Download The Housing Market Is Waving a Red Flag

'Largest-ever' Silicon Valley eviction to displace hundreds of tenants
Source: Guardian
In yet another sign of the tech industry’s growing impact on local housing markets in the Bay Area and
Silicon Valley, local housing advocates are lamenting the region’s largest-ever mass eviction of rentcontrolled tenants. The evictions are the latest example of rising income inequality in a region home to
many of the world’s wealthiest technology companies.
Making sense of the story
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Roughly 670 tenants are being displaced from their homes at the Reserve Apartments, which are
being demolished to make way for a development of market-rate housing. The apartments are
located five miles away from Apple’s headquarters, 14 miles away from Google, and 20 miles
away from Facebook.
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Residents must move out by April of next year so that developers could move forward with
construction of new housing that many of them will not be able to afford.
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For the longtime residents already struggling to make ends meet, it’s clear that they will face an
uphill battle in their search for comparable housing in the surrounding area – and that they will be
entirely priced out of the new building replacing their home.
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The Reserve evictions are part of a much broader trend of northern California communities
becoming unaffordable to middle-class people in the face of rapid gentrification and a booming
tech economy.
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Between 2000 and 2013, the number of low-income households in the Bay Area increased by 10
percent, but the region lost 50 percent of units defined affordable for this population, according to
researchers at the University of California, Berkeley.
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Projects like the one replacing the Reserve apartments are designed to help address the housing
shortage by building denser apartment buildings in an area where demand is so high.
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The city, like many municipalities in the region, encourages this kind of high-density
development targeting higher incomes as part of its long-term plans to accommodate a swelling
population and a rise in employment.
Read the full story
https://www.theguardian.com/technology/2016/jul/07/silicon-valley-largest-eviction-rent-controlledtenants-income-inequality
In other news …
Time to Think About Refinancing Your Mortgage?
Source: NY Times
Due to shifts in global bond markets, the average interest rate on a 30-year fixed-rate mortgage was 3.49
percent Monday, which is down from 4.2 percent a year ago and 3.9 percent at the start of 2016. As a
result, now may a good time to check the rate on your home mortgage, because borrowers could save
money by refinancing. For that, American homeowners can thank British voters, central banks in Europe
and Japan, and a global economy that just can’t get out of first gear. Furthermore, mortgage rates could
fall further in the weeks ahead as banks start to pass more of the savings from low rates in the bond
market through to customers.
Read the full story
http://www.nytimes.com/2016/07/13/upshot/its-time-to-think-about-refinancing-your-mortgageagain.html?_r=1
Share of Student Loan Debt-Laden Borrowers Rising
Source: DSNews.com
Mortgage holders carrying student loan debt has increased by more than 40 percent over the past 10 years,
bringing the count from 5.4 million in 2006 to 7.7 million in 2016, according to Black Knight Financial
Services’ May 2016 Mortgage Monitor. Approximately 15 percent of active mortgages reside with
borrowers who possess student loan debt. It was shown that borrowers with mortgages tend to perform
better on student loan debt obligations than those without mortgages. The report also found the share of
mortgage originations given to borrowers with student loan debt has increased to 19 percent of all
originations, a new high in 2014. Borrowers with a 760+ credit score were shown to be the least likely to
carry student debt, representing only less than 10 percent of that population.
Read the full story
http://www.dsnews.com/news/07-11-2016/share-of-student-loan-debt-laden-borrowers-rising
Nearly Two-Thirds of Americans Can’t Pass a Basic Test of Financial
Literacy
Source: Time
Nearly two-thirds of Americans can’t calculate interest payments correctly, according to a new study.
About a third said they didn’t even know how. Overall, a new study from the National Capability Study
by the FINRA Foundation, which surveyed 27,564 Americans, found that nearly two-thirds of Americans
couldn’t pass a basic financial literacy test, meaning they got fewer than four answers correct on a fivequestion quiz. Worse, the percentage of those who can pass the test has fallen consistently since the
financial crisis to 37 percent last year, from 42 percent in 2009. That being said, the study found that
many Americans have recovered from the financial crisis. Respondents who had no difficulty in covering
expenses increased 12 percentage points, to 48 percent in 2015 from 36 percent in 2009.
Read the full story
http://time.com/4403643/american-financial-literacy-test-fail/
Can Local Governments Impede Housing Markets?
Source: DSNews.com
Housing markets have been adversely affected by the addition of significant building costs that did not
exist as recently as 15 years ago, according to a recent survey of more than 100 builders by John Burns
Real Estate Consulting (JBREC). Analysis of the top 33 markets in the country found that the number of
new home communities has increased by only 4 percent in the last year, according to Burns. At that pace,
the number of new homes permitted will not reach 1.1 million until 2023, which is consistent with
historical averages. Local governments proved to be the primary reason that volume recovery was
stronger in some areas than in others. The survey found that government attitudes toward housing tend to
be either friendly and affordable or unfriendly and unaffordable.
Read the full story
http://www.dsnews.com/news/07-06-2016/can-local-governments-impede-housing-markets
The Housing Market Is Waving a Red Flag
Source: Bloomberg
Fervent speculation that abetted the housing bubble is showing up in the bloated share of foreclosures
snapped up by third-party investors at auction—a record 31 percent in June, according to RealtyTrac data
that starts in 2000. RealtyTrac senior vice president Daren Blomquist commented, “It's somewhat
counterintuitive—as the market gets better and there are fewer foreclosures available, demand for those
good deals, those bargains in the market goes up. When you see this high percentage of the properties
going to third-party investors, that is a sign that these speculators may be over-inflating the market.” The
third-party investors are gaining a bigger share of a shrinking pie, as foreclosure auctions made up 8
percent of all home sales in June, the lowest since August 2006.
Read the full story
http://www.bloomberg.com/news/articles/2016-07-14/the-housing-market-is-waving-a-red-flag
Talking Points …
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Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased 2.1 points to 83.2 in June, down
from May’s all-time survey high, as more consumers report mixed views toward housing and
income growth.
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Among those surveyed, the share who said now is a good time to sell a home increased 5
percentage points on net to a survey-high of 18 percent, and those saying now is a good time to
buy a home rose 3 percentage points on net to 32 percent.
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The share of consumers who expect home prices to go up over the next 12 months dropped 9
percentage points on net. In addition, those reporting that their household income is significantly
higher than it was 12 months ago dropped 10 percentage points.