Monthly Archives: January 2017

The government currently stands on affordable housing

The government currently stands on affordable housing

Amidst the partisan rancor in Washington, there is one issue that should unite both political parties: the urgent need to expand access to affordable rental housing.

The situation is dire. According to new research by Harvard’s Joint Center for Housing Studies, more than 11 million households in communities across America now spend in excess of 50% of their income just on rent. That’s an unsustainable proposition for millions of low-income families who are often forced to choose between paying the rent and purchasing groceries or critical medical care. Many are just one missed rent payment away from eviction and homelessness.

What’s the cause of today’s high rent burdens? Over the past decade, we have witnessed an unprecedented increase in demand for rental housing that has sent rents soaring. Unfortunately, household incomes have not kept pace. Exacerbating the situation is the severe shortage of rental homes that are affordable and available to the lowest-income families. This shortfall now stands at 7.4 million units, affecting every state and metropolitan area

Millions of low-income families rely on federal rental assistance, but these programs help just one out of every four eligible households. In many communities, housing vouchers are allocated through long waiting lists or by lottery.

For some, it may be easy to dismiss these concerns. But make no mistake: housing is a fundamental aspect of all our lives. Our homes, of course, provide necessary shelter but they also serve as the gateway to our communities and society at large. Children living in stable, affordable homes generally perform better at school and are healthier than those who lack this foundation. A growing body of research is also showing that restrictive land use policies and high housing costs hinder mobility and stymie economic growth.

As Pulitzer Prize-winning author Matthew Desmond explains: “Without stable shelter, everything else falls apart.”

The good news is that many of the solutions to the rental affordability crisis already enjoy broad bipartisan support.

Republican and Democratic members of Congress recently joined together to introduce legislation that would strengthen the Low-Income Housing Tax Credit, the nation’s most effective program to increase the supply of affordable rental homes. There’s no better time than now to pass this important legislation, which would help attract much-needed private investment in affordable housing.

The 1.1 million units in the Public Housing program are a critical source of affordable rental homes, but many of these units are in serious need of repair after years of disinvestment. Responding to this problem, the Department of Housing and Urban Development’s Rental Assistance Demonstration (RAD) program allows public housing authorities to leverage existing rental subsidies to attract private capital to support revitalization within Public Housing. The results so far are promising. However, the number of units that can convert to RAD is today capped at 185,000. Voices on both sides of the aisle are now calling for the cap to be raised or lifted entirely.

There is broad recognition that federal, state, and local regulatory policies can act as artificial barriers to affordable housing, either by raising construction costs, limiting affordable rental production, or preventing production altogether. More than 25 years ago, former HUD Secretary Jack Kemp called upon the nation to remove these barriers so that lower-income families can fully enjoy the opportunities our country affords.  Last year, former President Barack Obama made a similar plea and released a toolkit for states and cities seeking to expand access to affordable housing. What’s needed now is inspired leadership to make regulatory-barrier reduction a truly national goal.

Republicans and Democrats have come to appreciate the effectiveness of “housing-first” strategies that prioritize permanent housing for those experiencing homelessness. The result has been significant declines in homelessness among families and veterans. Building on this approach, the Bipartisan Policy Center Housing Commissionrecommended the provision of short-term emergency rental assistance to those low-income families who have suffered a major setback (such as a job loss or a major medical crisis) that could lead to eviction. The goal of this assistance would be to keep families in their homes, help them get stabilized, and prevent homelessness.

Preparing to spurn Starwood Capital after D.R. Horton improves its offer

Preparing to spurn Starwood Capital after D.R. Horton improves its offer

Thanks to a bidding war between two real estate giants, Forestar Group, a residential and mixed-use real estate developer, and its shareholders find themselves squarely in the catbird’s seat.

As recently as one day ago, Forestar said that it still planned to sell itself to Starwood Capital Group for $15.50 per share (or approximately $658 million), despite D.R. Horton attempting to swoop in and buy 75% of the company for a higher price, $16.25 per share (or approximately $520 million).

That came after Starwood increased its initial offer for Forestar from $14.25 per share to $15.50 per share as it tried to fend off D.R. Horton’s unsolicited bid for control of the company.

But things can change quite a bit in 24 hours.

On Thursday, Forestar announced publicly that its board was considering both companies’ offers, and may determine that D.R. Horton’s bid is superior.

Now, it appears that Forestar’s public negotiation proved successful, as the company announced Friday morning that both companies increased their offers for the company, with D.R. Horton increasing its bid enough that Forestar now plans to spurn Starwood’s offer and sell to D.R. Horton.

According to both Forestar and D.R. Horton, the homebuilder increased its bid from $16.25 per share to $17.75 per share, which would increase the purchase price for 75% of Forestar from $520 million to $568 million.

In a release, Forestar said Friday that its board unanimously determined that D.R. Horton submitted a “Superior Proposal,” which it now plans to accept instead of Starwood’s offer.

Forestar said that it notified Starwood on Friday about D.R. Horton’s increased offer and its intentions to terminate its merger agreement with Starwood and enter into a new acquisition agreement with D.R. Horton.

In a release of its own, D.R. Horton said that the company is very pleased with Forestar’s decision.

“We are pleased that the Forestar Board has determined that our revised offer constitutes a ‘Superior Proposal,’ and we look forward to completing this transaction as quickly as possible in the best interests of the Forestar and D.R. Horton shareholders,” Donald Horton, D.R. Horton’s chairman of the board, said.

“This transaction advances D.R. Horton’s strategy of increasing our access to high-quality optioned land and lot positions and will allow us to significantly accelerate Forestar’s growth into a leading national land developer,” Horton continued.

“Forestar’s shareholders will receive superior and immediate cash value, along with the opportunity to participate in significant value creation over the long term,” Horton added. “This strategic alignment will enable both companies to enhance their operational efficiency and returns.”

But things aren’t done and dusted quite yet.

Forestar said that Starwood also increased its offer for the company from $15.50 per share to $16, but the company currently prefers the offer from D.R. Horton.

But Forestar said in its release that it still plans to discuss and negotiate with Starwood in good faith, if Starwood so chooses, over “adjustments” to its merger agreement with Starwood that could lead to the company not accepting the D.R. Horton offer after all.

Those “adjustments” would likely be Starwood increasing its offer again, if the company wants to.

Starwood has already increased its offer from $14.25 per share to $15.50 and now to $16 per share, and it appears that Forestar is going to try to see if Starwood is willing to up the ante again.

Forestar said that it will negotiate with Starwood until the end of the day on June 28 before determining which offer to move forward with.

All of this back and forth has been a boon for Forestar’s shareholders as the company’s stock has risen substantially throughout the entire negotiation process.

Back on June 2, Forestar closed at $14.20 per share. In the wake of the initial offers from Starwood and D.R. Horton, the company’s stock shot up to $16 per share on June 5.

And the stock has been steadily rising since then too. As of 12:06 pm Eastern on Friday, June 23, the company’s stock was up more than $1 for the day, climbing to $17.65.

Back in November, the company’s stock was trading at less than $11 per share.

HomeActions buys the Gooder Group

HomeActions buys the Gooder Group

HomeActions, a lead-generation and client relationship platform for real estate professionals, announced this week that it acquired the Gooder Group, a publisher of digital and print lead-generating marketing tools for real estate and mortgage professionals.

Specifically, HomeActions said that it acquired “all of the assets” of the Gooder Group.

According to HomeActions, the deal will “significantly” expand its offerings to include e-marketing services and print services.

In a release, the company said that one of the key features of the deal is that HomeActions will now be able to offer its base of 5,000 clients a “complete program of digital and print products from one source that will enhance lead-generation and ‘stay in touch’ efforts.”

According to the companies, current Gooder Group clients that use the company’s e-newsletter service will soon be able to use the “advanced” HomeActions e-newsletter platform.

The companies said that all Gooder Group employees are expected to transition over to the HomeActions team immediately.

“We see this as an online and offline strategic move,” said Barry Friedman, the co-founder and CEO of HomeActions. “Our ability to offer a quality print platform for newsletters, brochures and more demonstrates our commitment to becoming a one-stop shop for all our clients’ needs.”

Financial terms of the deal were not disclosed.

 

New sales up annually but still remain historically low

New sales up annually but still remain historically low

In April, home prices dropped, followed by an increase in home prices in May, according to a joint release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. One expert explained the volatility in certain areas of the U.S. are to blame for the shifting home sales market.

“Much of the movement in new home sales the past two months can be traced to volatility in reported sales in the Midwest and West,” Nationwide senior economist Ben Ayers said. “Whereas sales in the West rebounded sharply in May, Midwest new home sales slipped again to a multi-year low.”

Demand reaches highest point ever

Demand reaches highest point ever

It seems nothing can stop housing demand, which just hit a new high, according to Redfin, an online real estate brokerage.

The company’s Housing Demand Index increased 11.3% in May to a new record high. The index now stands at a seasonally adjusted level of 136, the highest level of homebuyer demand since Redfin began tracking in January 2013.

The Demand Index is based on thousands of Redfin customers requesting home tours and writing offers. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.

A recent report from Trulia showed falling inventory is forcing homebuyers to move at the fastest pace ever. Competition is so fierce, in fact, that Redfin reports 33% of Americans, and 41% of Millennials, are buying homes before seeing them in person.

“Housing shortages look to intensify and may well turn into a housing emergency if the discrepancy between housing demand and housing supply widens further,” Lawrence Yun, National Association of Realtors chief economist, said in response to housing starts sinking to an eight-month low.

And because of this increasing competition, many experts say a slowdown in rising home prices is nowhere on the horizon.

And yet, despite these complications, the demand for housing continues to increase. The number of buyers requesting tours from Redfin increased 9% month-over-month in May, and the seasonally adjusted number of buyers writing offers increased 15.4%.

The index showed housing inventory dropped 11.8% in the 15 metros it covers, marking the 24th consecutive month of annual inventory declines. New homes listed for sale actually increased 4.2% in May, meaning people are buying up homes faster than they are being listed.

“On paper, the numbers we’ve been presenting all year make the market look like a seller’s haven,” Redfin Chief Economist Nela Richardson said. “But very often sellers are buyers too.”

“Sellers in hot markets can quickly generate several competing offers, but what they really need to be on their way to their next home purchase is a committed buyer who will make it to the closing table without delays or hassles,” Richardson said. “To provide this assurance, savvy buyers aren’t just offering the highest price; they are using creative strategies like pre-inspections and non-refundable deposits to demonstrate to sellers their commitment to close the deal.”

Mortgage originator accused of bilking elderly homeowners

Mortgage originator accused of bilking elderly homeowners

A mortgage originator from Chicago stands accused of running a reverse mortgage scam and defrauding elderly homeowners and lenders out of $7 million.

According to the U.S. Attorney’s Office for the Northern District of Illinois, Mark Steven Diamond is a mortgage loan originator with offices in Chicago and Calumet City, Illinois.

Diamond is currently facing seven counts of wire fraud after being accused of fraudulently causing lenders to make reverse mortgage loans to homeowners who either did not sign up for the loans or did so after Diamond allegedly misrepresented the terms of the loans.

The indictment alleges that Diamond fraudulently kept the loan funds for himself after convincing title companies to give the checks to him instead of the homeowners.

According to the indictment, Diamond targeted his victims, who ranged from ages 62 to 97, based on how much equity they had in their homes and whether they were financially sophisticated or not.

Additionally, the indictment states that if one of the relatives of Diamond’s alleged victims questioned whether a reverse mortgage was a good idea, Diamond would visit the victim’s home at a time when he knew the relative would not be there.

All in all, Diamond allegedly defrauded the lenders and homeowners out of $7 million.

Diamond pleaded not guilty to the seven counts of wire fraud.

Also listed in the indictment is Cynthia Wallace, who allegedly solicited homeowners into agreeing to allow Diamond to perform home repairs on their homes, despite Wallace know that Diamond would not actually perform the work.

The indictment also states that Wallace used several aliases and posed as a representative of the Department of Housing and Urban Development to fraudulently obtain money from victims.

Wallace pleaded not guilty to nine counts of wire fraud and two counts of falsely pretending to be an employee of the United States.

The indictment also seeks the forfeiture of $7 million from Diamond.