From the WSJ:
U.S. Home Prices Soar, But Minorities and Young People Miss Out
U.S. home values have jumped to records over the past four years, but some demographic groups have participated more in the rally than others.
A study by the Pew Research Center released Thursday found that homeownership rates since the peak in 2004 are down across the board. But while the rate among white households has fallen 5%, it has fallen 16% for African-American households.
The rate among households age 65 and up has fallen just 3%, compared with 18% for those younger than 35.
Nationally, the homeownership rate hit a more-than 50-year low in July, although it has since edged higher. That number reflects a growing population of senior citizens who continue to own homes in much greater numbers than their younger counterparts.
“Today’s homeownership rate is being propped up by an aging society,” said Richard Fry, a senior economist at the Pew Research Center.
Home prices jumped 5.5% in September compared with a year earlier, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. That was good news for homeowners, many of whom are nearing retirement age and ready to cash out on the appreciation of the past few years.
But as prices rise, homes are slipping further out of reach for younger and minority buyers.
Pew found that 72% of renters said they would like to buy in the future, but mortgage applications are down significantly. The falloff has been greatest among African-American and Hispanic borrowers, according to Pew.
Applications for home loans among whites tumbled 45% from 2004 to 2015, but plunged 77% among blacks and 76% for Hispanics, according to Pew. At the same time, the share of loan applications that were approved rose to 71% from 64%, likely reflecting stronger applicant pools.
Deterred by the lack of down-payment money or less-than-pristine credit, it appears many of these households assume they won’t be able to get a loan and don’t bother applying, according to Pew.
The tightening of credit to reduce default risk has had the unintended consequence of excluding more minorities from homeownership. In 2004, 32% of loans to African-American borrowers were subprime, while in 2015 only 7% of them were, according to Pew.
“That’s not to say that returning to the standards of 2003 [or] 2006 is appropriate,” Mr. Fry said. “It may be that banks can make successful loans to buyers with less-than-stellar credit histories.”
Also from the WSJ:
Rising Rates Ripple Through Mortgage Market
The era of ultralow mortgage rates is over.
The Federal Reserve’s decision to raise the federal-funds target rate by a quarter of a percentage point Wednesday means borrowing is about to get more expensive for consumers.
Some homeowners also will feel the pain, in particular those who signed up for home-equity lines of credit, adjustable-rate mortgages (ARMs) and other variable-rate loans. Interest rates on these loans tend to rise after rate increases, resulting in larger payments for borrowers.
The Fed’s rate increase is the second blow in the past five weeks for mortgage lenders and borrowers. Rates on plain-vanilla, 30-year fixed-rate mortgages have surged since Election Day by 0.76 percentage point, bringing them to an average of 4.38% on Thursday—their highest rate since April 2014, according to MortgageNewsDaily.com.
Mortgage lenders have slashed 2017 refinance-volume expectations for 2017 nearly in half, although they are banking on buyers rushing in to get mortgages before rates rise further. To keep purchase volume going, several large lenders are talking up the benefits of ARMs that feature fixed rates that are lower than a traditional 30-year mortgage for the first five or seven years.
Regular mortgage rates move in tandem with the yield on the 10-year Treasury, which has risen sharply since Election Day. The Fed rate increase will impact home-equity lines and, to a degree, ARMs.
Of course, interest rates on consumer borrowing remain very low across the board. Increases in borrowers’ payments from this week’s decision will be relatively small and for some borrowers offset by rising wages. But analysts warn that continuous rate increases of the same magnitude over the next year—a possibility that the Fed signaled—could result in home loans becoming less affordable for new borrowers and in more delinquencies among homeowners with variable-rate loans.
“This economy has gotten so conditioned to 2% and 3% mortgage rates that there is sticker shock,” said Chris Whalen, senior managing director at Kroll Bond Rating Agency Inc.
The most immediate pain on the home-loan front will be felt by homeowners shopping for home-equity lines of credit, or Helocs. These are typically used by people who want to borrow against the value of their home for renovations or other purposes.
Ultra low rates mean nothing. Everything is relative.
The fed raised .25% last December and the 10-year dropped 78 basis points between 12/30/15 and 2/10/16. 2.335% all the way down to 1.336% while the S&P 500 fell 13%. Deja vu all over again?
The fed raised .25% last December and the 10-year dropped 76 basis points between 12/30/15 and 2/11/16. 2.325% all the way down to 1.567% while the S&P 500 fell 13%. Deja vu all over again?
I posted this when it was new. I checked it in the middle of the day and it had 45,000 dislikes and maybe 1,000 likes or less. I just checked again. You can still like it or dislike it, but it no longer shows the count of either. I guess with over 1 million views it would be pretty embarrassing to see the dislike count. Is that a standard youtube control or is Google helping out here?
I think the Russians hacked Martin Sheen.
What pathetic pussies. 35K views, 17K dislikes. The limo libs are so completely out of touch, they still have no clue why they lost.
Bad news for Pumps. Just heard on a podcast (subject: Strong Dollar vs. Market Reflation)
“Will the millennials drive a different kind of dynamic in terms of the market and the economy itself? I mean if you look at the boomers, it was moving to the suburbs, bigger homes, and BMWs. You’re talking about millennials. This is the Uber, Airbnb and Apple generation. Will it be a different dynamic, in terms of what does well?”
Wantrobski(Chief Technical Strategist at New Albion Partners, LLC):
“Absolutely. Every generation is different from the prior generation, that’s how humankind evolves, frankly. I don’t expect, I don’t think anybody expects, these kids, these millennial kids to go back into the suburbs and sop up all the excess supply from our last housing bubble. That’s not how this works. But you have to remember, creative destruction, economic destruction is very dynamic for the markets.”
Is this the NJ whiskey report?
When everything reflates is when I head for the hills.
Sorry to have been away for a while. I discovered huffing paint thinner.
So now I see Turdmuffin calls himself ‘Lost’?
BTW, I think we’re gonna love becoming a fascist jerkwater.
So friends and family guilted me into voting for the first time in decades, I voted for Jill, and then they all called me a dick. That’s it for this voting shit.
As much as I despise Trump, I’m really enjoying the butt hurt legacy media and the death of neoliberalism and identity politics.
Welcome back, Clot. The place needs you.
Come drink whiskey
Glad to hear you have moved on from just huffing Everclear!
Clot for the win….realizing our Country is one step away from Oblivion since 1988
Welcome back clot!
clot: which jail were you in? are you still an anal virgin?
clot: heading up to the PR of Ithaka in late January for hockey and basketball…..
Do you have a recommendation for the best injection house?
I want to show my kid some of the best local sights…..
Welcome back clot. As refreshing and depressing as ever.
Yet clearly in touch with reality…
Huffing Everclear? Do you put it in a vaporizer?
I don’t think it’s clot, I think it’s JJ after taking time off for some remedial grammar lessons.
“I don’t belong to an organized political party. I’m a Democrat.” —Will Rogers
A Confederation of Cunts
Was in Barnes and Noble this weekend where a Princeton prof was holding his book signing. His books were totally in my wheelhouse and we had a great conversation. Must have chatted an hour. Bought two of his books and must go back to see if he slipped in a snarky comment. His latest was on the historical significance of the Brandywine–the wife bought that for me. He also had one on Walden and I bought that for my mother. Whole convo started because I saw that book and said of Thoreau that he never used five words when eighty would suffice. That got a laugh.
Sadly, it wasn’t until later that I though to ask about Krugman. Kicking myself v