Monthly Archives: May 2020

Building materials prices drop 6.6% Bedford Hills Real Estate

Prices paid for goods used in residential construction decreased 4.1% in April (not seasonally adjusted)—the largest monthly decline on record—according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The year-to-date decline (-5.4%) in residential construction inputs prices is more than three times larger than the previous record (-1.3% in 2009).

Building materials prices have fallen 6.6% since April 2019 by -0.6% per month, on average. In contrast, prices increased 0.2% per month, on average, from April 2018 to April 2019. The index now stands at its lowest level since August 2017.

Prices paid for gypsum products decreased 1.3% in April (seasonally adjusted) after climbing 2.2% in March. The price index for gypsum products has decreased 4.4% in 2020 and has fallen 9.5% since its most recent peak in March 2018.

Gypsum product prices have declined 4.4% YTD, the largest January-to-April decrease since seasonally adjusted data became available in 2012.

Although the PPI report shows that softwood lumber prices declined 10.8% (seasonally adjusted) in April, the decrease is at odds with recent prices reported by Random Lengths.  According to their weekly data, prices fell a more modest 2.7% over the month.

The discrepancy between the BLS and Random Lengths data stems from known differences in survey timing.  We anticipated this in last month’s PPI post, in which we stated that the decline over the last 10 days of March “should be captured in next month’s PPI report.”

Prices paid for ready-mix concrete (RMC) decreased 0.4% in April (seasonally adjusted), following a 0.7% increase in March. The RMC index has increased 1.1% year-to-date (YTD), which is close to the historical average YTD price change in April.

Prices were little changed from March to April in the Northeast (unchanged), Midwest (-0.2%), and South (-0.1%), but increased 1.9% in the West region (not seasonally adjusted). Since the beginning of 2020, RMC prices have decreased 3.2% in the Midwest but have climbed 5.0%, 1.1%, and 0.5% in the South, West, and Northeast, respectively.

Other changes in indexes relevant to home building are shown below.

in April (not seasonally adjusted)—the largest monthly decline on record—according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The year-to-date decline (-5.4%) in residential construction inputs prices is more than three times larger than the previous record (-1.3% in 2009).

Building materials prices have fallen 6.6% since April 2019 by -0.6% per month, on average. In contrast, prices increased 0.2% per month, on average, from April 2018 to April 2019. The index now stands at its lowest level since August 2017.

Prices paid for gypsum products decreased 1.3% in April (seasonally adjusted) after climbing 2.2% in March. The price index for gypsum products has decreased 4.4% in 2020 and has fallen 9.5% since its most recent peak in March 2018.

Gypsum product prices have declined 4.4% YTD, the largest January-to-April decrease since seasonally adjusted data became available in 2012.

Although the PPI report shows that softwood lumber prices declined 10.8% (seasonally adjusted) in April, the decrease is at odds with recent prices reported by Random Lengths.  According to their weekly data, prices fell a more modest 2.7% over the month.

The discrepancy between the BLS and Random Lengths data stems from known differences in survey timing.  We anticipated this in last month’s PPI post, in which we stated that the decline over the last 10 days of March “should be captured in next month’s PPI report.”

Prices paid for ready-mix concrete (RMC) decreased 0.4% in April (seasonally adjusted), following a 0.7% increase in March. The RMC index has increased 1.1% year-to-date (YTD), which is close to the historical average YTD price change in April.

Prices were little changed from March to April in the Northeast (unchanged), Midwest (-0.2%), and South (-0.1%), but increased 1.9% in the West region (not seasonally adjusted). Since the beginning of 2020, RMC prices have decreased 3.2% in the Midwest but have climbed 5.0%, 1.1%, and 0.5% in the South, West, and Northeast, respectively.

Other changes in indexes relevant to home building are shown below.

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eyeonhousing.org

Pending home sales drop 33.8% | Mt Kisco Real Estate

The index of pending home sales dropped 21.8% in April compared to March as the coronavirus pandemic kept prospective home-buyers out of the market, the National Association of Realtors reported Thursday.

Compared with a year ago, pending home sales were down 33.8%. Overall, it was the largest decline since the National Association of Realtors began tracking this data in 2001.

The index measures real-estate transactions where a contract was signed but the sale had not yet closed, benchmarked to contract-signing activity in 2001. It is an indicator of existing-home sales reports in the coming months.

What happened: The Northeast saw the biggest decline in contract signings, with a 48.2% plunge month over month — likely a reflection of the emergence of New York as one of the hot spots for the global coronavirus pandemic. The South saw the next largest decrease, followed by the West and the Midwest.

The rates of declines in April were lower in the Midwest, South and West compared to the declines in March.

Big picture: Stay-at-home orders to prevent the spread of coronavirus put a major dent in the number of contracts that were signed in April, which could preview a significant drop in home sales figures in months to come.

The good news for the market, though, is that sales activity has shown signs of a rebound. “In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about home buying in the midst of the social distancing measures,” said Lawrence Yun, chief economist at the National Association of Realtors.

Mortgage applications for loans used to purchase homes have increased on a weekly basis for six consecutive weeks now, according to the Mortgage Bankers Association. That’s a sign that buyers are lining up financing in order to march into the housing market.

The remaining question is whether sellers will follow. “Home sales could bounce back if sellers also enter the market with similar enthusiasm to buyers,” said Danielle Hale, chief economist at Realtor.com. “Our latest weekly data shows an improvement in new listings declines, but inventory levels still remain well below levels seen this time last year.”

If the number of homes on the market remains constrained, so too will the number of sales, regardless of buyers’ demand.

What they’re saying: “Mortgage applications for purchases have fully unwound their previous plunge, suggesting sales are rebounding in May,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a research note. “The housing sector seems to be weathering the crisis about as well as could be expected, even if it will take a long time before sales return to pre-virus levels given the massive job losses.”

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marketwatch.com/story/

Corona virus depression will hurt real estate | Bedford NY Real Estate

We’ve been there before.
We’ve been there before. Photographer: Dorothea Lange/Hulton Archive

As the economic carnage from the coronavirus pandemic continues, a long-forbidden word is starting to creep onto people’s lips: “depression.” 

In the 19th and early 20th centuries, there was no commonly accepted word for a slowdown in the economy. “Panic” was the term typically used for financial crises, while long slumps were commonly called depressions. Presidents such as James Monroe and Calvin Coolidge used the d-word to describe downturns during their administrations. There was even a slump in the 1870s that many referred to as the Great Depression at the time.

But then 1929 came, and there was no longer any doubt as to which depression deserved the modifier “great.” The crash hit the entire world, reducing economic output 15%. And it ground on mercilessly for years — by 1933, unemployment in the U.S. was at 25%. The Great Depression was so severe that governments permanently expanded their role in the economy.

Since the 1930s, economists and commentators have used the word “recession” to describe economic slumps, and none of them have been nearly as severe as the Great Depression. The only time this convention was really challenged was after the financial crisis of 2008. The global nature of the downturn, sparked by troubles in the financial industry, led many to draw parallels with the Great Depression. In the end, the term “Great Recession” stuck.

The economic damage from coronavirus, however, threatens to dwarf the 2008 downturn. More than 22 million people, or about 13% of the U.S. labor force, have already filed for unemployment:

Current forecasts are for the unemployment rate to reach 20% this month. Some predict it could go as high as 30% this year. That would eclipse even the Great Depression in severity.

So if severity alone is the criteria for a depression, this one will certainly deserve the moniker. President Ronald Reagan once quipped that “recession is when your neighbor loses his job; depression is when you lose yours.” There will be few people whose economic livelihoods are not hurt by the coronavirus.

But there are other possible criteria for deciding what gets labeled a depression. Besides severity, there’s duration; both the 1870s and the 1930s saw a decade of economic pain. Many hope that the economy will bounce back from the coronavirus in a so-called V-shaped recovery. It stands to reason that if the economy crashed because it was intentionally turned off by mandatory shutdowns, then letting people out of their houses will turn it back on.

Many of the economic relief measures now being implemented, such as the Paycheck Protection Program — which extends loans to small and medium-sized businesses that are forgiven if they retain their workers — have this sort of quick restart in mind. But while that’s a good idea, there are reasons to believe this downturn will not be over quickly.

First, there’s evidence that the main reason people are staying at home is not lockdowns but the threat of the virus itself. Data from online restaurant-reservation websites shows that in major cities, most of the decline in restaurant attendance happened before stay-at-home orders were issued. And polls indicate that most Americans are very wary of returning to their normal activities. This means that unless virus suppression regimes give people confidence that coronavirus isn’t a threat to their personal safety, they’re unlikely to come out and shop even if the government says there’s no need to worry. Because effective treatments probably won’t be available at least until the fall or later, that means many more months of business devastation except in the few competent and lucky places that get test-and-trace systems in place.

Next, there’s the global nature of the downturn. Gross domestic product is set to decline in almost every country. Some forecasters expect all economies to bounce back simultaneously, but a more likely scenario is that many countries will struggle to recover. That will hurt both U.S. export markets and international investors for years to come.

Finally, there’s the possibility of long-term financial market turmoil. In addition to severity and duration, a third common criterion for distinguishing depressions from recessions is that the former involves years of financial industry dysfunction and declines in lending.

The Federal Reserve is struggling mightily to preserve the solvency of U.S. banks and prop up asset markets, and so far it has succeeded. Interest rates are low, bank failures have not been widespread and stock markets have partly recovered:

But keeping banks on a government lifeline during years of business weakness, although better than the alternative of letting the financial system collapse, might still not equip the financial industry to do its traditional job of lending to productive enterprises. The threat of repeated coronavirus outbreaks, along with continued business failures, may make banks just as afraid to lend as they were after 2008.

Although the U.S. government can and should do its utmost to ensure that the coronavirus recession doesn’t check all the boxes for a depression, its powers to stop both the virus and the international slowdown are limited. Let’s hope this depression won’t last a decade, but an unprecedented slump followed by years of pain seems inevitable.

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www.bloomberg.com/opinion

Westchester unemployment soars to 24.6% | Armonk Real Estate

The devastating economic impact of the coronavirus is reflected in new unemployment data released Wednesday.
The devastating economic impact of the coronavirus is reflected in new unemployment data released Wednesday. (Shutterstock)

The devastating economic impact of the coronavirus in the Hudson Valley is reflected in new unemployment data released by the New York State Department of Labor Wednesday. While all 15 metro areas in New York lost private sector jobs since April 2019, the worst hit in the state was Orange-Rockland-Westchester, which lost 24.6 percent of its private sector jobs.

In comparison, private sector jobs in New York fell by 22.1 percent and in the nation by 14.5 percent.

The unemployment rate compared to a year ago spiked in all three metro regions of the lower and mid-Hudson Valley.

Metro RegionUnemployment rate April 2020Unemployment rate April 2019
Dutchess-Putnam14.13.2
Kingston14.63.3
Orange-Rockland-Westchester14.33.3

In comparison, in April 2020, New York State’s seasonally adjusted unemployment rate increased from 4.1 percent to 14.5 percent. This change (+10.4 percentage points) was the state’s largest recorded monthly increase since current record keeping began in 1976. In addition, the number of unemployed New York State residents increased by 931,600, while the labor force dropped by 307,600 – both monthly records.

The number of unemployed New Yorkers increased by 931,600 over the month, from 388,700 in March to 1,320,300 in April 2020, representing the largest monthly uptick on record.

The April month-over-month decline in private sector payroll employment is the largest in the history of the current series (which goes back to 1990) and brought employment to its lowest level since February 1994.

Rates are calculated using methods prescribed by the U.S. Bureau of Labor Statistics. The state’s area unemployment rates rely in part on the results of the Current Population Survey, which contacts approximately 3,100 households in New York State each month.

Those collecting unemployment are also receiving a $600 supplemental weekly benefit through the end of July. Democrats in Congress are pushing to have that benefit extended through January 2021, but Senate Republicans are cool to the idea, arguing that the increase in unemployment benefits is creating a disincentive for people to go back to work.

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patch.com.new-york/bedford/

Nearly Half of Americans Are Out of Work – Bad for real estate | Pound Ridge Real Estate

"For Sale By Owner" and "Closed Due to Virus" signs are displayed in the window of Images On Mack in Grosse Pointe Woods, Mich., Thursday, April 2, 2020. The coronavirus outbreak has triggered a stunning collapse in the U.S. workforce with 10 million people losing their jobs in the past …
AP Photo/Paul Sancya

A smaller share of American adults were employed in April than ever before in records going back to 1948.

The employment-population ratio, which measures the share of Americans above the age of 16 who are employed, fell to 51.3 percent, the Department of Labor said Friday. A year ago, it was 60.6 percent.

The previous low was 55 percent in the summer of 1954.

In November 2007, the employment-population ratio was 62.9 percent. This rate fell consistently during the subsequent recession and several months beyond, before stabilizing around 58.5 percent in October 2009. Between October 2009 and March 2014, the ratio remained stubbornly low, fluctuating within 0.3 percentage points of 58.5 percent. It began to climb again in 2014, hitting its post-2008 peak of 61.1 in February of 2020.

The labor force participation rate fell by 2.5 percentage points over the month to 60.2 percent, the lowest rate since January 1973 (when it was 60.0 percent).

The unemployment rate jumped to 14.7 percent in April and the economy shed 20.5 million jobs, according to data released by the Department of Labor on Friday.

Over the past seven weeks, more than 33 million Americans have filed claims for unemployment benefits. But the number of claims has been declining for five consecutive weeks.

The Trump administration successfully pushed Congress to authorize direct payments to U.S. households to support incomes and to raise the amount paid by unemployment benefits by $600 a week, making it possible for some Americans to earn more through losing a job than they made working. The federal government is also backing over $600 billion of loans to small businesses that can be forgiven if those businesses avoid layoffs.

The Fed cuts its interest rate target to a range between 0 and 0.25 percent. In addition, it is in the process of launching a number of new lending facilities aimed at providing liquidity to struggling businesses.

But loans and direct payments can only go so far to offset orders that many businesses close their doors entirely or dramatically reduce the number of customers they serve. The customers were told to stay at home and avoid going out except to purchase essential items. Bars, theaters, and gyms were shuttered in much of the country. Restaurants were required to close dining rooms, remaining open only for take-out and delivery. Manufacturers often had to shut down altogether, including the plants of most automakers in the U.S. Health care establishments found themselves bereft of businesses as patients canceled elective procedures and even regular check-ups.

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www.breitbart.com/economy

Cuomo extends halt on NYS evictions | Bedford Corners Real Estate

An aerial view of trees and buildings in New York City for an article discussing the eviction moratorium.

Faced with mounting pressure from tenant advocates, Gov. Andrew Cuomo has extended New York’s eviction moratorium another two months until August.

The measure builds on a March 20 order that prohibits residential and commercial evictions statewide through June. Now, that moratorium is in place through August 20 along with a ban on fees for late or missed rent payments during that same period.

“I hope it gives families a deep breath,” Cuomo said at a press conference announcing the extension. “Nothing can happen until August 20 and then we’ll figure out between now and August 20 what the situation is.”

Under the new executive order, a landlord cannot legally evict a tenant until the measure expires, preventing renters who are suffering a sudden financial hardship from being forced into the streets during a pandemic. The moratorium does not cancel rent payments, and tenants are still on the hook to pay back their landlords for any missed payments.

Renters who are struggling to make ends meet as a result of the COVID-19 pandemic also now have the option to put their security deposit toward paying rent—a measure New Jersey and Connecticut already allow and one that Mayor Bill de Blasio and other New York elected officials have advocated for since early April.

But there’s a catch: Those deposits must be repaid within 90 days of their usage. And if the amount of the deposit is less than a full month of rent, tenants still owe the remaining rent due that month, according to the executive order.

Cea Weaver, the campaign coordinator with Housing Justice For All, which is spearheading the push to cancel rent statewide, called the governor’s eviction moratorium extension and security deposit payments “half measures” that fail to truly protect tenants.

“It’s continuing to not face the problem,” says Weaver. “He’s ignoring the real issue—that tenants can’t pay—and just postponing the date of when there will be mass evictions.”

When asked about relief for landlords who may have difficulty making mortgage payments without rent revenue, Cuomo noted that the state is working on “relief from the banks for landlords also.” Landlord groups are not thrilled with Cuomo’s lack of details on support.

James Whelan, president of the Real Estate Board of New York, acknowledged that tenants and small retailers impacted by the pandemic “will need more time to pay their bills and more help from the federal government to do so” but those who have the ability to pay “should not get away with not paying rent.”

But paying—or not paying—rent may not be much of a choice for those who aren’t earning an income. The eviction moratorium keeps New Yorkers in their homes during a public health crisis, but crucially, it does not address the months of back rent tenants must eventually repay. Lawmakers and housing attorneys argue that there will be a “tidal wave” of eviction cases filed in the courts—potentiallyleading to mass homelessness—once that moratorium is lifted. And with COVID-19 hobbling New York’s economy, renters have few options to make up what’s owed.

Many in the state are still struggling to access unemployment benefits. And while federal stimulus checks of $1,200 have offered some relief, the one-time payment is woefully inadequate for the long-term financial burdens New York renters, homeowners, and small property owners face. (Others still, such as undocumented immigrants, don’t qualify for this aid.)

Cuomo has maintained that the eviction moratorium “solves” New York renters’ woes, and this week he doubled down on that assessment, saying that the extension and new security deposit mechanism “takes this issue off the table until August 20.” While the moratorium is a piece of the rent relief jigsaw puzzle, housing attorneys note that is it not a fullsolution.

“The governor must go farther,” says Ellen Davidson, a staff attorney with the Legal Aid Society. “We welcome the extension of the eviction moratorium, but make no mistake, it doesn’t stop tenants from being at risk.”

In March, New York Chief Administrative Judge Lawrence Marks announced a suspension on eviction proceedings in the courts, but a loophole of sorts briefly allowed landlords to file new eviction cases. Cuomo ultimately blocked those new cases by pausing the statue of limitations until May 7. That block has now been extended to June 6, according to Office of Court Administration spokesperson Lucian Chalfen.

In his latest executive order, Cuomo has banned the “initiation of a proceeding or enforcement” of evictions or a foreclosure, but only for those who are “eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic for a period of sixty days beginning on June 20.” Davidson fears the language of that provision leaves undocumented immigrants, and others who don’t qualify for unemployment aid, in a vulnerable position.

“Are they supposed to out themselves as undocumented to their landlords to be protected under this provision?” Davidson questioned, who has dealt with instances of landlords calling U.S. Immigration and Customs Enforcement on undocumented tenants. “It would seem this is putting undocumented New Yorkers in danger. It’s not clear to me how I would advise a client about what to do about this provision.”

The governor’s office did not immediately clarify the provision.

In the meantime, Jay Martin, the executive director of the Community Housing Improvement Program (CHIP), says greater federal support, such as additional stimulus aid and emergency housing vouchers, are sorely needed to help renters and landlords alike.

“New York State leaders are doing what they can and must to avoid a housing crisis in New York,” said Martin. “But it is past time for the federal government to step up and provide renters and building owners with the relief they need. If they do not millions of New Yorkers will suffer.”

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ny.curbed.com

US home sales fall 18% | Mt Kisco Real Estate

This April 16, 2020 photo shows a real estate company sign that marks a home for sale in Harmony, Pa. U.S. new home sales plunged 15.4% in March as the lockdowns that began in the middle of the month began to rattle the housing market. The Commerce Department reported Thursday, April 23, that sales of new single-family homes dropped to a seasonally adjusted annual rate of 627,000 last month after sales had fallen 4.6% in February. (AP Photo/Keith Srakocic)

Sales of existing homes plunged 17.8% in April with the real estate market still in the grips of the coronavirus pandemic.

The National Association of Realtors said Thursday that last month’s decline pushed sales down to a seasonally adjusted annual rate of 4.33 million units, the slowest pace since September 2011.

The sales drop was the largest one-month decline since a 22.5% fall in July 2010. That tail-off was preceded by the end a congressionally approved tax credit intended pull the housing market out of the 2006 collapse of the housing market.

The median price for a home sold in April was $286,800, which was an increase of 7.4% from a year ago. Lawrence Yun, chief economist of the Realtors group, attributed the big jump in the median price to a lack of enough homes for sale, especially for first-time buyers.ADVERTISEMENT

Sales were down in all parts of the country with the West seeing a 25% drop. Sales in the Northeast fell 16.9%. Sales were down 17.9% in the South and down 12% in the Midwest.

Analysts said that the coronavirus shutdowns had contributed to the shortage in the number of homes for sale in April and that played a role in the increase in prices.

“Homebuyers are getting back out there, searching for more space as they realize using their home as an office and school may become the norm,” said Taylor Marr, lead economist at Redfin, a real estate brokerage firm. “But sellers are still holding off on listing their homes, partially due to economic uncertainty and concerns of health risks.”

Redfin said that the most competitive housing markets in April and early May were Boston, San Francisco and Fort Worth.

Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said she expected sales to rebound off their lows in May “as a combination of pent-up demand as well as a desire to move to less densely populated areas boosts sales.”

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apnews.com

The coming rental market crisis | Chappaqua Real Estate

There’s a Rental Crisis Coming. Here’s How to Avoid It.
There’s a Rental Crisis Coming. Here’s How to Avoid It.

The Covid-19 pandemic is wreaking havoc on the U.S. rental market. Approximately 9 million households have so far failed to pay their May rent, according to industry data. Last month, 1.4 million fewer households paid their rent compared with this time last year.

The country’s 44 million rental households are uniquely vulnerable amid the current public health and economic crises. Renters often lack financial security and legal protections, not to mention bargaining power vis-a-vis their landlords. Worse, many are now being hit by the worst economic downturn since the Great Depression. Low-income renters, especially, work in industries crippled by Covid-related job loss: retail, hospitality and leisure, restaurants, and construction. Data suggests that 16.5 million renter households have already lost income because of the economic shutdown.

Faced with the specter of massive housing loss, policymakers have taken some steps to keep tenants in their homes, not only to help the renters but also as a critical public health measure — after all, it’s hard to comply with a “stay at home” order if you don’t have a home, or to socially distance if you’re forced to move into tight quarters with family or friends. The CARES Act has temporarily protected many renters by providing billions of dollars for emergency housing assistance, significantly expanded unemployment benefits and halted some evictions through July. Dozens of states and cities have also temporarily halted evictions, and cities such as Los Angeles, Chicago and Philadelphia are providing emergency funding for tenants.

It appears these stopgaps are working, at least for now: We have not seen as severe a spike in nonpayment of rent as might otherwise be expected, and early rent payment figures from May look a bit more encouraging than April’s numbers.

But these remedies focus on the short term. Because of the scale of this downturn, many if not most unemployed renters will not have new jobs by the end of July. The federal government needs a long-term plan to prevent millions of unemployed renters from losing their homes when eviction moratoriums and unemployment sweeteners run out.

More shutdowns coming

Indeed, public health experts are predicting that the Covid-19 crisis will last well beyond the summer, and some government officials are bracing for waves of shutdowns that could continue for 12 to 18 months. It’s also likely that the U.S. will get hit with another, perhaps more deadly, wave of the virus next winter. When the economy does reopen, it will be in the throes of a deep recession during which millions of middle-income tenants will likely be unemployed and require housing assistance for the first time. Without smart, proactive policies to help millions of unemployed renters, we will be facing billions of dollars in rental debt, chaos at the eviction courts and overcrowded shelters primed for another outbreak.

Renters were struggling before the Covid-19 outbreak amid a well-documented affordable housing crunch. Nearly 40 percent of renter households are rent-burdened — meaning that they spend more than a third of their salary on rent — and two-thirds of renter households can’t afford an unexpected $400 expense.

On top of that, renters have few of the legal and financial protections offered to homeowners. Many states forbid renters from withholding rent even if their unit is in disrepair, most renters have no right to legal counsel during eviction proceedings, and once eviction judgments are handed down, renters can be evicted in a matter of days. And, partly as a result of the subprime mortgage crisis of 2008, federal housing policy heavily favors homeowners over renters. Congress spends approximately three times as much on mortgage-interest reduction as it spends on rental housing vouchers each year. Whereas mortgage holders are protected by the provisions of the Dodd-Frank Act, notably through creation of the Consumer Financial Protection Bureau, no analogue exists for renters.

For the moment, these renters are being kept afloat through a combination of short-term emergency cash, unemployment benefits and eviction bans. But it won’t last past the summer. On top of the one-time $1,200 stimulus check, the extra $600 per week added to unemployment insurance checks expires in July. Unemployment doesn’t cover everyone, notably our 10 million to 12 million taxpaying undocumented immigrants — many of whom are renters — and those working in the informal economy providing child care, cleaning and other services. Another 8 million to 12 million unemployed Americans haven’t even bothered to apply, due to a well-documented backlog of claims and the difficult application process.

It’s not clear what appetite Congress has for extending the current short-term stimulus measures. Lawmakers might choose to extend the $600 per week unemployment sweetener past July. An extra $2,400 per month is more than enough to cover rent for most Americans, and once unemployment offices dig out from the initial crush of claims, delivering this assistance would be an efficient and direct way to keep more people in their homes. Yet Republicans are concerned that these expanded benefits are discouraging people from returning to work, and any such proposal would have to survive tough negotiations.

Meanwhile, the $300 billion recently provided in the most recent stimulus package to keep small business workers on payroll is likely already gone. Temporary rental assistance remains underfunded by tens of billions of dollars, and need is only growing as layoffs continue.

Mom-and-pop landlords

While landlords should be encouraged to reduce payments or implement repayment plans, canceling rent isn’t a viable option for many of them. The prototypical rental unit might be inside a high-rise apartment building owned by a real estate giant, but in fact the overwhelming majority of rental properties in this country are single-unit homes owned by mom-and-pop landlords. These property owners rely on rent to pay their own mortgages, to finance repairs and upkeep of rental properties, and to pay property taxes.

So, protecting tens of millions of renters in the midst of a deep recession won’t be easy. But Congress needs to recognize the importance of keeping rent checks flowing. Delinquent rents could easily spiral into foreclosed units and a consolidation of rental stock similar to Wall Street buy-ups after the Great Recession. That means an increase in substandard housing, worse property management and more marginalized Americans. What’s more, evictions cost U.S. cities hundreds of million of dollars per year. That money should be helping to prop up a struggling economy instead.

But while difficult, it’s not impossible to prevent a rental-housing crisis. Congress needs to expand direct rental assistance. That means cash for rent, sent either directly to landlords or renters.

The National Low Income Housing Coalition estimates that $100 billion in rental assistance would support 15.5 million low-income households over the next year. The Urban Institute’s estimate is about twice that, and accounts for renters of all incomes. That line item’s a drop in the bucket compared to the total stimulus funding Congress anticipates pushing through this year, and will stabilize millions of Americans’ largest household expenditure.

Several mechanisms

There are several mechanisms Congress could chose for this. Cash could be directly provided for rent through the Department of Housing and Urban Development’s existing Emergency Solutions Grant network, in which local services providers administer funds to those at risk of homelessness, or through temporary expansion of the department’s Housing Choice Voucher program, through which local housing agencies pay landlords a portion of low-income tenants’ rent. While some housing agencies might face a flurry of new applications, most unemployed American renter households with zero income would easily qualify.

Alternatively, Congress could attempt to funnel money more directly to landlords. The benefit of this approach is that there are fewer landlords than tenants, and they’re easier to track down. The drawback is that this approach would involve creating an entirely new program. If Congress goes this route, it could model a program on the Treasury Department’s Home Affordable Modification Program (HAMP), focused on landlords’ non-owner occupied homes, or expand the Federal Reserve’s Main Street Lending program to allow lending to the rental industry.

The bottom line is that Congress needs to find a way to inject funding into the rental ecosystem — whether through unemployment insurance, rental assistance or direct payment to landlords. Protecting our renters won’t be cheap, and it won’t be easy. But ignoring the coming crisis will cost billions more down the line in the form of rental debt and landlord foreclosures, and could keep millions of Americans from safely sheltering in place. That’s something we truly can’t afford.

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www.politico.com

Mortgage Lenders Tighten Screws on Credit | Armonk Real Estate

Mortgage rates are at record lows, but borrowers hoping to take advantage are running into the toughest loan-approval standards in years.

Over the past month, lenders have put in place higher credit-score and down payment requirements, and in some cases stopped issuing certain types of loans altogether, in effect shutting down a large swath of the mortgage market. If you’re trying to find an area mortgage lender, we are the corporate to show to. we’ve been serving Kansas City since 1996 with honesty, integrity, and expertise. Making us one among the simplest companies to settle on from. We are locally owned and operated and offer rock bottom rate. Through our unique home equity credit programs, we offer a stress-free home buying experience. We are committed to creating the method simple and enjoyable. We’ve streamlined the closing process to make sure a smooth and stress-free process. As an experienced lender, we’ll guide you to the simplest land loans; Conventional Loans (Fannie Mae and Freddie Mac), FHA (Federal Housing Administration), VA Loans, USDA, HELOC or Jumbo) and therefore the best lending program to fit your needs. With numerous financial products, we are certain that we’ll have the right product with the simplest rate of interest for you. Click here to read more about mortgage loans.

You’ve made the decision that you need some extra assistance in meeting your monthly financial obligations. One of the best options for those over sixty-two years of age who own their own home is a reverse mortgage. Instead of you paying the bank each month, the bank will actually pay you. The loan can be taken out as a lump sum, a fixed monthly payment or as a line of credit. You do not have to pay back the loan until you sell your home or move out permanently. There are many reverse mortgage lenders such as banks and credit unions that you can contact to obtain details about these loans. Rates may vary so you will want to check around with various banks before deciding. There are several types of reverse mortgage loans and they include the following:

Home Equity Conversion Mortgage – HECMs are the oldest types of reverse mortgage loans and the most popular. They are insured by the federal government through the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development. The amount of money you can take out as a reverse mortgage loan depends upon your age, the appraised value of your home, current interest rates and the location of your home. The older you are and the higher the equity (what it would sell for less what you still owe), the higher the loan amount can be. For 2006, the loan limit for a home in a rural area is $200,160 while the limit for high cost areas is $362,790.

Another reverse home mortgage product that you can obtain from a lender is the Fannie Mae Home Keeper. Fannie Mae is the largest investor of home mortgages in the country and a major investor in reverse mortgages. Fannie Mae developed its own reverse mortgage product as an alternative to the HECM to address the needs of customers who had a higher property value on their home. Home Keeper loans can be larger than HECMs because their mortgage limit is higher. Another Fannie Mae reverse mortgage product is the Home Keeper for Home Purchase program. This is for seniors who wish to use the reverse mortgage loan to buy a new home. For example, let’s say someone sold his home for a $60,000 profit and wants to buy a new house for $100,000. He could get a reverse mortgage using money from a Home Keeper loan so he would not have to use his savings to purchase the more expensive home.

The triggers, industry executives say, include lenders becoming risk-averse during the coronavirus crisis, knock-on effects of Congress allowing millions of borrowers to delay their monthly payments, and policies implemented amid the pandemic by mortgage giants Fannie Mae and Freddie Mac. The impact has been dramatic, with one model showing mortgage credit availability has plunged by more than 25% since the U.S. outbreak of the virus.

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The tightened lending could add another headwind for the nation’s besieged economy by dampening home sales just as some states lift stay-at-home orders and the spring months herald the traditional buying season. Already, mortgage refinances are coming in at a much slower pace than analysts would expect, considering the rock-bottom borrowing rates.

In March, riskier borrowers “could get a mortgage but just pay a higher price than other people,” said Michael Neal, a senior research associate at the Urban Institute Housing Finance Policy Center. “Now, some people are just not going to get mortgages.”

JPMorgan Chase & Co. tightened its standards last month, requiring borrowers to have minimum credit scores of 700 and to make down payments of 20% of the home price on most mortgages, including refinances if the bank didn’t already manage the loan.

Wells Fargo & Co. increased its minimum credit score to 680 for government loans that it buys from smaller lenders before aggregating them into mortgage bonds.

The banks’ revised standards are far above the typical minimum score of 580 and down payment of 3.5% that borrowers need to qualify for home-buying programs supported by the federal government.

Wells Fargo is no longer letting borrowers refinance their mortgages while cashing out home equity, and both Wells and JPMorgan have suspended new home-equity lines of credit. Truist Financial Corp. has suspended some cash-out refinances for jumbo loans with high balances because of economic conditions, a spokesman said.

Refinance Hesitancy

There are signs that banks are even trying to limit regular refinances. Wells Fargo on Thursday quoted a refinance rate of 4% for a 30-year fixed-rate mortgage, more than half a percentage point higher than it quoted for the same loan if used to buy a home.

A Wells Fargo spokesman said the company believes its rates are within the range of what they see from other lenders. He said the company suspended home-equity lines of credit in light of uncertainty surrounding the economic recovery.

A JPMorgan spokeswoman said the bank’s changes are temporary and due to the unclear economic outlook.

Refinances surged in early March as homeowners utilized low rates to reduce their monthly payments. But refinance rate locks, a forward-looking measure of refinance activity, had plunged 80% from their peak by mid-April, according to Black Knight Inc., a mortgage information service. The company said that even the steep increase in unemployment in March and April couldn’t explain why refinance activity fell so dramatically.

Fannie-Freddie Policies

Industry executives say the tighter underwriting is partly in response to policies put in place by Fannie and Freddie that make it expensive or risky to make certain kinds of mortgages. For instance, Fannie and Freddie said last month they would buy mortgages where the borrower had already entered forbearance. But the mortgage-finance companies excluded cash-out refinances. Mortgage Bankers Association Chief Economist Michael Fratantoni said that prompted many lenders to limit issuance of those products.

Fannie, Freddie and government agencies such as the Federal Housing Administration set standards for the mortgages they’re willing to back. For example, the FHA will insure loans where the borrower has a credit score of as low as 580 with a 3.5% down payment.

However, mortgage lenders sometimes set their own, stricter standards, even if they intend to sell the loans to Fannie or Freddie or have them insured by the FHA. Fannie and Freddie, which have been under the U.S. government’s control since the 2008 financial crisis, buy mortgages from lenders and package them into trillions of dollars of bonds with guarantees that protect investors against the risk of borrowers defaulting.

Mortgage credit availability has fallen 26% since the end of February, the Mortgage Bankers Association said in a Thursday statement, citing an index of lending standards. Most of the pain has been for loans not supported by the government. Still, mortgages backstopped by Fannie, Freddie and federal agencies in April did have the toughest credit terms that such loans have had in more than five years.

Servicers’ Peril

Many lenders appear to have put restrictions in place in response to the $2.2 trillion stimulus bill that lawmakers passed in March. Under the new law, lenders must let borrowers with government-guaranteed mortgages delay as much as a year’s worth of payments if they were impacted by coronavirus.

Even though they eventually get reimbursed, mortgage servicers are required to advance the missed payments to bond investors. That makes lenders less eager to offer loans to borrowers who they think will need forbearance, such as consumers with low credit scores and those who can only afford minimal down payments.

The MBA’s Fratantoni said the credit crunch has been exacerbated by the reticence of federal regulators to establish a liquidity facility that would help servicers advance payments to bondholders. While Fratantoni said large servicers may not go under, they’re still protecting themselves by tightening mortgage requirements.

“I can’t imagine any lender wanting to be aggressive at all in this environment,” said Moody’s Analytics chief economist Mark Zandi. “It’s how far deep into the bunker are you.”

Read Newsmax: Mortgage Lenders Tighten Screws on U.S. Credit in Echo of 2008 | Newsmax.com

Unemployment jumping to 15.5% will hurt housing prices | Mt Kisco Real Estate

According to the Unemployment Insurance Weekly Claims Report, released by the U.S. Department of Labor, the number of initial claims for unemployment insurance hit 3.2 million for the week ending May 2nd, bringing the total to 33.5 million over the past seven weeks.

In the week ending May 2nd, the number of people who applied for unemployment benefits, known as jobless claims, was at a seasonally adjusted level of 3,169,000, a decrease of 677,000 from the previous week’s revised level of 3,846,000 claims. The four-week moving average decreased to 4,173,500, from a revised average of 5,035,000 in the previous week. After it hit a record of 6.9 million for the week ending March 28th, the number of jobless claims has declined gradually in the following weeks. By the week ending May 2nd, the number of jobless claims was less than half of the peak of 6.9 million, and the seven-week’s jobless claims totaled 33.5 million.

The seasonally adjusted insured unemployment rate increased by 3.1 percentage points to 15.5% for the week ending April 25th. The number for seasonally adjusted insured unemployment increased to 22,647,000 during the week ending April 25th, from an upward revised level of 18,011,000 in the previous week. It was the highest level of seasonally adjusted insured unemployment in the history of the seasonally adjusted series.

The unadjusted number of initial claims, released by the U.S. Department of Labor, totaled 3,495,703 in the week ending April 25th, a decrease of 785,945 from the previous week. The chart below presents the top 10 states ranked by the number of initial claims for the week ending April 25th. Florida, California, Georgia, Texas, and New York reported the most initial claims. Florida led the way with 433,103 claims, followed by California with 325,343 claims and Georgia with 266,565 claims. The number of jobless claims in these 10 states accounted for about 56% of the total number of jobless claims in the week ending April 25th.

The trending of initial claims was mixed. For the week ending April 25th, Washington (+56,030), Georgia (+19,562), New York (+14,229), Oregon (+12,091), and Alabama (+8,534) reported the largest increases in initial claims, while California (-203,017), Florida (-73,567), Connecticut (-69,767), New Jersey (-68,173), and Pennsylvania (-66,698) had the largest decreases in initial claims.

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