Whether you think we’re actually in a housing bubble, and whether we are or not in actuality, doesn’t really matter, in the long term. The truth of the matter is, almost certainly we will find ourselves in one again. They happen regularly, and in lots of different countries, and for lots of well-meaning policy reasons. Alex Pollock has written a very good, concise piece for the American Enterprise Institute that explains why these policies are appealing to policy makers, and why bubbles are a problem.
We’ve covered the Fannie/Freddie issue before — the institutions are still precariously balanced, there’s broad support to overhaul them, but there’s huge debate on exactly how to overhaul them. Housingwire has a blog post that proposes one way to fix the problems, and asserts that it is not, in fact, too late to fix them. This particular proposal comes from The Housing Policy Council, and the blog post does a decent job of summarizing both the problem and their proposed solution. It’s worth a read, just to understand what is being proposed.
The premise of The Big Short, per Wikipedia, is “when four outsiders saw what the big banks, media and government refused to, the global collapse of the economy, they had an idea: The Big Short.” The comedy stars Brad Pitt, and is getting knockout reviews (87% on Rotten Tomatoes; 81% on Metacritic), but not everyone agrees. In particular, this op/ed on Philly.com claims the film is “entertaining, but not the truth”. Of course, we should hardly expect a documentary from a comedy with Brad Pitt, but the opinion is worth reading. After you’ve read it, go watch the film, which is apparently amazing, even if not historically accurate.
Surely, for most Americans, the idea of lying on any official form, let alone something as significant as a mortgage application, would be nearly unthinkable. It probably wouldn’t even cross your mind. But, as this article from South Florida indicates, it happens more frequently than one might think. If the thought does ever cross your mind, discard it immediately. You may not realize it, but providing false information on a mortgage application can be considered fraud, and the criminal penalties can be stiff.
While almost all data have pointed to a good 2016 in terms of the housing market, few sources are indicating that anything outrageous is going to happen. However, Brian O’Connell has written a rather extensive piece for The Street. He makes some predictions with which we at least marginally disagree, primarily around long-term mortgage interest rates; however, he makes a compelling argument that the pent-up building permits are going to bust open with entry-level housing starts, and we’re in for another (a continued?) housing boom.
As Winter finally begins to settle in, and as the holidays wind down, it’s easy to settle into the daily routine — get the kids ready, go to work, go to the gym, buy groceries, make dinner, sleep, repeat. Not much different here on January 6th than it was on December 6th. Don’t let that happen! Houzz has put together a list of 15 things do do around the home in January. Some of them are a little prosaic, but many of them will be sure to lift your spirits this January, from simple things like buying flowers and lighting candles, to longer term projects like starting to plan your spring garden.
Over the past year, it’s become quite clear that the housing market has recovered. However, does it really feel like the economy as a whole has? For most of us, probably not, and that’s largely because it hasn’t. Unemployment is down, but that’s because of the funny way the U.S. measures unemployment — there are plenty of people who are “no longer looking for work” that don’t count in that statistic. And as the housing market recovers, costs of rents don’t naturally decrease. ATTN has an interesting article that compares costs of housing to the minimum wage. Granted, they have an axe to grind, and it might not be your axe, but it’s still interesting, at least statistically.
If you’re still paying PMI on your mortgage, now may be a great time to look at refinancing and fixing that. According to Moody’s Analytics, single-family home prices are now above their previous-decade peak in more than 40% of markets. Nationally, prices are still down about 12% overall, but averages aren’t really useful — you need to look at your specific home and market. If you’re in a neighborhood that has rebounded, you may have enough equity in your home to refinance and kill that extra insurance payment.