Daily Archives: November 4, 2014

Liberal Politics Raise Housing Prices | Bedford Real Estate

 

A post at Trulia called “Blue Markets Face Bigger Housing Challenges Than Red Markets” has been generating interest in media outlets typically read by blue voters, like The Atlantic and the Washington Post. The Post even considers itself “startled” by the connection between cities with liberal politics and higher housing prices:

Between these two poles, though (metro San Francisco voted for Obama by 58 points, metro Knoxville for Romney by 34 points), the relationship between housing affordability and politics across the country is startlingly strong.

But for those of us following the ongoing struggle to deal with rising housing costs in the city, this isn’t startling at all; in fact it makes perfect sense. As Megan McArdle points out in her take on the Trulia data, density (more people living in a smaller area) tends to bother people who already live in a city. Those that got there first are tempted to close the door behind them.

Density also multiplies the frictions over things such as noise, pets, public amenities and so forth that people have to put up with. Which increases the pressure for a resolution via the law…Consider, too, that the liberal base is composed of a large number of small interest groups with a long and successful history of lobbying government for laws. Those groups have paid a lot of attention to enabling this sort of action, making sure that their local political institutions have lots of avenues by which small groups can affect the legislative process. Everything has extensive community review, and it’s easy for local groups to file lawsuits that block some undesirable project.
Strategy and tactics in liberal politics was born out of organizing the mass movement, getting bodies into rooms where decisions are being made and using the pressure of large numbers of people, and when necessary, law suits to win. What happens in cities where there are lots of liberals is that when it comes time to grow the population, and things change and maybe get uncomfortable, the resolution is to organize for restrictions on the development and construction of new housing, policies that raise rents. And oddly, this means using the tactics pioneered by Saul Alinsky not to push for more building and more housing choice for renters and new people, but less by erecting more rules, taxes, and fees. Red and Blue Chart What’s ironic is that the more liberal cities agitate about the cost of housing, the more rules, fees, and taxes they propose. I’ve called this dynamic the “San Francisco Death Spiral,” a pattern of pressure by existing residents to make more rules on new housing because new housing is too expensive which results in higher prices and thus more agitation. The claims about gentrification and income inequality that seem to beleaguer bigger, liberal cities also are used to support the arguments for more limits on market rate housing and taxes on it to “solve” the housing problem. What’s encouraging about the Trulia data and graphics is that perhaps it will cause some soul searching among elected officials in liberal cities. Maybe those leaders might at least consider the idea that raising costs and limiting supply really do contribute negatively to housing prices. What’s needed in liberal cities is an economic and ideological reset: you can support taxes and regulation and government spending to solve social problems and also support the idea that sometimes reducing some or all of those things can solve social problems too. As liberal cities grow because they are progressive, open, and support diverse lifestyles, maybe their housing policies can be open and progressive too.

 

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http://www.forbes.com/sites/rogervaldez/2014/11/03/liberal-progressive-politics-raise-housing-prices/

Buying Real Estate as an Immigrant to the U.S. | Bedford Hills Real Estate

The housing crisis may have tempered some enthusiasm for homeownership, but many people still consider putting down roots and buying a home to be part of the American dream. This is especially true for immigrants to the U.S. In fact, they accounted for nearly 40 percent of the net growth in homeowners between 2000 and 2010, according to a report by the Research Institute for Housing America (compare this with the 1970s when they represented just over 5 percent of the growth).

But the path to homeownership isn’t always easy for newcomers. Here a look at the challenges permanent or nonpermanent resident aliens with work visas or green cards sometimes face.

Language barriers. Many immigrants are fluent in English, but for those who aren’t, discussing complex mortgage or real estate terms can be a lot more complicated than exchanging pleasantries at the grocery store or completing a transaction at the post office. For instance, Jeff Riber, a broker and owner of ERA Heavener Realty in Jacksonville, Florida, worked with two couples who immigrated from Bosnia: a daughter who was fluent in English and her parents. “She was having to run point on the entire process for her parents,” he says. “If you don’t understand the terminology, it’s unnerving.” That’s where having a trusted friend or family member to translate can help, especially if the person has been through the homebuying process.

Qualifying for a mortgage. Noncitizens working in the U.S. can qualify for traditional mortgage financing, but because lenders look at U.S. credit histories, those new to the country may not have enough time to build a credit history. With government-backed loans requiring full documentation, lenders generally want to see at least two years of U.S. tax returns from borrowers, including nonpermanent residents (those who have a valid work visa but not a green card yet), according to Rob Spinosa, a Mill Valley, California-based mortgage loan originator with RPM Mortgage. If, for instance, you have been working in the country long enough to file 2012 and 2013 tax returns, you might qualify for a mortgage backed by Fannie Mae or Freddie Mac. Having a relationship with an international institution that offers U.S. mortgages could also help secure a mortgage from that lender.

If not, you might still qualify for a loan from a portfolio lender — a company that originates mortgages and holds a portfolio of loans rather than sells them on the secondary market. As Spinosa explains, these loans typically come with a lower loan-to-value ratio (meaning you might not be able to borrow as much money), a different set of underwriting guidelines and a slightly higher interest rate. He adds that these lenders typically charge a variable interest rate rather than a fixed rate.

The process is a bit different for a non-U.S. citizen who wants to buy an investment property but doesn’t have a Social Security number tied to a credit report. “For us to get an approval for a foreign national, we are checking references for employment and credit references in the country of origin,” Spinosa says. A nonpermanent resident might also use this approach instead of waiting for two years of tax returns.

Of course, establishing credit and showing tax returns is less important if you’re paying cash, which some newcomers do. “There is lending available and they do take advantage of it, but it’s not their mentality [to take out a mortgage],” points out Reba Miller, owner of RP Miller Realty Group, a New York agency with over $1 billion in residential transactions. “It’s more of an American mentality.”

Michael Barbolla, head of Rutenberg Realty, one of New York City’s largest real estate brokerages, has seen several recent cash transactions involving foreign investors. “In many of these new buildings, they’re paying cash, and as long as there’s some verification of assets, the deals can run very smoothly,” he says.

 

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http://finance.yahoo.com/news/buying-real-estate-immigrant-u-152517779.html

Chicago sales are soaring for $1 million and above homes | Pound Ridge Real Estate

 

Luxury home sales in the Chicago area are thriving in 2014. Home sales for the $1 million-plus segment of homes in the seven-county Chicago metro area are up 8% over 2013, according to the RE/MAX Luxury Report on Metro Chicago Real Estate.

In the first three quarters of 2014, there were 1,675 total units sold at $1 million or more in Chicago, with a median sales price of $1,350,000, which is up 3% compared to the same period in 2013.

During the third quarter, sales of luxury homes totaled 736 units, a 13% increase over the same quarter of last year, the RE/MAX report states. The median sales price for luxury properties rose 3% in the third quarter to $1,340,000.

The average time on the market for luxury properties sold during the first nine months of this year in the seven-county Chicago metropolitan area was 130 days, down from an average of 166 days in 2013.

Average market time during the third quarter was 123 days, down from 132 days in 2013.

In the City of Chicago itself, luxury sales were up 13% to 763 units through the first nine months of 2014, while the median sales price for the period was $1,400,000, up 2%.

During the third quarter, sales of $1 million or more totaled 320 units in the city, up from 270 in 2013, representing a 19% gain. The median sales price for the third quarter was $1,425,000, up 6% from the same quarter of 2013.

Sales activity in the first nine months of 2014 increased in each of the three neighborhoods that dominate Chicago’s luxury attached-home (condominiums, townhouses or co-ops) market. The Loop saw sales rise to 51 units from 44 the prior year.

In Lincoln Park, sales rose to 60 units from 33, and the Near North Side had 219 sales, up from 199. The median sales price was $1.25 million in Lincoln Park and $1.4 million in both the Loop and Near North Side.

 

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Chicago luxury home sales booming

Share of freshman home buyers at three decade low | Bedford Corners Real Estate

 

home buyers and sellers; the series dates back to 1981. Results are representative of owner-occupants and do not include investors or vacation homes.

The long-term average in this survey, dating back to 1981, shows that four out of 10 purchases are from first-time home buyers. In this year’s survey, the share of first-time buyers dropped 5%age points from a year ago to 33%, representing the lowest share since 1987 (30%).

Lawrence Yun, NAR chief economist, says there are many obstacles young adults are enduring on their path to homeownership.

“Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce,” he said. “Adding more bumps in the road, is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”

Yun said that he sees some problems being alleviated going forward.

“Stronger job growth should eventually support higher wages, but nearly half (47%) of first-time buyers in this year’s survey (43% in 2013) said the mortgage application and approval process was much more or somewhat more difficult than expected. Less stringent credit standards and mortgage insurance premiums commensurate with current buyer risk profiles are needed to boost first-time buyer participation, especially with interest rates likely rising in upcoming years.”

The household composition of buyers responding to the survey was mostly unchanged from a year ago. Sixty-five% of buyers were married couples, 16% single women, 9% single men and 8% unmarried couples.

In 2009, 60% of buyers were married, 21% were single women, 10% single men and 8% unmarried couples. Thirteen% of survey respondents were multi-generational households, including adult children, parents and/or grandparents.

 

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http://www.housingwire.com/articles/31934-nar-dearth-of-first-time-buyers-plagues-housing