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Brudgers hit on many of the most important points, but I'm surprised no one has yet mentioned lending requirements from Fanny Mae and Freddy Mac as major contri

Brudgers hit on many of the most important points, but I'm surprised no one has yet mentioned lending requirements from Fanny Mae and Freddy Mac as major contributors to this problem. The impact of their loan policies has increased dramatically as the US moved from small buildings and individual homes on city streets to a model of large housing developments and big apartment complexes. These two largest and most important lenders will either not lend or lend under worse terms when an apartment building or development has more than some small percentage of units available as rental units (IIRC, something like only 10-30% of units in a development can be available for rent.) This then leads many HOAs to actively monitor and police the number of rental units in any development or apartment building, since the HOA is often used to institute rules that protect or increase the value of the underlying asset. Renting your housing assets often requires HOA approval, and if the limit has already been reached, your petition to rent will likely be denied. Because of these lending policies rental units are under-represented in the overwhelming majority of new developments in more densely populated areas.

brownbat 12y ago
There are all sorts of odd legacy housing policies in this country, some of which contribute to major social problems, like inequalities in education. This American Life touched on this in 512, "House Rules": http://www.thisamericanlife.org/radio-archives/episode/512/house-rules http://www.thisamericanlife.org/radio-archives/episode/512/h... (audio) http://www.thisamericanlife.org/radio-archives/episode/512/transcript http://www.thisamericanlife.org/radio-archives/episode/512/t... (transcript) TAL brings in Nikole Hannah-Jones, from Pro Publica. Her full article is here: http://www.propublica.org/article/living-apart-how-the-government-betrayed-a-landmark-civil-rights-law http://www.propublica.org/article/living-apart-how-the-gover... It's a really interesting tour through the political history of US housing law, highlighting some of its nonsensical impacts More of a snowfall version: http://www.propublica.org/article/segregation-now-the-resegregation-of-americas-schools/#melissa http://www.propublica.org/article/segregation-now-the-resegr...
ozi 12y ago
Having just closed on a house today, I can confirm that the lending requirements have made a complete 180 degree turn from being too lax to monumentally ridiculous. What was annoying is the attitude the lenders seem to have when you give them shit for each hoop they make you jump through... it's their own fault the market is in the condition its in - not the home buyer's. That being said, this article is accurate for cities in Texas where the market is experiencing insane growth. I had to offer 5% over list and 40% down to get a winning offer out of more than 20 on a property that was active on the market for less than 48 hours.
- GrinningFool 12y ago
  " it's their own fault the market is in the condition its in - not the home buyer's." There's a fair bit of blame to around here. Lenders should not have been lending to unqualified individuals or pushing unreasonable loans. How come nobody ever mentions the Realtors in this process of looking for fault? They were generally most intimately familiar with their clients' finanacial states - working with them for weeks and months at a time, as opposed to a few hours that a finance company spends making a decision. Realtors abrogated their responsibility to their clients' best interests in the name of getting bigger & bettter commissions - because whether their clients could actually afford to keep the overpriced properties they were selling wasn't their problem. Finally, would-be home owners could have applied a healthy dose of common sense. It just took a little bit of research to see that houses were overpriced, and that there was zero logic in a 5 year ARM with a balloon payment under which you spend the first five years paying only a portion of the interest. That a $3000/mo mortgage when living from paycheck to paycheck is not a good idea. Yet millions did these things anyway, hand-waving at the future in order to get that extra square footage or in order to gamble something they didn't have on the hope that the unreasonable prices would continue for another five years. It may be that it's only luck and timing that stopped me from being one of those people - I don't know what I would have done had I been looking for a house in the mid-2000s (I bought mine in 2000 when prices were relatively sane). But I like to think I'd be taking responsibility for my own bad decision if I made it. No matter who was pushing me towards it.
  - malandrew 12y ago

brownbat 12y ago

There are all sorts of odd legacy housing policies in this country, some of which contribute to major social problems, like inequalities in education. This American Life touched on this in 512, "House Rules": http://www.thisamericanlife.org/radio-archives/episode/512/house-rules http://www.thisamericanlife.org/radio-archives/episode/512/h... (audio) http://www.thisamericanlife.org/radio-archives/episode/512/transcript http://www.thisamericanlife.org/radio-archives/episode/512/t... (transcript) TAL brings in Nikole Hannah-Jones, from Pro Publica. Her full article is here: http://www.propublica.org/article/living-apart-how-the-government-betrayed-a-landmark-civil-rights-law http://www.propublica.org/article/living-apart-how-the-gover... It's a really interesting tour through the political history of US housing law, highlighting some of its nonsensical impacts More of a snowfall version: http://www.propublica.org/article/segregation-now-the-resegregation-of-americas-schools/#melissa http://www.propublica.org/article/segregation-now-the-resegr...

ozi 12y ago

Having just closed on a house today, I can confirm that the lending requirements have made a complete 180 degree turn from being too lax to monumentally ridiculous. What was annoying is the attitude the lenders seem to have when you give them shit for each hoop they make you jump through... it's their own fault the market is in the condition its in - not the home buyer's. That being said, this article is accurate for cities in Texas where the market is experiencing insane growth. I had to offer 5% over list and 40% down to get a winning offer out of more than 20 on a property that was active on the market for less than 48 hours.

GrinningFool 12y ago
" it's their own fault the market is in the condition its in - not the home buyer's." There's a fair bit of blame to around here. Lenders should not have been lending to unqualified individuals or pushing unreasonable loans. How come nobody ever mentions the Realtors in this process of looking for fault? They were generally most intimately familiar with their clients' finanacial states - working with them for weeks and months at a time, as opposed to a few hours that a finance company spends making a decision. Realtors abrogated their responsibility to their clients' best interests in the name of getting bigger & bettter commissions - because whether their clients could actually afford to keep the overpriced properties they were selling wasn't their problem. Finally, would-be home owners could have applied a healthy dose of common sense. It just took a little bit of research to see that houses were overpriced, and that there was zero logic in a 5 year ARM with a balloon payment under which you spend the first five years paying only a portion of the interest. That a $3000/mo mortgage when living from paycheck to paycheck is not a good idea. Yet millions did these things anyway, hand-waving at the future in order to get that extra square footage or in order to gamble something they didn't have on the hope that the unreasonable prices would continue for another five years. It may be that it's only luck and timing that stopped me from being one of those people - I don't know what I would have done had I been looking for a house in the mid-2000s (I bought mine in 2000 when prices were relatively sane). But I like to think I'd be taking responsibility for my own bad decision if I made it. No matter who was pushing me towards it.
- malandrew 12y ago