Archive for the ‘housing and real estate’ Category

USPS OIG — Preservation and Disposal of Historic Properties

April 21, 2014 Comments off

Preservation and Disposal of Historic Properties (PDF)
Source: U.S. Postal Service, Office of Inspector General

The Postal Service did not know how many historic properties it owned or what it cost to preserve them, as required by the National Historic Preservation Act. It did not report the status of historic artwork to the National Museum of American Art, as required by Postal Service Handbook RE-6, Facilities and Environmental Guide, when it sold 10 historic post offices.

The Postal Service did not collaborate with the Advisory Council on Historic Preservation to improve its compliance with the National Historic Preservation Act and did not submit its 2011 status report to the council. The council could help the Postal Service establish covenants to protect historic features and help secure covenant holders to monitor compliance with those covenants. Also, the council could help review public requests to participate in the preservation process. The Postal Service could also use the U.S. General Services Administration — which employs experienced real estate and historical preservation professionals — to assist in the preservation process.

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Housing — In Search of Affordability

April 9, 2014 Comments off

In Search of Affordability
Source: Zillow

Across the United States, strong home price affordability has been recently eroded by a combination of rising home prices and mortgage rates. Some areas, particularly on the West Coast, have begun to look unaffordable compared to their historic norms, forcing some household to look to the periphery of urban areas in search of affordable homes.

At Zillow, we measure affordability by looking at how much of a person’s monthly income is spent on a mortgage payment. Historically in the United States, the median household would need to spend 22.1 percent of their income to afford the mortgage payments on the median home. This number fell dramatically during the housing recession, hitting a low of under 13 percent by the end of 2012.

Since then, both prices and interest rates have recovered, increasing the share of income needed to buy the median home to 15.1 (2013 Q4) percent nationwide – higher than in 2012, but still well below its historical average. This share of income is up from 15.0 percent reported in 2013 Q3 for the U.S. Looking forward, the U.S. is forecasted to remain more affordable than its historical average, as long as interest rates remain below 7 percent over the next year – an extremely likely scenario.

Quality of Infrastructure is a Top Deal Maker or Breaker for Real Estate Investment and Development Decisions

April 9, 2014 Comments off

Quality of Infrastructure is a Top Deal Maker or Breaker for Real Estate Investment and Development Decisions
Source: Urban Land Institute

The quality of infrastructure systems – including transportation, utilities, and telecommunications – is a top factor influencing real estate investment and development decisions in cities around the world, sharing a high ranking with consumer demand in terms of importance, according to a survey of public- and private-sector leaders conducted by the Urban Land Institute and EY. The findings are included in the Infrastructure 2014: Shaping the Competitive City report, released this week at ULI’s 2014 Spring Meeting in Vancouver, British Columbia.

The survey, conducted in January 2014, reflects the opinions of 241 public sector officials and 202 senior-level real estate executives (developers, investors, lenders and advisors) based in large and mid-sized cities across the globe, with concentrations in the United States, Europe and Asia Pacific.

Among the combined group of public and private sector participants, 88 percent rated infrastructure quality as the top influencer of real estate investment and development. Demographic forces, including consumer demand and workforce skills, ranked as other top considerations determining real estate investment locations. Infrastructure quality was rated as the highest influencer by public leaders (91 percent) and second to highest by private leaders (86 percent). Consumer demand was viewed as the top factor by the private sector (90 percent).

Strong telecommunications systems (including high-speed internet capability) led the list of infrastructure categories that drive real estate investment, along with good roads, bridges, and reliable and affordable energy.

The Effect of Large Investors on Asset Quality: Evidence from Subprime Mortgage Securities

April 4, 2014 Comments off

The Effect of Large Investors on Asset Quality: Evidence from Subprime Mortgage Securities
Source: Federal Reserve Bank of Atlanta

This paper examines how the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, the largest investors in subprime private-label mortgage-backed securities (PLS), influenced the risk characteristics and prices of the deals in which they participated. To identify the causal effect of the GSEs, we use the fact that PLS deals in which Fannie Mae and Freddie Mac purchased securities included separate mortgage pools: one specifically created for the GSEs and one or more others directed at other triple-A investors. Using within-deal variation, we find that the pools bought by Fannie Mae and Freddie Mac had similar ex-ante risk characteristics but performed much better ex-post relative to other mortgage pools in the same deals. These effects were concentrated in low-documentation loans and in issuers that were highly dependent on Fannie Mae and Freddie Mac. Our results extend the importance of disciplining effects of large claimholders beyond information-sensitive securities, such as equities and bank debt, to information-insensitive arm’s-length debt.

New From the GAO

April 3, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. International Financial Reforms: U.S. and Other Jurisdictions’ Efforts to Develop and Implement Reforms. GAO-14-261, April 3.
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2. Defense Infrastructure: Army Has a Process to Manage Litigation Costs for the Military Housing Privatization Initiative. GAO-14-327, April 3.
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3. 2020 Census: Prioritized Information Technology Research and Testing Is Needed for Census Design Decisions. GAO-14-389, April 3.
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CRS — The Mortgage Interest and Property Tax Deductions: Analysis and Options

March 31, 2014 Comments off

The Mortgage Interest and Property Tax Deductions: Analysis and Options (PDF)
Source: Congressional Research Service (via National Agricultural Law Center)

Concern has increased over the size and sustainability of the United States’ recent budget deficits and the country’s long-run budget outlook. This concern has brought the issues of the government’s revenue needs and fundamental tax reform to the forefront of congressional debates. Congress may choose to address these issues by reforming the set of tax benefits for homeowners. According to the Joint Committee on Taxation, federally provided tax benefits for homeowners will cost approximately $136.3 billion annually between 2014 and 2017. Reducing, modifying, or eliminating all or some of the current tax benefits for homeowners could raise a substantial amount of revenue, while simultaneously simplifying the tax code, increasing equity among taxpayers, and promoting economic efficiency.

This report focuses on the two largest federal tax benefits available to homeowners—the mortgage interest deduction and the deduction for state and local property taxes. While other tax benefits for homeowners exist, these two particular benefits are the most expensive in terms of forgone revenue to the federal government. Between 2014 and 2017 the mortgage interest deduction and property tax deduction are estimated to cost around $77.3 billion and $31.5 billion annually. Congress may therefore consider modifying these two tax benefits to raise revenue. The mortgage interest deduction and property tax deduction are also the two tax benefits proponents most often argue promote homeownership. Economists, however, have questioned this claim.

Out of Reach 2014

March 28, 2014 Comments off

Out of Reach 2014
Source: National Low Income Housing Coalition

The signature finding of Out of Reach is the annual Housing Wage – the hourly wage a full-time worker must earn to afford a decent two-bedroom rental home at HUD-estimated Fair Market Rent (FMR) while spending no more than 30% of income on housing costs. The Housing Wage allows Out of Reach to capture the gap between wages and rents across the country, and reveals the growing disparity that low income renters face.

In the United States, the 2014 two-bedroom Housing Wage is $18.92. This national average is more than two-and-a-half times the federal minimum wage, and 52% higher than it was in 2000. In no state can a full-time minimum wage worker afford a one-bedroom or a two-bedroom rental unit at Fair Market Rent.

On the 25th anniversary of Out of Reach, the report continues to demonstrate that large numbers of low income renters cannot find decent, affordable housing. As policymakers consider raising the federal minimum wage and combating income inequality, the shortage of affordable housing must also be addressed. Expanding the supply of affordable rental homes dedicated to the lowest income renters is a critical and fundamental part of any real solution. This is not an unattainable goal. Once funded, the National Housing Trust Fund will build, preserve, and rehabilitate rental homes that are affordable for extremely and very low income households. Through the National Housing Trust Fund, we can finally increase access to affordable housing for the lowest income households.

New From the GAO

March 27, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. Canceled DOD Programs: DOD Needs to Better Use Available Guidance and Manage Reusable Assets. GAO-14-77, March 27.
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2. Native American Housing: Additional Actions Needed to Better Support Tribal Efforts. GAO-14-255, March 27.
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3. Major Automated Information Systems: Selected Defense Programs Need to Implement Key Acquisition Practices. GAO-14-309, March 27.
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4. Manufacturing Extension Partnership: Most Federal Spending Directly Supports Work with Manufacturers, but Distribution Could Be Improved. GAO-14-317, March 27.
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5. Defense Infrastructure: DOD’s 2013 Facilities Corrosion Study Addressed Reporting Elements. GAO-14-337R, March 27.

6. Patient-Centered Outcomes Research Institute: Review of the Audit of the Financial Statements for 2013 and 2012. GAO-14-415R, March 27.

Government Involvement in Residential Mortgage Markets

March 20, 2014 Comments off

Government Involvement in Residential Mortgage Markets
Source: Federal Reserve Bank of Atlanta

With the federal funds rate effectively at the zero lower bound, the Federal Reserve has used unconventional forms of monetary policy. Specifically, the central bank has issued forward guidance about the policy path and purchased large amounts of U.S. Treasury bonds and agency mortgage-backed securities (MBS) in an effort to lower long-term interest rates. In the case of agency MBS purchases, a goal was to stimulate the housing market by lowering mortgage rates. Two papers presented at the recent Atlanta Fed/University of North Carolina—Charlotte conference, “Government Involvement in Residential Mortgage Markets,” examine the extent to which the Federal Reserve has been successful.

New From the GAO

March 19, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. Military Housing: Information on the Privatization of Unaccompanied Personnel Housing. GAO-14-313, March 18.
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2. Nuclear Command, Control, and Communications: Review of DOD’s Current Modernization Efforts. GAO-14-414R, March 18.

Violations Increased the Cost of Housing’s Administration of Its Bond Refund Program

March 19, 2014 Comments off

Violations Increased the Cost of Housing’s Administration of Its Bond Refund Program
Source: U.S. Department of Housing and Urban Development, Office of Inspector General

We audited certain portions of the U.S. Department of Housing and Urban Development’s (HUD) multifamily housing programs as part of our fiscal year 2013 annual audit plan, based on an auditability study that we conducted, which identified potentially significant risk factors in its McKinney Act bond refund program. The objectives of the audit were to determine whether HUD properly enforced requirements that regulated the application of automatic adjustment factors to Section 8 rents for projects that had bond refund savings to prevent excessive rents and whether adjustments to receivables due to HUD from bond refunds were properly supported.

There were violations relative to HUD’s calculation of rents using automatic annual adjustment factors for bond-refunded projects and justification and support for writeoffs of receivables due to HUD from bond refunds. Specifically, HUD paid more than $2.6 million in excessive Section 8 rents due to a pattern of violations, which would indicate the existence of excess rents beyond the projects reviewed during the audit and similar to violations reported in past reviews. More than $2.7 million in questionable writeoffs of receivables due to HUD for bond refund savings were also identified. The amount included more than $2.6 million, which HUD wrote off without proper justification, and more than $139,000 for which HUD could not locate or provide proper documentation to show whether the writeoff was justified and supported. We also identified the release of more than $143,300 in trust fund balances to entities outside HUD without proper support. These conditions occurred primarily because the Office of Housing had not developed and implemented adequate monitoring of the bond refund program to ensure compliance with requirements.

We recommend that the Deputy Assistant Secretary for Multifamily Housing develop and implement procedures for (1) monitoring the calculation of annual rent increases for Section 8 projects and the remittance of trust fund balances; and (2) ensuring requests made by Housing for adjustments to bond receivables are in accordance with requirements. In addition, we recommend that the Deputy Assistant Secretary initiate actions needed to ensure the enforcement of program requirements and the proper resolution of more than $2.7 million in questioned costs.

Audit of the Department of Justice’s Efforts to Address Mortgage Fraud

March 18, 2014 Comments off

Audit of the Department of Justice’s Efforts to Address Mortgage Fraud (PDF)
Source: U.S. Department of Justice, Office of Inspector General

DOJ and its components have repeatedly stated publicly that mortgage fraud is a high priority and during this audit we found some examples of DOJ-led efforts that supported those claims. Two such examples are the Criminal Division’s leadership of its mortgage fraud working group and the FBI and USAOs’ participation on more than 90 local task forces and working groups. However, we also determined during this audit that DOJ did not uniformly ensure that mortgage fraud was prioritized at a level commensurate with its public statements. For example, the Federal Bureau of Investigation (FBI) Criminal Investigative Division ranked mortgage fraud as the lowest ranked criminal threat in its lowest crime category.1 Additionally, we found mortgage fraud to be a low priority, or not listed as a priority, for the FBI Field Offices we visited, including Baltimore, Los Angeles, Miami, and New York. We also found that while the FBI received $196 million in appropriated funding to investigate mortgage fraud activities from fiscal years 2009 through 2011, in FY 2011 the number of FBI agents investigating mortgage fraud as well as the number of pending investigations decreased.

Riding First Class: Impacts of Silicon Valley Shuttles on Commute & Residential Location Choice

March 16, 2014 Comments off

Riding First Class: Impacts of Silicon Valley Shuttles on Commute & Residential Location Choice (PDF)
Source: University of California-Berkeley (College of Environmental Design)

Employer-provided private shuttles have become a prominent part of the transportation network between San Francisco and Silicon Valley. As the Bay Area plans for transportation investments to meet sustainability goals and accommodate future population and employment growth, an understanding of the role of regional commuter shuttles becomes increasingly important. This study investigates the impacts of private shuttles on commute mode and residential location choice by conducting a travel time comparison and surveying shuttle riders. The authors find that the provision of shuttles and knowledge of shuttle stops influences both commute mode and residential location choice. Shuttles are an attractive option due to their time and cost savings compared to other modes. However, shuttles exacerbate the jobs-housing imbalance by enabling individuals to live farther from work. The extent to which location of shuttle stops influences residential location choice varies from person to person, though the vast majority of shuttle riders live within a short walk from the nearest shuttle stop. Policies should strike a balance between improved sustainability with existing land use patterns and better long-term regional transportation and land use planning.

Housing Crash Continues to Overshadow Young Families’ Balance Sheets

March 14, 2014 Comments off

Housing Crash Continues to Overshadow Young Families’ Balance Sheets
Source: Federal Reserve Bank of St. Louis

The average young family—which we define as a single- or multi-person family unit headed by someone under 40—has recovered only about one-third of the wealth it lost during the financial crisis and recession. The average wealth of middle-aged families (ages 40 to 61) and older families (ages 62 or older) has recovered to about its precrisis level.

The main reason young families’ balance-sheet recovery lags is the recent housing crash and its lingering effects. The homeownership rate among younger families has plunged, reflecting both the loss of many homes through foreclosure or other distressed sales and delayed entry into homeownership among newly formed households. The house-price gains that have helped mainly older families to rebuild homeowners’ equity have been overshadowed among younger families by the ongoing retreat from homeownership.

CRS — An Analysis of the Geographic Distribution of the Mortgage Interest Deduction

March 13, 2014 Comments off

An Analysis of the Geographic Distribution of the Mortgage Interest Deduction (PDF)
Source: Congressional Research Service (via National Low Income Housing Coalition)

This report analyzes variation in the mortgage interest deduction tax expenditure across states. Tax expenditures, such as the mortgage interest deduction, can generally be viewed as government spending administered via the tax code, or as tax incentives that are intended to achieve particular policy objectives. Regardless of the interpretation, tax expenditures provide a benefit to qualifying taxpayers by lowering their federal tax liabilities. Recent proposals to change the mortgage interest deduction could affect how its benefits are distributed. Understanding how the deduction’s benefits are currently distributed across taxpayers in different states may help Congress in assessing the potential impact on constituents from a particular policy change.

New From the GAO — Capital Financing: Alternative Approaches to Budgeting for Federal Real Property

March 12, 2014 Comments off

Capital Financing: Alternative Approaches to Budgeting for Federal Real Property
Source: Government Accountability Office

Officials at four selected agencies—the General Services Administration (GSA), U.S. Department of Agriculture (USDA), the Department of Veterans Affairs (VA), and the Department of the Interior (Interior)—experienced challenges receiving full upfront funding for federal real property projects through the annual appropriations process. For example, due to budget constraints, GSA acquired one property between 2008 and 2012. In addition, GSA has been unable to access funding to complete renovations in Interior’s headquarters building due to obligation limitations in the GSA-administered Federal Buildings Fund (FBF). The FBF, which is the primary funding source for operating and capital costs associated with federal space, held an unobligated carryover balance of $4.7 billion at the end of fiscal year 2013 as a result of congressional limits on obligations. Officials noted that authority to retain proceeds provides a key incentive to initiate disposals, as agencies without this authority must request upfront funding for disposal costs while resulting proceeds are paid to the Department of the Treasury. Nonetheless, officials at selected agencies with the authority to retain disposal proceeds cited barriers to disposals, such as poor market demand, historical status or necessary remediation.

National Association of REALTORS® Generational Trends Study Shows Confidence in Market, Some Challenges

March 12, 2014 Comments off

NAR Generational Trends Study Shows Confidence in Market, Some Challenges
Source: National Association of REALTORS®

Young home buyers remain optimistic and see their home as a good investment, while older buyers are more likely to trade down to a smaller property to match changing lifestyles, according to the 2014 National Association of Realtors® Home Buyer and Seller Generational Trends study, which evaluates the generational differences of recent home buyers and sellers.

Eight out of 10 recent buyers considered their home purchase a good financial investment, ranging from 87 percent for buyers age 33 and younger, to 74 percent for buyers 68 and older.

Tax Subsidies for Asset Development: An Overview and Distributional Analysis

March 12, 2014 Comments off

Tax Subsidies for Asset Development: An Overview and Distributional Analysis
Source: Urban Institute

The federal government channels much of its support for asset building through the tax code. Asset-building tax subsidies, primarily for homeownership and retirement saving, totaled $384 billion in 2013. This report reviews federal tax expenditures for housing, retirement, savings, business development, and higher education. We highlight research on the effectiveness of and justifications for these expenditures, find limited efficacy in their current form, and note possible adjustments. We estimate the distributional effect of major tax expenditures and find that the vast majority of subsidies benefit the top two income quintiles. Last, we review prospective policies such as matched saving accounts and automatic enrollment.

Foreclosure Rates and Changes: Q4 2013 vs. Q4 2012

March 10, 2014 Comments off

Foreclosure Rates and Changes: Q4 2013 vs. Q4 2012
Source: National Association of REALTORS®

Rising home values and an improved economy changed the foreclosure picture dramatically over the last two years. The decline in foreclosures and distressed sales resulted in less downward pressure on prices and more buyer confidence. To find out how your market performed, see the 4th quarter 2013 Local Market Reports.

Condition of America’s Public School Facilities

March 6, 2014 Comments off

Condition of America’s Public School Facilities
Source: National Center for Education Statistics

This report provides national estimates on the condition of public school facilities. The study presented in this report collected information about the condition of public school facilities in the 2012-13 school year.


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