tag:blogger.com,1999:blog-1110014885778996459.post7439330908678832933..comments2024-03-29T00:15:52.716-07:00Comments on Idiosyncratic Whisk: Housing: Part 298 - FICO ScoresKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-1110014885778996459.post-18966366852508544832018-05-21T20:53:02.566-07:002018-05-21T20:53:02.566-07:00OT
http://realtormag.realtor.org/daily-news/2018/...OT<br /><br />http://realtormag.realtor.org/daily-news/2018/03/05/foreign-buyers-coming-us-are-changing<br /><br />“Everyone recognizes the stability and security of the U.S. market more than ever before,” Genton says. He adds that up to 70 percent of a 59-unit Four Seasons Private Residences project in Beverly Hills likely will be foreigners.<br /><br />---30---<br /><br />I understand not everyone subscribes to the "large current account trade deficits equates to rising house prices" idea. There is some serious scholarship in this area that suggests as much, but there is serious scholarship backing up every point of view in macro. So set that aside. <br /><br />But the optics! We build housing on the Westside of LA, just not for Americans. <br /><br />Various versions of these bad optics scenarios play out, even domestically. We build (somewhat less desirable) housing in downtown LA too, just not for middle-class people. Even there, you better be well-set financially, if you want to buy. <br /><br />Of course, the solution is not xenophobia, or social welfare-housing programs, but un-zoning property. But that is the solution not on the radar. <br /><br />Given context, the optics are perfect for creating class envy, obstructionism and xenophobia. <br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-14048534061655024152018-05-21T16:49:02.989-07:002018-05-21T16:49:02.989-07:00Great post. Yes housing and rent affordability are...Great post. Yes housing and rent affordability are certainly key issues along the West Coast and elsewhere. <br /><br />The macroeconomics profession seems unable to wrestle with the policy implications.Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-74248002955838986242018-05-20T14:06:47.924-07:002018-05-20T14:06:47.924-07:00I would argue that the prime scapegoat is the lend...I would argue that the prime scapegoat is the lenders/business plan. The places where terms decayed were places where rent affordability has been extremely high because of an endemic shortage of housing. That created a natural demand for mortgages that were less affordable. Those loans were a part of the destabilization, but there was nothing inevitable about the process that brought on the destabilization.<br /><br />The CFPB doesn't keep you from paying 50% of your income on rent. It only keeps you from taking on a mortgage. And, we don't track households that become homeless or move to less expensive cities because their rents are high with the same specificity that we track delinquencies and foreclosures.<br /><br />This leaves the impression that mortgage risk is the problem, but it is rent affordability that is the problem. Since we scapegoated the lenders, this problem has only gotten worse.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-53741887093511298192018-05-20T14:01:05.502-07:002018-05-20T14:01:05.502-07:00Easier to scapegoat the customer than admit to fla...Easier to scapegoat the customer than admit to flaws in the business plan!Pete-0https://www.blogger.com/profile/16401819287720203032noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-3522181732289810502018-05-20T11:59:04.895-07:002018-05-20T11:59:04.895-07:00Yes. If there was a shift in risk, it was in the ...Yes. If there was a shift in risk, it was in the terms of the loans, not the borrowers. That is why it has been a terrible mistake to impose strict new lending standards that have sharply reduced lending based on borrower characteristics.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-6176663657203304692018-05-20T11:45:54.156-07:002018-05-20T11:45:54.156-07:00Wasn’t it more a situation of lower standards on t...Wasn’t it more a situation of lower standards on the asset side of the underwriting rather than the borrower? For example, didn’t advance rates (loan to value ratios) grow well beyond previous averages?Pete-0https://www.blogger.com/profile/16401819287720203032noreply@blogger.com