Monday Morning Cup of Coffee: Inside the housing economy’s monster news weekend

Your MBA / Fed / Fannie / Freddie / Kilauea / California housing update!

Monday Morning Cup of Coffee takes a look at news across the HousingWire weekend desk, with more coverage to come on bigger issues.

Plenty of stories in this issue of MMCC, so hang on tight! 

The Mortgage Bankers Association Secondary conference started Sunday with sessions including the Executive Perspectives panel, which HW Content Solutions Managing Editor Sarah Wheeler tells us all about here. So far, the conference remains quiet as the occasional attendant files in to register or set up their booth. The mood is much more relaxed than the hustle that’s expected to ensue Monday when the conference begins in earnest.

A message from our reporter, Kelsey, who's on the ground: "Stay tuned in to HousingWire and follow me on Twitter, @kels_ramirez, as I bring you the latest from experts all over the U.S. on the mortgage secondary market."

Looking forward to it, Kelsey!

Now, we’ll go ahead and talk about the boom down here in the Lone Star state.

That’s right, Texas is the place to be (HousingWire is based in DFW) and our latest jobs report can beat up your latest jobs report.

Texas added 42,500 jobs in April, according to seasonally adjusted and benchmarked payroll employment numbers released by the Federal Reserve Bank of Dallas.

The state added a revised 26,600 jobs in March. That brings the year-to-date annualized growth rate to 3.7%.

“Texas job growth picked up in April, and year to date the state has added 151,200 jobs—the most over a four-month period since the end of 2014,” said Keith Phillips, Dallas Fed assistant vice president and senior economist. “Combined with continued growth in the leading index, this makes it very likely that job growth will be strong in the second half of 2018.”

“Energy jobs continue to accelerate sharply, growing at a double-digit rate year to date. Energy-producing areas of the state such as Midland and Odessa are booming. Houston, which has about 25% of all jobs in the state, is now the fastest-growing major metro in Texas so far this year at 4.5%.”

Meanwhile, in the rest of the nation, particularly on its cramped coastlines, housing affordability is so out of reach that even well-paid workers need to find housing that can be shared.

This article in TechCrunch lists all the start-ups that help struggling workers find roommates. Co-living, subletting, sharing “units,” whatever you want to call it — Shared housing startups are taking off.

“Notice any commonalities? Yes, the startups listed are all based in either New York or the San Francisco Bay Area, two metropolises associated with scarce, pricey housing. But while these two metro areas offer the bulk of startups’ living spaces, they’re also operating in other cities, including Los Angeles, Seattle and Pittsburgh," the article says. 

On the capital markets side, there's a new report issued by the DBRS U.S. RMBS team.

The report looks at collateral and performance trends in credit risk transfer securitizations issued by Fannie Mae and Freddie Mac. They are the deals in which the risk is spread to the private-investor space. And, as DBRS reports, things are going well!

DBRS has noticed a significant increase in the inclusion of HomeReady loans (Fannie Mae) and Home Possible loans (Freddie Mac) for the most recent high LTV securitizations, the report explains. 

Those are the affordable mortgage products designed to expand the availability of mortgage financing to creditworthy low- to moderate-income borrowers.

"For example, the STACR 2018-HQA1 transaction at closing consisted of approximately 18.2% Home Possible loans and the CAS 2018-C02 transaction at closing consisted of approximately 12.5% HomeReady loans," DBRS explains.

The report then concludes that, overall, post-crisis GSE CRT transactions have good loan characteristics and exhibit generally low delinquencies and cumulative credit events.

From the report:

"DBRS had noticed an initial increase in delinquencies for certain transaction after recent natural disasters that have subsequently trended lower since the occurrence of those events. Prepayments have been relatively stable for deals seasoned more than 12 months — generally between 8% and 15% CPR across the vintage — except for certain deals issued between second-half 2014 and 2015, which are posting CPRs slightly above 20%. For the actual LS pools, cumulative credit event rates are at or close to 0%, and some of this may be attributed to the fact these loans are not seasoned enough to experience certain credit events."

Bloomberg Opinion columnist Virginia Postrel has a novel explanation for why there is a housing crisis in California — she caused it.

It's a cutesy headline, "How I Caused California’s Housing Crisis," but the op-ed is no joke. What follows is a reasonable explanation of why startups like the ones mentioned above are even necessary in the Golden State.

Here's a bit of history from the piece:

"The recession of the 1990s depressed housing construction. When the economy turned up, it was harder than ever to get new projects approved, especially in major cities. Homebuilding instead sprawled into outlying areas where middle-income families took on long commutes and risky mortgages to claim their piece of the California dream. Places like San Bernardino County, east of Los Angeles, still haven’t fully recovered from the real estate crash."

Postrel's premise is so strong, it's doubtful the sharing economy will be able to do much to address the overall demand. Note to Californians: There are plenty of jobs left in Texas.

Out in Hawaii, after the initial damage reports from HousingWire, lava from Kilauea has since destroyed four homes, prompting airlifts. We're keeping an eye on the damage but there are about 5,900 homes in the ZIP code 96778, the current site of the Kilauea lava eruption, according to data provided exclusively to HousingWire by CoreLogic. And of those homes, 1,029 are considered in high-risk areas, or areas where lava has flowed in the recent past.

Finally, a story about a real estate investor who was just trying to do his job when a nosy neighbor called the cops on him. The video below shows Michael Hayes, a real estate investor in Memphis, Tenn., who went to look at a fixer-upper on the market. 

Now, some press coverage will tell you the neighbor, who is white, called the cops on Hayes, because he is black… but we won't go so far. Hayes confirms the below video is him and the incident happened, but declined further comment.

As you can hear in the video, the police are (rightfully) on the side of the real estate investor who really shouldn't have to put up with this kind of nonsense while trying to do his job.



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