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Housing Market is Recovering

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With consumer confidence up and mortgage rates down, the housing market is making a slow but steady recovery.  “Right now, I think, is a good time to buy because house values are still low,” says Kate Newton, Pennsylvania Housing Finance Agency (PHFA) Director of Homeownership Programs.  “Especially in Pennsylvania there really aren’t any more signs – that we should expect anyway – for house values to decrease.” 

The Pennsylvania Builders Association reports that new home permits are up 14% year-over-year, another sign that Pennsylvania’s housing recovery is underway. 

Newton says Pennsylvania was fortunate not to have a huge ‘housing bubble,’ so our housing market did not fall as far or as hard as it did in other states.  Appearing on WITF’s Radio Smart Talk, Newton noted that housing markets will vary locally.  The PHFA has recently released county-by-county data on housing availability and affordability. 

The latest update from Freddie Mac indicates that mortgage rates are near record lows (3.34% for a 30-year fixed-rate loan), and the National Association of Realtors reports that pending home sales are at their highest levels since March 2007.

Cash

General Assistance Cash Grants to End Next Month

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This will be the last month of state-issued checks for more than 60,000 needy and disabled residents who’ve been beneficiaries of General Assistance cash grants from the Department of Public Welfare.

The roughly $150-million dollar program has been on the chopping block since Governor Tom Corbett’s initial budget plan was unveiled in February.  Late in the budget process a deal was reached to allow for one additional month of checks to be issued, so as to ease the transition, but the program will soon be eliminated.

“Some of them will end up on the streets, some of them will end up in emergency rooms, some of them will end up in jail,” says Housing Alliance of Pennsylvania Executive Director Liz Hersh, who fears many of these vulnerable citizens will be left with nothing.

Vincent Hughes

State Sen. Vincent Hughes

Senate Minority Appropriations Chair Vincent Hughes (D-Phila.) has a district office right around the corner from a welfare office.  “Everyone’s in a panic,” he says of the knowledge that their lifeline is being cut.

But Governor Tom Corbett says his administration is working to connect people losing these state-funded cash benefits to other programs.  “From discussions with staff, we believe that some people probably are not exercising access to some areas that they might have access to,” Corbett explained to reporters during recent budget negotiations.

Homes, Homeowners, Properties, Neighborhood

Property Tax Elimination to be Discussed at Capitol Hearing

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Taxpayer groups from across Pennsylvania are rallying behind the latest attempt to abolish burdensome school property taxes.  The newly-introduced Property Tax Independence Act would replace homeowners’ most dreaded bill with a one percentage point increase in the state sales tax, a broadening of the sales tax base, and a hike of the personal income tax from 3.07 – 4%.

It’s a dollar-for-dollar tax shift, and the bill’s author says the number of losers is extremely small.  “What this does is shift the [school funding] burden off the backs of six million property owners, up to the shoulders of 12-million sales tax payers,” state Rep. Jim Cox (R-Berks) tells Radio PA.  “Everyone pays the sales tax.  How much is largely up to them, but everybody pays the sales tax.”

One difference between HB 1776 and previous attempts to thwart the local property tax is the unprecedented level of input it received from Pennsylvania taxpayers.  In fact, the Property Tax Independence Act has the backing of 72-taxpayer groups.

“This is about all homeowners who are suffering under the burden of school property taxes,” says Pennsylvania Coalition of Taxpayer Associations spokesman David Baldinger.  “In some areas of the state, the monthly property tax escrow can be equal to the mortgage itself.”

Baldinger is among the testifiers scheduled to address the state House Finance Committee on Monday morning.  While enactment of such a dramatic change would be nothing short of monumental, Rep. Cox believes he already has enough votes to advance the bill out of committee and to the House floor.

HB 1776 has 70-cosponsors, 50-Republicans and 20-Democrats.  There’s also a companion bill in the Senate.

Senate Votes to Fund Mortgage Assistance Program

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State budget pressures have taken their toll on the Homeowners’ Emergency Mortgage Assistance Program (HEMAP).  The program, which provides small loans to financially distressed homeowners on the brink of foreclosure, has not accepted any new applications since last September. 

State lawmakers now believe they’ve found a solution, and the Senate has voted unanimously to tap the recent national mortgage abuse settlement for HEMAP funding.  Pennsylvania will be receiving about $65-million dollars specifically for consumer protection purposes.  Senator John Gordner’s bill (SB 1433) would direct 90% of that money into the HEMAP program.  The remaining 10% would be split evenly between the attorney general’s office and legal services for consumers.

“Since 1983, we have saved 46,000 homes through our HEMAP program,” Gordner explained from the Senate floor prior to Wednesday’s vote. 

United Way of Pennsylvania President Tony Ross tells Radio PA that HEMAP is one of the wisest investments the state can make, “Because we know that homelessness is a major cost driver in terms of social services.”  Ross points to a recent study that found hundreds of millions of dollars in savings. 

If it becomes law, the bill is expected fund HEMAP for the next five years.  It’s now headed across the capitol where it will await consideration by the state House.

Apartments, Apartment Building

Report Examines Affordable Housing Gap

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Fair Market Rent for a two bedroom apartment in Pennsylvania comes to $835/month.  That means 2.2-minumum wage earners would have to work 40-hours/week in order to afford the average unit, according to the 2012 “Out of Reach” report. 

Pennsylvania’s minimum wage is $7.25/hour. 

The National Low Income Housing Coalition and Housing Alliance of Pennsylvania released the report, which concludes a Pennsylvania household must earn more than $16/hour to afford the average apartment (without spending more than 30% of income on housing). 

“It means that having a decent place to live – that people can afford, that’s near their job – it’s out of reach for many people who are working hard and playing by the rules,” says Housing Alliance of Pennsylvania executive director Liz Hersh. 

She says how state government addresses the budget can either make things better or worse for the housing market.  “We’re really seeing a lack of investment in accessible housing, even thought a small investment actually saves a lot of money in nursing home placement.”

Neither the Homeowners Emergency Mortgage Assistance Program nor Homeless Assistance received funding in the governor’s budget plan. 

HEMAP may be restored through mortgage foreclosure settlement dollars.  While Homeless Assistance is slated for elimination, budget documents indicate that 80% of the savings would be transferred to Human Services Development Block Grants.

Housing Advocates See Way to Restore HEMAP Funding

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The state will be getting a significant chunk of change from the recently announced mortgage foreclosure settlement with the big banks.  Housing advocates believe some of that expected $69-million dollars should be used to restore the Homeowners Emergency Mortgage Assistance Program.  “It’s appropriate to put this foreclosure money back into a solution that is foreclosure related,” says Liz Hersh, executive director of the Housing Alliance of Pennsylvania. 

She points to a new analysis by the Reinvestment Fund, which shows that that the HEMAP program saved 6,100 homes from foreclosure between 2008 – 2010.  While the state invested $38-million dollars into HEMAP over that time, the study pegs the cost savings at $480-million dollars. 

The issue of the mortgage foreclosure settlement was broached at Monday’s Appropriations Hearing with Budget Secretary Charles Zogby.  “I think certainly something like the HEMAP program is one that many have interest in seeing some of those funds go to, but that is ultimately to be decided,” Zogby told the Senate panel.  He says discussions are taking place between the Governor’s Office and Attorney General’s Office. 

The current state budget reduced HEMAP funding from $10.5-million dollars to $2-million dollars.  That money dried up early on, and the program is not currently slated for funding in the newly proposed state budget.

It’s a Buyer’s Market; But Home Buyer Satisfaction is Down

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Between low prices and low interest rates, you would expect home buyer satisfaction to be high.  That’s generally true – but it’s not as high as it was in last year’s JD Power and Associates survey.  “There are still some challenges out there for the buyer.  Namely they have to get funds, they have to get a loan,” says Jim Howland, JD Power’s senior director of the real estate and construction practice.  “In many cases they are also selling a dwelling as well.  So, things generally aren’t rosy for all of them, even in this period.” 

While home buyer satisfaction is down, in the JD Power and Associates study, home seller satisfaction is up.  Higher scores for the so-called “marketing factor” account for the biggest gains.  “That’s any online marketing that was done, any open houses, in person, print, that kind of thing,” Howland says.

On JD Power’s 1,000 point scale, home buyer satisfaction comes in at 797, which is still higher than home sellers’ score of 779.  “RE/MAX ranked highest in both categories this time around, which is kind of a first for them, and a bit of news,” Howland explains.  However, the scores of all the top real estate companies are comparable.  This is the 4th year for the JD Power and Associates Home Buyer/Seller Study.   

The JD Power study preceded this week’s news, from the National Association of Realtors that, that pending home sales were up for the second straight month.  However, that’s not enough to give analysts hope that the housing market is on the rebound.  Also, new numbers from Freddie Mac show average mortgage rates inching upward, but still just 4.55%.