In the first quarter of 2024, home prices increased in 93% of U.S. metro areas, with significant growth observed in 30% of these markets. The national median price for single-family homes rose to $389,400, marking a 5% year-over-year increase. The South led in sales volume, while the Northeast saw the highest price appreciation. Despite high mortgage rates, market conditions improved slightly for buyers due to a marginal decline in required mortgage payments compared to the previous quarter.

After Kathy Hochul's failed New York Housing Compact plan last year, New York State is trying again to tackle its severe housing crisis. According to anonymous sources close to the deal, New York state leaders have reportedly reached a tentative agreement on a legislative plan to tackle the crisis and will be presented to the full Senate and Assembly on Monday. The framework of the deal offers incentives for both developers and tenants. Developers would receive significant tax breaks to develop more affordable units, while tenants would benefit from enhanced protections against eviction in certain cases. Additionally, the agreement would allow landlords of rent-stabilized apartments to raise rents for renovation costs and eliminate size restrictions on new Manhattan apartment buildings, fulfilling long-standing desires of city officials.

The housing market for buyers in California is becoming increasingly challenging. Prices are soaring while the inventory remains limited. Statistics reveal a stark reality: home prices have surged 9.7% over the past year, with the median home price now at $813,980. Meanwhile, inventory levels have plummeted by 48.3%, exacerbating the affordability crisis. Despite historically low mortgage rates, competition remains fierce, leading to bidding wars and further price escalation. Experts suggest that while the market may stabilize in the long term, immediate relief for buyers appears unlikely.

Currently, the average rate for a 30-year mortgage stands at around 6.9%, a significant decrease from late October when it peaked at nearly 8%. Despite expectations of rates declining later in the year, some buyers are opting to act now due to fears of increased competition. The combination of high mortgage rates and soaring home prices has made affordability a major concern, with many households earning less than what's needed to afford a median-priced home. While economists anticipate mortgage rates easing, uncertainty remains.

There are ongoing bipartisan efforts at various levels of government to address housing supply and pricing challenges in the United States. The importance of local action in addressing these issues, particularly through measures such as accessory dwelling units (ADUs), changes in zoning rules, and reduction of lot sizes, is increasingly becoming evident. Despite political differences, lawmakers in some states are collaborating on bipartisan housing legislation. However, challenges such as NIMBYism hinder progress at the local level, prompting calls for state-level intervention to overcome resistance to housing reforms. 

Los Angeles Mayor Karen Bass took office in 2022 and since then, has been making a big push to address homelessness, particularly in Venice Beach. Mayor Bass initiated the Inside Safe program to provide motel rooms for homeless residents, resulting in cleaner sidewalks and parks in Venice Beach. However, challenges persist, including budgetary constraints and the need for permanent housing solutions. Critics accuse Bass of prioritizing aesthetics over long-term solutions, while supporters applaud her urgency in tackling the crisis. Despite progress, concerns remain about the sustainability and effectiveness of current efforts, highlighting the complex nature of addressing homelessness in Los Angeles.

According to a recent market study report by Arizent, where the company surveyed professionals across different financial segments such as banking, insurance, mortgage, technology etc, there is a range of different opinions about AI. Most respondents have concerns over job displacement and ethical considerations persist, especially regarding generative AI's accuracy and fairness. The general attitude among mortgage professionals is to be hyper cautious towards adopting generative AI, and they citied uncertainty and budget constraints as top considerations. Some of the main concerns of industry professionals regarding the adoption of AI includes loss of personalized customer interactions and job security. Despite apprehensions, there's acknowledgment of AI's potential to enhance efficiency and job performance, with expectations of AI handling a significant portion of tasks within the next five years. While efficiency gains are anticipated across various industries, banking professionals foresee AI primarily bolstering fraud protection.

In California, state and local governments have allocated substantial funds for affordable housing initiatives. Despite widespread acknowledgment of the need for affordable housing, publicly funded initiatives face challenges such as labor agreements and bureaucratic processes, which can inflate costs and slow down construction. Many private firms are moving away from a reliance on government funds, which according to them, drives up development cost owing to the red tape. Instead, these firms are exploring alternative financing models. 

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For example, SDS Capital Group is raising an impact fund from private investors, to build a 49-unit low-income housing project in South Los Angeles. While privately financed projects may still rely on government support for operation, recent regulatory changes have facilitated approvals and increased profitability for such developments. Concerns linger regarding the long-term maintenance and sustainability of privately funded housing projects, particularly regarding the welfare of residents and the availability of federal funding for rental assistance programs. Nevertheless, advocates see potential in private-equity models to drive down construction costs and inspire government reform in affordable housing initiatives.

During the recent legislative session, House Bill 2474, aimed at holding Washington cities accountable for building affordable housing and shelters, gained momentum before dying at the Senate. Championed by Rep. Strom Peterson, the bill was prompted by instances like Kenmore's rejection of a 100-unit affordable housing project, drawing criticism from Governor Inslee for obstructing solutions to homelessness. Evolving over the session, the bill proposed fiscal penalties for non-compliant cities, emphasizing mediation between cities and housing developers before enforcement. Despite setbacks, advocates like Michele Thomas stressed the urgency of addressing homelessness, a critical issue highlighted by over 28,000 homeless individuals counted in Washington during the 2023 Point-in-Time count. With hopes for its return next year, the bill reflects a statewide imperative to bridge the gap in housing needs, projected to exceed 500,000 units for low-income earners over the next two decades.

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There has been an emergence in partnerships between healthcare systems and affordable housing developers, such as the H3C project in New Orleans, aiming to integrate stable housing with better health outcomes. Supported by investments from entities like Aetna and Kaiser Permanente, these initiatives reflect a growing recognition among health organizations of the benefits of addressing housing insecurity. While healthcare systems are not acting as banks, they are bridging gaps in funding for affordable housing, leveraging resources to meet community needs and their own nonprofit requirements. Such collaborations extend beyond traditional housing projects to include specialized care facilities and initiatives targeting populations with the greatest needs. Additionally, healthcare systems are exploring innovative approaches, including utilizing their land assets and collecting data to inform future partnerships and interventions aimed at addressing health and housing disparities.

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Leaders in New York’s State Senate are set to propose sweeping legislation to counter the growing housing crisis in the state of New York. The proposed legislation by leaders in New York’s State Senate aims to address the housing crisis through several key points:

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• Creation of a new public benefit corporation to finance housing construction on state-owned land, inspired by the Mitchell-Lama program.
• Introduction of a new developer tax break with stronger affordability protections than the previous 421a program.
• Inclusion of "good cause eviction" legislation to restrict landlords' ability to evict tenants and justify rent hikes.
• Push for more construction of larger residential buildings in Manhattan and legalization of basement units.
• Requirement for condos and rentals built through the program to be affordable to middle-income households.

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The proposal will be released as part of the One House budget bill, to incentivize significant new development while supporting landlords and tenants. However, its success hinges on gaining support from both houses of the Legislature and the governor, with details such as financial viability and inclusiveness of tenant protections remaining crucial factors.

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The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Veterans Affairs (VA) announced the allocation of over $14.5 million to public housing agencies (PHAs) nationwide to address veteran homelessness. An estimated distribution of more than 1,400 HUD-Veterans Affairs Supportive Housing (HUD-VASH) vouchers will be carried out nationwide. Some of the highest concentration of vouchers will go to Tucson, Arizona; Philadelphia; and Spokane, Washington. These vouchers combine rental assistance from HUD with support services, like case management and clinical services provided by VA. The vouchers have contributed to a 4% decrease in veteran homelessness since 2020 and has housed over 46,000 homeless veterans in 2023 alone.

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The housing market in November 2023 is characterized by surging mortgage rates, high home prices, and limited inventory. Mortgage rates have reached a 23-year high of 7.79%, causing a decline in existing-home sales for the fourth consecutive month. The Federal Reserve has paused its rate hikes, but experts are more concerned about the Fed's future plans for rates. A potential government shutdown could further impact housing market activity, particularly if Fannie Mae and Freddie Mac can't participate in the mortgage market. Housing affordability remains a significant challenge, and first-time buyers are finding it increasingly difficult to enter the market. While a housing market crash is unlikely, some areas may see price declines. Foreclosures are not expected to surge in 2023. Experts advise prospective buyers to focus on their own financial readiness rather than trying to time the market. For sellers, proper pricing, preparation, and online listings are crucial strategies.

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The National Association of Realtors is facing significant changes as CEO Bob Goldberg resigns earlier than expected, amid ongoing challenges. The association recently lost a federal lawsuit, being held liable for conspiring to artificially inflate commissions in the real estate market, resulting in a $1.78 billion damages award. This verdict may impact real estate agent practices in an environment of rising home prices. The association plans to appeal and seek reduced damages. Additionally, the NAR faced criticism in August when its president, Kenny Parcell, resigned due to sexual harassment claims. Nykia Wright will serve as interim CEO while the association searches for a permanent replacement. Goldberg will continue to offer his expertise as an executive consultant during the transition.

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(Image Credits: NAR website) 

The Federal Housing Administration (FHA) has announced updated appraisal requirements for the valuation of manufactured homes certified under Fannie Mae's MH AdvantageTM and Freddie Mac's CHOICEHome® programs. These updates, unveiled by Federal Housing Commissioner Julia Gordon at a conference in Chicago, align FHA appraisal requirements with industry standards, aiming to enhance the valuation of these homes for borrowers seeking FHA-insured mortgages. The changes support the Biden-Harris Administration's Housing Supply Action Plan and its goal of increasing the availability and affordability of manufactured housing. The updated policy allows appraisers to use appropriate site-built-home comparable sales when there are insufficient comparable sales for certified manufactured homes, removing a roadblock to the effectiveness of FHA programs in serving buyers of these energy-efficient and affordable homes.

The United States faces a severe housing shortage, and while some state and local leaders are trying to address it through new construction, the article argues that rehabilitating and reusing older and historic buildings should be a crucial part of the solution. Approximately 40% of America's building stock is at least 50 years old, and many such structures are in need of upgrades and repairs. Rehabbing these older buildings for housing is often more cost-effective and environmentally friendly than new construction. The Advisory Council on Historic Preservation is considering a policy that encourages such rehabilitation and adaptation, and it could guide federal, state, local, nonprofit, and individual actions. The aim is to increase affordable housing and align with the Biden administration's housing goals.

California Governor Gavin Newsom signed a new law aimed at addressing the state's ongoing homeless crisis. The law allows religious institutions and nonprofit colleges to rezone their properties for low-income housing, bypassing local permitting and environmental review rules. This "YIGBY" (Yes in God's Backyard) initiative seeks to utilize surplus land and underutilized parking lots for housing. It is seen as a significant step in combating homelessness, as California is home to nearly a third of all homeless people in the U.S. The law will be in effect from 2024 until 2036 and is expected to unlock opportunities for housing development across the state. Additionally, Governor Newsom signed another housing bill extending the life of a law that streamlines rules for housing projects, further promoting housing construction in California. However, the legislation faced opposition from various cities and environmental groups. The state's ongoing efforts to address homelessness also include the construction of 1,200 tiny homes in four cities.

A coalition of trade associations, including CHLA, NAR, and ICBA, has called on the Biden administration to address the historically large spread between 30-year mortgage rates and 10-year Treasuries. The spread, currently over 300 basis points, far surpasses the historic norm of around 150 basis points. The trade groups have urged the Federal Reserve to change its policy, maintaining its stock of mortgage-backed securities (MBS) and suspending runoff until the spread stabilizes. They also recommend amending preferred stock purchase agreements (PSPAs) to enable Fannie Mae and Freddie Mac to purchase their MBS temporarily. These actions could potentially reduce mortgage rates by 100 to 150 basis points, providing market certainty amid rising rates.

The National Low Income Housing Coalition report shows Texas only has 29 available and affordable rental homes per 100 extremely low-income renters. The report ranks Houston, Dallas, and Austin in the top ten worst major metro cities for affordable housing.

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Source - iStockphotos

With climate change making severe weather events more common and the area’s housing crisis increasing the number of people who need support, the operation of the shelters is taking an increasing toll on county and city officials and budgets, as well as the community volunteers whose labor the region relies on to run the shelters.

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Image credits - Mika Baumeister/Unsplash

On January 10, 2023, Governor Kathy Hochul announced a statewide strategy to address New York’s housing crisis. This new plan, named The New York Housing Compact, aims to build 800,000 new homes over the next decade to meet the state’s historic housing shortage.‍

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Hochul’s Compact would have boosted housing production in New York City’s suburbs, by overriding local planning boards that limit most land to single-family detached homes. However, it didn't make it past the State Budget after heated negotiations at the State Legislature.

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What is next for New York's affordable housing future?

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Imade credits - Mike Groll/Office of Governor Kathy Hochul

In recent years, Florida has become one of the least affordable places to live in the nation, making affordable housing one of the top issues impacting Floridians. While the state’s reputation as a place for leisurely coastal living has made it a popular retirement destination for seniors, Florida has also seen an influx of young, high-earning professionals from states like New York, where the median home price is nearly double that of Florida’s. While individuals from states like New York or California — two states with some of the highest average incomes in the country — may find Florida to be more affordable, everyday Floridians are paid lower wages on average and renters in Florida have historically been more cost-burdened than any other state in the nation. In the span of just two years, median rent prices increased by over 30 percent across the state, from about $1,340 in February 2020 to roughly $1,760 in February 2022. To afford a modest one-bedroom rental home at fair market rent, a person earning $10 per hour (the state’s minimum wage for most of 2022) would need to work 86 hours per week.