Mortgage rates and the housing market

[Skatastrophy]

Plus about 10 other things we could do to bring housing prices down.

I don't care very much if housing prices come down or if buying a home feels unaffordable; people will get used to it as they always have.

But, capitalism needs to be regulated in certain circumstances. Mass corporate buying is putting unnecessary pressure on both the buy side and the sell side of the market because they will likely never sell those properties. That's unhealthy for the market. If removing them from the market causes prices to dip, so be it. If prices stay high, great.

[MU82]

As I mentioned earlier, there are some remedies being tried on the local level.

For example, it's legal for HOAs to limit or even forbid rental properties in a community, and some have, effectively ending corporations' interest in buying homes in those communities. Some HOAs also require that new buyers live in the house they are buying or leave it vacant for 6-12 months before they are allowed to rent it out.

I believe I've also read that it's legal for a state to pass a law limiting the practice, though I'm not sure if any do.

There have been a few bipartisan bills introduced in Congress, but like so many bills they haven't gotten out of committee. A lot of moneyed interests send in their lobbyi$t$ to keep such laws from seeing the light of day.

[Hards Alumni]

As I mentioned earlier, there are some remedies being tried on the local level.

For example, it's legal for HOAs to limit or even forbid rental properties in a community, and some have, effectively ending corporations' interest in buying homes in those communities. Some HOAs also require that new buyers live in the house they are buying or leave it vacant for 6-12 months before they are allowed to rent it out.

I believe I've also read that it's legal for a state to pass a law limiting the practice, though I'm not sure if any do.

There have been a few bipartisan bills introduced in Congress, but like so many bills they haven't gotten out of committee. A lot of moneyed interests send in their lobbyi$t$ to keep such laws from seeing the light of day.

Okay, but those are very inefficient ways at achieving the goal.  Basically lip service.  And retail investment isn't the only thing driving home prices.

[MU82]

Okay, but those are very inefficient ways at achieving the goal.  Basically lip service.  And retail investment isn't the only thing driving home prices.

I don't know of anybody here who said or even suggested that it is the only thing driving home prices. In many areas of the country, it is one of several factors.

If more and more HOAs effectively ban the practice, I don't see how that is lip service on their part. Congress pretending to get serious about it, sure, that's pretty typical lip service.

[dgies9156]

A couple of thoughts on corporate purchasing of residential homes:

1) I've seen a lot of these in my work. My group will review commercial loan relationships in which 15 to 20 loans are secured by 15-20 residences. Most of these I've seen are to entrepreneurs, many of whom are comparatively small investors with most of their assets tied up in real estate. Their investments are in middle class and blue collar communities.

2) I'm wondering if anyone keeps statistics on corporate ownership of 1-4 family residences. You can get there through several ways, including NASICs, collateral analyses or records from the registrar of deeds. All I've seen is anecdotal data.

3) To Sister Chick's point, when we bought our current house, we had only an inspection contingency. No financing contingency. That doesn't mean someone isn't using debt. That means they have a stand-by commitment to lend money subject to a real estate appraisal, clean title and standard closing terms. We used quite a bit of debt at close to bridge the sale of our two homes at the time we bought our last house. At worst, you have to prove you have the money on hand to close in case the financing does not come through.

4) Corporations have far more financing options than do individuals. Blame the fall-out from the 2008 financial crisis for that.

5) Keep in mind that most homes in the United States are NOT covered by HOAs. In the places we have lived with HOAs, the Board has to approve rental agreements and there's a $250 processing fee for each lease. The rental term has to be at least one month. Our county has a one-month minimum rental requirement but with AirBnB and Vrbo, that's hard to enforce.

I admit I'm not too thrilled at the thought of Congress telling me to whom I can't sell my house to, or whether I can rent it.

Final thought: Most qualified mortgages have provisions governing a home's use. Technically, if you claim a 1-4 family residence as a principal residence and then rent it out, you're in violation of your loan covenants and the lender can immediately call the loan. But enforcement is virtually impossible unless borrowers are required (they aren't) to provide annual financial statements EVERY YEAR.

[Pakuni]

https://www.wsj.com/politics/elections/harris-to-call-for-construction-of-3-million-new-housing-units-tax-incentives-to-build-homes-for-first-time-buyers-9e057b83?mod=politics_lead_story

[Jockey]

https://www.wsj.com/politics/elections/harris-to-call-for-construction-of-3-million-new-housing-units-tax-incentives-to-build-homes-for-first-time-buyers-9e057b83?mod=politics_lead_story

Great. 

Another handout. Our economy will collapse even further.

[Jay Bee]

It's happening all over the country.

The ultra-rich destroy everything they touch.

Please define ultra-rich as well as rich.

[TSmith34, Inc.]

Please define ultra-rich as well as rich.

Ultra-rich = Rico
Rich = me

[Skatastrophy]

Ultra-rich = Rico
Rich = me

Rich - Muscoop users
Wealthy - Muscoop moderators

[Frenns Liquor Depot]

You might be a rich guy if...


...you're complaining about the price of scallops

[Pakuni]

Please define ultra-rich as well as rich.

Ruch = Ricky Stratton
Ultra = Richie Rich

[dgies9156]

Rich = Someone with $1.00 more than I have.

Ultra Rich = Someone with $10.00 more than I have.

[Scoop Snoop]

It's happening all over the country.

The ultra-rich destroy everything they touch.

Especially the megadonors who are funding the presidential campaigns of America's two magnificent political parties.

[jficke13]

A couple of thoughts on corporate purchasing of residential homes:

1) I've seen a lot of these in my work. My group will review commercial loan relationships in which 15 to 20 loans are secured by 15-20 residences. Most of these I've seen are to entrepreneurs, many of whom are comparatively small investors with most of their assets tied up in real estate. Their investments are in middle class and blue collar communities.

2) I'm wondering if anyone keeps statistics on corporate ownership of 1-4 family residences. You can get there through several ways, including NASICs, collateral analyses or records from the registrar of deeds. All I've seen is anecdotal data.

3) To Sister Chick's point, when we bought our current house, we had only an inspection contingency. No financing contingency. That doesn't mean someone isn't using debt. That means they have a stand-by commitment to lend money subject to a real estate appraisal, clean title and standard closing terms. We used quite a bit of debt at close to bridge the sale of our two homes at the time we bought our last house. At worst, you have to prove you have the money on hand to close in case the financing does not come through.

4) Corporations have far more financing options than do individuals. Blame the fall-out from the 2008 financial crisis for that.

5) Keep in mind that most homes in the United States are NOT covered by HOAs. In the places we have lived with HOAs, the Board has to approve rental agreements and there's a $250 processing fee for each lease. The rental term has to be at least one month. Our county has a one-month minimum rental requirement but with AirBnB and Vrbo, that's hard to enforce.

I admit I'm not too thrilled at the thought of Congress telling me to whom I can't sell my house to, or whether I can rent it.

Final thought: Most qualified mortgages have provisions governing a home's use. Technically, if you claim a 1-4 family residence as a principal residence and then rent it out, you're in violation of your loan covenants and the lender can immediately call the loan. But enforcement is virtually impossible unless borrowers are required (they aren't) to provide annual financial statements EVERY YEAR.

Any politician who puts forward a concrete plan to outlaw HOAs gets my vote. Bonus votes if they put forth a plan to eject all existing HOA board members into the Oort Cloud.

[rocky_warrior]

Any politician who puts forward a concrete plan to outlaw HOAs gets my vote. Bonus votes if they put forth a plan to eject all existing HOA board members into the Oort Cloud.

For neighborhoods, sure.  But for condo buildings there's not really any way to avoid them, unless you pay for a giant management & maintenance contract.

[Skatastrophy]

For neighborhoods, sure.  But for condo buildings there's not really any way to avoid them, unless you pay for a giant management & maintenance contract.

Yep. Even in neighborhoods it makes sense when you have shared park/nature/retention-pond property. HOAs should be to care for community-managed property, not for busybody business.

[The Sultan]

Yeah HOAs are voluntary organizations. They should not be outlawed. If you don't like one, don't join one.

[TSmith34, Inc.]

Especially the megadonors who are funding the presidential campaigns of America's two magnificent political parties.

As the Roberts court intended

[lawdog77]

Yeah HOAs are voluntary organizations. They should not be outlawed. If you don't like one, don't join one.

uh, not so easy. Many neighborhoods have mandatory HOA's. If one wants to live there, one can't simply say "No, thanks" to the HOA.

[The Sultan]

uh, not so easy. Many neighborhoods have mandatory HOA's. If one wants to live there, one can't simply say "No, thanks" to the HOA.

Then live somewhere else.

[lawdog77]

Then live somewhere else.

dumb answer. not that easy

[The Sultan]

dumb answer. not that easy

It isn't a dumb answer. There are all sorts of ways laces that don't have HOAs. Live there if you don't want to live with one. Outlawing them, when many function for relatively minor reasons, is an overreaction.

[lawdog77]

It isn't a dumb answer. There are all sorts of ways laces that don't have HOAs. Live there if you don't want to live with one. Outlawing them, when many function for relatively minor reasons, is an overreaction.

I never said outlaw them. I am saying hoas arent really voluntary. If one finds a house in their price range and area they like but there is an HOA, they cant just say F it, we'll find something else. Espcially not in the current market

[The Sultan]

I never said outlaw them. I am saying hoas arent really voluntary. If one finds a house in their price range and area they like but there is an HOA, they cant just say F it, we'll find something else. Espcially not in the current market

Sure you can. Why are you being so obstinate about this?