A common theme that it has been a perfect time to buy. Once new jobs come back, then these recently hired people will purchase homes. However, the wages on these new jobs too low to purchase homes at current prices.
The low-wage jobs explosion
By Tami Luhby @CNNMoney August 31, 2012: 12:26 PM ET
NEW YORK (CNNMoney) — Sure, the economy is adding jobs these days…but most of those positions pay pretty poorly.
Some 58% of the jobs created during the recovery have been low-wage positions, according to a new report by the National Employment Law Project. Only 22% have been mid-wage jobs and 20% higher-wage positions. These low-wage jobs pay $13.83 an hour or less
“The recovery continues to be skewed toward low-wage jobs, reinforcing the rise in inequality and America’s deficit of good jobs,” said Annette Bernhardt, NELP’s policy co-director. “While there’s understandably a lot of focus on getting employment back to pre-recession levels, the quality of jobs is rapidly emerging as a second front in the struggling recovery.”
The explosion in low-wage job growth comes after the Great Recession hammered the mid-wage job sector. Some 60% of the jobs lost during the downturn were mid-wage, as opposed to 21% of low-wage and 19% of higher-wage positions.
The fastest growing low-wage jobs include retail salespeople, food prep workers, laborers and freight workers, waiters and waitresses, personal and home care aides, office clerks and customers representatives.
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Proprietary OC Housing News home purchase analysis
709 North GILBERT St Anaheim, CA 92801
$374,900 …….. Asking Price
$300,000 ………. Purchase Price
7/31/2012 ………. Purchase Date
$74,900 ………. Gross Gain (Loss)
($24,000) ………… Commissions and Costs at 8%
============================================
$50,900 ………. Net Gain (Loss)
============================================
25.0% ………. Gross Percent Change
17.0% ………. Net Percent Change
299.6% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$374,900 …….. Asking Price
$13,122 ………… 3.5% Down FHA Financing
3.60% …………. Mortgage Interest Rate
30 ……………… Number of Years
$361,779 …….. Mortgage
$94,463 ………. Income Requirement
$1,645 ………… Monthly Mortgage Payment
$325 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$94 ………… Homeowners Insurance at 0.3%
$377 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,440 ………. Monthly Cash Outlays
($247) ………. Tax Savings
($559) ………. Equity Hidden in Payment
$15 ………….. Lost Income to Down Payment
$114 ………….. Maintenance and Replacement Reserves
============================================
$1,763 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,249 ………… Furnishing and Move In at 1% + $1,500
$5,249 ………… Closing Costs at 1% + $1,500
$3,618 ………… Interest Points
$13,122 ………… Down Payment
============================================
$27,237 ………. Total Cash Costs
$27,000 ………. Emergency Cash Reserves
============================================
$54,237 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Cost of Ownership Analysis
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$285,000 724 North MAGNOLIA Ave |
0.44 miles 3 bd / 1.5 ba 1,280 Sq. Ft. |
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$330,000 1236 North VENTURA St |
0.67 miles 3 bd / 2 ba 1,351 Sq. Ft. |
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$395,000 1327 North FERNDALE St |
0.74 miles 4 bd / 2 ba 1,303 Sq. Ft. |
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$430,000 441 North LA REINA St |
0.75 miles 5 bd / 2.75 ba 1,554 Sq. Ft. |
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$379,900 2525 West AVONDALE Pl |
0.9 miles 3 bd / 2 ba 1,134 Sq. Ft. |
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$415,000 196 South LINHAVEN Cir |
1.03 miles 4 bd / 3 ba 1,740 Sq. Ft. |
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$329,900 1333 North COLUMBINE Pl |
1.06 miles 4 bd / 1.75 ba 1,314 Sq. Ft. |
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$379,000 8637 KENDOR |
1.11 miles 3 bd / 1.75 ba 1,200 Sq. Ft. |
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$429,000 1419 SIMI Pl |
1.13 miles 3 bd / 1.75 ba 1,688 Sq. Ft. |
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$379,900 2545 West ORANGE Ave |
1.18 miles 3 bd / 1.75 ba 1,448 Sq. Ft. |
mortgage costs are going to rise
GSEs to Raise G-Fees by Average of 10 Basis Points
Before the end of this year, Fannie Mae and Freddie Mac will raise guarantee fees (g-fees) on single-family mortgages by an average of 10 basis points.
When the GSEs provide mortgage-backed securities (MBS), they guarantee the payment of principal and interest on the securities and charge a g-fee for the guarantee. The fee is used to cover potential credit losses in case a borrower defaults and for administrative costs.
On Friday, FHFA, the GSEs’ conservator, announced it has directed Fannie Mae and Freddie Mac to increase g-fees as a step toward encouraging more mortgage market participation from private firms.
“These changes will move Fannie Mae and Freddie Mac pricing closer to the level one might expect to see if mortgage credit risk was borne solely by private capital,” said Edward J. DeMarco, Acting Director of FHFA, stated in a release.
The increases are scheduled to take effect on December 1 for loans exchanged for mortgage-backed securities. For loans sold for cash, the increases are scheduled for November 1, 2012.
In addition to making the announcement, FHFA released a report on single-family g-fees for 2010 and 2011, which found the GSEs, on average, increased g-fees by 26 basis points in 2010 and 28 basis points in 2011.
FHFA also noted the report revealed higher risk mortgages were generally subsidized by lower-risk loans, and most single-family mortgages bought by Fannie Mae or Freddie Mac came from a concentrated group of large lenders. According to the report, in 2010 and 2011, the top five lenders accounted for around 60 percent of the GSEs combined business volume compared to under 10 percent for lenders ranked below the top 100.
FHFA stated the issue will be addressed by having the g-fees charged to lenders who deliver large volumes of loans more “uniform” compared to those who deliver small volumes.
Cross-subsidies will be addressed by increasing g-fees on loans that take more than 15 years to mature. According to the report, 15-year fixed-rate loans have a history of lower credit losses.