the local university (Eastern Kentucky U.), repeatedly attempted to purchase the property from her. The relationship between Emma and EKU deteriorated, and she refused to sell.
Here's the propety angle: When Watts died in 1970, her will specified that the mansion could never be sold. She left a trust fund to pay for basic upkeep and, for four decades, no one has touched the building or its furnishings. The will reads:
(The trustee) shall have no power or authority to sell or in any manner hypothecate any of my real estate located in Madison County, Kentucky, or any of the furniture, furnishings, linens, china, silver, glassware, books, ornaments or other tangible personal property located in Elmwood at the time of my death. . . . It is my primary testamentary intention to preserve my residence, “Elmwood,” and to maintain it in its present condition, in so far as is possible, for the benefit of my cousins, Margaret Kilgore Cope, Millard Lewis Cope, Jr., and Margaret Parhan Cope.
Thursday, September 29, 2011
When the census first started measuring the size of American households, back in 1790, the average home had nearly six people in it. By 1960, that number had fallen to just over three. According to early 2010 estimates—although the data also shows many of us doubling up to make rent in the recession—we’re now down to about 2.6.
But there’s one group that still hasn't caught on: homebuilders. American households have been shrinking for years at exactly the same time as our houses have been expanding. By a lot. Data from the Center for Neighborhood Technology compares trends in household size to census data on home construction, showing that the average size of new homes swelled from 1,400 square feet in 1960 to 2,100 four decades later.
The article goes on to hypothesize about what will become of all the McMansions that sprang up in the mid-1990s.
Monday, September 26, 2011
From the N.Y. Times: Why rent when you can move back home?
The author argues that the American obsession with real estate and independence is undermining our happiness and financial well-being:
I suspect that many young American adults who have to move in with their parents feel crummy about it. Most Russian immigrants I know do not. They don’t see it as a sign of failure but as a means to achieve their financial goals more quickly. Are Americans really all that desperate to break free of their parents? Or does the push toward independence originate from the top? Are baby boomers sending the not-so-subtle message to their children that they prefer an empty nest?
Tuesday, September 20, 2011
Not in California. The California Fair Employment and Housing Act bars discrimination based on a rental applicant's source of income, as long as the applicant can show the financial ability to pay the rent. The justification for this rule is "the need to protect access to housing for rental applicants whose income comes from sources other than employment," such as social security and pension benefits.
Thursday, September 1, 2011
Tuesday, August 23, 2011
Elan Nichols (Michigan State) has posted Unanswered Questions Under the PTFA: Exploring the Extent of Tenant Protections in Foreclosed Properties (Journal of Affordable Housing) on SSRN. Here's the abstract:
The somewhat new Federal Protecting Tenants at Foreclosure Act (the “PTFA”), as recently amended, still leaves many questions of interpretation in states with the foreclosure by advertisement process, and in states with laws related to issues on which the PTFA is silent. The PTFA is vague in places, and does not address certain issues raised by the foreclosure processes in certain states, where state law is not clearly preempted.
This article will examine how the PTFA, including the recent amendments and any recent judicial and advisory opinions, applies in states with the foreclosure by advertisement process (as opposed to judicial foreclosure). The article will use Michigan as a case study for this inquiry, briefly discussing other states with a similar process. In so doing, the article will discuss issues raised in these states concerning matters on which the PTFA’s terms are vague or wholly silent.
To that end, this article picks up where the article, “Interpreting the Protecting Tenants at Foreclosure Act of 2009,” 19 J. of Affordable Housing & Community Dev Law 205 (Winter, 2010), by Allyson Gold, left off. Of particular assistance will be the recent statutory amendments, any relevant case law, interpretive statements from the Department of Housing and Urban Development, and the “working interpretation” adopted by legal services providers and others agencies dealing with the foreclosure crisis. Consequently, this article will conclude with a proposal for a reasonably fair interpretation of the PTFA in states with foreclosure by advertisement and in states where the PTFA is not expressly preempted but still leaves questions.
Monday, August 15, 2011
Monday, August 8, 2011
Charles Lamb (SUNY Buffalo - Political Science), Eric Wilk and Nicholas Seabrook have posted The Right to Fair Housing: It's Development, Growth, and Enforcement on SSRN. Here's the abstract:
The right to fair housing was initially created by the Thirteenth and Fourteenth Amendments and the Civil Rights Act of 1866. During the twentieth century, however, state governments adopted laws prohibiting various types of housing discrimination before Congress enacted the most important federal guarantee - the Fair Housing Act of 1968 (Title VIII of the Civil Rights Act of 1968). Indeed, not only did state governments precede the federal government in expanding the right to fair housing between the late 1930s and 1968, but state laws were usually broader than Title VIII in both their coverage and administrative enforcement provisions. Title VIII also strongly encouraged the expansion of fair housing rights at the state and local levels by requiring that subnational governments have the first opportunity to enforce the Fair Housing Act if they passed legislation substantially equivalent to Title VIII. This cooperative federalism requirement has dramatically influenced the growth and enforcement of fair housing rights. States and localities throughout most of the nation have significantly strengthened the right to fair housing since the early 1980s, increasingly enforcing Title VIII. To determine how well this cooperative federalism arrangement is working, we first compare the enforcement performance of HUD and state and local civil rights agencies along several dimensions by relying on two data sets obtained from HUD. Using one of these data sets, we then explore the extent to which federal, state, and local agencies provide outcomes favoring complainants in housing discrimination cases. We find that Title VIII enforcement at the state and local levels is often better than HUD enforcement. We further conclude that state civil rights agencies resolve complaints in favor of complainants nearly as often as HUD and that localities sometimes do so even more frequently. We address policy implications briefly in our conclusions.
Monday, August 1, 2011
The Israeli government is currently facing massive, nation-wide protests over the high cost of housing. On Saturday, 150,000 seemingly middle-class people took to the streets to demand socioeconomic change and "social justice." The anger has the Prime Minister Netanyahu so spooked that he's canceled a trip to Poland to deal with the situation.
As the New Yorker reports, the protesters "aren’t saying they can’t afford to get by, just that they can’t afford to live in the city. And the protesters contend that Israel has no Brooklyn or Scarsdale equivalent. One of them, Shlomo Krauss, criticized the outskirts of Israel for “their dubious infrastructure, failing public transportation and zero employment opportunities” in a widely circulated op-ed laying out the protesters’ gripes, with the headline, “Don’t call us spoiled.” Some sources estimate that the price of buying an apartment has gone up 55% over the five years, while rents have increased by 27% .
For me, the big surprise is how anti-market the protesters seem. They're calling for the government to "immediately get involved in the housing market. [T]hey would like to see fair housing for all, achieved by the construction of public housing projects, in addition to government oversight over the rentals market."
From an outsiders perspective, the problem looks very, very different; If anything it seems like there's way too much government involvement in the housing market already. The Israel Land Administration controls a huge chunk of the country's property, while the nation's planning bureaucracy moves at an infamously slow pace. Free up more land for development and you'll get more apartments. Moreover, there's clearly a title security problem that needs addressed (and no one seems to mention). Who wants to invest in infrastructure anywhere near the border before a lasting peace has been established?
(image found with creative commons search)
Friday, July 22, 2011
Property owners in San Francisco are converting large numbers of rental apartments into short-term quarters for tourists. Some are blaming the city's rent control laws for this "hotelization:"
Ms. Kelley predicted that more units would be turned into vacation rentals as landlords sought to avoid rent-control laws available to long-term tenants.
“The city has made its bed with restrictive rent-control laws,” she said, “but with a vacation rental you can avoid that.”
Thursday, July 21, 2011
Thomas Sprakling (Columbia - student) has posted Does Five Equal Three? Reading the Takings Clause In Light of the Third Amendment's Protection of Houses (Columbia Law Review) on SSRN. Here's the abstract:
The Supreme Court’s 5-4 decision in Kelo v. City of New London broke new ground by holding that the seizure of owner-occupied homes as part of a plan to foster economic development was a taking for “public use” under the Takings Clause of the Fifth Amendment. Kelo’s many critics have yet to advance a constitutionally-grounded rationale for why homes should receive special protection from condemnation. This Note argues that the Third Amendment’s solicitude for the home provides a constitutional basis for distinguishing between homes and the other forms of “private property” covered by the Takings Clause. The Amendment, which provides that “[n]o soldier shall, in time of peace be quartered in any house, without the consent of the owner, nor in time of war, but in a manner to be prescribed by law,” shares both historical and textual links with the Clause. These connections suggest the judiciary should apply a form of heightened scrutiny similar to the “meaningful” review standard proposed by Justice Kennedy’s concurring opinion in Kelo when determining whether the government’s seizure of an owner-occupied home is for “public use.”
Wednesday, July 13, 2011
For those that haven't kept up with the career of Marion Barry, you'll be happy to hear that the erstwhile crack smoking mayor of D.C. is back on the city council. And not only is he back, he's proposing aggressively stupid legislation. Specifically, Barry plans to introduce a bill that would ban the construction of all new apartment buildings in his Ward (Here's a copy of the Bill's text). Why??? Barry thinks this plan will encourage home-ownership and the renovation of the area's dilapidated housing. "The American dream is to own a home. And black people have not gotten the American dream as much as they need to," he says. "Somebody can rent for 20 years, and has no equity in their unit at all."
It's hard to see how this bill helps the people of Ward 8 in any way. If anything D.C. in general, and Ward 8 in particular, needs denser & more affordable housing. Right now, DC's population is exploding. So any proposal to artificially limit the supply of available rentals seems likely to push (poor) long-term residents out of the neighborhood. It's also tough to comprehend how this land use measure would help the folks of Ward 8 acquire the downpayments and credit history that are the normal barriers to home ownership.
Perhaps the really interesting question here isn't about the policy but rather, why do people in D.C. keep voting for Barry?
Friday, July 8, 2011
Across the country, apartment vacancies are dropping fast and rents are starting to creep up. If you're looking for signs that the economy is about to turn around, this might be a good sign. If buying a home becomes more attractive versus renting that should kick-start the construction sector of the economy, which will lower unemployment, which will allow more people to buy more homes...
(Graph from calculatedriskblog.com)
Thursday, June 9, 2011
Tuesday, June 7, 2011
Five months ago, Bank of America filed foreclosure papers on the home of Maurenn Nyergers. The trouble for Bank of America is that Nyergers never had a mortgage - she paid cash for her house.
The case eventually went to court and Nyergers was able to prove she didn't owe Bank of America a dime. In fact, the judge ordered Bank of America to pay Nyergers' legal fees.
But then, Nyergers said she waited more than five months for a check. So the family's lawyer, Todd Allen, moved to seize the bank branch's assets. Allen instructed sheriff's deputies and movers to remove desks, computers, copiers, filing cabinets and any cash in the teller's drawers.
According to sources, bank employees were locked out of the branch and the bank's manager appeared "visibly shaken" and "bewildered." Yet, within the hour, a fairy tale ending; The bank manager handed over a check to the lawyer for the legal fees.
Thursday, June 2, 2011
Slate argues that, "the American economy is making a significant shift from buying to renting, and that may ultimately be good news." More specifically, the piece makes the case that:
Contrary to the housing-bubble dogma that a mortgaged apartment or house provides a pathway straight to the American Dream—and contrary to the tax code, which encourages buyers and discourages renters with a huge break for mortgage interest—renting is better than owning for many Americans. Indeed, dozens of recent studies have shown that, excepting the go-go bubble years, houses tend not to make very good investments at all: A prospective homebuyer would have made more money taking her down payment, parking it in inflation-adjusted Treasury bonds, and renting.
This is all well and good (and true), but the author ignores a lot of the other, non-economic benefits of homeownership. First, there's the security of knowing that, as long as you make the payment, no one can take the place away from you. The landlord can't turn your dwelling into condos at the end of the year. Second, there are real autonomy benefits to home ownership. You have the freedom (and incentive) to install expensive window treatments, granite countertops, and the hot tub of your dreams. Finally, other than wearing sweater-vests, there's just nothing else in our national culture that signals a person is mature, and trustworthy, and respectable like owning a home.
A house may not be a good investment, but it is a terrific consumption good.
Tuesday, May 31, 2011
David Reiss (Brooklyn) has posted Foundations of Federal Housing Policy (book chapter) on SSRN. Here's the abstract:
Federal housing policy is heavily funded and made up of a morass of programs. This book chapter provides a taxonomy of goals for housing policy. The chapter first asks what the aim of housing policy is. In other words, what can a well-designed and executed housing policy achieve? The answer to this question is not at all clear-cut. Some argue that the aim of housing policy is to allow all Americans to live in safe, well-maintained and affordable housing. Others argue for a more modest aim – achieving an income transfer to low- and moderate-income families that mandates that the income transferred is consumed in increased housing. And yet others argue that the main aim is to create a nation of homeowner-citizens, a goal which hearkens back to Jefferson’s idealized “yeoman farmer” and continues through to George W. Bush’s "ownership society."
Beginning with these possibilities, I identify and categorize various "principles" of American housing policy. This is an important exercise because 80 plus years of housing policy; hundreds of billions of dollars; and literally hundreds of different housing programs have all conspired to confuse the essential aims of American housing policy. This chapter seeks to clarify debates surrounding American housing policy as the Obama Administration puts its own stamp on this field.
Thursday, May 19, 2011
One of the eye-opening aspects of blogging here is this: often, if one of us puts up a post that contains the word "mortgage," we get spam in the comments box. I would not be in the least surprised to find a comment on this post tomorrow that reads something like this:
This is a very interesting discussion of will mortgage scammers never cease. I like to read about will mortgage scammers never cease. Will mortgage scammers never cease is very important.
Refi-now [at] lowestrates [dot] com
Since these usually come in response to a post about the latest mortgage industry outrage, it (frankly) pisses me off.
And just tonight, during dinner, I got a call from someone in Newport, CA, claiming to be working for Fannie Mae. He told me my mortgage had "crossed his desk" and he wanted me to know, as a public service, that I could get a much lower rate, and he was prepared to tell me how. I told him . . . well, I suppose this is a family blog, but I told him that I did not think highly of him.
I was naive enough to think that the mortgage crisis would have put, if not an end, at least dampener on this type of despicable activity. This is exactly how so many people's lives were ruined, and exactly why the mortgage industry became such a chaotic, undisciplined, unethical nightmare that lenders can't even produce the note for mortgage loans on which they intend to foreclose.
But if it wasn't apparent before, it should be apparent now that the mortgage crisis -- that is, the crisis of the mortgage industry -- is in the past. Its particpants either walked away before the scam collapsed, or got bailed out if they were left holding the cards.
Now they're back in action. Want proof? The front page of the on-line version of today's New York Times has an ad for "Orange Home Loans As Low as 3.05% APR." Click on the link, and you get an offer for a 5 year fixed rate mortgage loan at 2.99% if you can put 20% down, but with monthly payments set as if the loan were a 30 year fixed rate. In other words, when 5 years have gone, and you need to re-finance, you'll have built up no new equity in the home because you've been paying as if you had 30 years to pay it off, not 5. You'll essentially have to purchase the home again, at a much higher rate. And this isn't some fly-by-night company. At least they require 20% down.
So the crisis of the mortgage industry is over. Instead, what we have now is a foreclosure crisis. A crisis that is rendering families homeless, destroying equity in homes, and in some places (here's looking at you, Florida) undermining the rule of law.
Soon we'll have a restitution crisis.
If we get any spam in response to this post, I'll post it as an addendum here.
Mark A. Edwards
[comments are held for approval (and now you know why), so there will be some delay in posting]
Christopher J. Mayer (Columbia Business), Edward R. Morrison (Columbia Law), Tomasz Piskorski (Columbia Business) and Arpit Gupta (Columbia Business) have posted Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide on SSRN. Here's the abstract:
We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with subprime mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide's relative delinquency rate increased thirteen percent per month immediately after the program's announcement. The borrowers whose estimated default rates increased the most in response to the program were those who appear to have been the least likely to default otherwise, including those with substantial liquidity available through credit cards and relatively low combined loan-to-value ratios. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.
Monday, May 16, 2011
As someone with a strong sense of place (I love love love my hometown) I was happy to see this article in the New York Times. Constance Rosenblum discusses the joys (and some of the frustrations) of staying put in one home and one city for decades.
People stay in one place for many reasons. Often the explanation is financial. In a city of ever-pricier housing, giving up even the tiniest rent-stabilized space can seem insane. If a personal or professional life doesn’t change much, there may be no incentive to move, and even if a life evolves, a space may be elastic enough to accommodate shifting needs. Sometimes it’s simply easier to stay than to go.