February 16, 2016
Tuesday’s Regulatory & Legislative Roundup
- NYC Mayor Bill De Blasio released a new comprehensive zoning plan, arguing for taller buildings for affordable housing with fewer parking spaces.
- See also: City Planning Commission Report.
- The House Republicans have announced intent to form a six-committee task force to develop new policy agenda, including on issues of tax reform, poverty, opportunity and upward mobility.
February 16, 2016 | Permalink | No Comments
February 15, 2016
Lincoln at Independence Hall
On President’s Day, it is worth sitting with the words of Abraham Lincoln, spoken at an address at Philadelphia’s Independence Hall in 1861:
I am filled with deep emotion at finding myself standing here, in this place, where were collected together the wisdom, the patriotism, the devotion to principle, from which sprang the institutions under which we live. You have kindly suggested to me that in my hands is the task of restoring peace to the present distracted condition of the country. I can say in return, Sir, that all the political sentiments I entertain have been drawn, so far as I have been able to draw them, from the sentiments which originated and were given to the world from this hall. I have never had a feeling politically that did not spring from the sentiments embodied in the Declaration of Independence. I have often pondered over the dangers which were incurred by the men who assembled here, and framed and adopted that Declaration of Independence. I have pondered over the toils that were endured by the officers and soldiers of the army who achieved that Independence. I have often inquired of myself, what great principle or idea it was that kept this Confederacy so long together. It was not the mere matter of the separation of the Colonies from the motherland; but that sentiment in the Declaration of Independence which gave liberty, not alone to the people of this country, but, I hope, to the world, for all future time. It was that which gave promise that in due time the weight would be lifted from the shoulders of all men. This is a sentiment embodied in the Declaration of Independence. Now, my friends, can this country be saved upon that basis? If it can, I will consider myself one of the happiest men in the world, if I can help to save it. If it cannot be saved upon that principle, it will be truly awful. But if this country cannot be saved without giving up that principle, I was about to say I would rather be assassinated on this spot than surrender it.
Now, in my view of the present aspect of affairs, there need be no bloodshed and war. There is no necessity for it. I am not in favor of such a course, and I may say, in advance, that there will be no bloodshed unless it be forced upon the Government, and then it will be compelled to act in self-defence.
My friends, this is wholly an unexpected speech, and I did not expect to be called upon to say a word when I came here. I supposed it was merely to do something toward raising the flag. I may, therefore, have said something indiscreet. I have said nothing but what I am willing to live by and, if it be the pleasure of Almighty God, die by.
February 15, 2016 | Permalink | No Comments
Happy Presidents Day!
“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” – John Quincy Adams
February 15, 2016 | Permalink | No Comments
February 12, 2016
Homeowner Nation or Renter Nation?
Arthur Acolin, Laurie Goodman and Susan Wachter have posted a forthcoming Cityscape article to SSRN, A Renter or Homeowner Nation? The abstract reads,
This article performs an exercise in which we identify the potential impact of key drivers of home ownership rates on home ownership outcomes by 2050. We take no position on whether these key determinants in fact will come about. Rather we perform an exercise in which we test for their impact. We demonstrate the result of shifts in three key drivers for home ownership forecasts: demographics (projected from the census), credit conditions (reflected in the fast and slow scenarios), and rents and housing cost increases (based on California). Our base case average scenario forecasts a decrease in home ownership to 57.9 percent by 2050, but alternate simulations show that it is possible for the home ownership rate to decline from current levels of around 64 percent to around 50 percent by 2050, 20 percentage points less than at its peak in 2004. Projected declines in home ownership are about equally due to demographic shifts, continuation of recent credit conditions, and potential rent and house price increases over the long term. The current and post WW II normal of two out of three households owning may also be in our future: if credit conditions improve, if (as we move to a majority-minority nation) minorities’ economic endowments move toward replicating those of majority households, and if recent rent growth relative to income stabilizes.
This article performs a very helpful exercise to help understand the importance of the homeownership rate. This article continues some of the earlier work of the authors (here, for instance). I had thought that that earlier paper should have given give more consideration to how we should think about the socially optimal homeownership rate. Clearly, a higher rate, like the all-time high of 69% that we had right before the financial crisis, is not always better. But just as clearly, the projected low of 50% seems way too low, given long term trends. But that leaves a lot of room in between.
This article presents a model which can help us think about the socially optimal rate instead of just bemoaning a drop from the all-time high. It states that
Equilibrium in the housing market is reached when the marginal household is indifferent between owning and renting, requiring the cost of obtaining housing services through either tenure to be equal. In addition, for households, the decision to own or rent is affected by household characteristics and, importantly, expected mobility, because moving and transaction costs are higher for owners than for renters. Borrowing constraints also affect tenure outcomes if they delay or prevent access to homeownership. (4-5)
This short article does not answer all of the questions we have about the homeownership rate, but it does answer some of them. For those of us trying to understand how federal homeownership policy should be designed, it undertakes a very useful exercise indeed.
February 12, 2016 | Permalink | No Comments
Friday’s Government Reports Roundup
- The Center on Budge and Policy Priorities (CBPP) released report on the Housing Opportunity Through Modernization Act of 2015, finding that the bipartisan housing bill would make rental assistance programs more effective.
- The National Housing Conference released a report, How Investing in Housing Can Save on Health Care.
February 12, 2016 | Permalink | No Comments
February 11, 2016
Reverse Mortgage Lowdown
Athene quoted me in Is a Reverse Mortgage Right for You? It opens,
Experts weigh the pros and cons of this loan—to help you make a smart choice.
For homeowners age 62 and older who have a significant amount of equity (appraised value minus mortgage balance) in their homes, a reverse mortgage can seem like an attractive option. Simply put, a reverse mortgage allows you to convert a portion of the equity in your home into cash, without having to sell your home. But this type of loan isn’t right for everyone. Here’s help determining if a reverse mortgage is the smart choice for you.
Pros: A reverse mortgage is a loan against your home equity, which you can take as a lump sum payment, a monthly payment, or a line of credit. The loan is paid off when you no longer live in the home. “It allows a homeowner to access home equity in the present in order to supplement current income,” says David Reiss, a professor of law at Brooklyn Law School who teaches residential real estate courses.
Consider this loan if you would like to stay in your current home and
- Have lived in your home for a long time and plan to use the equity to supplement Social Security and other investment income streams
- Have other assets and are not using this as a loan of last resort
- Might not be able to access the cash you need in emergencies
Cons: These loans aren’t cheap, says Scott Withiam, housing counseling supervisor at American Consumer Credit Counseling, Inc. Plus, the industry that sells them has been under scrutiny from the Consumer Financial Protection Bureau for deceptive practices. “The reverse mortgage industry has had more than its share of shady operators who are drawn to all that equity that seniors have amassed,” says Reiss. “Homeowners considering a reverse mortgage should make sure to review the terms of the transaction with someone whose financial judgment he or she trusts.”
February 11, 2016 | Permalink | No Comments
Thursday’s Advocacy & Think Tank Roundup
- The Urban Institute released a report, Helping Families Involved in the Child Welfare System Achieve Housing Stability, which examines how the Family Unification Program is implemented.
- Enterprise Community Partners released An Investment in Opportunity, establishing a long-term platform for policy changes at all governmental levels in order to tackle the growing rental housing crisis in America.
- The Urban Institute released a report, Health Conditions in Five Choice Neighborhoods, finding that residents, especially those living in public housing, face significant health challenges.
February 11, 2016 | Permalink | No Comments
