Review the following articles and describe how they relate to banking and home purchases. What types of services do banks offer? What are some of the most important things you would consider when purchasing property such as a house?

The US housing market is entering a 'deep freeze' as surging borrowing rates and sky-high home prices hit buyers, Moody's Zandi says

Amanda Cooper Thu, July 21, 2022

• The US housing market won't crash, but will see "a major comeuppance" in terms of price declines.
• Moody's chief economist Mark Zandi said more and more buyers are simply locked out of the market.
• Existing home sales in the US hit a two-year low in June, as prices stayed at record highs.

The US housing market is about to enter a "deep freeze," as surging borrowing rates and stubbornly high prices lock out a growing number of buyers, according to Mark Zandi, the chief economist of Moody's Analytics. Data on Wednesday showed a drop in existing home sales to a two-year low in June. The National Association of Realtors reported seasonally adjusted sales hit a rate of 5.12 million last month, the lowest since June 2020, and below expectations for 5.38 million. "It makes sense, with the higher mortgages conflating with higher house prices, first-time homebuyers just can't afford to buy in. They're locked out, and trade-up buyers, they're locked in because if they sell and buy, they've got to get another mortgage at a higher rate and their monthly payments are going to rise," Zandi told CNBC's "Power Lunch" (Links to an external site.)on Wednesday. "So demand is really weakening very rapidly and, you're right, I think housing is going into a deep freeze," he said.

Potential homebuyers are facing a toxic combination of mortgage rates running at their highest since 2009 above 5% - in line with the increase in interest rates by the Federal Reserve, which is battling inflation at 41-year highs - and a red-hot housing market that was fueled by over a decade of ultra-low borrowing rates. Home affordability has slumped, triggering a collapse in mortgage applications to 22-year lows, which in turn has weighed on markets for construction materials such as lumber, which has dropped nearly 50% in value this year.

Single-family home prices in the United States are at a record high of almost $407,000, having almost doubled in under 10 years. But Zandi says this figure is a median price and does not reflect that real estate prices are in fact declining. "You have a lot more homes selling at the higher end of the market, a lot fewer homes selling at the lower end of the market, because first-time buyers are locked out. And that causes that price measure to increase. But the underlying price dynamics, they're weakening very rapidly," he said.

More worrying for the outlook for home prices, inventories of unsold homes ballooned by almost 10% last month, highlighting how properties are taking longer to change hands. "If you look at inventories across the country, in the most juiced areas of the market coming into this, they're up quite a bit. So everything coming together suggests that in coming months and certainly by the end of the year going into next, we're going to see some real house price weakness," Zandi said. "Now, having said all of that, I'm not arguing 'crash', but I'm just arguing there's a major comeuppance though coming with regard to house prices. I think the market is under a lot of stress," he added.

Charlie Bilello, the founder of Compound Capital Advisors, a financial advisory firm, tweeted on Wednesday that the downturn that is emerging at the lower end of the housing market is coming(Links to an external site.) for the higher end. "2 years ago, the 30-yr mortgage rate was 2.90% & the median existing home price in the US was $294k. Today the 30-yr mortgage rate is 5.71% & the median existing home price is $416k. With a 20% down payment, that's a 98% increase in the monthly payment (from $978 to $1,933)," he said in a separate tweet(Links to an external site.).

Pandemic-ravaged economy, housing issues await returning California lawmakers - Jan 10, 2021 AP

In this June 10, 2020 file photo Assembly Speaker Anthony Rendon, D-Lakewood, left, talks with Assembly Republican Leader Marie Waldron, of Escondido, during the Assembly session in Sacramento. (AP Photo/Rich Pedroncelli, File)

Mending California's coronavirus-ravaged economy and fixing a state unemployment agency that is at the center of a titanic fraud case that could exceed $2 billion are at the top of the to-do list when lawmakers resume their session on Monday.

They already have introduced numerous bills responding to the pandemic, ranging from extending protections for renters to attempting to regain some decision-making authority they had delegated to Gov. Gavin Newsom. They pushed back their usual start by one week because of the latest coronavirus surge.

Among their most urgent priorities, lawmakers are racing to extend eviction protections that otherwise will expire Jan. 31.

Two lawmakers are pursuing bills that would maintain a law passed months ago barring evictions for people who have been unable to pay their rent since the pandemic began in March, though they must pay 25% of what they owe since September. Assemblyman David Chiu wants to extend the protections at least through 2021, while a bill by Sen. Anna Caballero, a fellow Democrat, is proposing an extension through March.

Newsom has endorsed an extension, but did not say how long it should be. The California Rental Housing Association objected that Chiu's long-lasting bill would force many landlords "into financial ruin."

Newsom proposed a $227 billion budget on Friday that would take effect July 1. But he is asking lawmakers to act sooner on a number of proposals he says are necessary to help the state recover from the pandemic.

That includes giving a one-time stimulus payment of $600 to taxpayers who earn less than $30,000 annually. The effort would cost the state $2.4 billion.

Newsom also wants the state to pony up $575 million for grants to small businesses, plus millions more in loans and fee waivers. And he is proposing the state spend $2 billion to help schools pay for testing, ventilation and personal protective equipment in the hopes they will resume in-person instruction.

Legislative leaders have pledged to act quickly, but they have their own ideas on how to address those issues.

A bill by Democratic Assemblyman Phil Ting would require public schools to reopen within two weeks of their county leaving the state's most restrictive shutdown tier. The California Teachers Association and the California Federation of Teachers oppose the idea, which they said would substitute political pressure for science in deciding when it's safe to reopen.

A bill by Republican Sen. Andreas Borgeas, plus Caballero and Democratic Assemblywoman Cottie Petrie-Norris, would spend $2.6 billion on small business grants.

Lawmakers from both parties are eager to revamp the state's beleaguered Employment Development Department, which at one point had a backlog of 1.6 million initial and continuing claims from workers who lost their jobs due to the pandemic.

The department has resolved more than 91% of those claims, but the backlog has been growing again as California imposed new lockdown orders last month to try to stem an unprecedented surge in coronavirus cases that threatens to overwhelm the medical system.

The department also has struggled to root out fraud. State officials have admitted they approved $400 million in fraudulent benefits to prison inmates, including some on death row.

Petrie-Norris, who heads the Assembly Accountability and Administrative Review Committee, said she would seek legislation requiring the department to crosscheck unemployment applications with inmate records to identify fraudulent claims. Senate Republican Leader Shannon Grove and GOP Assemblyman Phillip Chen said they would offer similar legislation.

"It seems like a commonsense step and seems shocking that we haven't been doing it," Petrie-Norris said.

State officials say the agency has a new agreement with the California Department of Corrections and Rehabilitation that allows the two entities to more broadly share information.

Petrie-Norris also is proposing an oversight advisory board for the department, as is Republican Assemblyman Tom Lackey, while Assembly GOP leader Marie Waldron wants to put a deadline on the department to process new claims.

GOP Sen. Scott Wilk teamed with Democratic Sen. Melissa Hurtado to propose that the department stop including Social Security numbers on mailed documents following a critical state audit.

Democratic Assemblywoman Lorena Gonzalez is proposing that the state allow for direct unemployment insurance deposits into recipients' bank accounts. California is one of just three states that pay with checks or debit cards that Gonzalez said lack security precautions and have withdrawal limits. They also have been frozen at times while the state investigates the widespread fraud.

Meanwhile, Republicans and some Democrats are chafing under strict stay-at-home orders and other measures by Newsom, a Democrat who lawmakers initially granted extraordinary authority to act unilaterally early in the pandemic.

GOP Assemblyman Kevin Kiley criticized Newsom on the day lawmakers first reconvened after the November election.

"We sat back and watched as Gov. Gavin Newsom seized legislative power for himself, falsely claiming that a state of emergency, no matter how long it lasts, transforms California into an autocracy," Kiley said.

He and fellow Republican Sen. Brian Jones co-authored three related bills that Jones said would "help bring some sanity back to how the State of California should operate: as a democratic republic, not a monarchy."

One would limit the governor's emergency declarations to 60 days instead of allowing them to continue indefinitely. Two other GOP Assemblymen, Jordan Cunningham and Vince Fong, have a similar measure.

Another would bar the state from revoking a business' license for not complying with a shutdown order unless authorities could prove it caused a widespread virus transmission.

The third would hold that every child has a right to in-person schooling.

https://ktla.com/news/california/pandemic-ravaged-economy-housing-issues-await-returning-california-lawmakers/

Home prices post record 18% drop

By Les Christie. December 30, 2008

NEW YORK (CNNMoney.com) -- Home prices posted another record decline in October, falling 18% compared with a year earlier, according to a closely watched report released Tuesday. The 20-city S&P Case-Shiller index has posted losses for a staggering 27 months in a row. In October, 14 of the 20 cities set fresh price decline records. "The bear market continues; home prices are back to their March 2004 levels," says David Blitzer, Chairman of the Index Committee at Standard & Poor's.

Sunbelt cities suffered the most, but most of the country is watching home values fall. Home prices in Phoenix, Las Vegas and San Francisco all fell more than 30% on a year-over-year basis. Miami, Los Angeles and San Diego recorded year-over-year declines of 29%, 28% and 27%, respectively. "As of October 2008, the 20-City Composite is down 23.4%," said Blitzer. "In October, we also saw three new markets enter the 'double-digit' club." Atlanta, Seattle and Portland each reported annual rates of decline of about 10%. "While not yet experiencing as severe a contraction as in the Sunbelt, it seems the Pacific Northwest and Mid-Atlantic South is not immune to the overall demise in the housing market," Blitzer added.

Deteriorating environment

Many of the factors affecting home prices turned strongly negative this fall, according to Blitzer. "October was really the first month to feel the full brunt of the credit crunch," he said. "Up until the Lehman Brothers [bankruptcy filing on September 15], everyone felt relatively optimistic." Plus, in many of the free-falling cities the majority of real estate sales consist of distressed properties such as foreclosed homes and short sales. These houses tend to sell at a steep discount to the rest of the market, and when they account for a large proportion of all sales, they can exaggerate the depth of price declines. Of course, foreclosures continue to be a big problem as well. In October alone, nearly 85,000 people lost their homes to foreclosure(Links to an external site.)(Links to an external site.), adding vacant inventory to an already overburdened market.

Home sellers should not expect prices to improve any time soon, according to Pat Newport, a real estate analyst for IHS Global Insight. "I expect it's going to get quite a bit worse over the next couple of months," he said. "Existing home sales(Links to an external site.)(Links to an external site.) reports have really been bad." Home sales fell 8.6% in November, much more than expected, to an annualized rate of 4.49 million units according to the National Association of Realtors. And although interest rates are currently extremely low - the 30-year fixed-rate averaged 5.14% during the week of December 24, according to mortgage giant Freddie Mac (FRE(Links to an external site.)(Links to an external site.), Fortune 500(Links to an external site.)(Links to an external site.)) - that's doing more to help people refinancing existing mortgages(Links to an external site.)(Links to an external site.) than it is to help new home buyers. "Buyers still have to have a 20% down payment," said Newport, "and, in this environment, it can be hard to meet that criteria."

The latest Case-Shiller numbers provide more ammunition to Washington policy makers who want to do more to fix the housing mess, according to Jaret Seiberg, an analyst with the Stanford Group, the policy research firm. "These data just add to the tremendous pressure on the president-elect and the Democrats to stimulate housing," he said. "That means more lucrative tax incentives and broad foreclosure prevention. All of this will likely be in the stimulus plan that Congress adopts in January." Nicholas Retsinas, Director of Harvard University's Joint Center for Housing Studies, agrees. "Housing problems are at the core of our economic problems," he said, "yet, of the government interventions made during 2008, few were focused on housing." With a new administration and Congress in place next month, he expects to see a renewed interest in stabilizing the housing market.

FHFA as Conservator of Fannie Mae and Freddie Mac

On September 6, 2008, FHFA used its authorities to place Fannie Mae and Freddie Mac into conservatorship. This was in response to a substantial deterioration in the housing markets that severely damaged Fannie Mae and Freddie Macs' financial condition and left them unable to fulfill their mission without government intervention. A key component of the conservatorships is the commitment of the U.S. Department of the Treasury to provide financial support to Fannie Mae and Freddie Mac to enable them to continue to provide liquidity and stability to the mortgage market. The Treasury Department has provided $189.5 billion in support, which includes an initial placement of $1 billion in both Fannie Mae and Freddie Mac at the time of the conservatorships and an additional cumulative $187.5 billion investment from the Treasury Department.

In accordance with the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 as amended by HERA, FHFA is authorized to "take such action as may be: (i) necessary to put the regulated entity in a sound and solvent condition; and (ii) appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity." In addition, as conservator, FHFA assumed the authority of the management and boards of Fannie Mae and Freddie Mac during the period of the conservatorship. However, Fannie Mae and Freddie Mac continue to operate legally as business corporations and FHFA has delegated to the chief executive officers and boards of directors responsibility for much of the day-to-day operations of the companies. Fannie Mae and Freddie Mac must follow the laws and regulations governing financial disclosure, including the requirements of the Securities and Exchange Commission.

While FHFA has broad authority over Fannie Mae and Freddie Mac, the focus of the conservatorships is not to manage every aspect of their operations. Instead, FHFA leadership reconstituted Fannie Mae and Freddie Macs' boards of directors in 2008 and charged them with ensuring that normal corporate governance practices and procedures are in place. The boards are responsible for carrying out normal board functions, which are subject to FHFA review and approval on critical matters. This division of duties represents the most efficient structure for FHFA to carry out its responsibilities as conservator.

The agency launched initiatives to recover losses resulting from the housing crisis of 2008 and avoid further liability to Fannie Mae and Freddie Mac. FHFA sought to reduce the amount of outstanding repurchases and worked to reduce the number of loans originated with manufacturing defects due to poor underwriting standards. Finally, FHFA undertook the necessary actions to reduce the number of operational loss events at Fannie Mae and Freddie Mac. The 2012 Strategic Plan for Enterprise Conservatorships(Links to an external site.)(Links to an external site.) envisioned a new securitization infrastructure to replace Fannie Mae's and Freddie Mac's (the Enterprises) outdated infrastructures and attract private capital to share credit risk, which is now borne solely by the Enterprises.

FHFAproposed a common platform that would support theFannie Mae's and Freddie Mac'sexisting business and upgrade their aging and inflexible infrastructures. This would save taxpayers the costs of maintaining and upgrading two parallel structures in the future, although building such a platform means up-front information technology costs. FHFA worked with the Enterprises to develop a plan for the design of a common securitization platform of hardware and software to serve both companies and also potentially be used in a post conservatorship market (which would depend on decisions by Congress).

We also worked withFannie Mae and Freddie Macon recommendations for an improved contractual and disclosure framework to support a more efficient and effective secondary mortgage market. The contractual and disclosure framework includes a complex set of rules, regulations, contractual agreements, and enforcement mechanisms that define the process of securitization.

In October 2012, FHFA released a white paper, Building a New Infrastructure for the Secondary Mortgage Market(Links to an external site.)(Links to an external site.),proposing a framework for a common securitization platform and an improved contractual and disclosure framework and requested public input. The white paper sought to identify the core components (proposed as data validation, issuance, disclosure, bond administration, and master servicing) of mortgage securitization that will be needed in the housing finance system in the future. The securitization platform could be used by multiple issuers to process payments and perform other functions.

Along with the white paper, FHFA joined Fannie Mae and Freddie Mac (the Enterprises) in outreach to a full range of stakeholders, including a variety of industry participantssmall and large companies, trade groups, advocacy organizations, vendors, originators, servicers, investors, and mortgage insurers, among others. We worked with the Enterprises to use the feedback gathered on the securitization platform prototype, to align key contract features and practices, and address additional protections investors require. This effort will take several years. Long-term, continued operation in a government-run conservatorship is not sustainable for Fannie Mae and Freddie Mac because each company lacks capital, cannot rebuild its capital base, and is operating on a remaining, finite line of capital from taxpayers. Until Congress determines the future of Fannie Mae and Freddie Mac and the housing finance market, FHFA will continue to carry out its responsibilities as Conservator. For the most recent information read FHFA's 2014 Strategic Plan for the Conservatorships(Links to an external site.)(Links to an external site.).

https://www.fhfa.gov/Conservatorship/pages/history-of-fannie-mae--freddie-conservatorships.aspx(Links to an external site.)(Links to an external site.)

How Bankruptcy Will Impact Detroit's Housing Market

Morgan Brennan (Links to an external site.)(Links to an external site.), Forbes Staff, Jul 24, 2013

Detroit's Chapter 9 bankruptcy filing kicks off in federal court today,as a flurry of creditors challenge its legality according to Michigan's state constitution.

The beleaguered Midwestern metropolis, saddled with an estimated $18.5 billion in long term debt, filed thelargest municipal bankruptcy in American history(Links to an external site.)(Links to an external site.)last Thursday. Since thenspeculation has swirled around how this could impact the many players within the Detroit economic ecosystem from retirees to bondholders to businesses to the auto industry. But it also begs the question: what does this mean for Motor City real estate?

To take an early stab at how this could potentially play out for the city's real estate, let's first take a look at the current state of the market.

Detroit has represented an American city in decline for the better part of half a century. It has long held a top spot on theAmerica's Most Dangerous Cities list(Links to an external site.)(Links to an external site.), thanks largely to a murder rate nearing 40-year highs and it regularly lands toward the bottom of FORBES'Best Places for Business and Careers(Links to an external site.)(Links to an external site.).

It's certainly no secret that Detroit touts one of the most beaten down housing markets in the country -- a direct result of poor economic fundamentals. The metro area's unemployment rate stands at 16%, or more than double the national average. Median income for city residents averaged a paltry $27,862 during the five years ended in 2012. And though once the fourth largest city in the country, Detroit's population has shrunk from roughly 1.8 million residents during its 1950 peak to just about 700,000 in 2012, according to U.S. Census data.(Links to an external site.)(Links to an external site.)

It's all contributed to a blighted urban landscape in whichan estimated 78,000 buildings and as many as 100,000 homes sit abandoned and vacant. One in every 764 homes within the overall Detroit metro area has a foreclosure filing attached, according to RealtyTrac(Links to an external site.)(Links to an external site.), compared to one in every 1,025 homes nationwide. In some of the city's hardest hit neighborhoods, filings plague an alarming one in every 310 homes. As of April, home prices were down in the Detroit metro area 35% from their housing bubble peak and 30% lower than their April 2003 levels,according to the S&P/Case-Shiller Home Price Index.(Links to an external site.)(Links to an external site.)

Yet in recent months something surprising has happened throughout the area: the housing market has been showing signs of life. In April, for example, despite the fact that they're still a third lower than the mid-2000s, home prices logged a yearly gain of 20%, according to the index(Links to an external site.)(Links to an external site.).More surprising still, some economists have even recently posited(Links to an external site.)(Links to an external site.) that Detroit's housing market may actually be undervalued once adjusted for inflation and analyzed relative to those dismal median salary estimates.

The nascent housing recovery has blossomed largely due to a growing number of high-risk-taking investors betting their cash on high returns. Both institutionsand individuals have been snapping up properties for as little as $500 in property tax lien sales(Links to an external site.)(Links to an external site.).

Investor interest has hailed from as far as Wall Street, even China. In a recent analysis of online home searches from abroad, Realtor.com found Detroit listings received the most traffic from Australians. And the renewed activity has propelled some real estate brokers to return to the Motor City and its surrounding suburbs to capitalize on the growing number of buyers,according to a recent article in the Detroit News(Links to an external site.)(Links to an external site.)

Local real estate brokers seem to be relatively confident that the filing will do little to taper demand in the areas most sought after, asserting that economic and social woes have already been priced into city's still-depressed values. "For the people who right now are looking to buy a home in the city, in the back of their mind they knew that this was already out there,"Dan Elsea,brokerage services president of Real Estate One,recently told the Detroit Free Press(Links to an external site.)(Links to an external site.).

Lormax Stern Development partner Daniel Stern echoed a similar sentiment on CNBC(Links to an external site.)(Links to an external site.), noting that,"The bankruptcy, for us, it's old news." He says prices in desirable neighborhoods like downtown Detroit (currently undergoing a massive revitalization initiative) and the city's surrounding suburbs have been climbing for the better part of four years.

Real estate site Zillow(Links to an external site.)(Links to an external site.) Z -4.23%(Links to an external site.)(Links to an external site.), which assesses values for all homes in a given area, says the Detroit metro area began to see a turnaround in home values in November of 2011, after values fell 52% from their peak. In June, the median home value was up over 14% versus last year and 72% of homes traded during that month did so at a gain. In the second quarter alone, saysZillow(Links to an external site.)(Links to an external site.), values for the entire metro area rose 3.3%.

A lot comes down to how the bankruptcy plays out -- and how confident prospective buyers feel in light of those proceedings."If the city continues to hollow out, it's unlikely the housing market will continue to recover," says Dr. Svenja Gudell, senior economist of Zillow. "Roughly 30% of Detroit's housing units already lie vacant, and without job growth and a healthy economy to attract new workers, what demand there is will inevitably dry up. Those homes currently vacant will remain so, blighting the cityscape and creating a double whammy of downward price pressure in the city's neighborhoods.

"Restarting the Motor City's economic engine, and soon, will be critical if Detroit is to have any hope of attracting the kinds of workers and homebuyers necessary to jump-start demand," she adds.

Clues about the bankruptcy's possible impact on housing might exist out west in California where three separate municipalities filed for bankruptcy protection last year.Last summerTrulia(Links to an external site.)(Links to an external site.) TRLA +%(Links to an external site.)(Links to an external site.) chief economist Jed Kolkoanalyzed the effects those filings(Links to an external site.)(Links to an external site.)would have on the local housing markets ofStockton,Mammoth Lakes andSan Bernardino.(Links to an external site.)(Links to an external site.)

https://www.forbes.com/sites/stevenbertoni/2017/06/27/podcast-family-founded-philz-coffee-aims-to-scale-from-quirky-sf-cafe-to-east-coast-empire/#77eda1b128b4.

Higher prices squeezing both renters and would-be homeowners

June 16, 2017

A diminished supply of available homes is swelling prices in large U.S. metro areas from New York to Miami to Los Angeles, squeezing out would-be buyers and pushing up rents as more people are forced to remain tenants. The trend is pressuring Americans' budgets, with about one-third of households spending more than 30%of their gross income on housing as of 2015, according to a report being released Friday by Harvard University's Joint Center for Housing Studies.

Homeownership rates have stagnated in part because high rents have made it difficult for many prospective buyers to amass a down payment for a house. At the same time, the sparse supply of available properties is benefiting existing homeowners, many of whose home values have recovered from the housing bust a decade ago.

The tight supply of homes and a shortage of affordable rental housing have improved little in recent years for a variety of reasons. Among the key factors is that construction has yet to regain the pace of homebuilding that predated the bust. "As the economy continues to recover, as income picks up as household formations pick up, it's not spurring a supply response," said Chris Herbert, managing director of Harvard's Joint Center for Housing Studies. "It's a worsening of the situation that was evident last year."

Housing affordability

The government considers people who spend over 30% of their income on housing to be "cost-burdened." Those who spend more than 50%are considered "severely" burdened. About one-third of households 38.9 million were considered cost-burdened in 2015, down from 39.8 million a year earlier. This was the fifth straight annual decline. Still, roughly 16% of households, or about 18.8 million, paid more than half their income on housing. The share of renters paying more than they can afford varies from city to city. In Miami, it's 35.4%. In El Paso, Texas, it's just 18.4%. Other cities where households were deemed to be cost-burdened include Daytona Beach, Fla.; Riverside, Calif.;and Honolulu.

Ryan Welch of Santa Monica, Calif., is among those feeling stuck between rising rents and home prices. Welch, 32, pays about $1,500 a month for a rent-controlled one-bedroom apartment he shares with his wife. That works out to about a quarter of their monthly income, an affordable portion. Welch, who works in advertising sales, would like a bigger place with more amenities. But he's reluctant to leave their apartment. "I'm nervous to move to a place that's not rent-controlled," he said. Saving to own a home, something he wants to do, has had to take a back seat to making payments on student loans and his car, among other expenses. "I'd much rather buy, but I can't come up with the down payment," Welch said.

Home supply and prices

The availability of homes for sale has fallen short of demand. Last year, the typical new home for sale was on the market for just 3.3 months, according to the report well below the average of 5.1 months dating to the 1980s. All told, 1.65 million homes were on the market last year, the fewest in 16 years, the report said. The supply is worse for lower-priced homes that would be affordable to typical first-time buyers. Builders have been constructing fewer homes for that segment of buyers. Between 2004 and 2015, construction of single-family homes of less than 1,800 square feet fell to 136,000 from nearly 500,000, according to the report.

The trends helped boost national home prices 5.6%last year, above their housing boom peak. (Prices remained nearly 15% below their peak, when adjusted for inflation.) "Builders are starting to turn more attention to the entry-level market," Herbert said. "My guess is we'll see some increase in our supply of smaller, more moderate-cost new housing on the single-family side."

Widening cost gap

One striking finding in the Harvard report is the gap in home values that's widened since 2000, well before the market hit its boom-era highs. When adjusted for inflation, prices in markets along the East and West coasts have vaulted more than 40%since 2000. By contrast, values in the Midwest and South have declined. Among the markets where prices remain well below their housing-boom peaks: Las Vegas, Chicago, Detroit and Tampa, Fla. By contrast, home values have risen far above their previous highs in Denver, San Francisco and Austin, among other markets. "If you go back to, say, 1970 and you look at the differences in house prices across market areas, they were not nearly as extreme as they are now," Herbert said. "It's a function of income inequality and how much the differences in income have grown." In addition, regulatory constraints and a shortage of available land limit construction in many areas.

Rental prices and supply

Though apartment construction surged in the years after the housing bust, demand for rental housing has grown even more. The rental vacancy rate fell last year to 6.9%, a three-decade low, according to the Harvard report. That's the seventh straight annual decline. Much of the apartment construction in recent years has been made up of luxury developments catering to affluent renters rather than to households of modest means. The number of rental units available for under $800 fell by 261,000 between 2005 and 2015, according to the report. By comparison, the number of units for $2,000 or more climbed by 1.5 million in the same period.

Homeownership rate

The nation's homeownership rate has been falling since peaking around 69% in 2004. Last year, it hit 63.4%, just above the low set in 1965. But the rate appears to be stabilizing, according to the report. "Even if it is no longer falling, it's settling in at a rate that's low by historic standards," Herbert said. The rate has grown notably worse for African-Americans, the report found. Homeownership among African-Americans is now at its lowest point since the 1960s and nearly 30 percentage points below the rate for whites, Herbert said.

Homebuilding up, but still low

Construction increased in 2016 for the seventh year in a row, adding 1.17 million houses and apartments. But that was still the lowest growth rate since 2011, the report noted. Building of single-family homes has been rising faster, up 9.4%last year to 781,600 units. Even so, residential construction still trails the 1.4-1.5 million annual rate that prevailed in the 1980s and 1990s, the report notes. On Friday, the government reported that housing starts fell 5.5% in May to a seasonally adjusted annual rate of 1.09 million units. "We're still not yet at 1.2 million starts," Herbert said. "Back in the day, it would have been a bad year during a recession, and we're still trying to get back up there. We're certainly not back to normal in terms of supply."

Office of Thrift Supervision shuts down IndyMac

By ALEX VEIGA, AP Business July 13, 2008

LOS ANGELES - IndyMac Bank's assets were seized by federal regulators on Friday after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures. The bank is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said. The Office of Thrift Supervision said it transferred IndyMac's operations to the Federal Deposit Insurance Corporation because it did not think the lender could meet its depositors' demands. IndyMac customers with funds in the bank were limited to taking out money via automated teller machines over the weekend, debit card transactions or checks, regulators said. Other bank services, such as online banking and phone banking were scheduled to be made available on Monday. "This institution failed today due to a liquidity crisis," OTS Director John Reich said. IndyMac had $32.01 billion in assets as of March 31.

Pasadena, Calif.-based IndyMac Bancorp Inc., the holding company for IndyMac Bank, has been struggling to raise capital as the housing slump deepens. A spokesman for the lender did not immediately return an e-mail request for comment. The banking regulator said it closed IndyMac after customers began a run on the lender following the June 26 release of a letter by Sen. Charles Schumer, D-N.Y., urging several bank regulatory agencies that they take steps to prevent IndyMac's collapse. In the 11 days that followed the letter's release, depositors took out more than $1.3 billion, regulators said. In a statement Friday, Schumer said IndyMac's failure was due to long-standing practices by the bank, not recent events. "If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today," Schumer said. "Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs."

The FDIC planned to reopen the bank on Monday as IndyMac Federal Bank, FSB. Deposits are insured up to $100,000 per depositor. As of March 31, IndyMac had total deposits of $19.06 billion. Some 10,000 depositors had funds in excess of the insured limit, for a total of $1 billion in potentially uninsured funds, the FDIC said. Customers with uninsured deposits could begin making appointments to file a claim with the FDIC on Monday. The agency said it would pay unsecured depositors an advance dividend equal to half of the uninsured amount. IndyMac spent the last two weeks trying to reassure customers that it was not near default.

On Monday, IndyMac announced it had stopped accepting new loan submissions and planned to slash 3,800 jobs, or more than half of its work force the largest employee cuts in company history. In the letter to shareholders, IndyMac Chairman and Chief Executive Michael W. Perry said the drastic measures were made in conjunction with banking regulators to improve the company's financial footing and "meet our mutual goal of keeping Indymac safe and sound through this crisis period." The plan was supposed to generate roughly $5 billion to $10 billion per year of new loans backed by government-sponsored mortgage companies, Perry said at the time.

But the run on its deposits ultimately short-circuited the strategy, prompting regulators action Friday. The lender, which opened in 1985, closed its run with a string of quarterly losses. The company posted its first annual loss in its history last year, losing more than $614 million as it struggled through the housing slump. It posted a $184.2 million loss in the first quarter of this year and warned last month that it wouldn't return to profitability this year unless the slide in U.S. housing prices slowed. The housing outlook was not improving, however, and Perry warned he expected the company's second-quarter loss to be wider than its loss in the first quarter.