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Continued Slowing In Top 100 Housing Markets

A new report from Veros Real Estate Solutions (Veros) predicts that properties in the nation’s 100 largest markets will appreciate at a rate of 3.7 percent over the 12 months ending March 1, 2020. According to the VeroFORECAST for first quarter 2019, this continues a projected slowing that first appeared in the previous quarter’s report. 


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Among the states where predictions raise concern are Louisiana, which has half of the ten markets at the bottom of the report’s 100 most-populous markets, and California. The Golden State is expected to continue softening significantly with forecast appreciation for both the Los Angeles and San Diego markets falling well under five percent. The Bay Area is expected to fare only slightly better, with appreciation just above five percent, well below its double-digit readings in the recent past.


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Other states where VeroFORECAST projects depreciation or significantly lower appreciation are Illinois, Connecticut, Utah, North Dakota, and Southwest Florida, as well as many New York City boroughs and the major Texas markets of Dallas-Ft. Worth and Houston.


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Veros, an award-winning industry leader in enterprise risk management, collateral valuation services and predictive analytics, provides these quarterly VeroFORECAST reports by subscription to its clients and in a summary overview to industry media. The current report is based on data from 349 Metropolitan Statistical Areas (MSAs), which include 13,545 zip codes, 984 counties, and represent 82 percent of U.S. residents.


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After a steady rise over many quarters, the forecast has come down from +4.5 percent six months ago to +3.9 percent last quarter and now to +3.7 percent for this quarter. Although this is a big decline over such a short period of time, it is not cataclysmic.

While the further drop is seen as “significant,” according to Eric Fox, Veros VP of Statistical and Economic Modeling and the report’s author, he cautions it does not signal an impending crash.

“We do not see a significant depreciation,” Fox said, “but simply a slowing down of most markets. The overall housing market is still expected to remain healthy as the fundamentals remain solid including historically low interest rates and a strong economy with low unemployment rates.”

Nevertheless, he adds, “The strength of the past few years is expected to dissipate somewhat in most markets.”

An Affordable Path To Homeownership

As volume dips, Risk Reduction Mortgage Corp., a startup Fintech mortgage product provider, has launched its signature solution, Risk Reduction Mortgages. This new product will be made available to homeowners and creditors starting in 2019, disrupting the $30-trillion U.S. and $160-trillion global real estate market.


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Developed by renowned mortgage experts, this product has been proven to substantially reduce risk for all stakeholders and provide much needed stability to the housing finance system. Underpinned by Home Diversification Agreements (borrower sells local home-price index and buys national price index), Risk Reduction Mortgages will deliver key benefits:


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>> Eliminate the need for PMI, HFA or piggy-back second mortgages for those unable to afford the standard 20-percent down payment – providing savings of thousands of dollars each year for the tens of millions of homeowners in this category.


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>> Provide a diversification benefit enabling homeowners to substantially reduce their home equity value risk, obtain a similar reduction in foreclosure risk and enjoy a lower interest rate due to their reduced-risk profile.

>> Provide creditors (e.g.- GSEs) up to a 70-percent reduction in systemic credit losses.

“Our new mortgage product is the most important financial innovation since securitization,” says Marc Biron, RRMC founder and CEO. “If available at the time, there is strong evidence they would have helped avert the 2008 meltdown”

Adds RRMC Senior Advisor, John N. Osland, “Our mission is to help millions of homeowners by diversifying their most concentrated investment – their homes. We will remain relentlessly laser-focused on the homeowner.”

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The Impact Of Earthquakes On Housing

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ATTOM Data Solutions and Greenfield Advisors, an economic and real estate research firm, released an analysis of housing market trends in Oklahoma following the recent spike in earthquake activity in that state.

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The analysis was based on public record real estate data collected and licensed by ATTOM along with earthquake data from the U.S. Geological Survey and oil price data from the U.S. Energy Information Administration.

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The analysis found that statewide in Oklahoma earthquakes increased 375 percent between the four quarters ending in Q1 2014 and the four quarters ending in Q1 2016, when earthquake activity reached a peak of 336 earthquakes during the quarter.

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Foreclosure activity — including default notices, scheduled foreclosure auctions, and bank repossession (REOs) — increased 19 percent over the same time period following a nearly four-year downward trend. Statewide foreclosure activity increased on a year-over-year basis in five of the seven quarters ending in Q1 2016 following 15 consecutive quarters of year-over-year decreases in foreclosure activity.

But home sales volume and prices continued to trend higher during the two-year period ending in Q1 2016. Home sales statewide increased 12 percent between the four quarters ending in Q1 2014 and the four quarters ending in Q1 2016, and median home prices in Q1 2016 were up 9 percent from Q1 2014.

“Home sales and prices have consistently been trending higher in Oklahoma over the past four years, aligning with the national housing market recovery, but foreclosure activity in Oklahoma over the past two years has diverged from the national trend, rising 19 percent during the same two-year period where earthquake activity increased 375 percent,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

“Oil prices that plummeted 64 percent during the same two-year period could also be contributing to the rise in foreclosure activity across the state, although it’s important to note that foreclosure activity actually decreased 14 percent during the same time period in Tulsa County, where no earthquake epicenters were reported,” Blomquist continued. “Meanwhile in Oklahoma County, where earthquake activity increased 20 percent over the past two years, foreclosure activity increased 39 percent over the same time period.”

“While sales volumes and sale prices have been trending higher over the past four years, consistent with the overall housing market recovery, geographic scale is important when evaluating whether the earthquakes are responsible for loss of property value,” said Clifford A. Lipscomb, vice chair and co-managing director at Greenfield Advisors, a Seattle-based economic and real estate research firm. “Repeatedly, in our work, we see that state and county level sales data can mask what’s going on in particular neighborhoods. To tie earthquake activity to loss in property value, it takes a close examination of the affected area and control areas, or areas that are similar to the affected area in several dimensions.”

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Senior Home Equity On The Rise

Housing wealth continues to grow for U.S. homeowners aged 62 and older, providing seniors with added financial security in their retirement years. That’s according to the National Reverse Mortgage Lenders Association, who reported today that the aggregate value of senior home equity reached $5.9 trillion in the second quarter of 2016, a gain that propelled the NRMLA/RiskSpan Reverse Mortgage Market Index to a new peak of 212.45 from 207.60 in Q1 and an 8.7 percent year-over-year increase.

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First published in Q1 2000, when senior home equity totaled $2.38 trillion, the RMMI was benchmarked at 85.47. The index initially peaked at 182.26 in Q1 2006 before declining through Q1 2009, when senior home equity dropped to a trough of $3.48 trillion and the index fell to 125.08.

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Since that time, the housing recovery and growing population of senior homeowners have contributed to an upward trajectory for the RMMI. In Q2 2016, senior home values reached $7.4 trillion while senior-held mortgage debt increased by $10.75 billion to $1.48 trillion.

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“Healthy improvements in the housing sector are creating more financial options for senior homeowners who want to stay in their home as long as possible but who may need to make structural modifications or coordinate care services to manage living there safely and independently,” said NRMLA President and CEO Peter Bell.

According to Healthy Aging Begins at Home, a May 2016 report from the Bipartisan Policy Center’s Senior Health and Housing Task Force, most homes are not currently set up to meet the daily needs of aging residents. While a range of modifications and long-term support services are available to seniors, many are cost prohibitive for low- and middle-income households. Home health aide services, for instance, have a national median cost of $41,600 a year, while lowering countertops could cost between $1,650 – $4,000.

The BPC Task Force suggests that home equity, which can be accessed with a reverse mortgage among other financial instruments, offers owners a potential source of capital to cover necessary expenditures and enable them to age in place.

“Incorporating home equity into a retirement funding stream with a reverse mortgage is not a new idea, but important new protections for borrowers have regenerated interest in this strategy, which can help more seniors afford the tools to live safely in their homes for a longer period of time,” said Bell.

The RMMI in Q1 2016 was revised from 209.12 to 207.60 primarily because of the updated Fed total housing value in the third quarter release.

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Listen Up Candidates

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Have you been following the Presidential Election? Most people have. Why? It’s outlandish. Earlier this year presumptive Republican nominee Donald Trump called Hillary Clinton an “unbelievably nasty, mean enabler” who “destroyed” the lives of her husband’s mistresses.

The comments, made during an evening rally in Eugene, Ore., marked the sharpest tone he’s taken against the Democratic frontrunner since becoming his party’s presumptive nominee, and the first time he’s been so direct in referencing Bill Clinton’s affairs in months.

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“She’s been the total enabler. She would go after these women and destroy their lives,” Trump said. “She was an unbelievably nasty, mean enabler, and what she did to a lot of those women is disgraceful.”

In exchange, presumptive Democratic nominee Hillary Clinton condemned Donald Trump’s criticism of U.S. District Judge Gonzalo Curiel, who is overseeing lawsuits involving Trump University, during a conversation with MSNBC’s Rachel Maddow.

“This racist attack on the judge is just another example of how he is absolutely impervious to the values of America, to the progress that we have made over many, many decades,” Clinton said of Trump’s comments. “He’s trying to demean, and defame a federal judge who was a very accomplished federal prosecutor who was first appointed by a Republican governor in California.”

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Trump has said Curiel, who is presiding over two of the three cases against Trump’s now defunct for-profit school, cannot be fair in the ruling because Curiel is “a hater,” “very hostile,” and “Mexican,” and Trump wants to build a wall along the border with Mexico. Curiel was born in Indiana and is American.

I know, the level of discourse it’s unbelievable. With the presidential elections fast approaching, one in five Americans (21%) say a candidate’s housing and finance policies will influence their vote, according to new research conducted for loanDepot. Nearly two out of five (36%) also think the presidential candidates are doing a bad job of articulating their housing and finance policies, and 35 percent would like to hear more from the candidates on these topics. Among those interested in hearing more, 56 percent are Democrats, 39 percent are Republicans, and 29 percent are Millennials.

Americans also weighed in on their economic and housing priorities for the 45th president’s first 100 days, electing to keep housing more affordable and interest rates low. Making homeownership more affordable for middle and lower income families topped the list with 37 percent of Americans, including 32 percent who are Millennials, 64 percent who are Democrat and 32 percent who are Republican. Keeping interest rates low (34%) and making more credit available to small businesses (11%) are second and third priorities. There was bi-partisan agreement on keeping interest rates low during the next president’s first 100 days with Democrats and Republicans at 47 percent and 49 percent respectively.

“People across the nation told us they want to hear more from the presidential candidates about their housing and financial policies on issues like income, access to credit, interest rates and affordable housing,” said loanDepot Chairman and CEO, Anthony Hsieh. “The candidate who does a good job in communicating their policies moving forward has an opportunity to influence millions of potential voters.”

Same Old Same Old? Maybe Not ?

Most Americans expect their financial situations to stay the same or get worse as a result of the upcoming presidential election, which could be due to a lack of information from candidates about these key policies. While the majority of likely voters (66%) don’t expect the election will impact their personal finances, nearly one quarter (24%) think they’ll be worse off financially. Of those who expect be worse off, 56 percent say the candidates have done a bad job of articulating their housing and financial policies. More Democrats (50%) expect to be worse off financially as a result of the elections than Republicans (44%). Only six percent of all voters expect to be better off as a result of the general November election.

Millennials May Miss Out?

With Millennials now outnumbering baby boomers as the nation’s largest living generation of consumers, their entrance into homeownership has been anticipated as a welcome boost to home sales, especially starter homes. However, while 38 percent of home loans closed by Millennials in April 2016 were FHA loans1, the survey revealed many are still discouraged about their incomes and the election’s impact on their access to credit. In fact, more than one third (36%) of Millennials say their primary financial concern is not making enough money, and 46 percent are concerned about how the elections will impact their ability to access credit. Two out of five (40%) Millennials said making homeownership more affordable to middle- and low-income Americans should be a priority for the next president’s first 100 days.

“As more Millennials enter the housing market, we expect to see a higher priority placed on better borrowing options for first-time homebuyers,” said Hsieh. “loanDepot is one of the five largest FHA lenders in the country and we remain focused on helping borrowers, including Millennials, access the credit they need to finance home purchases.”

Accessing Credit: Perception vs. Reality?

The loanDepot research found perceptions on financial trends sometimes don’t match reality. For example, 38 percent of Americans said they think it’s harder to get home loan today than it was immediately after the financial crisis in 2008. In fact, while guidelines have tightened since 2008, applications for purchase mortgages were more likely to be denied in 2008 than in 2014, the most recent year for which Federal Reserve2 data is available. Denial rates for home purchase loan applications hit 18 percent in 2008, while denials in 2014 topped out at 13 percent. Denial rates for home refinance applications in 2008 were 38 percent and dropped to 31 percent in 2014.

About the Survey?

The survey was conducted by OMNIWEB using the KnowledgePanel in a national online omnibus service of GfK Custom Research North America. The KnowledgePanel is the only commercially available online probability panel in the marketplace making the sample truly projectable to the US population, which sets it apart from traditional “opt-in” or “convenience” panels. A total of approximately 1,000 interviews were completed, with 500 female adults and 500 male adults. The margin of error on weighted data is +/- 3 percent for the full sample.

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Presidential Candidates, Don’t Forget To Talk About Lending

The two presumptive nominees have spent the past few days criticizing each other. The American people however, want the candidates to talk about housing policy. With the presidential elections fast approaching, one in five Americans (21%) say a candidate’s housing and finance policies will influence their vote, according to new research conducted for loanDepot. Nearly two out of five (36%) also think the presidential candidates are doing a bad job of articulating their housing and finance policies, and 35 percent would like to hear more from the candidates on these topics. Among those interested in hearing more, 56 percent are Democrats, 39 percent are Republicans, and 29 percent are Millennials.

loanDepot Election Survey Results - Democrats vs. Republications

Americans also weighed in on their economic and housing priorities for the 45th president’s first 100 days, electing to keep housing more affordable and interest rates low. Making homeownership more affordable for middle and lower income families topped the list with 37 percent of Americans, including 32 percent who are Millennials, 64 percent who are Democrat and 32 percent who are Republican. Keeping interest rates low (34%) and making more credit available to small businesses (11%) are second and third priorities. There was bi-partisan agreement on keeping interest rates low during the next president’s first 100 days with Democrats and Republicans at 47 percent and 49 percent respectively.

“People across the nation told us they want to hear more from the presidential candidates about their housing and financial policies on issues like income, access to credit, interest rates and affordable housing,” said loanDepot Chairman and CEO, Anthony Hsieh. “The candidate who does a good job in communicating their policies moving forward has an opportunity to influence millions of potential voters.”

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Same Old Same Old?  Maybe Not
Most Americans expect their financial situations to stay the same or get worse as a result of the upcoming presidential election, which could be due to a lack of information from candidates about these key policies. While the majority of likely voters (66%) don’t expect the election will impact their personal finances, nearly one quarter (24%) think they’ll be worse off financially. Of those who expect be worse off, 56 percent say the candidates have done a bad job of articulating their housing and financial policies. More Democrats (50%) expect to be worse off financially as a result of the elections than Republicans (44%). Only six percent of all voters expect to be better off as a result of the general November election.

Millennials May Miss Out
With Millennials now outnumbering baby boomers as the nation’s largest living generation of consumers, their entrance into homeownership has been anticipated as a welcome boost to home sales, especially starter homes. However, while 38 percent of home loans closed by Millennials in April 2016 were FHA loans1, the survey revealed many are still discouraged about their incomes and the election’s impact on their access to credit. In fact, more than one third (36%) of Millennials say their primary financial concern is not making enough money, and 46 percent are concerned about how the elections will impact their ability to access credit. Two out of five (40%) Millennials said making homeownership more affordable to middle- and low-income Americans should be a priority for the next president’s first 100 days.

“As more Millennials enter the housing market, we expect to see a higher priority placed on better borrowing options for first-time homebuyers,” said Hsieh. “loanDepot is one of the five largest FHA lenders in the country and we remain focused on helping borrowers, including Millennials, access the credit they need to finance home purchases.”

About The Author

Veros Releases Housing Forecast

Veros released its most recent VeroFORECAST, a quarterly national real estate market forecast for the 12-month period ending December 1, 2016.

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The VeroFORECAST report indicates residential market values will continue their overall upward trend during the next 12 months, with overall annual appreciation rising to +4.4% (from its Q3-2015 forecast of +3.6%) with 94% of markets forecast to appreciate. “Our current VeroFORECAST update continues to show increasing strength for the next year and above last quarter’s update,” says Eric Fox, VP of Statistical and Economic Modeling at Veros.

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“However in the 13 to 24 month forecast window, we expect the rate of appreciation to slow down with this forecast period expecting only +2.3% appreciation. The primary driver for this weakening can be attributed to tightening already begun by the Fed which is likely to cause mortgage interest rates to begin ticking upward. We don’t see dramatic increases in interest rates or a repeat of 2007 price declines. At this point, it simply looks like a slowing of the increase in house prices as we get into well into 2016 and 2017.”

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“The top forecast markets are all showing appreciation in the 10% range with the Pacific Northwest getting very hot,” continues Fox. “Portland, Seattle, and Bend are numbers 1, 2, and 4 in the nation, respectively. Denver and San Francisco continue to be strong as well rounding out the Top 5. Most of these markets have strong economies, growing populations, and month’s supply of homes around 2.0 months or less. With these conditions, it is difficult for these markets to do anything other than appreciate at a good clip. Oregon, Washington, and North Carolina showed the biggest gains in one-year forecast levels from last quarter’s update. Top performing markets continue to confine themselves to California, Colorado, Florida, Washington, and Oregon which comprise 21 of the Top 25 forecast markets.”

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The forecast bottom markets are expected to be in the eastern portion of the U.S. New Jersey, Connecticut, parts of New York, West Virginia, Alabama, and parts of Pennsylvania account for well over half of the bottom 25 markets. However even these expected poorest performing of markets are only expected to depreciate slightly or be flat.

Good News For Housing This Month

Auction.com has released its July Auction.com Real Estate Nowcast which projects that existing home sales for the month of July will fall between seasonally adjusted annual rates of 5.49 and 5.84 million annual sales, with a targeted number of 5.67 million – up 3.2 percent from June and 11.7 percent from a year ago.

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“May and June existing home sales have both been very encouraging for anyone looking for proof that the housing market is in recovery, and our July nowcast indicates that this positive momentum will continue into July,” said Auction.com Executive Vice President Rick Sharga. “One potential area of concern is the steeper-than expected increase in home prices. While this is driven by limited inventory, and a declining number of distressed home sales, affordability may start to become an issue if home price increases continue to outpace wage growth. And if the Fed does move to raise interest rates as expected this fall, we could see home sales volume begin to weaken.”

Earlier today, the National Association of Realtors® (NAR®) released its existing home sales data for June, reporting that home sales were at 5.49 million units – a 3.2 percent increase from May’s sales and the highest level in eight years. The sharp increase was in line with Auction.com’s June nowcast point estimate of 5.55 million (revised downward from 5.57 million) – a prediction that beat the consensus estimate, whose high end range of 5.45 million was below the actual level of sales. The NAR also revised downward its May report to 5.32 million from its original estimate of 5.35, nearly matching Auction.com’s nowcast estimate of 5.31 for that month.

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NAR also reported a June increase in existing home prices to $236,400 – a 6.5 percent leap from one year ago and besting the previous all-time high of $230,400 set in July 2006, meaning that from a price perspective, the housing recovery has shifted to an expansion. This number was well within the range of $217,482 and $240,375 that Auction.com predicted last month.

Findings from the Auction.com Real Estate Nowcast suggest that sales prices for existing homes will fall between $227,170 and $251,082 in the month of July, with a targeted price of $239,126. This represents a 4.6 month-over-month and a 7.7 percent year-over-year increase for the month, and would set another record for median home prices.

While the first time homebuyer percentage slipped slightly to 30 percent from 32 percent in June according to the NAR data, it remains higher than earlier in the recovery. “First time homebuyers will continue to be challenged in an environment with limited entry level inventory, tight credit and rapidly-rising prices,” Sharga noted. Additionally, all-cash sales, the best indicator of true investor purchases, continued to drop, falling to 22 percent in June, from 24 percent in the previous month and 32 percent the year before.

“This is not surprising given the big increases in prices that are making return hurdles harder and harder to meet,” said Auction.com Chief Economist Peter Muoio. “This is the lowest level of all-cash sales since December 2009. Similarly, distressed sales accounted for just 8 percent in June, matching an August 2014 low. Taken together these indicators signify a housing recovery on more solid ground, with fickle investors playing a smaller role, the vast majority of sales non-distressed, prices back to pre-bust levels and sales increasing sharply.”

Mind The Wealth Gap

The writer Harlan Ellison once commented, “The two most common elements in the universe are hydrogen and stupidity.” I cannot offer much input today regarding hydrogen, but I can discuss stupidity with the help Capitol Hill’s favorite emetic virago, Rep. Maxine Waters, D-Calif., the ranking member of House Financial Services Committee.

Prior, Rep. Waters introduced something in the House of Representatives called the “Wealth Gap Resolution,” with the goal of addressing what she saw as the widening wealth disparities in the United States. The resolution is designed to accomplish three things: to acknowledge that a wealth gap exists, to acknowledge that nonwhites have it worst when it comes to this situation, and to blame this problem on public policy, with a vague suggestion that legislative changes are required.

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“President Barack Obama has already recognized inequality as the ‘defining challenge of our time,’” said Congresswoman Waters. “Members of Congress on both sides of the aisle have acknowledged just how harmful inequality and the wealth gap are for many middle class families. The time is now to meet words with actions. We have a moral obligation to address this crisis with substantive solutions.”

A press statement issued by Rep. Waters’ office placed a heavy emphasis on the racial elements of this issue, especially in regard to homeownership.

“The median wealth of white households is 20 times that of Black household and 18 times that of Latino households,” the statement said. “Additionally, White households have $100,000 more in liquid retirement savings than both African-American and Latino households. Such disparity leaves communities of color with no conceivable path to ensure their families don’t fall victim to intergenerational poverty. To these populations, wealth is principally derived from homeownership, an idea often hailed as the quintessential American Dream. But after finding themselves on the receiving end of decades of predatory lending and other discriminatory practices, the 2008 financial crisis sent these families’ wealth – and their hopes of obtaining that American Dream – plummeting.”

The fact that the wealth gap has widened considerably since Barack Obama became president was curiously missing from Rep. Waters’ resolution – indeed, the idea that Black unemployment would be substantially higher during the years when an African American is in the White House is an inconvenient fact that rarely gets mentioned when the racial element gets included in this discussion.

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But Rep. Waters, not unlike another prominent revisionist – Sen. Elizabeth Warren – is trying to rewrite recent history by putting the blame solely on the private sector. There is no mention of finagling with federal housing policy in the years of Bill Clinton’s presidency, which loosened underwriting and lending standards that resulted in toxic efforts to artificially pump up minority homeownership rates. Nor is there mention of how members of Congress benefited from extravagant lobbying by the government-sponsored enterprises, resulting in Capitol Hill consenting to the reckless policies that drove Fannie and Freddie into federal conservatorship and pushed the economy off a cliff.

Rep. Waters’ resolution is stupid at so many levels: it solves no problems, assigns blame where it doesn’t belong, absolves current leadership in the Executive and Legislative Branches of government of failing to create a successful economic environment for all Americans, and only continues the strident efforts by a shrill political corner of trying to divide people along financial and racial lines. Too bad we can’t stick this silly congresswoman in a hydrogen balloon and float her out of Washington.

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The Failure Of HUD’s Indian Housing Policy

On February 18, the U.S. Department of Housing and Urban Development (HUD) scooped out its annual serving of money as part of the Indian Housing Block Grant (IHBG) initiative. This year, more than $651 million was distributed to 586 tribes across 34 states.

HUD issued a press release that described the program using this language: “Eligible activities for the funds include housing development, assistance to housing developed under the Indian Housing Program of the 1937 Housing Act, housing services to eligible families and individuals, housing management services, crime prevention and safety, and model activities that provide creative approaches to solving affordable housing problems. The block grant approach to housing was enabled by the Native American Housing Assistance and Self Determination Act of 1996 (NAHASDA).”

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The same press release offered this quote from HUD Secretary Julián Castro: “Our nation is at its best when everyone has a fair chance to thrive. These funds will support the innovative work Native American tribes and families are doing to build a more prosperous future. Our partnership with these local leaders today will create better housing opportunities, more robust economic development and stronger communities tomorrow.”

Okay, so let’s try to make sense of this. Federal assistance for tribal housing stretches back to the 1937 Housing Act, and the block program has been around since NAHASDA became law in 1996, but Secretary Castro is talking about creating better housing opportunities on tribal lands for tomorrow? What’s wrong with this picture? After all of this time and all of the money poured into Indian housing, shouldn’t this sector of the economy be able to stand on its own feet by now without continued federal aid?

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The central problem here is poverty and limited economic opportunities for the residents of tribal lands. According to the various data sources that track this demographic, more than 25 percent of American Indians are living in poverty and only 61.6 percent of native adults are either part of the workforce or are actively looking for employment. As of the third quarter of 2014, American Indian unemployment was at 11 percent – the national rate was 6.2 percent.

And why is this situation so horrendous? Last year, Shawn Regan, a research fellow at the Property and Environment Research Center, published an article in Forbes to detail why this situation is so acute. Regan identified five key reasons why American Indians are lagging so far behind other sectors of the population: Indian lands are owned and managed by the federal government, which is no one’s idea of a good property manager; nearly all aspects of economic development on tribal lands fall under Uncle Sam’s control; the tribal lands operate under complex legal systems (created by Washington) that hinder growth, especially independent economic development; Washington has a long history of mismanaging native funds; and, in areas where energy development could bring in riches, the federal government has done everything possible to prevent such development from occurring.

Regan might have included a sixth problem: federal laws prevent Native Americans from easily pursuing the American Dream. Because much of the land in Indian Country is held in trust by the federal government, tribes have no right to sell the land they live on. This prevents traditional mortgage lending on Indian reservations. Furthermore, if the property is held in trust, the tribe must issue a 50-year lease to its member seeking to build a home – but only after getting the approval from the Bureau of Indian Affairs. The home and the leasehold interest are then mortgaged, but the land must remain in trust for the tribe.

Yeah, can you imagine if the government tried to pull those housing laws in predominantly black or Hispanic neighborhoods? This grossly unfair situation is only allowed to take place on tribal lands. Thus, traditional homeownership on tribal lands is less common while government-funding handouts are par for the course.

But those handouts are hardly generous. And despite Secretary Castro’s cheery insistence on a better day tomorrow, many tribes have become fed up with the lack of progress today. Two years ago, Paul Iron Cloud, CEO of the Oglala Sioux (Lakota) Housing Authority at Pine Ridge Reservation, S.D., offered a stark view of NAHASDA’s failings before a Senate hearing.

“Sadly, in 2013, our housing – and tribal housing on many similarly situated reservations and Alaskan Native communities – is far worse today than 17 years ago,” he said. “Though NAHASDA provides us and many other tribes and tribal housing entities valuable resources, because of stagnant and reduced funding levels as well as flawed funding allocation methods, we and a large number of other tribes today have the worst housing in the United States. NAHASDA funding levels limit us to building on average no more than 30 to 40 units a year, yet we currently need 4,000 new units and 1,000 homes repaired. The result is that we now have the most overcrowded housing in this country.”

Instead of the annual ceremony of dumping hundreds of millions of dollars into a system that is not making life better for the nation’s poorest demographic, maybe it is time to step back, get out the toolbox and start to build a better way for American Indians to share in the benefits of homeownership. IHBG and NAHASDA are not making this situation better – in fact, they have taken a travesty and prolonged it into a travesty.

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