First it was New York City’s Cooper Village and Stuyvesant Town, and now, another enclave built by Metropolitan Life in the 1940s for veterans and middle-class families has run into financial distress after being purchased by speculators during the recent real estate boom. The owners of the 115-acre, 3,221-unit Parkmerced apartment complex in San Francisco, which houses upward of 6,000 tenants, will default on their $550 million mortgage, which comes due in October. The reason? Overspeculation, of course, and trying (and failing) to replace rent-regulated tenants with those willing to pay market rates—similar to circumstances surrounding New York City’s massive defaults. Andrew Florio, an analyst at Real Capital Analytics, told The New York Times, “[i]t’s pretty interesting that they have all ended up in the same place. People assumed they could boost revenues by kicking people out and raising rents.” We’d like to think they’d think twice about that assumption next time.
As Seattle continues its efforts to expand its affordable housing stock (and housing options), tiny so-called cottages are popping up in its backyards. The city recently changed its zoning rules to allow these cottages to be built in single-family neighborhoods. It also rejected a proposed cap of 50 cottages per year. The move helped spark a design competition for reasonably priced plans. Seattle’s cottages are certainly less isolated than the tiny houses we started seeing a few years back popping up on the prairie in Texas, some as small as 12 by 16 feet, but they produce similar results: reasonably priced units at a space premium.
Indeed, living small is apparently catching on. In Southern California, known for its sprawl, the Los Angeles Times reports that RV-sized apartments, replete with innovative design that allows for central air, high ceilings, and other modern amenities, are allowing people to live in their neighborhoods of choice without spending market-rate rent. There’s even something of a national trend afoot: the U.S. Census Bureau shows that the median size of a U.S. home, which skyrocketed from 900 square feet in the 1950s to 2,277 in 2007, has begun to wane—down to 2,161. Not tiny living yet, by any means, but maybe it’s a start in that direction.
After 23 years, the Chicago housing authority is no longer in receivership. The court-ordered receivership had placed administrative duties in the hands of a private company, Habitat Co. Now U.S. District Court Judge Marvin Aspen has determined that CHA has sufficiently addressed desegregation issues and is no longer out of compliance with the landmark Gautreaux case, which required all new public housing construction in Chicago to be outside of predominantly African-American low-income neighborhoods. The ACLU, which filed the original 1987 lawsuit that landed the CHA in receivership, has indicated that it is satisfied with the progress made since Habitat took over. In 1999, Mayor Richard Daley, as part of a complex and controversial proposal for transforming Chicago’s public housing, outlined a plan to rehabilitate 25,000 units. That plan, according to CHA, is roughly 70 percent complete, with hundreds of blighted buildings demolished and nearly 18,000 units rehabilitated or redeveloped.
Illinois attorney general Lisa Madigan has filed a lawsuit against Countrywide, alleging it steered African-American and Latino borrowers into subprime mortgages and charged them more for them. Madigan’s office conducted a two-year investigation into Countrywide’s lending policies, and the resulting suit, as reported in HousingWire, alleges that in 2006, Countrywide sold higher-cost loans to 50.9 percent of its African-American borrowers and 33.8 percent of its Latino borrowers, compared to 19.5 percent of white borrowers. Bank of America, which completed its takeover of Countrywide in July 2008, has said that Countrywide’s practices took place before the bank giant assumed control, but Madigan’s office isn’t having it, according to the HW report, saying “Bank of America needs to be held accountable by taking financial responsibility for cleaning up the devastation of the predatory company that it chose to take over.”
According to Deutsche Bank, 20 million homeowners might be underwater by 2012. Turns out of those 20 million, those with the most expensive homes are actually more likely to walk away from their mortgages than those with more modest homes. The New York Times cites CoreLogic data showing that while the seriously delinquent rate for homeowners with loans of less than a million dollars is one in twelve, the rate for homeowners with loans in excess of a million dollars is one in seven.
In August, when the FDIC seized ShoreBank of Chicago, it represented the demise of the oldest community development bank in the United States. The bank, according to its Web site, will carry on as the Urban Partnership Bank, which absorbed ShoreBank’s core deposits and its assets that were in receivership. But some are asking why this bank, renown for socially responsible lending and caught up “in a crisis not of its own making,” according to The American Prospect‘s Robert Kuttner, does not qualify for TARP money. ShoreBank raised $150 million in new capital from many of the TARP-saved institutions, but still the Treasury Department did not yield the $75 million the bank sought. Kuttner says it’s political, preventing the appearance of helping a bank in the president’s old neighborhood. Or was it just not big enough to not fail? Unfortunately, we’re only left to speculate.