This week in housing was an especially busy one; PPI looks at just a few highlights with Case-Shiller numbers, a new government pilot program on housing and a huge announcement from Bank of America. Let’s get to it.
1. S&P Case-Shiller, the leading Index of national housing values, came out on Monday. The December data continued to highlight what is clearly the biggest drag on a recovery that is trying to find its footing, declining home values. Case Shiller’s latest numbers showed the composite of the three indices (national, 10 cities, and 20 cities) was down 3.8 percent for the fourth quarter of 2011 and were the lowest numbers for the popular Index since the crisis began in 2006.
In related “Index” news, PPI released the first edition of the “PPI Battleground Home Values Index” last week. The Index looks at home values since the 2008 election in 16 battleground states.
2. The Federal Housing Finance Agency (FHFA) released its Real Estate Owned (REO) to Rental pilot program, announcing the first block of 2,490 homes that will be eligible, or 1 percent of Fannie Mae and Freddie Mac’s foreclosure inventory. The program’s intent is to take the REO, homes that have been taken over in foreclosure by the two housing giants, in the hardest hit markets, and sell them to investors on the precondition that they will become rental properties. While many lauded the agency for an innovative initiative, critics noted that 85 percent of the first block of eligible homes is already occupied by tenants, thus not directly reducing vacant homes.
PPI believes it is a smart way to start that will attract investors to a turnkey investment and will establish the programs viability. This also begins the long process of getting the homes off the government payroll, getting the taxpayer reimbursed and gets private capital off the sidelines.
In fact, we like innovative solution so much; we decided to have a conference about it. On April 4-5, 2012, PPI will co-host “America’s Housing Crisis: Private Sector Responses and Public Policy Innovation” with Columbia Business School and Zillow In New York City. We are honored to have a keynote address given by Nobel Prize winning economist Joseph E. Stiglitz and confirmed panelists include Richard A. Smith, CEO of Realogy, Peter M. Orser, CEO of Weyerhaeuser Real Estate Company and Laurie Goodman of Amherst Securities Group, among many, many more. Please join us if you can!
3. In what is turning into a “he-said, she-said” public dispute, Bank of America has announced it will stop selling certain mortgages to Fannie Mae, while Fannie says it initiated the break in the long time relationship. The dispute originates from ongoing repurchase activities on loans that were originated in the pre-crash boom years. With Bank of America as one of the largest originators, and Fannie Mae, along with Freddie Mac, being the only game in town, PPI thinks we may now have a case study for implications of a breakdown between such large market makers.
Photo Credit: Nannette Turner
