What We're Reading: July 20

Throughout the week, the BPC Housing Commission highlights news items that address critical developments in housing policy. Any views expressed in the content posted on this forum do not necessarily represent the views of the Commission, its co-chairs or the Bipartisan Policy Center.

What We’re Reading posts now include a compilation of useful links in the Housing Visualized section below. These resources offer the latest economic indicators, expert insight, and statistical trends related to the U.S. housing market.

Housing Visualized

2010 Census l Mapping the Census l Housing Market Indicators

Infographic: Household Formation Gap l Who Gains Most From Tax Breaks

Infographic: Housing’s Economic Impact l Measuring State-Level Economic Mobility Past Commissions and Reports l Trulia’s Housing Barometer

Credit Conditions l U.S. Housing Summary 2012 l Changes in Home Prices since 2003

Wells Fargo Monthly Economic Outlook l Wells Fargo Real Estate & Housing Reports

 

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High rents, tight credit put many at the mercy of the market

By Michelle Conlin and Ilaina Jonas

Reuters

“Five years after the housing bubble burst, the United States is in the midst of a housing affordability crisis. Home prices have fallen a third from their peaks, but many Americans cannot benefit because they cannot get a mortgage. With credit tight, many consumers have no choice but to rent. Others who can afford to buy are also renting, because they view real estate as a lousy investment. With this increased demand, rents in some cities have jumped by double-digit percentage rates.” Read more here.

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Study links child abuse to home foreclosures

By Maggie Fox

NBC News

“The researchers found just under a 1 percent increase in the number of general physical abuse cases reported at 38 pediatric hospitals every year between 2000 and 2009 and a more than 3 percent rise in the number of traumatic brain injuries seen in babies. These increased rates seemed to directly correlate with the rate of mortgage foreclosures in a community, Dr. Joanne Wood of the Children’s Hospital of Philadelphia and colleagues reported in the journal Pediatrics. There might be something uniquely stressful about losing a home that can lead to child abuse, they suggested.” Read more here.

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Bloomberg Wants to See More Tiny Apartments in New York

By Sean Andrew Chen

Next American City

“Why try to build more tiny apartments? Affordability. You don’t need to be an economist to know how expensive or difficult it is to live in New York for single individuals. Studio and single-occupant apartments are highly limited: There are only a million throughout a city with nearly two million singles. And roommates aren’t a feasible solution for everybody.” Read more here.

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Housing Market Must Swallow Bitter Pill To Address Negative Equity

By Jann Swanson

Mortgage News Daily

“A Georgetown law professor is proposing that a Resolution Trust Corporation (RTC) like entity might be the key to getting the housing market back on track. In Clearing the Mortgage Market through Principal Reduction: A Bad Bank for Housing (RTC 2.0) Adam J. Levitin considers ways in which negative equity problems might be addressed and assesses the feasibility of using a “bad bank” entity for pooling and standardized restructuring and resecuritization of underwater mortgages. ” Read more here.

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Home Builders Beef Up on Cash to Gird for Next Wave

By Robbie Whelan and Dawn Wotapka

The Wall Street Journal

“With minimal new lots being delivered since the housing crisis, ready-to-build sites in prime locations with established school districts and short commute times to job centers have become scarcer and more pricey, sparking bidding wars for land. Some builders have responded by buying raw land and paying to add infrastructure and amenities themselves, counting on consumer demand for new homes rising over the next few years. Since developing a single lot typically costs tens of thousands of dollars, buying raw land is an expensive gamble for builders.” Read more here.

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Location, Location, and Pacification: The Effect of Crime Reduction on Residential Property Value

By Claudio Frischtak and Benjamin R. Mandel

Liberty Street Economics (Federal Reserve Bank of New York)

“Since there are many different factors that can affect house prices simultaneously, we study the housing market around the time of a specific policy event tightly linked to the objective of crime reduction. This event is the introduction of the Unidade Pacificadora da Policia (“Pacifying Police Unit,” or UPP) program in Rio, beginning in late 2008. As in many cities in developing countries, a significant fraction of the population of Rio live in very low-income communities with a high concentration of substandard, informal housing; in Rio, these communities are called favelas.” Read more here.

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Gen Y Household Formation: Calm Before the Storm

By Jane M. Wolkowicz

Multifamily Executive

“The percentage of 18-34 year-olds living with their parents between 2006 and 2010 increased 2.7 percent, bringing the total number to 1.95 million. That’s the largest decline of household formation numbers for any age group during that time. But Eric Belsky, managing director of the Joint Center for Housing Studies, remains optimistic that this demographic will start forming households in the near term—and start buying homes in the long term. ” Read more here.

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Ocwen shared appreciation program slashes average mortgage by $75k+

By Jon Prior

HousingWire

“Ocwen Financial Corp. reduced principal for 18,924 mortgage borrowers as of May as part of its shared appreciation program launched one year ago. The average monthly payment on principal and interest shrank to $624 from $1,270 before the modification was granted. Ocwen reduced an average $75,500 per loan.” Read more here.

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For black Americans, financial damage from subprime implosion is likely to last

By Ylan Q. Mui

The Washington Post

“The implosion of the subprime lending market has left a scar on the finances of black Americans — one that not only has wiped out a generation of economic progress but could leave them at a financial disadvantage for decades. At issue are the largely invisible but profoundly influential three-digit credit scores that help determine who can buy a car, finance a college education or own a home. The scores are based on consumers’ financial history and suffer when they fall behind on their bills.

“For blacks, the picture since the recession has been particularly grim. They disproportionately held subprime mortgages during the housing boom and are facing foreclosure in outsize numbers. That is raising fears among consumer advocates, academics and federal regulators that the credit scores of black Americans have been systematically damaged, haunting their financial futures.” Read more here.