Finally a good time to sell?

Posted on July 8, 2015 by grim

From HousingWire:

Consumer attitudes on housing signal healthier purchase market ahead

Americans’ outlook toward the current home selling market and the future of home rental prices may bode well for purchase activity this year, according to results from Fannie Mae’s June 2015 National Housing Survey.

Amid continued strong job and income growth, consumers are looking more favorably on the current selling climate, perhaps portending an uptick in the existing home supply.

“Our June survey results show the positive impact on housing of job and income growth,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The expectation of higher rents is a natural outgrowth of increasing household formation by newly employed individuals putting upward pressure on rental rates. A complementary rise in the good time to sell measure suggests that limited inventory, which is putting upward pressure on house prices, gives an increasing advantage to sellers.

“Together, these results point to a healthier home purchase market, with more renters likely to find owning to be more cost-effective than renting and more sellers likely to put their homes on the market,” Duncan said.

Among those surveyed, the share who believe now is a good time to sell a home reached a new survey high, increasing three percentage points to 52% and crossing the 50-percent threshold for the first time in the survey’s history. At the same time, the share who said they expect home rental prices to go up in the next 12 months rose four percentage points to 59%, also an all-time survey high.
…
Here are some highlights:

The average 12-month home price change expectation fell to 2.6%.

The share of respondents who say home prices will go up in the next 12 months fell to 47%. The share who say home prices will go down rose to 7%.

The share of respondents who say mortgage rates will go up in the next 12 months rose 3 percentage points to 50%.

Those who say it is a good time to buy a house fell to 63% – tying a survey low – while those who say it is a good time to sell rose to 52% – a new survey high.

The average 12-month rental price change expectation fell to 4.2%.

The percentage of respondents who expect home rental prices to go up rose to 59% – a new survey high.

Posted in Economics, Housing Recovery, National Real Estate | 164 Comments

NJ 23th largest economy in the world

Posted on July 7, 2015 by grim

From the Star Ledger:

N.J.’s economy would crack world’s Top 25 if it was its own country, report says

New Jersey’s economic growth fared worse than nearly every other state in the nation last year.

But the state’s gross domestic product is roughly the same size as Poland’s, according to a map created by an economist at the American Enterprise Institute.

The gross domestic product in New Jersey grew by 0.4 percent in 2014, federal data shows, to roughly $504 billion. That increase ranked New Jersey 46th nationwide. Only Maine, Virginia, Mississippi and Alaska had lower rates of growth last year.

Using data on gross domestic products from the Bureau of Economic Analysis and the International Monetary Fund, Mark J. Perry, the editor of the Carpe Diem blog for American Enterprise Institute, matched the economic output of states to those of countries and mapped the results.

“It’s pretty amazing how ridiculously large the US economy is, and the map above helps put America’s GDP of nearly $18 trillion in 2014 into perspective by comparing the GDP of US states to other country’s entire national GDP,” Perry wrote in a June 10 blog post .

California’s $2.31 trillion in economic output in 2014 is just short of Brazil’s gross domestic product in the same year, according to Perry, while Texas is about equal to Canada and New York is similar to Spain.

Posted in Demographics, Economics, New Jersey Real Estate | 95 Comments

The difference between NJ and CA real estate

Posted on July 6, 2015 by grim

In NJ, if you have a stalker you can’t sell the house. In SF, if you find a dead body during the home inspection, nobody cares.

From HousingWire:

Corpse found in $1M San Francisco house for sale – Price could go higher

A mummified corpse of the homeowner was found in a Lake District Victorian house for sale in San Francisco, according to an article from SocketSite.

The article explained that the homeowner’s daughter, who was living in the house, was a hoarder.

Despite all this, the home still received a bid of $1 million, and the final price could go higher.

As the mother’s death was never reported, the sale will require court confirmation. And while the $1,029,500 bid for the house has tentatively been accepted, interested parties will have an opportunity to bid higher at the probate hearing for the estate, the date for which has yet to be scheduled.

Posted in Humor | 90 Comments

Yeah, New Jersey stinks. Stinks like money.

Posted on July 4, 2015 by grim

I hear people complain about the drive up or down 95, it stinks, dark and dank industrial wasteland. Miles and miles of warehouse, factory, smokestacks, power plants, shipping containers, garbage dumps.

It’s beautiful.

You can keep your scenic roadways and parks, we’ll keep the industry that makes us the one of the most economically productive areas in the entire world, and one of the wealthiest areas in the world.

Where do people think jobs come from? Where manufacturing takes place? Where shipping and trade happen? In quaint downtowns with pretty tree lined streets? On fancy dot com campuses with rainbow slides and sleeping pods? Get real you idiots.

Next time you drive down the turnpike, open your eyes and revel in the economic powerhouse that is not only critical to the Northeast, but the entire United States. Want to see the greatest wonder of the new economic world? Drive through the Northeast corridor of the US, the one where we’re at the heart.

By the way, stay the f*ck out if you don’t like us.

From CBS:

New Jersey Residents: Poll Ranking State As Nation’s Least Likeable ‘Stinks’

A recent poll was not winning too many fans in New Jersey Friday, after it ranked the Garden State dead last in favorability among the 50 states.

As CBS2’s Dave Carlin reported, those who really know New Jersey praise the people as great, and the real estate as prime – with beautiful sights like the waterfalls in Nutley.

But others dismiss the state as a land of mobsters and grime.

“I don’t think the Sopranos helped the state of New Jersey,” said Charles Derios of Newark.

Indeed, Hollywood stereotypes got the blame for the poll results from YouGov that slammed the Garden State as the place to hate.
The survey asked Americans to rate the states, and New Jersey came dead last – as least likable of 50.

In fact, New Jersey was the only state for which more respondents had an unfavorable opinion than a favorable one. Forty percent of poll respondents rated New Jersey unfavorably, and 30 percent rated the state favorably – giving the state a net favorability rating of minus 10 percent, according to YouGov.

A YouGov article on the poll said the state has an image problem in popular cuture.

“The popular image of New Jersey often falls somewhere between the MTV show ‘Jersey Shore,’ HBO’s award winning mafia drama ‘The Sopranos’ and the chemical plants and gray industrial landscape stretched along I-95 that inspired much of the work of Bruce Springsteen,” Peter Moore wrote for YouGov.
…
Dwayne Quinn of New Orleans spoke to 1010 WINS’ Al Jones on Thursday about the poll. He said there simply isn’t much in New Jersey.

“I mean I’ve heard it as the armpit capital of the world or even the butt crack capital of the world. You know, there’s not much that attracts,” he said.

But one New Jersey resident responded, “I think it stinks.”

Posted in Humor, New Jersey Real Estate | 77 Comments

NY Metro Home Prices up 2.8% in April

Posted on July 3, 2015 by grim

From the Record:

Region’s home prices tick up 2.8%

As the housing market continues to recover, single-family home prices in the New York metropolitan area ticked up 2.8 percent in the year that ended in April, the S&P/Case-Shiller home price indexes reported Tuesday.

Nationally, prices rose 4.2 percent, according to Case-Shiller.

Home prices in the region are back to the levels of July 2004 and remain about 18.7 percent below their peaks in mid-2006, according to Case-Shiller Nationally, home values are at the levels of autumn 2004, about 14 percent to 16 percent below their peaks.

“Home prices continue to rise across the country, but the pace is not accelerating,” David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. “Recent housing data is positive. Sales of new and existing homes are rising, and construction of new homes enjoyed strong gains in May.”

Prices in the region didn’t fall as far as national averages during the housing crash, so they have not rebounded as quickly as the market has recovered. In addition, home values in New Jersey are under downward pressure from a large backlog of distressed properties heading into foreclosure. And New Jersey’s job market has been slower to heal after the recession than the national employment market, which has limited the ability of many families to buy homes. New Jersey’s unemployment rate of 6.5 percent is a full percentage point above the national rate.

Case-Shiller does not break out home values by county, but according to New Jersey Realtors, single-family prices in Bergen County were a median $462,500 in April, up 6.9 percent from April 2014. The median in Passaic was $282,250, up 3.8 percent from a year earlier.

Posted in Demographics, Economics, Employment, Housing Recovery, New Jersey Real Estate | 54 Comments

Cash sales top 48% in NJ

Posted on July 2, 2015 by grim

From Inman:

All-cash purchases, institutional investors saw record lows in May single-family market

The percentage of single-family homes and condos purchased with all cash or by institutional investors hit record lows in May.

Nearly 25 percent of all home sales in May were all cash purchases, according to RealtyTrac’s U.S. Home & Foreclosure Sales Report. This figure represents the lowest level of all-cash closings since November 2009. A year ago, more than 30 percent of buyers closed with all cash.

The share of institutional investors — entities purchasing at least ten properties in a calendar month — dropped to 2.4 percent of single-family home sales in May, the lowest level since January 2000.

The most common states for all cash deals in May were New Jersey and Florida, with these transactions accounting for nearly 48 percent of all sales in both locales. New York (38.8 percent) and Massachusetts (37.1 percent) followed.

Posted in Economics, New Jersey Real Estate | 114 Comments

New highs for NYC, over the river … notsomuch

Posted on July 1, 2015 by grim

From the NYT:

Average Home Price in Manhattan Reaches $1.87 Million, a New High

After flirting with records for more than a year, the average sales price of a Manhattan apartment hit a new high in the second quarter, according to at least two reports to be released on Wednesday by major real estate brokerage firms.

A strong local economy, combined with high demand and not enough listings, pushed the average sales price up 11 percent, to $1.87 million, compared with the same period in 2014, surpassing the previous peak of $1.77 million reached in the first quarter of last year, according to Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of a report for Douglas Elliman Real Estate.

The median sales price, which measures the middle of the market and is less affected by high-end sales, was $980,000, just behind the record of $1.025 million set in the second quarter of 2008, before the financial crisis hit, according to Miller Samuel.

“It’s like everyone revved up their engines again,” said Pamela Liebman, the chief executive of the Corcoran Group, which put the record average sales price at $1.81 million and the median at $960,000. “We saw continuous demand across all price points, buoyed by some exciting new developments that have come on the market and a continued influx of buyers from China.”

“In all my years of doing this,” she added, “I have never seen such a hunger for New York City real estate.”
…
The higher prices were driven by two key factors. Inventory growth has begun to stall, especially in the resale market, where potential sellers are reluctant to list their properties as they are often outbid, turned down for loans or simply cannot find what they are looking for. The number of available listings barely budged, up 1.3 percent in the second quarter to 5,730, compared with a year ago, according to Douglas Elliman.

Posted in Demographics, Economics, Housing Recovery, NYC | 121 Comments

Pending Home Sales Hits Post-Recession Highs

Posted on June 30, 2015 by grim

From the WSJ:

U.S. Pending Home Sales at Highest Level in Nine Years

A forward-looking indicator of home sales rose to its highest level in more than nine years in May, a sign the housing market is gaining traction after a shaky start to the year.

The National Association of Realtors said Monday its index of pending home sales increased 0.9% to a seasonally-adjusted 112.6, the highest level since April 2006. The index tracks contract signings, which usually close within two months.

The April index was revised down to 111.6 from 112.4.

Economists surveyed by The Wall Street Journal had expected a 1.2% increase in May.

“The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,” NAR chief economist Lawrence Yun said.

Monday’s index was “a little softer than expectations,” wrote Daniel Silver of J.P. Morgan in a note. “But the trend in the series still looks favorable, with pending sales up for five straight months through May.”
…
First-time home buyers also started making their way back to the real-estate market last month.

But existing home sales, which account for about 90% of the market, are still well below their prerecession peak, when they routinely exceeded 6 million and even topped 7 million for part of 2005.

Prices have also been rising lately. The median price of an existing home last month was $228,700, or 7.9% higher than in May 2014.

“Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages,” Mr. Yun said.

Pending home sales rose 6.3% in the Northeast and 2.2% in the West but fell 0.6% in the Midwest and 0.8% in the South.

Posted in Housing Recovery, National Real Estate | 86 Comments

Home prices setting new records in April

Posted on June 29, 2015 by grim

From HousingWire:

Black Knight: Home prices rise 1% in April from March

U.S. home prices were up 1% for the month, rising 4.9% on a year-over-year basis, according to Black Knight’s latest Home Price Index report, based on April 2015 residential real estate transactions.

This puts national home prices up nearly 3% since the start of the year and up just under 24% since the bottom of the market at the start of 2012.
At $248,000, the national level HPI is now just 7.6% off its June 2006 peak of $268,000.

Washington led gains among the states, seeing 2.0% month-over-month appreciation, while Seattle led metro areas with 2.2% growth from March.
Detroit, Michigan; San Jose, California, and Ft Collins, Colorado all saw home prices rise 2.0% for the month, making them three of the nation’s best performing metro areas.

Among the nation’s 20 largest states, four hit new peaks in April:

Colorado ($294K)

New York ($345K)

Tennessee ($174K)

Texas ($208K)
…
Of the nation’s 40 largest metros, 10 hit new peaks:

Austin, TX ($277K)

Columbus, OH ($181K)

Dallas, TX ($209K)

Denver, CO ($314K)

Honolulu, HI ($526K)

Houston, TX ($214K)

Nashville, TN ($213K)

San Antonio, TX ($189K)

San Francisco, CA ($701K)

San Jose, CA ($847K)

Both Boston, MA and Portland, OR are within 0.75% of reaching new peaks.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 87 Comments

Peek into the Lower Hudson Valley Market

Posted on June 28, 2015 by grim

From Lohud.com:

The slump is over: real estate is back

Looks like very good news for homeowners across the Lower Hudson Valley — experts are saying that the multi-year real estate slump is finally over.

“It’s the best market we’ve had since 2007, both in price and the velocity of sales,” said Arthur Scinta of Houlihan Lawrence, who works exclusively in the red-hot Pelhams.

In Rockland, the number of home sales is up 16 percent this spring compared to 2014. In Putnam, they shot up 23 percent compared to last spring. Westchester has seen a more temperate increase of 6 percent.
…
“It’s a sellers’ market,” said Brian Levine, manager of the Houlihan Lawrence office in Irvington, another strong market.”We’re seeing bidding wars, we’re seeing all-cash offers. We’re sending people away with really good credit. They’re not getting the houses they want because people are showing up with all cash, and as we all know cash is king.”

The endless winter we endured put a big damper on the early spring real estate market, leaving buyers and sellers alike huddled indoors behind mountains of snow. Who wants to put their home on the market when you can’t even goose up the curb appeal with basics like a newly painted front door and fresh landscaping?

But for parts of the Lower Hudson Valley and for certain price points the market has come roaring back to life these last couple of months.

Some houses are selling very fast. “I listed a house on May 13th in West Harrison and we had signed contracts on it by the evening of the 20th,” said Wendy Alper, an agent with Julia B. Fee Sotheby’s International Realty in Rye.

It’s definitely a seller’s market, Scinta said. At least 30 of the 59 houses sold in Pelham so far this year had multiple bids. “Generally, that translates into over the asking price,” he said.
…
Buyer demand remains strong locally and a shortage of homes on the market continues to be a problem, Levine said. “There is a severe inventory shortage across the nation, and that’s true here as well.”

In Yonkers, Jane McAfee of Houlihan Lawrence has seen a very low inventory since January. “At the beginning of the year there were 199 houses on the market in Yonkers, and for Yonkers that’s not many,” she said. On June 1, 2014, for example, there were 304 single-family homes for sale in the city.
…
“It’s unlike any spring market I’ve been in — and I’ve been doing this for 21 years — because it’s so late,” McAfee said. “It’s not just that there were storms, it was so bad all winter long. People were not getting their houses ready — they certainly couldn’t do any work outside.”

In most years, “we’d be at the tail end of the spring market now, but we’re still in the thick of it,” said Levine, the Irvington manager. “We’re seeing a lot of activity. I keep looking at the calendar and saying it should be starting to slow down now.”
…
“The closer to New York City the better — Pelham, Bronxville, Larchmont, the river towns (Dobbs Ferry, Hastings-on-Hudson, Irvington and Tarrytown),” said Scinta, the Pelham agent. “The market is always driven by the city and it rolls north. As the market recovers, it pushes its way up.”

Posted in Housing Recovery, NYC | 30 Comments

Getting ahead in the new normal

Posted on June 26, 2015 by grim

From the NYT:

More Americans Are Renting, and Paying More, as Homeownership Falls

To Johnnie McDowell, the house on Livingston Street seems to taunt him every time he walks by. It’s nothing special: The two-story home is a bit shabby, and it’s been on and off the market in recent months without finding a buyer. Still, he cannot stop dreaming of a better life for his family as he imagines the extra space inside and his children and dog playing outdoors once he weeds the yard.

The McDowell family, however, remains squeezed into a rental apartment: a single floor of an oddly configured duplex that Mr. McDowell has fashioned into three small bedrooms for himself, his wife, Takiba, and two children. With a monthly rent of $1,400, car payments, unpredictable family expenses, a spotty credit report and an empty savings account, Mr. McDowell sees no way to soon pull together a decent down payment.
…
In the past, many families like the McDowells, whose household income is almost $100,000 a year, would already be nestled in a starter home, maybe even on the cusp of upgrading to something bigger and more expensive on the profits from their first house.

But even as the market continues to improve — sales of existing homes in May increased to their highest pace in six years, the National Association of Realtors reported on Monday, and first-timers make up 32 percent of the buyers — it is leaving millions of Americans unwillingly stuck in rental housing.
…
“It’s more of a new normal,” said Robert J. Shiller, an economics professor at Yale University and a Nobel laureate. “We went through a wrenching experience with the biggest housing bubble and the biggest collapse since 1890. This is an anxious time.”

The nation’s homeownership rate has been falling for eight years, down to 63.7 percent in the first quarter of this year from a peak of over 69 percent in 2004, according to a new report released on Wednesday by Harvard University’s Joint Center for Housing Studies.

The flip side of the decline in homeownership is a boom in rentals and a significant rise in the cost of renting. On average, the number of new rental households has increased by 770,000 annually since 2004, the center’s report said, making 2004-14 the strongest 10-year stretch of rental growth since the late 1980s.
…
Some economists see signs of a turnaround, with reluctant renters like Mr. McDowell starting to find ways to enter the mortgage market, where interest rates are still at bargain levels. The economists predict home buying will continue to rise as long as the economy keeps growing and unemployment falls further, prodding employers to raise wages faster than inflation.
…
But in the meantime, the flood of renters has reduced the national vacancy rate to its lowest point in nearly 20 years, according to the center’s report. And while builders are adding apartments rapidly, they are concentrating on the higher end of the market, pinching those in the middle and bottom. Last year, rents rose at a 3.2 percent rate, more than twice the pace of overall inflation.
…
The situation is particularly acute in New Jersey, where the McDowell family lives. According to an analysis of 2013 government data by Enterprise Community Partners, a nonprofit based in Columbia, Md., dedicated to creating more affordable housing, more than three out of 10 New Jersey renters spend at least half of their household income on rent and utilities, the second-highest rate in the nation, behind Florida.
…
On a recent warm evening, Mr. McDowell stood outside the broken white picket fence that lined the home, with Erin bouncing down the sidewalk.

“I would rip up all of this,” he said, plotting how he’d clean up the yard so the children and their shih tzu, Cleo, could safely play. “I have dreams. My wife and I have dreams.”

Posted in Demographics, Economics, Housing Recovery, New Jersey Real Estate | 94 Comments

Hipsters hate Yuppies

Posted on June 25, 2015 by grim

You are fooling nobody bud, you are clearly a hipster in a yuppie disguise. Also, be it noted, white men can’t tag.

From the Jersey Journal:

Photos show alleged vandal behind ‘Go home yuppie scum’ graffiti in Jersey City

Police are seeking the public’s help in identifying a man seen in new security footage allegedly spray painting “GO HOME YUPPIE SCUM!” on a new residential building next to City Hall.

Eric and Paul Silverman, the developers behind the new building, Charles & Co., released photos of the man, who tagged the Grove Street building on June 13.

The alleged vandal is a white male with a thin build, dark hair and a beard. He was caught on video footage tagging the Montgomery Street side of Charles & Co. at about 5 a.m. that Saturday. The graffiti was gone by noon, and the Silvermans estimate the damage to be in excess of $2,750.

In the footage, he is dressed in business casual clothing, including a blazer and a tie. He is wearing sunglasses.
…
The graffiti was found the same week Downtown Jersey City residents debated a new, anti-gentrification campaign that used “go home yuppie scum” as one of its slogans.

Posted in Humor, New Development, Unrest | 116 Comments

Stalker or elaborate sham to sue?

Posted on June 24, 2015 by grim

From the NY Daily News:

New Jersey couple sues over dream home that came with creepy, threatening letters from ‘The Watcher’

A New Jersey couple who thought they were buying their dream home are suing its previous owners, claiming the house has a longtime stalker who writes terrorizing letters and signs them “The Watcher.”

A Union County lawsuit contends the original owners of the six-bedroom, $1.3 million home in upscale Westfield deliberately withheld information about the anonymous, threatening missives.

“Currently, plaintiffs are in the process of selling the home as they are unable to live in the home without extreme anxiety and fear for their children’s safety and well-being,” says the suit that was filed earlier this month, according to Courthouse News Service.

The names of the plaintiffs and the defendants, as well as the home’s address, were not divulged by the site to protect the privacy of those involved.

“Plaintiffs are having trouble selling the home as interested parties, once notified of the letters, no longer view the property as a safe home,” the suit claims.

The letters began arriving on June 5, 2014, three days after closing, the couple contends. They show The Watcher’s “mentally disturbed fixation and claim to possession and/or ownership of the home,” the suit says.

The letters claim the home had been in The Watcher’s family for decades.
…
The new owners claim the sellers received a letter from The Watcher more than a week before closing on the sale. That correspondence “noted there would be a new family moving into the home.”

The sellers were “so desperate to sell the million-dollar home (they) knowingly and willfully failed to disclose … this disturbing letter,” the suit says.

The new owners are seeking damages for breach of contract and fraud. They are asking for their money back, plus interest.

Posted in New Jersey Real Estate, Unrest | 90 Comments

First time buyers back in the market?

Posted on June 23, 2015 by grim

From the WSJ:

U.S. Existing-Home Sales Increase 5.1% in May

Sales of previously owned homes surged in May, buoyed in part by the return of younger buyers who had long struggled to find a path into the market.

The pace of existing-home sales rose 5.1% last month from April to a seasonally adjusted rate of 5.35 million, the National Association of Realtors said Monday. Sales for April were revised up to 5.09 million from an initially reported 5.04 million.

Sales last month hit their strongest pace since November 2009. “We’re moving back toward a more normal housing market,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.

Analysts pointed to the return of first-time buyers, who have been cautious for much of the recovery, as evidence the housing market is starting to look more like it did in the early 2000s, before a boom and bust. First-time buyers rose to 32% of all existing-home buyers from 27% a year ago, NAR said. Historically, first-time buyers have made up about 40% of the market.

Significant growth in home prices and sales is unlikely without new buyers. A stronger market for existing homes can help shape the wider economy in part because homeowners invest in things from washing machines to lawn mowers and use their homes to finance other big purchases.

“If you take first-time buyers out of the equation then all you’re doing is shuffling deck chairs around,” Mr. Stanley said.
…
Still, the recovery has been too uneven for economists to feel certain the housing market is on solid ground. Sales unexpectedly fell in April before recovering last month. One issue is a shortage of new and existing inventory that is pushing up prices and driving potential buyers away.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 70 Comments

Subprime wasn’t the problem?

Posted on June 22, 2015 by grim

From Fortune:

The subprime mortgage crisis wasn’t about subprime mortgages

In the years following the financial crisis, a cottage industry arose that tried to explain just what happened to the American economy and the financial system.

Early on in the process, journalists zeroed in on one set of villains: subprime lenders and the supposedly irresponsible borrowers who were their customers. We were regaled with stories of mortgage lenders like Countrywide handing out loans that borrowers couldn’t possibly repay, and then selling them on to investment banks, who packaged them into “toxic” bundles like Goldman Sachs’ infamous Abacus collateralized debt obligation.

When these subprime borrowers began to default, so the narrative goes, the dominoes began to fall, eventually helping to send the entire mortgage market, U.S. financial system, and global economy into crisis.

At the time, the press spent a lot of energy scrutinizing subprime borrowers and lenders, based on the fact that in the early days of the crisis, the rate and absolute number of subprime foreclosures were much higher than foreclosures in the prime market. It was around this time that CNBC’s Rick Santelli gave his famous rant against talk of bailing out underwater homeowners that helped launch the Tea Party movement, calling the folks who were at risk of foreclosure “losers.”

Furthermore, much of the reforms instituted since the financial crisis have centered around increasing scrutiny of mortgage lending, to make sure that these sorts of irresponsible loans aren’t made again.

But if journalism is the first-draft of history, then it’s about time for a second draft. In a new working paper by Wharton economists Fernando Ferreira and Joseph Gyourko, the authors argue that the idea that subprime lending triggered the crisis is misguided. The paper looks at foreclosure data from 1997 through 2012 and finds that while foreclosure activity started first in the subprime market, the foreclosure activity in the prime market quickly outnumbered the number of subprime foreclosures.

Posted in Foreclosures, Housing Bubble, Risky Lending | 70 Comments