Discussing why HUD changing their mission statement does not change how I do business, mortgage credit availability, where home prices are today and where they are headed, why we are not seeing another housing bubble, construction employment, the affect of inflation and rising mortgage rates on housing and more!
HUD Changing Their Mission Statement
Recently, it was reported that HUD is changing their mission statement:
Housing and Urban Development Secretary Ben Carson is changing the mission statement of his agency, removing promises of inclusive and discrimination-free communities.
In a March 5 memo addressed to HUD political staff, Amy Thompson, the department’s assistant secretary for public affairs, explained that the statement is being updated “in an effort to align HUD’s mission with the Secretary’s priorities and that of the Administration.”
The current HUD mission statement as of today reads:
HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination, and transform the way HUD does business.
And the new mission statement is:
HUD’s mission is to ensure Americans have access to fair, affordable housing and opportunities to achieve self-sufficiency, thereby strengthening our communities and nation.
While it is simpler, does it deserve the criticism it has garnered from many different housing organizations?
Consider this statement from NAR President Elizabeth Mendenhall:
As REALTORS® join with our industry partners, allies and consumers throughout 2018 to commemorate the 50th anniversary of the Fair Housing Act, we believe that fair housing for all should remain a core part of HUD’s mission. The Fair Housing Act provides that HUD will enforce the Act and administer its programs and activities in a manner that affirmatively furthers fair housing. When President Lyndon B. Johnson signed the Fair Housing Act into law, he exclaimed that fair housing for all—all human beings who live in this country—is now a part of the American way of life. Not only is fair housing integral to the ethical commitment of our members, as outlined in the REALTOR® Code of Ethics, it is critical to our ability to serve our customers, clients, and the community. We look forward to continuing our work with HUD to advocate for inclusive sustainable communities free from discrimination.
As a Realtor and a human being with a heart, working brain and a soul, I am opposed to any and all discrimination.
Even if NAR was not doing the right thing when it comes to Fair Housing, I still would.
Even if HUD is not doing the right thing when it comes to Fair Housing, I still will.
I do not need the Code of Ethics or the law or any government regulation to force me to do the right thing. HUD changing their mission statement does not mean I will change who I am.
Just because something is legal or the rules allow it does not mean it is right, moral or ethical. I will always do what is right, moral, ethical and legal and hope all Realtors will do the same.
We have to be realistic because as sad as it is, there are many that will discriminate nomatter what HUD’s mission statement is. Much of the recent craziness about being politically correct is totally overboard to me…
But Fair Housing is NOT something to forget about or ignore! HUD Secretary Ben Carson recently spent $31,000 on a table instead of focusing on leading HUD to do what is right for ALL Americans.
Wasting tax payer dollars instead of fighting discrimination is NOT an example of how to be HUD Secretary in my opinion.
I strongly suggest you also read HUD’s mission to combat discrimination is as important now as ever and New HUD Mission Statement Undermines Fair Housing for All
Mortgage Credit Availability Decreases in February
Mortgage credit availability decreased in February according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) which analyzes data from Ellie Mae’s AllRegs® Market Clarity® business information tool.
Lynn Fisher, MBA’s Vice President of Research and Economics, said:
Credit availability fell in February by 1.2 percent, led downwards by a decline in conventional offerings. A change in program offerings from a single large investor in the conventional space was responsible for much of the net decline. The decline in February returned the jumbo component index to levels just above year-end levels, and the conforming component index to levels just above last October. The government component index continued along the same modest downward trajectory that it has been on for nearly a year.
This is not good but anyone looking to buy a home should not be overly concerned. Simply sit down with several mortgage professionals to discuss your mortgage options and you will find that credit worthy home buyers have nothing to fear.
Will Home Prices Increase Nearly 4% in Next 12 Months?
Among the REALTOR® respondents who responded to the January 2018 survey, the median expected price change for the next 12 months was 3.6 percent, according to the January 2018 REALTORS® Confidence Index Survey. In December 2017, the median expected price change was 3.1 percent. Strong buyer traffic amid low supply of homes coming into the market continues to push up home prices. In January 2018, the median price of existing homes sold rose to $240,500, up six percent from one year ago.
Check out this map showing the median expected price change of the survey respondents in the next 12 months at the state level:
You can see this map is showing an expectation of home prices in South Carolina to increase over 3% in the coming year. I would caution everyone to consult with a local experienced Realtor to discuss what is happening in their local market and what is possible or realistic for a specific property.
I know that many are thinking we could be seeing…
Another Bubble in Home Prices?
CoreLogic recently reported that U.S. property values increased by more than 37% over the last 5 years. This does appear to be ample reason to be worried that we are seeing another housing bubble like the one that happened back in 2006-2008.
Check out this chart using the CoreLogic data to show how home prices increased between December 2012 and 2017 by state:
Frank Nothaft, Chief Economist at CoreLogic, said:
Homeowners in the United States experienced a run-up in prices from the early 2000s to 2006, and then saw the trend reverse with steady declines through 2011. After finally reaching bottom in 2011, home prices began a slow rise back to where we are now.
Greater demand and lower supply – as well as booming job markets – have given some of the hardest-hit housing markets a boost in home prices. Yet, many are still not back to pre-crash levels.
You have to remember that back in 2012 we were coming out of the housing market crash. Home prices since 2012 have been increasing but not in a way that was unexpected!
Every 3 months, Pulsenomics conducts a survey of over 100 economists, real estate experts, and investment and market strategists. They ask them to predict how home prices will increase in the next five years.
According to the December 2012 survey, US homes prices were predicted to appreciate by 23.1% by December 2017. The most optimistic of those surveyed said that home prices would increase 33.6% and the most skeptical expected home prices to increase by 11.2%.
You can see that the predicted home price appreciation rate was BELOW what actually happened! The most recent Pulsenomics survey said that home prices should grow by 18.2% during the next 5 years.
Remember that these “experts” were well under what happened in the last 5 years! We must remember that many “experts” also did not see the last housing bubble or warn of the housing market crash.
Which is why the recent report, How to Use Real Estate Trends to Predict the Next Housing Bubble from Teo Nicolais at Harvard Extension School is so interesting. He determined that another housing bubble probably won’t happen until 2024.
Nicolais looked at previous peaks in real estate values going all the way back to 1818 by using the research of various economic experts. The report describes the four phases of a real estate cycle and explains each phase.
Those who study the financial crisis of 2008 will (we hope) always be weary of the next major crash. If George, Harrison, and Foldvary are right, however, that won’t happen until after the next peak around 2024.
Between now and then, aside from the occasional slow down and inevitable market hiccups, the real estate industry is likely to enjoy a long period of expansion.
The reason why we are seeing home prices increase is because there is high demand and limited supply. This is different than the housing bubble when speculation drove the market.
The key for anyone looking to buy or sell is to consult with a local Realtor about what is happening in your area. If you have any questions about buying or selling real estate in the Anderson SC area. please Contact Me!
Construction Employment Increases in 35 States
Thirty-five states and the District of Columbia added construction jobs between January 2017 and January 2018, while 32 states and D.C. added construction jobs between December and January, according to an analysis by the Associated General Contractors of America of Labor Department data released today. Association officials cautioned, however, that newly-imposed tariffs on steel and aluminum products are likely to undermine future job growth in the sector.
AGC chief economist Ken Simonson said:
The widespread growth of these good-paying jobs is encouraging. But many of the jobs are at risk if unwise tariffs push up materials costs, making projects unaffordable, and if the nation continues to underfund infrastructure investment.
There is no doubt that the tariffs could have a negative impact on the economy and housing market as I covered over a week ago in this article. It is a shame to see something that could derail the economy or housing market being pushed in Washington.
What Does Faster Inflation and Rising Mortgage Rates Mean for Housing?
Healthy economic growth and a strong labor market are increasing the risk of rising inflation, which increases the likelihood the Fed will raise rates faster than currently expected. The latest jobs’ report indicated a strong start to 2018, with total non-farm payroll employment increasing by 313,000. Impressively, the labor market strength was broad-based, as all industries experienced job gains in February. The robust job market is gradually putting upward pressure on compensation, with wages up 2.6 percent compared with a year earlier.
The fate of consumer house-buying power in 2018 will depend on the tug-of-war between rising household income and inflation-driven pressure on mortgage rates.
So, if the rate of inflation accelerates and the Fed reacts with more rate increases, what does that mean for housing? Rising inflation will also push up long-term bond yields to compensate investors for the higher level of inflation. For example, the yield on the 10-year Treasury note has already climbed about 0.6 percent since the start of the year on the expectation of rising inflation. Mortgage rates follow the same path as long-term bond yields. According to data released by Freddie Mac last week, the 30-year, fixed-rate mortgage rate increased to 4.43 percent, up 0.5 percent from the beginning of the year and the eighth consecutive week of rising mortgage rates. A higher mortgage rate means reduced house-buying power.
While no one knows with 1005 certainty what the future holds, we do know that if mortgage rates and home prices keep increasing it will decrease the budget of some home buyers.
With the limited inventory of affordable homes, things could get pretty hairy for some home buyers!
Final Rule on Borrower Notice of Foreclosure Prevention Options Issued
The Truth in Lending Act requires mortgage servicers to provide periodic statements to borrowers, and the Bureau has developed sample forms for servicers to use. The 2016 mortgage servicing rule requires that servicers send modified periodic statements or coupon books to certain consumers in bankruptcy starting April 19, 2018. The rule also addressed the timing for servicers to transition to providing or ceasing to provide modified periodic statements to consumers entering or exiting bankruptcy. After issuing the rule, however, the Bureau learned that certain technical aspects of the timing of this transition may create unintended challenges and be subject to different legal interpretations. In October 2017, the Bureau sought public comment on a proposed rule that would provide greater certainty to help servicers comply. Today the CFPB is finalizing that proposed rule. Specifically, the final rule provides a clear single-statement exemption for servicers to make the transition, superseding the single-billing-cycle exemption included in the 2016 rule.
Hopefully this is not going to lead to abuse by some lenders and will be an improvement on the old confusing system the lenders had to follow. Only time will tell…
Well that is all I have time for today! Be sure to share and subscribe!