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LendingTree: These are the best markets for the nation’s middle-class homeowners

A recent analysis published by Moody’s Investors Services indicates the era of unusually affordable housing has ended, meaning America’s housing affordability has returned to average historical levels.

Although this means homes are no longer cheap on a national basis, LendingTree’s latest affordability report suggests the market is still relatively affordable for most Americans.

According to LendingTree’s data, those who earn America’s median income can still afford a median-priced home in the majority of the nation’s housing markets.

“This is good news, as it means that most metros aren’t prohibitively expensive for the majority of the middle class,” LendingTree writes. “In fact, we found that, on average, a middle-middle class family makes about $450 dollars more a month than what would be necessary to pay for a home priced at the median home value in their area.”

Additionally, LendingTree discovered lower-middle class families can still afford a median-priced home in 34 of the nation’s largest housing markets. 

“Houston, Dallas and Minneapolis are the metros where members of the middle-middle class have the easiest time paying for a median priced home,” LendingTree writes. “In these metros, middle-middle class families could afford to pay almost $800 more than what they need to pay in order to purchase a median priced home.”

Unsurprisingly, the report also revealed upper-middle class families earn more than $1,900 above what would be necessary to pay for a median-value home.

“While there is no metro in our study where upper-middle class families cannot afford a median priced home, in Washington, D.C., Minneapolis and Hartford, Connecticut, they can afford to spend about $2,600 more than what they would need to pay for a median priced home,” LendingTree writes.

This image highlights the most affordable metros for each subsection of the middle class:

LendingTree: Housing Affordability

(Source: LendingTree)

NOTE:  In order to determine whether or not a home is affordable, LendingTree assumes a middle-class buyer will be able to afford a 20% down payment and receive a mortgage loan with a rate of 4.6%.

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The No. 1 U.S. market just got more affordable

Quick – what’s the No. 1 market in the U.S.?

If you answered San Francisco, you would have been right, that is, if we were talking about home prices. But we’re not.

In terms of new home starts, the Dallas/Ft. Worth area remains the No. 1 market in the country with 35,090 housing starts per year, according to data from Metrostudy, a provider of primary and secondary market information to the housing and related industries.

In fact, its housing starts even continue to grow, jumping 12.1% year-over-year in the second quarter, the data showed. And annual closings soared, rising 20.8% annually, the largest increase since the third quarter of 2013.

Metrostudy explained this increase in closings follows six months of builders delivering affordable homes in the $200,000 to $300,000 range. The median new home price even dropped in the Dallas-Ft. Worth area by 1.7% from last year to $325,400.

Early this year, Freddie Mac predicted new home sales will be the driving factor of housing growth this year as the market struggles to produce enough inventory for the rising demand for homes.

And now, that market just got a little more affordable as builders concentrate market growth in the more affordable market segments. The chart below shows what percentage of new home starts are built in each price range.

Click to Enlarge

Dallas starts

(Source: Metrostudy)

The data further enforces the shifting demand for lower-priced homes.

“As builders and developers push to deliver smaller lots and more affordably priced product, expect the median price to fall,” said Paige Shipp, regional director of Metrostudy’s Dallas-Fort Worth market. “In a market where new and resale price appreciation significantly outpaced wage growth, a lower median price indicates that more homebuyers will be able to afford new homes.”

“The median resale price of $258,000 is 5.7% higher than 2017,” Shipp said. “As the median new home price drops and resale price increases, the delta between new and resale narrows. Currently, the difference between the median resale and new home price is 26.1%. The greatest difference in price was 50% in 2015.”

But this comes at a time when, across the U.S., affordability dropped to a 10-year low due to low mortgage inventory, rising home prices and even Canadian lumber tariffs, according to the latest report from the National Association of Home Builders.

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Would you spend $1M on a rock?

What’s the most expensive rock you’ve ever bought? Perhaps the one on your significant other’s ring finger?

If you think that was expensive, take a look at this boulder about to sell for nearly $1 million in San Francisco.

1235 Sansome St

This 7,000-square-foot plot of land is almost wholly consumed by a gargantuan boulder that’s been used as a quarry for the city of San Francisco at various times in its history. Not ideal for real estate development, but in San Francisco, people are saying this lot is a steal at $1 million.

According to Business Insider, the lot in San Francisco’s Telegraph Hill neighborhood could hold as many 12 new homes with a little bit of creative engineering and a pile of greenbacks. In San Fransisco’s market, you best believe the new owner is set up nicely to make a killing on this investment if construction costs don’t break his or her budget.

The rock went on sale back in December 2016 and was originally listed for over $1 million. There were no takers until the owner dropped the price to $998,000 in April. According to Business Insider, the sale is pending.

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ADP: Employment increases 219,000 in July

U.S. employment rates continue to rise, increasing in almost every sector in July, according to the ADP and Moody’s Analytics National Employment Report.

The National Employment Report indicates that private sector employment increased 219, 000 jobs from June to July.

The chart below demonstrates a steady rate of increase since 2013:

ADP - August 1

 (Source: ADP, Moody’s Analytics)

 “The labor market is on a roll with no signs of a slowdown in sight,” ADP Research Institute Vice President and Co-Head Ahu Yildirmaz said. “Nearly every industry posted strong gains and small business hiring picked up.”

The report indicates that construction jobs increased once again, and overall the goods-producing sector is predicted to increase by 42,000 jobs.

Below is a breakdown of job segments that saw increases or decreases in employment between June and July:

Natural resources and mining: Increase 3,000

Construction: Increase 17,000

Manufacturing: Increase 23,000

The service-providing sector is predicted to increase by 177,000 jobs, including:

Trade, transportation and utilities: Increase 21,000

Information: Decrease 1,000

Financial activities: Increase 15,000

Professional and business: Increase 47,000

Education and health: Increase 48,000

Leisure and hospitality: Increase 37,000

Other services: Increase 9,000

Moody’s Analytics Chief Economist Mark Zandi said that although the job market is healthy recent economic changes indicate potential instability to certain industries.

“The job market is booming, impacted by the deficit-financed tax cuts and increases in government spending,” Zandi said. “Tariffs have yet to materially impact jobs, but the multinational companies shed jobs last month, signaling the threat.”

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2018 Women of Influence: Julie Piepho

Julie Piepho, president of national operations, Cornerstone Home Lending

Julie Piepho, president of national operations at Cornerstone Home Lending, recently received the Andrew D. Woodward Distinguished Award from the Mortgage Bankers of America as well as an award from the Minority Mortgage Bankers Association.

Piepho’s career is marked by her propensity for going boldly into unfamiliar or unfriendly environments and prospering under pressure.

She started her career as the only female management train­ee in her company to be promoted to mortgage loan officer within eight months. From there, she’s been hustling her way to the top of the industry. After years of grinding as a mortgage loan officer, she became the first president of a joint venture between a mortgage company and a national bank.

As president of Cornerstone, she created the project man­agement department, established a fair lending apartment and the business intelligence department. Excellence through training and efficiency are the focus of her actions as president of Cornerstone.

Piepho serves as chair of the Colorado Mortgage Lenders Association and chairman of the Residential Board of Governors for MBA.

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2018 Women of Influence: Vikki Bartholomae

Vikki Bartholomae, President, eXp Realty

eXp Realty is expanding at a tremendous rate, and Vikki Bartholomae has been instrumental in the company’s growth.

Bartholomae helped expand the company to more than 10,000 employees and offices in 47 states, including two Canadian provinces. She broke the all-time launch record for eXp by recruiting 113 agents in just three months, earning the coveted “black belt” recruiting award.

Bartholomae has a reputation as a friendly and effective leader. In addition to running the weekly meeting, she put policies in place for agent attraction, which teaches agents how to act with integrity. She manages the ICON Agent Program, which involves identifying and leading hundreds of top-producing agents.

Bartholomae has more than 16 years of experience in the real estate industry, holding various leadership positions with Tarbell Realtors, Disney Vacation Development and Keller Williams. She also has extensive experience in the coaching and training of real estate professionals, which includes the development of mentor programs for new agents.

In January, Bartholomae moderated the California Association of Realtors’ WomanUp! panel at Inman Connect. She is also the recipient of Walt Disney’s Leadership Circle sales award, and Disney’s highest honor, the Purpose Award.

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2018 Women of Influence: Sarah Valentini

Sarah Valentini, president and co-founder, Radius Financial Group

Sarah Valentini’s energy propelled radius from a crazy idea into an award-winning brand that has been recognized as one a top place to work in Boston and honored for diversity within its workplace.

Valentini initiated the Next Generation Independent Mortgage Banker program at radius to bring more young talent to the mortgage industry. The program, NEX GEN IMB, offers young professionals a paid eight-week training curriculum focused on mortgage sales, operations and marketing to prepare and induct candidates into the mortgage business.

This year, Valentini helped drive radius deeper into the insurance business by establishing a full-fledged insurance agency. “We are proud to stand up our own insurance business to give our borrowers a seamless experience as they protect their investment,” Valentini said of the move.

Valentini’s 20-plus years of success in residential mortgage lending demonstrates her abilities as a dynamic relationship builder and she directs the same drive that built radius to helping other people and initiatives about which she is passionate. She currently serves as the membership chair on the board of directors for C200, a global organization for women business leaders.

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2018 Women of Influence: Susan Tobin

Susan Tobin, Chief Business Architect, PromonTech

In her role as chief business architect at PromonTech, Susan Tobin is responsible for defining the business scope and requirements to ensure the development of compliance-driven solutions that solve for the most pressing problems for consumers and lenders. Tobin draws on her expansive knowledge in risk, compliance and operations to guide product development teams through the complexity that exists in lending. She was one of PromonTech’s earliest hires and was instrumental in developing its point-of-sale solution, Borrower Wallet.

Tobin led the user experience efforts that created a broad understanding of PromonTech’s product features, meeting the needs of both applicants and loan officers while satisfying the evolving compliance environment. She also played a major role in drafting PromonTech’s True North, the company’s product development goals.

Tobin is a rare combination of a visionary and a doer, someone who can roll up her sleeves and evaluate manifold issues that require careful unwinding and re-assembling. As a startup that continues to build tools to solve problems in the lending space, PromonTech considers her leadership invaluable. She is an expert on origination and capital market challenges and informs new solutions that will create real improvements in borrower education through secondary market execution.

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2018 Women of Influence: Teri Sundh

Teri Sundh, CEO, TRK Connection

Teri Sundh, CEO at TRK Connection, is an industry titan in the mortgage tech space and loan quality control. Under her watch, TRK doubled the number of clients subscribing to its Insight Risk and Defect Management software and increased its revenue by 300% in 2017 alone.

Sundh’s passion for innovation and willingness to tackle some of the industry’s most difficult challenges has earned her the respect of mortgage compliance veterans.

During her time with TRK, Sundh has been responsible for the launch of two fintech solutions for lenders: Insight RDM, a web-based mortgage QC audit platform; and Core Connect, a vendor order management and tracking tool.

With these innovations, Sundh is taking the industry by storm, propelling TRK to new heights at a breakneck pace.

In under three years, Sundh has led TRK Connection to deliver a modern, sophisticated quality control audit platform that marries ease of use with functionality and flexibility, allowing mortgage quality control departments to mold the system around their current processes.

Through her vision and leadership, she has given lenders the power to accelerate the QC review process and enabled them to identify and remedy defects with speed and accuracy and ensure the highest levels of loan quality.

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HUD receives scathing audit for oversight in soon-to-be ghost town

A new, scathing report from the Office of Inspector General puts the U.S. Department of Housing and Urban Development in the hot seat for its lack of action taken on the soon-to-be ghost town of Cairo, Illinois.

Back in 2016, HUD announced it would tear down two of the city’s housing developments, Elmwood and McBride, after taking control back from the local housing authority, Alexander County Housing Authority. The move would force the relocation of about 400 residents, many to a new city.

Later, in 2017, HUD Secretary Ben Carson responded to letters from the resident, saying he would do everything in his power to help them remain in Cairo.

But the new report from the OIG shows that the city of Cairo has insufficient housing stock for these displaced families, and nearly 200 families will have to move out of the city.

A HUD spokesperson said that HUD was “stunned…at what we saw, not just in terms of the deplorable living conditions that we encountered but at the poor, even absent record keeping, the staggering backlog of critical repairs, all of this going to the very health and safety of the residents living there.”

The area’s deplorable living conditions included being infested with rodents and bugs, the heating and plumbing not functioning and the high crime in the area.

However, these conditions at ACHA did not occur overnight, the report explained. HUD had been aware of negative conditions at ACHA since at least 2010. Over the span of six years, HUD performed multiple assessments and reviews of ACHA.

The chart below shows the steps HUD had taken since 2010 to address the worsening conditions.

Click to Enlarge

HUD Audit

(Source: OIG)

In fact, ACHA failed HUD’s assessments in every physical condition indicator since 2012. HUD also identified weakness in ACHA’s financial conditions as early as 2013.

What’s more, the report shows that ACHA was generally uncooperative in addressing the negative conditions identified by HUD’s assessments and reviews. Despite HUD’s attempts to bring ACHA into compliance, the negative conditions remained.

Even as far back as 2013, a HUD team reported nine findings shows the deteriorating physical condition of the two housing developments. Here is what they found:

  • The McBride and Elmwood housing developments had ongoing security issues.
  • The plumbing at the McBride housing development was deteriorated and in need of rehabilitation.
  • The former executive director improperly procured a consultant services contract for himself.
  • ACHA awarded retirement packages and offered part-time employment to specific employees with no documented or defined formula or eligibility requirements.
  • ACHA’s nepotism policy was inadequate.
  • An ACHA board member had a nephew and grandson employed by the PHA.
  • The executive director’s son-in-law and the assistant executive director’s husband were maintenance workers at ACHA.

And while these conditions did not improve in 2013, ACHA’s Real Estate Assessment Center, which is responsible for inspecting HUD properties to ensure decent, safe and sanitary conditions, score did increase.

This even led some of the field staff members to voice their shock at the “inflated scores.”

And indeed, a later re-inspection showed the conditions had actually worsened from 2012 to 2013, not improved, as the REAC scores indicated. The report conducted in 2013 for the Elmwood and McBride housing developments showed 112 health and safety issues and estimated that if all units were inspected, 1,134 health and safety deficiencies would be found.

But despite these findings, ACHA did not enter into an agreement with HUD until August 2015, when it was then required to comply with provisions related to fair housing, security of housing and equal employment opportunity.

Eventually, HUD took ACHA into temporary receivership, a last resort option for public housing authorities with the most severe problems, and gave a list of reasons why it had not taken the housing authority into receivership sooner.

  • PIH officials initially allowed ACHA several opportunities to improve instead of using HUD’s authority to declare it in substantial default and take possession of it. In our discussions with PIH officials, they did not seem to be aware of HUD’s authority to take possession of ACHA without first offering it an opportunity to cure deficiencies.
  • ACHA’s official performance scores were not initially low enough to initiate the PHARS protocol.
  • PIH officials disagreed about the extent to which ACHA’s actions and existing documentation were sufficient to place it into receivership.
  • HUD officials claimed that receiverships were costly to administer and could attract negative attention to the agency.
  • HUD guidance and expertise on receiverships were limited at the time.

Among other reasons, HUD explained it was hesitant to take the housing authority into receivership as it could take many years to execute, require four to five full-time employees and cost more than $5 million.

But the OIG said HUD could have and should have done more to oversee ACHA. It also said in its report that while it may be too late for the residences already scheduled for demolition, there are currently 50 more public housing authorities that are designated as troubled.

In light of these events, the report outlines four suggestions for HUD in future dealings with troubled housing authorities:

  1. Create agreements and strategies with other program offices that describe when cross-programmatic reviews and enforcement actions against PHAs are required.
  2. Train PIH officials on the authority and processes for declaring PHAs in substantial default and for taking PHAs into HUD possession.
  3. Update and strengthen the training program for HUD receivers of PHAs.
  4. Update procedures for receiverships to include specific guidance on when initiating a receivership may be appropriate.