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Home Ownership, an American dream losing to HUD’s Take Over

For all of us whether retiring, graduating college, starting a new job, or recently married; deciding on your future home will continue to be your biggest decision.  Housing has been all over the news this week without a mention of HUD and AFFH, the elephant in the room, to include the publications listed below.  These publications won’t knock your socks off as this article is intended, they represent the typically politically correct conventional information about the current state of housing.

  1. Click “Income gap hits neighborhoods”, by the Associated Press, Sunday 11/22
  2. Rentals usurp American Dream of home ownership”, by the USA Today, Wednesday 11/25
  3. Why the Housing Rebound Hasn’t Lifted the U.S. Economy Much”, by the Wall Street Journal, Monday 11/23, copied at the bottom for those who do not subscribe.

These are not copycat articles and there’s no conspiracy, just independently published articles that reveal either ignorance or political correctness on the part of the media avoiding the new reality and preventing information about the terrible impact of AFFH on housing from spreading.  After all, the AFFH rule is all about race, segregation, and national origin, i.e., not only a popular topic on college campuses, and now central to local government planning; just not the stuff writers want to discuss in their selected topics topics about housing.

There are many dedicated housing authorities and civil rights groups acting as HUD surrogates such as the National Association of Housing and Redevelopment Officials (NAHRO) who don’t have a problem with political correctness and who don’t mind using race to go on the offensive with their own self indoctrination of self-righteousness.

As these type of articles continue to inform they also show that the world is not standing still, this country is being transformed and is no longer looking like the land of opportunity and the land of the free it once was, instead it’s looking like a country governed by local governments bribed by HUD grants and a growing electorate receiving handouts.

Before Obama’s socialist America the character of this country was always believed to be about opportunity, hard work, saving, and rugged individualism. Ideals we don’t hear so much about any more.

Housing has been determined by the market place, absent of discrimination, not by central government planning.  The Supreme Court disagrees. In spite of our history of immigration for over two hundred years of spawning ethnic neighborhoods the court has decided that there is now an illegal “disparate impact” due to racial inequality now requiring the government to fix what our history of expansive housing has somehow unjustly delivered. Without false arguments based on interpreting the 1968 Fair Housing Act, there is little the Court and the federal government has to stand on, but regardless, AFFH as a truly communist program is forging ahead to our national demise.   If you have doubts about communism be sure to read the previous article published here on, click: “HUD Releases Introduction to AFFH and the New Rule Webcast“.

Continuing with a review of this weeks housing articles, consider the following story described in the article “Income gap hits neighborhoods”, where

“Our argument is that the shape of the American city is the shape of American life.”
– Redfin CEO Glenn Keman

Glenn Keman clarifies that he means “the only time you meet someone wealthy is when you’re handing them a croissant.” Without alluding to the government, this article broadcasts the message about a problem for our children who unfairly can’t live in the right zip codes. Without stating a solution, this article clearly doesn’t expect his problem to be fixed by the market place. This is an endorsement of AFFH type thinking drawing on the same sympathies of the bigoted housing authorities and government attempting to fix a problem with which it shouldn’t be involved.

Rentals on the other hand, as describe in the article “Rentals usurp American Dream of home ownership” summarizes the current flight of families from home ownership who can only expect to rent. Attempting to represent both sides, this article describes the trend and the satisfaction many have with renting, but doesn’t fairly account for the advantages of home ownership and the gross impact home ownership has on family life and the American culture. The impact of the AFFH Tool on local planning will greatly diminish home ownership as affordable housing means more and more rentals.

“Why the Housing Rebound Hasn’t Lifted the U.S. Economy Much” is a kind of investor’s perspective into the recent rebound of home equity, but perhaps most revealing about the importance of housing and home ownership is the direct effect home equity has on boosting the economy by providing increased spending as a significant stimulant on the economy.  Confirming something we all know, that any rebound is market driven; albeit in spite of government handicaps such as Dodd-Frank regulations.

A couple of years ago your opinion was just that, an opinion, but now it should be evident that since the AFFH rule our opposing opinions are significant in this war against HUD.  There’s a fence, on one side is the federal government and its surrogates with their self-righteous attitude now positioned to regulate local government planning with the AFFH tool.  On the other side are those of us who are now politically incorrect and opposed the federal government beginning with its oversight of our zoning laws and misuse of  billions of tax payer dollars for bribes in the form of grants. Perhaps it’s really just that simple, us against them.

The following Wall Street Journal article is provided for those who don’t subscribe.  Current subscribers, click:  “Why the Housing Rebound Hasn’t Lifted the U.S. Economy Much“.

By Joe Light
Nov. 22, 2015 2:50 p.m. ET

American homeowners are finally digging out of the hole created by the housing crisis. But their housing wealth is playing a much smaller role in the overall economy than it did before the downturn.

Home equity has roughly doubled to $12.1 trillion since house prices hit bottom in 2011, according to the Federal Reserve. As a result, a key gauge of housing wealth—homeowners’ equity as a share of real-estate values—is nearing the point seen a decade ago, before the downturn.

Such a level once would have offered a double-barreled boost to the economy by providing owners with more money to tap and making them feel more flush and likely to spend. But today, that newfound wealth has had little effect on behavior. While the traditional ways Americans tap their home equity—home-equity loans, lines of credit and cash-out refinances—are higher than last year, they are still depressed.

In the first half of the year, owners borrowed $43.5 billion against their homes with home-equity loans and lines of credit, according to trade publication Inside Mortgage Finance. That was 45% higher than in the first half of 2014, but scarcely a quarter of the amount seen when equity was last as high in 2007.

Meanwhile, cash-out refinances, which let homeowners take out a new mortgage and tap some of the home’s value at the same time, were up 48% in the three months ended in August from the year-earlier period, according to Black Knight Financial Services. But they remain below the level seen in the summer of 2013. The average cash-out refinance in the three months ended in August left the borrower with mortgage debt of about 68% of the home’s value—not a risky level by any stretch.

Home equity’s effect on consumer spending is at its lowest ebb since the early 1990s, according to Moody’s Analytics. The research firm estimates that every $1 rise in home equity in the fourth quarter of 2014 would translate to about two cents of extra consumer spending over the next 1 to 1½ years. That was a third of the impact home equity had before the bust, Moody’s said.

The impact is more muted now despite the fact that home equity per homeowner has roughly doubled. At the end of the second quarter, the figure was about $156,700, up from $81,100 in the second quarter of 2011, according to Moody’s Analytics chief economist Mark Zandi. Though the homeownership rate has fallen, the total number of households has increased, meaning the number of households that own hasn’t changed much since the housing bubble burst in 2006, Mr. Zandi said.

Why aren’t homeowners feeling flush again? For one thing, since rising home prices over the past few years largely have made up for ground lost during the recession, many owners might not even realize they have equity to tap.

The percentage of homeowners who were underwater, or owing more on their mortgage than the home’s value, dropped to 8.7% by mid-2015 from 21% at the end of 2011, according to CoreLogic. Yet the percentage of homeowners who thought they were underwater fell by merely one percentage point to 27%, according to housing-finance company Fannie Mae.

The bust looms large and home equity is seen as more fleeting than it used to be, said Fannie Mae chief economist Doug Duncan.

“Consumers are definitely more conservative financially than they were 10 years ago. They’ve seen that house prices can be volatile,” Mr. Duncan said.

Mortgage lenders also aren’t giving owners access to as much equity as they used to. While it was common during the boom to see loans that took out 100% or even more of a home’s value, now few will let an owner take out more than 80%.

Finally, other kinds of loans are cheaper, removing one incentive to tap home equity.

Six years ago, for example, the average five-year new-car loan had an interest rate of 6.83%, versus 5.56% for a $30,000 home-equity credit line. But in the week ended Nov. 11, the average interest rate for a five-year new-car loan was 4.3%, according to, versus 4.74% for the HELOC.

Home equity as a share of real-estate values at the end of the second quarter was 56%, according to the Federal Reserve, not quite back to the level of 60% seen in the boom. That means Americans’ mortgage debt is still elevated relative to home values, which could be another factor affecting the decision of whether or not to cash out equity.

Could home equity start to flex its muscle sometime soon?

Some economists think it might. One reason: In many metro areas, home prices have overtaken or are about to overtake their boom-era peak.

About 38% of metro areas had prices above their pre-2009 peak at the end of the third quarter, up from a 30% level last year, according to Moody’s Analytics and CoreLogic. A further 13% of metros are within 5% of their prebust peak.

That’s important, because it means new home equity is being created rather than merely making up for lost ground. It also means fewer homeowners are underwater, freeing them up for a home sale and potential move-up purchase while also making home improvements and renovations seem less like throwing good money after bad.

“We’re at an inflection point,” Mr. Zandi said. “Since the crash, it’s all been about repairing homeowners’ equity but now that house prices are returning to prerecession levels, we will see homeowners’ equity driving consumer spending, home improvements and economic activity.”


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