After a frenzied bidding war, a quirky house built on a bridge over a concrete drainage channel in Alhambra has sold for $180,000 over the asking price in what still may be considered a bargain in Southern California’s pricey real estate market.
The unusual location of the house and its comparatively modest $250,000 asking price drew national attention and hundreds of visitors when it hit the market a few weeks ago. Most of the visitors were looky-loos who wanted to get a peek at the small home someone built in 1949 into the side of a bridge owned by the city overlooking the Alhambra Wash.
“This was definitely a unique property, no doubt about it,” said real estate agent Douglas Lee of Compass, who had the listing. “I have never come across anything like this.”
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People were enthralled by what TV tabloid show “Inside Edition” called “the troll house” for its bridge location — more than 155,000 have viewed the show segment about the home posted on YouTube.
Lee declined to identify the buyer who came up with the top bid of $430,000, but Lee said he is a retired Rosemead High School teacher.
The 450-square-foot dwelling on the 1300 block of East Main Street has a terrace that looks over the wash and a rooftop patio that sits next to a road bridge, separated only by a fence. It’s within walking distance of a Vietnamese restaurant and a hair salon but has no designated parking spot.
The house is a one-bedroom, one-bath fixer-upper that once belonged to the parents of one of Lee’s high school friends. Lee said his friend’s parents purchased the home in 2005 for about $72,000. Their plan was to use it as a swanky “man cave,” Lee said, but it sat vacant for nearly two decades according to KTLA5.
The average one-bedroom home in the Alhambra neighborhood costs about $350,000, while the median sale price for an existing single-family house in Southern California is about $785,000.
Times staff writer Noah Goldberg contributed to this story.
When it comes to purchasing a home, buyers may have difficulty finding financing beyond the conforming loan limit. In this instance, you may need to apply for a jumbo loan. Whether your sights are set on a new construction home in Boise or a cabin home in McCall, let’s break down what a jumbo loan is in Oklahoma, the 2023 conforming loan limits, and what’s needed to qualify for this type of loan.
What is a jumbo loan?
What exactly is a jumbo loan in Idaho? A jumbo loan is a specialized type of mortgage that comes into play when you’re seeking financing for a home that surpasses the conforming loan limits (CLL) established by the Federal Housing Finance Agency (FHFA). Typically, this type of loan is necessary for upscale, luxurious properties or those situated in pricey housing markets.
If you need to borrow more than the conforming loan limit, you’ll need a jumbo loan. Idaho jumbo loans allow you to borrow more money to buy a more expensive home, but they also come with higher interest rates and stricter requirements than conventional loans.
What is the jumbo loan limit in Idaho?
In 2023, the conforming loan limit for a single-family home in most U.S. markets is $726,200. However, this limit can be higher in areas where the median home price is significantly above the national average.
$726,200 is the conforming loan limit in most Idaho counties
$1,089,300 is the maximum limit in Idaho’s more expensive counties
Keep in mind that the amount being borrowed is what determines whether or not you’ll need a jumbo loan, not the price of the home. So, if you were to put $50,000 down on a $750,000 home in Boise County, the mortgage would be $700,000, which is under the conforming loan limit for this area. In this case, your loan wouldn’t be considered a jumbo loan.
The following counties in Idaho have a conforming loan limit beyond $726,200 for 2023:
County
Conforming Loan Limit
Blaine County
$740,600
Camas County
$740,600
Teton County
$1,089,300
To identify the conforming loan limits where you’re considering buying a home in Idaho, check out this FHFA map.
What are the requirements for a jumbo loan in Idaho?
As previously mentioned, the requirements for a jumbo loan are much more stringent than a conforming loan. The specific requirements can vary from lender to lender, but below are the typical requirements for borrowers seeking a jumbo loan in Idaho.
Higher credit score: When it comes to applying for a jumbo loan, credit score requirements are typically more stringent than for conventional mortgages. While some lenders may be willing to accept a lower score, a credit score of at least 720 is generally required to qualify for a jumbo loan. It’s important to have a strong credit profile and a solid financial history to increase your chances of being approved for a jumbo loan.
Larger down payment: Buying a high-priced home usually requires a larger down payment from the buyer. Conventional loans may offer programs for down payments as low as 3%- 5%, but jumbo loans require a minimum down payment of 10%, with some lenders requiring up to 30%. If the homebuyer puts down less than 20%, they will likely need to pay for private mortgage insurance (PMI).
More assets: Idaho jumbo loan borrowers are typically required to have additional assets. In particular, lenders may require borrowers to demonstrate sufficient liquid assets or savings to cover one year’s worth of loan payments.
Lower debt-to-income ratio (DTI): Mortgage lenders consider a borrower’s debt-to-income ratio (DTI) when evaluating their eligibility for a jumbo loan. To qualify for a jumbo mortgage in Idaho, borrowers typically need a DTI below 43%, though closer to 36% is preferred. The DTI represents the borrower’s monthly debt payments divided by their gross monthly income.
Additional home appraisals: For a jumbo loan, mortgage lenders may require a second appraisal to ensure that the property’s value is accurate. This is particularly true in areas where there are few comparable home sales. The home appraisal acts as a second opinion and helps the mortgage lender to mitigate their risk. It’s important to note that the cost of a secondary appraisal may be higher than a typical home appraisal, particularly in areas with fewer sales.
When moving somewhere new, what’s most important isn’t how big your kitchen is or whether or not your new home has a fireplace. You might value what else you have access to and how quickly you can enjoy those perks. It’s common for renters to look at not only the rental property itself but also what the surrounding area offers: Can you find grocery stores, eateries, shops, bars and office buildings nearby?
People seek those conveniences, but it’s difficult to find all in the same area. That’s where live-work-play communities can come in and offer everything you could need and more—all in one place.
What are live-work-play communities?
Live-work-play communities include housing, stores, office spaces, gyms, dining, schools and other living conveniences for tenants and community members. They make it easy to get everything you need outside of your home, whether it be groceries, a workspace or entertainment, hence the name “live-work-play.” In addition to it being where you live, you can easily pivot to working or relaxing and having fun.
Are live-work-play communities different from mixed-use developments?
Live-work-play communities are the same idea as mixed-use developments—the only thing that’s really different is the term people choose! On top of the easy access to everything you’ll need, these communities typically offer more than one type of housing. They have smaller apartments and townhomes for those that want a little more room and some even have single-family homes for those that want a larger, more private home while being close to the action.
Four benefits of renting in a mixed-use development
Live-work-play communities have plenty of advantages for those living in them. Overall, you’ll find that convenience is the common thread, but let’s dive into some of the specifics.
No commute
When you live close enough to work that you can quickly walk, you’ll reap multiple benefits. Not only is it saving you time, but there’s also the additional advantage of not needing to increase car wear-and-tear or pay for gas or parking, saving you countless fees and maintenance costs over time. Driving less also means you’re reducing your carbon footprint. So, for those that are in the office at all for their job, even with a hybrid work schedule, not having a commute provides both convenience and savings.
Access to entertainment and shopping
When you’ve got restaurants, shopping and other businesses and services right outside your door, you rarely find the need to make your way across town. You may head out for date night or you may just want to pop into a boutique for a few minutes to check it out. Either way, you’re not going through the hassle of heading out to a mall or city center to find what you want.
Easy to make friends
When you’re out and about all the time in the same area, you can quickly make friends with those you see out and about. In the case of a mixed-use neighborhood, you’ll likely see your neighbors frequently while you perform your daily activities. This is especially nice if you’re moving to a new area from out of town and don’t know anyone yet: You’ll find a strong community full of future friends.
Housing needs met at every stage
For some, living in the same area for five or more years sounds appealing, but life circumstances and demands can change drastically over that time. You may not have a partner when moving to an area, but then find someone and want a bigger place to live. And years later, you may decide to have a family.
When it comes to a live-work-play community, you may not need to move more than a minute or two away. You could easily go from a one-bedroom apartment to a three-bedroom townhome in the same location! Mixed-use developments accommodate any age and stage of life.
Three drawbacks of renting in a live-work-play community
Along with the many pros, there are some cons to living in live-work-play developments and neighborhoods. For some, these are entirely negative, but we suggest you consider these cons.
Lack of privacy
When you’re in a close-knit community and within walking distance of almost everything, it means you’re likely going to run into people frequently. Whether you’re on a walk through the park, shopping for food at the grocery store or out at a restaurant, you may not get much privacy and other residents will likely know what’s going on with you all the time, whether you like it or not.
Higher cost
When you’re paying to live in a rental, you’re paying for more than the unit itself—you’re paying for its location and amenities. This means that you’re going to spend more for the convenience of living near co-working spaces and entertainment, so these areas will have a higher cost to live there.
Strict rules
Because a mixed-use development is trying to build and maintain a whole community, it usually means there are many rules to follow. This could be everything from restrictions on house and yard projects (sometimes this can affect your interior design) to who can visit.
It’s difficult to entertain large groups since these communities aren’t always in typical residential areas with lots of street parking, so if you’re one that enjoys having people over all the time, you may find it hard to live the life you want here.
Where are mixed-use communities located?
Mixed-use or live-work-play communities used to only exist in large cities, where there was a higher population and more demand for all-in-one developments. But in more recent years, these developments have started popping up outside of major metros. As remote work grows steadily, you’ll see them emerging in more areas, since those who work remotely often like having everything close to where they live and work.
Are live-work-play communities right for now?
Live-work-play developments have their advantages, so many developers are building them. They serve everyone from young professionals to young families to empty-nesters, because of the unmatched lifestyle perks they offer. Further, they show us what the future might look like for planned communities.
However, these communities aren’t right for everyone. It’s up to you to decide if you really want the convenience of having a residential space right by your office, along with all of the fun and play. Keep in mind that you’re giving up some privacy and control over your living area—which is completely comfortable for some people, but not for others.
Searching for live-work-play developments
If you’re looking for live-work-play developments, it’s easy to start your search online. Since mixed-use communities are booming, you can typically find them in almost any area, especially in cities of all sizes. Most rental websites can point you in the right direction, so take a look at the live-work-play areas near you today!
Morgen Henderson is a writer who grew up in Utah. She lived in the Dominican Republic for a year and a half, where she was involved in humanitarian service. Some of Morgen’s work has appeared in State of Digital, The Next Scoop and TechPatio. In her free time, she loves to travel, bake, master DIY projects and improve her Spanish skills.
Big rush on multifamily properties is unleashed “One of the bigger trends we’ve noticed is the big rush when it comes to lenders like KDM or individual investors, are multifamily property types,” Llorente said. “Another new underserved market that’s opened up has been the smaller balance, smaller multifamily investment properties.” Like any savvy lender, KDM … [Read more…]
Fannie Mae has upgraded its economic outlook for 2020, saying it expects the economy to get a big boost from growth in the housing market.
Fannie Mae’s Economic and Strategic Research Group said in a report this week that housing helped the economy to grow in the third quarter of 2019 for the first time in over 18 months, and says the momentum will continue into the fourth quarter and on to next year.
The
primary driver of economic growth next year will be consumer
spending, but housing will also function as a positive contributor in
the short term, Fannie said. It noted that sales of both existing and
new homes increased in the third quarter. Housing permits, pending
home sales, and housing starts also increased during the same period.
Still,
Fannie admits that the housing sector still faces challenges,
particularly around supply and affordability, which continue to be a
big obstacle for many prospective buyers.
The
economy is also at risk from the ongoing trade tensions between the
U.S. and China, and political uncertainty elsewhere in the world,
Fannie said. But its economists predict the Federal Reserve will make
at least one more interest rate cut in early 2020, before pausing for
the rest of the year.
“Even
as global uncertainties mount, we continue to expect the domestic
economy to produce solid, if not spectacular, growth,” Doug Duncan,
Fannie Mae’s senior vice president and chief economist, said in a
statement. “As we forecasted, housing supported the larger economy
in the third quarter, and we expect it to continue to play a
productive role through the first half of 2020. Positive
contributions from single-family housing construction, home
improvements, and broker fees pushed residential fixed investment
growth to a robust 5.1 percent annualized pace this past quarter, and
we forecast continued but moderating strength as construction
activity and home sales growth continue at a slower pace.”
With
mortgage rates normalizing, Duncan said Fannie experts to see
refinance activity decline in 2020. The refinance share of mortgage
originations will likely drop from a projected 37% in 2019 to 31%.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
High above the Las Vegas Strip, solar panels blanketed the roof of Mandalay Bay Convention Center — 26,000 of them, rippling across an area larger than 20 football fields.
From this vantage point, the sun-dappled Mandalay Bay and Delano hotels dominated the horizon, emerging like comically large golden scepters from the glittering black panels.Snow-tipped mountains rose to the west.
It was a cold winter morning in the Mojave Desert. But there was plenty of sunlight to supply the solar array.
“This is really an ideal location,” said Michael Gulich, vice president of sustainability at MGM Resorts International.
The same goes for the rest of Las Vegas and its sprawling suburbs.
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Sin City already has more solar panels per person than any major U.S. metropolis outside Hawaii, according to one analysis. And the city is bursting with single-family homes, warehouses and parking lots untouched by solar.
L.A. Times energy reporter Sammy Roth heads to the Las Vegas Valley, where giant solar fields are beginning to carpet the desert. But what is the environmental cost? (Video by Jessica Q. Chen, Maggie Beidelman / Los Angeles Times)
There’s enormous opportunity to lower household utility bills and cut climate pollution — without damaging wildlife habitat or disrupting treasured landscapes.
But that hasn’t stopped corporations from making plans to carpet the desert surrounding Las Vegas with dozens of giant solar fields — some of them designed to supply power to California. The Biden administration has fueled that growth, taking steps to encourage solar and wind energy development across vast stretches of public lands in Nevada and other Western states.
Those energy generators could imperil rare plants and slow-footed tortoises already threatened by rising temperatures.
They could also lessen the death and suffering from the worsening heat waves, fires, droughts and storms of the climate crisis.
Researchers have found there’s not nearly enough space on rooftops to supply all U.S. electricity — especially as more people drive electric cars. Even an analysis funded by rooftop solar advocates and installers found that the most cost-effective route to phasing out fossil fuels involves six times more power from big solar and wind farms than from smaller local solar systems.
But the exact balance has yet to be determined. And Nevada is ground zero for figuring it out.
The outcome could be determined, in part, by billionaire investor Warren Buffett.
The so-called Oracle of Omaha owns NV Energy, the monopoly utility that supplies electricity to most Nevadans. NV Energy and its investor-owned utility brethren across the country can earn huge amounts of money paving over public lands with solar and wind farms and building long-distance transmission lines to cities.
But by regulatory design, those companies don’t profit off rooftop solar. And in many cases, they’ve fought to limit rooftop solar — which can reduce the need for large-scale infrastructure and result in lower returns for investors.
Mike Troncoso remembers the exact date of Nevada’s rooftop solar reckoning.
It was Dec. 23, 2015, and he was working for SolarCity. The rooftop installer abruptly ceased operations in the Silver State after NV Energy helped persuade officials to slash a program that pays solar customers for energy they send to the power grid.
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“I was out in the field working, and we got a call: ‘Stop everything you’re doing, don’t finish the project, come to the warehouse,’” Troncoso said. “It was right before Christmas, and they said, ‘Hey, guys, unfortunately we’re getting shut down.’”
After a public outcry, Nevada lawmakers partly reversed the reductions to rooftop solar incentives. Since then, NV Energy and the rooftop solar industry have maintained an uneasy political ceasefire. Installations now exceed pre-2015 levels.
Today, Troncoso is Nevada branch manager for Sunrun, the nation’s largest rooftop solar installer. The company has enough work in the state to support a dozen crews, each named for a different casino. On a chilly winter morning before sunrise, they prepared for the day ahead — laying out steel rails, hooking up microinverters and loading panels onto powder-blue trucks.
But even if Sunrun’s business continues to grow, it won’t eliminate the need for large solar farms in the desert.
Some habitat destruction is unavoidable — at least if we want to break our fossil fuel addiction. The key questions are: How many big solar farms are needed, and where should they be built? Can they be engineered to coexist with animals and plants?
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And if not, should Americans be willing to sacrifice a few endangered species in the name of tackling climate change?
To answer those questions, Los Angeles Times journalists spent a week in southern Nevada, touring solar construction sites, hiking up sand dunes and off-roading through the Mojave. We spoke with NV Energy executives, conservation activists battling Buffett’s company and desert rats who don’t want to see their favorite off-highway vehicle trails cut off by solar farms.
Odds are, no one will get everything they want.
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The tortoise in the coal mine
Biologist Bre Moyle easily spotted the small yellow flag affixed to a scraggly creosote bush — one of many hardy plants sprouting from the caliche soil, surrounded by rows of gleaming steel trusses that would soon hoist solar panels toward the sky.
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Moyle leaned down for a closer look, gently pulling aside branches to reveal a football-sized hole in the ground. It was the entrance to a desert tortoise burrow — one of thousands catalogued by her employer, Primergy Solar, during construction of one of the nation’s largest solar farms on public lands outside Las Vegas.
“I wouldn’t stand on this side of it,” Moyle advised us. “If you walk back there, you could collapse it, potentially.”
I’d seen plenty of solar construction sites in my decade reporting on energy. But none like this.
Instead of tearing out every cactus and other plant and leveling the land flat — the “blade and grade” method — Primergy had left much of the native vegetation in place and installed trusses of different heights to match the ground’s natural contours. The company had temporarily relocated more than 1,600 plants to an on-site nursery, with plans to put them back later.
The Oakland-based developer also went to great lengths to safeguard desert tortoises — an iconic reptile protected under the federal Endangered Species Act, and the biggest environmental roadblock to building solar in the Mojave.
Desert tortoises are sensitive to global warming, residential sprawl and other human encroachment on their habitat. The U.S. Fish and Wildlife Service has estimated tortoise populations fell by more than one-third between 2004 and 2014.
Scientists consider much of the Primergy site high-quality tortoise habitat. It also straddles a connectivity corridor that could help the reptiles seek safer haven as hotter weather and more extreme droughts make their current homes increasingly unlivable.
Before Primergy started building, the company scoured the site and removed 167 tortoises, with plans to let them return and live among the solar panels once the heavy lifting is over. Two-thirds of the project site will be repopulated with tortoises.
Workers removed more tortoises during construction. As of January, the company knew of just two tortoises killed — one that may have been hit by a car, and another that may have been entombed in its burrow by roadwork, then eaten by a kit fox.
Primergy Vice President Thomas Regenhard acknowledged the company can’t build solar here without doing any harm to the ecosystem — or spurring opposition from conservation activists. But as he watched union construction workers lift panels onto trusses, he said Primergy is “making the best of the worst-case situation” for solar opponents.
“What we’re trying to do is make it the least impactful on the environment and natural resources,” he said. “What we’re also doing is we’re sharing that knowledge, so that these projects can be built in a better way moving forward.”
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The company isn’t saving tortoises out of the goodness of its profit-seeking heart.
The U.S. Bureau of Land Management conditioned its approval of the solar farm, called Gemini, on a long list of environmental protection measures — and only after some bureau staffers seemingly contemplated rejecting the project entirely.
Documents obtained under the Freedom of Information Act by the conservation group Defenders of Wildlife show the bureau’s Las Vegas field office drafted several versions of a “record of decision” that would have denied the permit application for Gemini. The drafts listed several objections, including harm to desert tortoises, loss of space for off-road vehicle drivers and disturbance of the Old Spanish National Historic Trail, which runs through the project site.
Separately, Primergy reached a legal settlement with conservationists — who challenged the project’s federal approval in court — in which the company agreed to additional steps to protect tortoises and a plant known as the three-corner milkvetch.
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The company estimates just 2.5% of the project site will be permanently disturbed — far less than the 33% allowed by Primergy’s federal permit. Regenhard is hopeful the lessons learned here will inform future solar development on public lands.
“This is something new. So we’re refining a lot of the processes,” he said. “We’re not perfect. We’re still learning.”
By the time construction wraps this fall, 1.8 million panels will cover nearly 4,000 football fields’ worth of land, just off the 15 Freeway. They’ll be able to produce 690 megawatts of power — as much as 115,000 typical home solar systems. And they’ll be paired with batteries, to store energy and help NV Energy customers keep running their air conditioners after sundown.
Unlike many solar fields, Gemini is close to the population it will serve — just a few dozen miles from the Strip. And the affected landscape is far from visually stunning, with none of the red-rock majesty found at nearby Valley of Fire State Park.
But desert tortoises don’t care if a place looks cool to humans. They care if it’s good tortoise habitat.
Moyle, Primergy’s environmental services manager, pointed to a small black structure at the bottom of a fence along the site’s edge — a shade shelter for tortoises. Workers installed them every 800 feet, so that if any relocated reptiles try to return to the solar farm too early, they don’t die pacing along the fence in the heat.
“They have a really, really good sense of direction,” Moyle said. “They know where their homes are. They want to come back.”
Primergy will study what happens when tortoises do come back. Will they benefit from the shade of the solar panels? Or will they struggle to survive on the industrialized landscape?
And looming over those uncertainties, a more existential query: With global warming beginning to devastate human and animal life around the world, should we really be slowing or stopping solar development to save a single type of reptile?
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Moyle was ready with an answer: Tortoises are a keystone species. If they’re doing well, it’s a good sign of a healthy ecosystem in which other desert creatures — such as burrowing owls, kit foxes and American badgers — are positioned to thrive, too.
And as the COVID-19 pandemic has demonstrated, human survival is inextricably linked with a healthy natural world.
“We take one thing out, we don’t know what sort of disastrous effect it’s going to have on everything else,” Moyle said.
We do, however, know the consequences of relying on fossil fuels: entire towns burning to the ground, Lake Mead three-quarters empty, elderly Americans baking to death in their overheated homes. With worse to come.
The shifting sands of time
A few miles south, another solar project was rising in the desert. This one looked different.
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A fleet of bulldozers, scrapers, excavators and graders was nearly done flattening the land — a beige moonscape devoid of cacti and creosote. The solar panel support trusses were all the same height, forming an eerily rigid silver sea.
When I asked Carl Glass — construction manager for DEPCOM Power, the contractor building this project for Buffett’s NV Energy — why workers couldn’t leave vegetation in place like at Gemini, he offered a simple answer: drainage. Allowing the land to retain its natural contours, he said, would make it difficult to move stormwater off the site during summer monsoons.
Safety was another consideration, said Dani Strain, NV Energy’s senior manager for the project. Blading and grading the land meant workers wouldn’t have to carry solar panels and equipment across ground studded with tripping hazards.
“It’s nicer for the environment not to do it,” Strain said. “But it creates other problems. You can’t have everything.”
This kind of solar project has typified development in the Mojave Desert.
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And it helps explain why the Center for Biological Diversity’s Patrick Donnelly has fought so hard to limit that development.
The morning after touring the solar construction sites, we joined Donnelly for a hike up Big Dune, a giant pile of sand covering five square miles and towering 500 feet above the desert floor, 90 miles northwest of Las Vegas. The sun was just beginning its ascent over the Mojave, bathing the sand in a smooth umber glow beneath pockets of wispy cloud.
On weekends, Donnelly said, the dune can be overrun by thousands of off-road vehicles. But on this day, it was quiet.
Energy companies have proposed more than a dozen solar farms on public lands surrounding Big Dune — some with overlapping footprints. Donnelly doesn’t oppose all of them. But he thinks federal agencies should limit solar to the least ecologically sensitive parts of Nevada, instead of letting companies pitch projects almost anywhere they choose.
“Developers are looking at this as low-hanging fruit,” he said. “The idea is, this is where California can build all of its solar.”
We trekked slowly up the dune, our bodies casting long shadows in the early morning light. When we took a breather and looked back down, a trail of footprints marked our path. Donnelly assured us a windy day would wipe them away.
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“This is why I live here, man,” he said. “It’s the most beautiful place on Earth, in my mind.”
Donnelly broke his back in a rock-climbing accident, so he used a walking stick to scale the dune. He lives not far from here, at the edge of Death Valley National Park, and works as the nonprofit Center for Biological Diversity’s Great Basin director.
As we resumed our journey, the wind blowing hard, I asked Donnelly to rank the top human threats to the Mojave. He was quick to answer: The climate crisis was No. 1, followed by housing sprawl, solar development and off-road vehicles.
“There’s no good solar project in the desert. But there’s less bad,” he said. “And we’re at a point now where we have to settle for less bad, because the alternatives are more bad: more coal, more gas, climate apocalypse.”
That hasn’t stopped Donnelly and his colleagues from fighting renewable energy projects they fear would wipe out entire species — even little-known plants and animals with tiny ranges, such as Tiehm’s buckwheat and the Dixie Valley toad.
“I’m not a religious guy,” Donnelly said. “But all God’s creatures great and small.”
After a steep stretch of sand, we stopped along a ridge with sweeping views. To our west were the Funeral Mountains, across the California state line in Death Valley National Park — and far beyond them Mt. Whitney, its snow-covered facade just barely visible. To our east was Highway 95, cutting across the Amargosa Valley en route from Las Vegas to Reno.
It’s along this highway that so many developers want to build.
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“We would be in a sea of solar right now,” Donnelly said.
Having heard plenty of rural residents say they don’t want to look at such a sea, I asked Donnelly if this was a bad spot for solar because it would ruin the glorious views. He told me he never makes that argument, “because honestly, views aren’t really the primary concern at this moment. The primary concern is stopping the biodiversity crisis and the climate crisis.”
“There are certain places where we shouldn’t put solar because it’s a wild and undisturbed landscape,” he said.
As far as he’s concerned, though, the Amargosa Valley isn’t one of those landscapes, what with Highway 95 running through it. The same goes for Dry Lake Valley, where NV Energy’s solar construction site is already surrounded by energy infrastructure.
What Donnelly would like to see is better planning.
He pointed to California, where state and federal officials spent eight years crafting a desert conservation plan that allows solar and wind farms across a few hundred thousand acres while setting aside millions more for protection. He thinks a similar process is crucial in Nevada, where four-fifths of the land area is owned by the federal government — more than any other state.
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If Donnelly had his way, regulators would put the kibosh on solar farms immediately adjacent to Big Dune. He’s worried they could alter the movement of sand across the desert floor, affecting several rare beetles that call the dune home.
But if the feds want to allow solar projects along the highway to the south, near the Area 51 Alien Center?
“Might not be the end the world,” Donnelly said.
He shot me a grin.
“You know, one thing I like to do …”
Without warning, he took off racing down the dune, carried by momentum and love for the desert. He laughed as he reached a natural stopping point, calling for us to join him. His voice sounded free and full of possibility.
Some solar panels on the horizon wouldn’t have changed that.
Shout it from the rooftops
Laura Cunningham and Kevin Emmerich were a match made in Mojave Desert heaven.
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Cunningham was a wildlife biologist, Emmerich a park ranger when they met nearly 30 years ago at Death Valley. She studied tortoises for government agencies and later a private contractor. He worked with bighorn sheep and gave interpretive talks. They got married, bought property along the Amargosa River and started their own conservation group, Basin and Range Watch.
And they’ve been fighting solar development ever since.
That’s how we ended up in the back of their SUV, pulling open a rickety cattle gate off Highway 95 and driving past wild burros on a dirt road through Nevada’s Bullfrog Hills, 100 miles northwest of Las Vegas.
They had told us Sarcobatus Flat was stunning, but I was still surprised by how stunning. I got my first look as we crested a ridge. The gently sloping valley spilled down toward Death Valley National Park, whose snowy mountain peaks towered over a landscape dotted with thousands of Joshua trees.
“Everything we’re looking at is proposed for solar development,” Cunningham said.
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Most environmentalists agree we need at least some large solar farms. Cunningham and Emmerich are different. They’re at the vanguard of a harder-core desert protection movement that sees all large-scale solar farms on public lands as bad news.
Why had so many companies converged on Sarcobatus Flat?
The main answer is transmission. NV Energy is seeking federal approval to build the 358-mile Greenlink West electric line, which would carry thousands of megawatts of renewable power between Reno and Las Vegas along the Highway 95 corridor.
The dirt road curved around a small hill, and suddenly we found ourselves on the valley floor, surrounded by Joshua trees. Some looked healthy; others had bark that had been chewed by rodents seeking water, a sign of drought stress. Scientists estimate the Joshua tree’s western subspecies could lose 90% of its range as the world gets hotter and droughts get more intense.
But asked whether climate change or solar posed a bigger threat to Sarcobatus Flat, Cunningham didn’t hesitate.
“Oh, solar development hands down,” she said.
Nearly 20 years ago, she said, she helped relocate desert tortoises to make way for a test track in California. One of them tried to return home, walking 20 miles before hitting a fence. It paced back and forth and eventually died of heat exhaustion.
Solar farms, she said, pose a similar threat to tortoises. And at Sarcobatus Flat, they would cover a high-elevation area that could otherwise serve as a climate refuge for Joshua trees, giving them a relatively cool place to reproduce as the planet heats up.
“It makes no sense to me that we’re going to bulldoze them down and throw them into trash piles. It’s just crazy,” she said.
In Cunningham and Emmerich’s view, every sun-baked parking lot in L.A. and Vegas and Phoenix should have a solar canopy, every warehouse and single-family home a solar roof. It’s a common argument among desert defenders: Why sacrifice sensitive ecosystems when there’s an easy alternative for fighting climate change? Especially when rooftop solar can reduce strain on an overtaxed electric grid and — when paired with batteries — help people keep their lights on during blackouts?
The answer isn’t especially satisfying to conservationists.
For all the virtues of rooftop solar, it’s an expensive way to generate clean power — and keeping energy costs low is crucial to ensure that lower-income families can afford electric cars, another key climate solution. A recent report from investment bank Lazard pegged the cost of rooftop solar at 11.7 cents per kilowatt-hour on the low end, compared with 2.4 cents for utility solar.
Even when factoring in pricey long-distance electric lines, utility-scale solar is typically cheaper, several experts told me.
“It’s three to six times more expensive to put solar on your roof than to put it in a large-scale project,” said Jesse Jenkins, an energy systems researcher at Princeton University. “There may be some added value to having solar in the Los Angeles Basin instead of the middle of the Mojave Desert. But is it 300% to 600% more value? Probably not. It’s probably not even close.”
There’s a practical challenge, too.
The National Renewable Energy Laboratory has estimated U.S. rooftops could generate 1,432 terawatt-hours of electricity per year — just 13% of the power America will need to replace most of its coal, oil and gas, according to research led by Jenkins.
Add in parking lots and other areas within cities, and urban solar systems might conceivably supply one-quarter or even one-third of U.S. power, several experts told The Times — in an unlikely scenario where they’re installed in every suitable spot.
Energy researcher Chris Clack’s consulting firm has found that dramatic growth in rooftop and other small-scale solar installations could reduce the costs of slashing climate pollution by half a trillion dollars. But even Clack said rooftops alone won’t cut it.
“Realistically, 80% is going to end up being utility grid no matter what,” he said.
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All those industrial renewable energy projects will have to go somewhere.
Sarcobatus Flat may not be the answer. Federal officials classified all three solar proposals there as “low priority,” citing their proximity to Death Valley and potential harm to tortoise habitat. One developer withdrew its application last year.
Before leaving the area, Cunningham pointed to a wooden marker, one of at least half a dozen stretching out in a line. I walked over to take a closer look and discovered it was a mining claim for lithium — a main ingredient in electric-car batteries.
If solar development didn’t upend this valley, lithium extraction might.
On the beaten track
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The four-wheeler jerked violently as Erica Muxlow pressed her foot to the gas, sending us flying down a rough dirt road with no end in sight but the distant mountains. Five-point safety straps were the only things stopping us from flying out of our seats, the vehicle leaping through the air as we reached speeds of 40 mph, then 50 mph, the wind whipping our faces.
It was like riding Disneyland’s Matterhorn Bobsleds — just without the Yeti.
Ahead of us, Muxlow’s neighbor Jimmy Lewis led the way on an electric blue motorcycle, kicking up a stream of sand. He wanted us to see thousands of acres of public lands outside his adopted hometown of Pahrump, in Nevada’s Nye County, that could soon be blocked by solar projects — cutting off access to off-highway vehicle enthusiasts such as himself.
“You could build an apartment complex or a shopping mall here, and it would be the same thing to me,” he said.
To progressive-minded Angelenos or San Franciscans, preserving large chunks of public land for gas-guzzling, environmentally destructive dirt bikes might sound like a terrible reason not to build solar farms that would lessen the climate crisis.
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But here’s the reality: Rural Westerners such as Lewis will play a key role in determining how much clean energy gets built.
Not long before our Nevada trip, Nye County placed a six-month pause on new renewable energy projects, citing local concerns about loss of off-road vehicle trails. Similar fears have stymied development across the U.S., with rural residents attacking solar and wind farms as industrial intrusions on their way of life — and local governments throwing up roadblocks.
For Lewis, the conflict is deeply personal.
He moved here from Southern California more than a decade ago, trading life by the beach for a five-acre plot where he runs an off-roading school and test-drives motorcycles for manufacturers. His warehouse was packed with dozens of dirt bikes.
“This is my life. Motorcycles, motorcycles, motorcycles,” he said, laughing.
Lewis has worked to stir up opposition to three local solar farm proposals. So far, his efforts have been in vain.
One project is already under construction. Peering through a fence, we saw row after row of trusses, waiting for their photovoltaic panels. It’s called Yellow Pine, and it’s being built by Florida-based NextEra Energy to supply power to California.
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Lewis learned about Yellow Pine when he was riding one of his favorite trails and was surprised to find it cut off. He compared the experience to riding the best roller-coaster at a theme park, only to have it grind to a halt three-quarters of the way through.
“I don’t want my playground taken away from me,” he said.
“Me neither!” a voice called out from behind us.
We turned and were greeted by Shannon Salter, an activist who had previously spent nine months camping near the Yellow Pine site to protest the habitat destruction. She and Lewis had never met, but they quickly realized they had common cause.
“It’s the opposite of green!” Salter said.
“On my roof, not my backyard,” Lewis agreed.
Never mind that conservationists have long decried the ecological damage from desert off-roading. Salter and Lewis both cared about these lands. Neither wanted to see the solar industry lay claim to them. They talked about staying in touch.
It’s easy to imagine similar alliances forming across the West, the clean energy transition bringing together environmentalists and rural residents in a battle to defend their lifestyles, their landscapes and animals that can’t fight for themselves.
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It’s also easy to imagine major cities that badly need lots of solar and wind power — Los Angeles, Las Vegas, Phoenix — brushing off those complaints as insignificant compared with the climate emergency, or as fueled by right-wing misinformation.
But many of concerns raised by critics are legitimate. And their voices are only getting louder.
As night fell over the Mojave, Lewis shared his idea that any city buying electricity from a desert solar farm should be required to install a certain amount of rooftop solar back home first — on government buildings, at least. It only seemed fair.
“Some people see the desert as just a wasteland,” Lewis said. “I think it’s beautiful.”
The view from Black Mountain
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So how do we build enough renewable energy to replace fossil fuels without destroying too many ecosystems, or stoking too much political opposition from rural towns, or moving too slowly to save the planet?
Few people could do more to ease those tensions than Buffett.
Our conversation kept returning to the legendary investor as we hiked Black Mountain, just outside Vegas, on our last morning in the Silver State. We were joined by Jaina Moan, director of external affairs for the Nature Conservancy’s Nevada chapter. She had promised a view of massive solar fields from the peak — but only after a 3.5-mile trek with 2,000 feet of elevation gain.
“It’ll be a little StairMaster at the end,” she warned us.
The homes and hotels and casinos of the Las Vegas Valley retreated behind us as we climbed, looking ever smaller and more insignificant against the vast open desert. It was an illusion that will prove increasingly difficult to maintain as Sin City and its suburbs continue their march into the Mojave. Nevada politicians from both parties are pushing for legislation that would let federal officials auction off additional public lands for residential and commercial development.
Vegas and other Western cities could limit the need for more suburbs — and sprawling solar farms — by growing smarter, Moan said. Urban areas could embrace density, to help people drive fewer miles and reduce the demand for new power supplies to fuel electric vehicles. They could invest in electric buses and trains — and use less water, which would save a lot of energy.
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“As our spaces become more crowded, we’re going to have to come up with more creative ideas,” Moan said.
That’s where Buffett could make things easier.
The billionaire’s Berkshire Hathaway company owns electric utilities that serve millions of people, from California to Nevada to Illinois. Those utilities, Moan said, could buck the industry trend of urging policymakers to reduce financial incentives for rooftop solar and instead encourage the technology — along with other small-scale clean energy solutions, such as local microgrids.
That would limit the need for big solar farms — at least somewhat.
Berkshire and other energy giants could also build solar on lands already altered by humans, such as abandoned mines, toxic Superfund sites, reservoirs, landfills, agricultural areas, highway corridors and canals that carry water to farms and cities.
The costs are typically higher than building on undisturbed public lands. And in many cases there are technical challenges yet to be resolved. But those kinds of “creative solutions” could at least lessen the loss of biodiversity, Moan said.
“There’s money to be made there, and there’s good to be done,” she said.
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It’s hard to know what Buffett thinks. A Berkshire spokesperson declined my request to interview him.
Tony Sanchez, NV Energy’s executive vice president for business development and external relations, was more forthcoming.
“The problem for us with rooftop solar,” he said, is that it’s “not controlled at all by us.” As a result, NV Energy can’t decide when and how rooftop solar power is used — and can’t rely on that power to help balance supply and demand on the grid.
Over time, Sanchez predicted, a lot more rooftop solar will get built. But he couldn’t say how much.
Rooftop solar faces a similarly uncertain future in California, where state officials voted last year to slash incentive payments, calling them an unfair subsidy. Industry leaders have warned of a dramatic decline in installations.
As we neared the top of Black Mountain, the solar farms on the other side came into view. They stretched across the Eldorado Valley far below — black rectangles that could help save life on Earth while also destroying bits and pieces of it.
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Moan believes the key to balancing clean energy and conservation is “go slow to go fast.” Government agencies, she said, should work with conservation activists, small-town residents and Native American tribes to study and map out the best places for clean energy, then reward companies that agree to build in those areas with faster approvals. Solar and wind development would slow down in the short term but speed up in the long run, with quicker environmental reviews and less risk of lawsuits.
It’s a tantalizing concept — but I confessed to Moan that I worried it would backfire.
What if the sparring factions couldn’t agree on the best spots to build solar and wind farms, and instead wasted years arguing? Or what if they did manage to hammer out some compromises, only for a handful of unhappy people or groups to take them to court, gumming up the works? Couldn’t “go slow to go fast” end up becoming “go slow to go slow”?
In other words, should we really bet our collective future on human beings working together, rather than fighting?
Moan was sympathetic to my fears. She also didn’t see another way forward.
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“We really need to think holistically about saving everything,” she said.
The sad truth is, not everything can be saved. Not if we want to keep the world livable for people and animals alike.
Some beloved landscapes will be left unrecognizable. Some families will be stuck paying high energy bills to monopoly utilities, even as some utility investors make less money. Some tortoises will probably die, pacing along fences in the heat.
The alternative is worse.
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While there are thousands of mortgage companies nationwide, only a select few land in the top 10.
Today, we’ll examine U.S. Bank Mortgage, which ranked 9th in 2019 for total home loan origination volume.
Being a very large depository institution, they’ve got advantages that other, smaller competitors don’t have.
Namely, lots of liquidity and the ability to keep loans on their books, instead of having to sell them off and rely on short-term financing.
This means they can offer mortgage products that the other guys can’t, and potentially lower mortgage rates too.
Let’s learn more about U.S. Bank’s mortgage division.
U.S. Bank Mortgage Fast Facts
9th largest mortgage lender in 2019 based in Minneapolis, Minnesota
Operates both a retail direct-to-consumer and correspondent lending business
Funded $32 billion in home loans last year
A third of total loan volume took place in California
Nearly half of their volume consisted of jumbo loans
Originate a large share of adjustable-rate mortgages
Available in all 50 states and D.C., branches located in 40 states
How to Apply for a Mortgage with U.S. Bank
You can apply online or by phone via digital mortgage application powered by Blend
A faster pre-qualification or loan estimate is also available if simply shopping around
Can request a call from a loan officer or visit a retail branch if located near you
Once approved you can track loan progress via the U.S. Bank Loan Portal
Those who want to apply for a mortgage with U.S. Bank can do so via their website, without human interaction.
So if you’re the impatient type, or simply know what you’re doing, you can get started straight away.
Their digital mortgage application is powered by Blend, a fintech vendor used by many of the top mortgage companies in the country.
Known as the U.S. Bank Loan Portal, it allows you to link financial accounts and speed through the application process without having to gather paperwork and upload documents.
You can connect payroll, tax, and bank account information securely to ensure your application is accurate and complete.
And once approved, you can track loan progress, get status updates, and send messages to your loan team if you have questions.
Alternatively, you can call them up or request a phone call, or visit a brick-and-mortar branch if you want a more hands-on, personal touch.
If you’ve been referred to someone specific, or want to work with someone in your neck of the woods, they have a loan officer directory as well.
You can filter by both address or by name to find someone you know or an individual who works nearby. Then you can apply for a mortgage directly from their personal website.
It’s also possible to generate a quick pre-qualification via their website if you’re not quite ready to apply, but want to see where you stand.
Or if you’re just shopping around, they offer the ability to generate a loan estimate using limited borrower information (look out for a link to this option on the bottom of the application page).
All in all, U.S. Bank makes it easy to get pricing or apply for a home loan.
What Does U.S. Bank Mortgage Offer?
Home purchase loans, refinance loans, home equity loans/lines
Conventional financing (Fannie/Freddie) and government (FHA, USDA, VA)
Fixed-rate mortgages and ARMs
Jumbo home loans up to $3 million loan amounts
Construction home loans and lot loans
Portfolio loans (non-QM)
Physician mortgages
Available on primary homes, second homes, and 1-to-4-unit investment properties
One thing that separates U.S. Bank Mortgage from other mortgage lenders is its expansive menu of home loan offerings.
You can get a home purchase loan, a refinance loan, both rate and term and cash out, a streamline refinance such as a VA IRRRL, or a home equity loan/line.
As noted, they are a large depository bank, which allows them to offer things their competitors can’t.
Namely, portfolio loans that they keep on their books, with their own set of rules and guidelines that may go above and beyond what others have available.
Sure, you can get a conventional 30-year fixed mortgage from U.S. Bank, like anywhere else. But you can also get a 10/1 ARM, a jumbo loan, a construction loan, or a physician’s mortgage.
Additionally, they’ve got a full menu of adjustable-rate mortgage options, such as a 3/1, 5/1, or 10/1 ARM. It’s unclear if they offer interest-only mortgages at this time.
Those looking to purchase a home can sign up in the U.S. Bank Loan Portal and apply for a mortgage eligibility letter, which is their version of a mortgage pre-approval.
Existing homeowners can take advantage of both home equity lines of credit (HELOCs) and home equity loans if you’re happy with your first mortgage but want to tap equity.
You may also be eligible for a discount on closing costs if you’re an existing U.S. Bank customer or if your company participates in the U.S. Bank Corporate Employee Mortgage Program.
Ultimately, they’ve got you covered no matter what type of financing you need.
U.S. Bank Smart Refinance
U.S. Bank Mortgage also offers a so-called “Smart Refinance,” which is their take on the no closing cost refinance.
It allows you to refinance an existing home loan without incurring the typical closing costs, at least out of pocket.
Interestingly, you can only get a loan term as long as 20 years on the Smart Refinance, which is probably intended to keep your loan payoff on track.
But you can take cash out, so even if your loan balance grows as a result, your payoff should come faster, or at least not be extended.
This can save you interest, though monthly payments will be higher to compensate for the shorter loan term.
And there’s a good chance the mortgage rate will be higher to offset the lack of closing costs, unless those are rolled into the loan.
U.S. Bank Mortgage Rates
One plus is that U.S. Bank openly advertises its mortgage rates right on their website. And they are updated daily as the market changes.
You can see both purchase and refinance rates, along with rates by loan type, such as 30-year fixed or 5/1 ARM, or an FHA loan rate.
I checked them out and their fixed mortgage rates seemed pretty competitive relative to what other lenders are offering.
Their jumbo loans were priced only a little bit higher than their conforming loans, and their government home loans were similarly priced.
Their adjustable-rate mortgage rates were actually pricing higher than their fixed offerings, which is a bit of an oddity, though common at the moment.
Typically, these would be offered at a discount, so if applying with U.S. Bank, a fixed-rate mortgage may be the way to go.
Be sure to pay attention to the loan assumptions – when I checked, many of the loan rates required discount points of 0.862% for the advertised rate.
Additionally, they assumed you were buying or refinancing a single-family, primary residence with 20% down and a FICO score of 740+.
U.S. Bank Mortgage Reviews
U.S. Bank Mortgage has a 4.98 rating out of 5 on Zillow, which is as close to perfection as I’ve seen, especially since it’s based on over 4,000 customer reviews.
That’s a pretty large sample size for such as high rating – many customers indicated that the interest rate and fees were lowered than expected.
The nice thing with the Zillow reviews is you can also see how an individual loan officer performs since most of the reviews show who the customer worked with.
You may want to search for specific loan officers since U.S. Bank is such a large company to ensure you’re matched with one of their best employees.
Their reviews on Trustpilot aren’t nearly as good, though some are for products other than mortgage. Be sure to filter reviews for home loans to get a better idea of what to expect.
They are Better Business Bureau accredited, and have been since 1970. While they have an A+ BBB rating, they’ve only got a 1-star and change rating based on customer reviews.
Again, with a mega bank you’re going to have mixed experiences, which is why comparing individual loan officer reviews is key.
U.S. Bank Mortgage Pros and Cons
The Good Stuff
Available in all 50 states and D.C.
Completely digital loan application with ability to link financial accounts
They advertise their mortgage rates (and provide daily pricing updates)
Discounts for existing U.S. Bank customers
Lots of home loan programs to choose from
Free mortgage calculators to determine affordability
They may service your loan as opposed to selling it off to a different company
The Possible Bad Stuff
No mention of lender fees (may have to pay an origination fee)
May need a high FICO score to get approved
Customer experience may vary since it’s such a large bank
Possibly bureaucratic since you’re dealing with a huge company
Homebuyers didn’t get any relief in mortgage rates this week, leaving them with little choice to either move forward with their purchase plans at elevated rates or stick to the sidelines.
The rate on the 30-year fixed mortgage edged higher to 6.71% from 6.67% the week prior, according to Freddie Mac. Rates have swayed between 6% and 7% since the start of the year, showing little signs of softening this summer.
The high rates have kept many homeowners from listing their homes, driving up prices on what’s left in the market and creating unfavorable conditions for the buyers still on the hunt.
“That move-up buyer is pretty much gone,” Luis Padilla, CEO of Oceanside Realty and Padilla Team in Miami, told Yahoo Finance. “It’s what’s putting the brakes on the market and inventory.”
Rate-trapped homeowners stall inventory growth
The latest data showing homes that went into contract in May underscores the inventory challenges.
Pending home sales, a leading indicator of the housing market’s health, dropped 2.7% in May from the previous month, much more than what was expected. That’s largely because buyers couldn’t find enough homes to make a deal, NAR chief economist Lawrence Yun said, noting that each listing received three offers on average.
The shortages have persisted. There were 459,000 single-family homes on the market for the week ending June 26, according to Altos Research. While up 1.9% from a week prior, that’s 10% fewer homes compared with a year ago.
“Normally by mid June you’d have 10-20% more homes on the market than over the holidays,” Mike Simonsen, CEO of Altos Research, wrote in his blog. “But this year we have fewer.”
The biggest reason for the dearth of properties is reluctance from homeowners, most of whom have a much lower mortgage rate than the prevailing rate.
“That move buyer doesn’t want to give up that 3% mortgage rate,” Padilla said. “They would rather commute 30 minutes to work than pay hundreds more on a monthly mortgage payment.”
Buyers move on to new homes
So what’s a homebuyer to do? Many of them who are still in the market are looking at new builds.
That was one factor that pushed the volume of mortgage applications for purchases up 3% for the week ending June 23, according to the Mortgage Bankers Association (MBA). That’s the third week of increases and the highest level of activity since early May.
“New homes sales have been driving purchase activity in recent months as buyers look for options beyond the existing-home market,” MBA Deputy Chief Economist Joel Kan said in a statement. “Existing-home sales continued to be held back by a lack of for-sale inventory as many potential sellers are holding on to their lower-rate mortgages.”
Though new inventory offers a glimmer of hope, very few homes that are available are affordable to entry-level buyers.
Padilla noted that while the share of active listings had increased 19.5% in May in the Miami-Dade area, the average cost of a single-family home was $620,000, up 7.8% from a year prior. Prices for condos increased 6.5% to $415,000.
That tracks with national data this week showing prices have increased for three months in a row, making conditions worse for buyers out there.
“This is good news for homeowners gaining more equity,” Mark Fleming, First American’s chief economist, previously told Yahoo Finance. “But it will pressure affordability for the potential first-time homebuyer.”
Gabriella is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.
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Profitability Analysis, Closed-End 2nd Products; Ginnie Ticket Primer for Government Program Lenders
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Profitability Analysis, Closed-End 2nd Products; Ginnie Ticket Primer for Government Program Lenders
By: Rob Chrisman
1 Hour, 19 Min ago
Hey, I’ve got news for you: 2023 is half over. Sometimes reality bites, and vendors and lenders can’t sit there, wringing their hands, waiting for things to get better on their own. Are lenders suddenly going to make huge margins on lots of volume in the second half? Are LOs who were doing 2-3 loans a month in the first half suddenly going to do 4-6? Are vendor reps suddenly going to double their clients? Are rates going to plummet? Is the number of houses for sale going to skyrocket? Banks, credit unions, and depositories are certainly doing something. An analysis of call reports shows that mortgage banking income at banks and thrifts increased by 36 percent on a sequential basis. JPMorgan Chase and Wells Fargo individually more than doubled their MB income from the fourth quarter to the first. Others, like Truist and PNC followed, as Inside Mortgage Finance points out. That said, to the surprise of no one, mortgage-banking income at banks and thrifts was down 38 percent from the first quarter of 2022. (Today’s podcast can be found here and this week’s is sponsored by Gallus, the premier business intelligence tool for the mortgage industry. With hassle-free insights and user-friendly functionality, Gallus empowers you to make faster, data-driven decisions for enhanced profitability. Hear an interview with Gallus Insights’ Augie Del Rio on how mortgage companies are best leveraging data in a high-rate environment.)
Lender and Broker Software, Services, and Products
Artificial intelligence (AI) is here, and as everyone works to determine how AI can enhance business processes, many are also scratching their heads over the new challenges. If you’re attending the American Legal and Financial Network (ALFN) Answers 2023, don’t miss the panel on Tuesday, July 18, “AI: Like It or Not, It’s Here. Are You Ready? Ethical and Business Challenges to the Utilization of Technology in a Default World.” This lunch session will cover current and future AI uses for industry law firms, service providers and others. Black Knight SVP of Servicing Technologies & Product Innovation Dana Federspiel will participate in this informative discussion to share her expertise in default processing within the mortgage industry. Take advantage of this opportunity to gain a better understanding of the intersection between AI and its potential uses in our industry. Contact Black Knight to learn more about solutions for today’s market challenges.
“I love chasing borrowers down for appraisal fees” said no one ever. With Fee Chaser by LenderLogix, you definitely won’t be saying that. Give your borrowers an easy, secure way to pay their appraisal, lock-in and condo doc fees with Fee Chaser’s seamless integration into Encompass® by ICE Mortgage Technology™. It can even handle first mortgage payments. Head over to LenderLogix and get a demo texted to your phone.
“Did you know that by yearend 2022, a remarkable 82 percent of homeowners enjoyed an interest rate below 5 percent, and an impressive 92 percent of homeowners had an interest rate below 6 percent? Consequently, there has been a decline in the demand for traditional cash-out refinancing. This is exactly where Vista Point’s Closed-End Second loan proves valuable! Rather than discarding the original low interest rate, a second loan creates a blended rate giving your borrower a lower payment solution while tapping their built-up equity. Discover the potential savings for your specific situation by visiting here and see how much your borrower can reduce their monthly mortgage payment by using our Closed-End Second Cash-Out Equity Solution. Give your borrower access to the cash they need without sacrificing their advantageous interest rate, with second line amounts up to $550K and combined lien amounts up to $2.5M. For more information, please contact us.”
Does your mortgage accounting team dream about having the ability to analyze the profitability of each loan the company originates? For Smartfi Home Loans, this dream came true with its new, industry-focused finance system, Loan Vision. Smartfi found they were able to gain efficiency and improve their processes with the help of Loan Vision’s immense drill down capabilities. “With Loan Vision, there is this wealth of information at your fingertips,” says Bill Berg, Finance, Technology, and Servicing Leader at Smartfi®. “To understand the ins and outs at the loan level, there’s a tremendous amount of analytical power there. I’m not sure how you would be able to successfully understand your business without it.” Interested in learning more about how your General Ledger should be helping you maximize efficiencies in your accounting department and gain access to financials faster? Contact Carl Wooloff to schedule a call today.
Government Loans and Servicing
Traditionally FHA and VA loans have a higher profit margin than other loan types. But originating them is not a walk in the park. James Hedvall, Chief Capital Markets Officer with Doorway Home Loans, put down some notes he titled a, “GNMA Primer.”
“I’ve been in this business for many years and have seen things done well and things done poorly. And I receive a fair number of questions regarding secondary execution. One typical question is whether a lender should pursue obtaining their ‘Ginnie Ticket,’ or to become a GNMA Approved Issuer.
“Having the ability to take FHA, VA, and USDA loans, turn them into securities, is a powerful tool for well-equipped secondary groups. Why? Well, first it allows you to underwrite straight to AUS findings, manual underwrites and originating loans that are outside correspondent overlays, provide competitive pricing and service to underserved communities, as well as allowing for efficient execution into the capital markets. However, there are a few considerations that need to be understood, because it’s not for every originator.”
James writes, “There are approximately 350 issuers spread across large and small depositories, credit unions, servicers, and independent mortgage bankers. The approval process, sometimes referred to sarcastically within capital markets circles as the GNMA Denial Department, can be long and challenging. There are plenty of cases out there where relatively large originators, with good balance sheets, are rejected by Ginnie Mae. I have witnessed first-hand the approval process a few times, and my best piece of advice is that ‘all battles are won, before they’re ever fought.’ Successful applicants have a few things in common: good financial standing, very competent Secondary and Accounting departments, plenty of operational redundancies, strong quality control oversight, last but not least, updated and complete Policies and Procedures which cover the entire origination cycle.
“For those interested in servicing, when you’re approved to issue GNMA bonds, you will be servicing your loans (PIIT agreements aside). This is why you deliver to the GSEs and issue GNMA bonds in the first place; originators should have a strategy with servicing and its intricate oversite, even if they are utilizing a sub-servicer. Historically, servicing GNMA loans (primarily FHA & VA) is costlier than its conforming cousin. A good sub-servicer can minimize this financial burden.
“In terms of keeping, maintaining, and tracking documents, if you’re FNMA/FHLMC approved, you certainly know what a document custodian does. More times than not, when I hear complaints about a custodian, it has to do with a problem on GNMA loans, as they will be the ones who review your loan collateral and initially certifies your pools for trade (most pools are traded after getting initial certification, although not a requisite).
“Ideally, a good custodian will perform a single document review that accommodates all requirements at once. This eliminates “exception surprises” at the time of sale due to different requirements delaying settlement. Choosing your custodian wisely can save headaches down the road, headaches which normally cause delays in settlements, resulting in an erosion of gain-on-sale.
“In the capital markets, broker/dealers come into play. Outside Secondary Marketing, Broker/Dealers are normally given very little thought by originators. If you’re hedging a pipeline for mandatory execution, broker/dealers are the ones your Secondary group trades forward TBA contracts with, that off-set interest rate exposure from the time the loan is locked, until the time the loan funds and gets committed. But for Issuers, they play an important role in the execution of GNMA pools as they are the ones who are buying them from the Issuer. A good relationship with your broker/dealer goes further than just execution. They can also help with pool formation and optimization. Without going down the rabbit-hole on coupons vs note rates vs high balance di-minimus requirements, B/D’s can help you build out pools that can increase the spread that is willing to be paid above (and sometimes below) what TBA’s are trading at; what you hear as the ‘spec pool pay up.’
“Lenders must pay attention to operations within the Originator. A strong Secondary Marketing team is imperative. Having a good Secondary Manager who understands the entire process: what can be pooled, when can it be pooled, when to create a pool in GinnieNet, and purview into the whole mortgage pipeline not just funded loans, helps in the dozens of moving parts in the process. A strong CFO/Accounting Dept who understands the financial risk of issuing GNMA securities pays dividends.
“Some may not know, but part of the financial risk in issuing has to do with covering P&I shortages every month. GNMA doesn’t buy loans directly like FNMA & FHLMC do. They act primarily as an insurance company, guaranteeing that bond holders receive timely payments of cash flow (for this service GNMA charges 6 bps on every loan, referred to as their Guarantee Fee, or G-Fee). When borrowers are late with payments, or miss payments, it’s the responsibility of the issuer to make up for the missed P&I payment to the holder of that security. This can be a huge outflow of cash per month considering your responsibility is to EVERY bond that has ever been issued by the originator. Anyone issuing GNMA securities back in early 2020 when COVID hit, and the term “forbearance” went mainstream, remembers that moment. Possessing the capital to weather P&I shortages is an absolute must.
“Most often overlooked is your Trailing/Final Docs department. Your last responsibility as an issuer is to make sure that trailing docs (final title/deed or mortgage) get to your custodian for final certification. This needs to be done within 365 days of issuance. This may not be a huge problem for some, but states like Hawaii come to mind, where turn times of county recorders are historically slow and getting a certified copies of anything may take months.”
James wrapped up with, “Everything above is scrutinized by GNMA during the approval process. As I mentioned before, possessing the right individuals, having strong relationships with vendors, and possessing very strong operational controls should be viewed as a requirement before submitting your application.” Thank you, James!
Capital Markets
Many mortgage rates are firmly in the 7 percent range now, and certainly 6 and 6.5 percent pass through mortgage securities are the norm for hedging. We might just be here for the remainder of 2023. The solid economic news certainly doesn’t point to lower rates any time soon.
Monday was a quiet day for those in the mortgage industry, with few locks, many people out of the office, and an early close ahead of the Independence Day holiday. Markets shook off warnings about cooling growth and a slowdown in manufacturing, likely because the highlight of the week will be Friday’s fresh look at the labor market, with June Nonfarm Payroll data following May’s big upward payroll surprise. U.S. IHS Markit Manufacturing PMI remained in contractionary territory for the eighth consecutive month in the final reading for June while the ISM Manufacturing Index fell further into contractionary territory. The manufacturing sector continues to operate in a state of contraction as optimism about the second half of 2023 weakens amid recession concerns. Some would argue that investors are still too optimistic about the prospects for economic growth and the ability of the Fed to stamp out inflation.
There was a better-than-expected Construction Spending report for May, in at +0.9 percent month-over-month. On a year-over-year basis, total construction spending was up 2.4 percent due to renewed strength in new single-family construction despite a jump in mortgage rates. Economic data over the last week continued to show a resilient U.S. economy. The final estimate of first quarter GDP was unexpectedly revised higher from 1.3 percent to 2.0 percent as additional data on consumer expenditures contributed to the increase. The personal consumption expenditures index (4.1 percent) remained well above the Fed’s target. Home price data from Case-Shiller indexes showed increasing prices in April while building permits increased 5.6 percent to an annualized rate of 1.496 million units in May. The lack of existing homes for sale has led to price increases on the limited available for sale inventory as well as an increase in new construction. Consumer confidence reached its highest level since January 2022 due to a strong labor market and receding fears of recession. We also learned last week that consumer confidence rose to its highest level in 17 months in June amid a brighter take on the current situation and a less dire assessment of the future.
Markets return to a relatively quiet calendar today, though there is some potential market moving potential from the release of the minutes from the June 13/14 FOMC meeting, Redbook same store sales, May factory orders, and remarks from New York Fed President Williams. We begin Wednesday with Agency MBS prices little changed from Monday and the 10-year yielding 3.86 after closing Monday at 3.86 percent; the 2-year is up to 4.91 percent.
Jobs
“In our most recent Chrisman post, MWF announced our Growth Strategy into the mid-west and Southeast markets. Most recently, we are pleased to announce the addition of Jeff Hemm RVP in Idaho and the Pacific NW, and the expansion of our new Branch in North Carolina. Jeff is a well-known leader in our industry and will bring a strong leadership presence in our new markets. MWF is excited to have TJ Powell on our team and the entire North Carolina team as we grow in new markets and expand in Florida. “I’m proud of our Team and the efforts to expand the MWF family in new areas. This is part of our written growth strategy and an important part of our overall company expansion,” Ed Adams, SVP Production. For information about our growth plans and career opportunities, contact Ed Adams.”
“Is your firm interested in launching a wholesale mortgage enterprise that’s mission-driven? Our group has a combined 100-year history in mortgage banking (operations, sales, underwriting, and capital markets) with a proven track record of generating over $2 billion annually over the last three decades. There are two participation opportunities: investment or joint venture. Our team includes an experienced and trusted sales force, operators, tech stack, warehouse lines, and take-out investors. Although we are currently based in California, we are actively working towards expanding to the East Coast and Southeast regions. Our expertise lies in Non-QM; however, we offer conventional and will offer government loans as well. Our focus is on serving underserved communities, and our long-term goal is to become a CDFI to ensure fair lending practices. If interested, please reach out to Chrisman LLC’s Anjelica Nixt to forward your note.
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Mortgage rates continue to slide, and home prices just dropped by the biggest amount since 2011, but it’s not enough for wary Americans to jump back into the market.
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Freddie Mac chief economist Sam Khater says prospective buyers are keeping a close eye on rates as they wait for their moment. As for inventory, he adds, “a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.”
Buyers braving today’s rates will need a substantial income to afford a quality home.
Say you’re buying a $500,000 property. Assuming you have a 10% down payment and lock in a 30-year fixed mortgage at today’s average rate of 6.67%, you’d have to pay about $3,563 a month after property taxes and insurance, according to estimates from Zillow.
Considering that most lenders want you to keep your housing expenses at or under 30% of your gross income, you’d need to earn at least $142,500 a year to afford that $500,000 home.
30-year fixed-rate mortgages
The average 30-year fixed mortgage — the most popular home loan among American buyers — slipped from an average rate of 6.69% to 6.67% this week.
The rate still remains elevated from last year, however, when it averaged 5.81%.
While the Fed paused its series of hikes to the federal funds rate this month, officials said to expect another half-point increase by year’s end — higher than previously projected.
“In other words, borrowing, including home purchases, will likely remain expensive through the remainder of the year,” writes Realtor.com economist Jiayi Xu.
Xu adds that affordability remains a challenge for prospective buyers, meaning a significant share will be flocking toward cheaper markets — driving up prices in these areas as well.
“The heightened competition in these markets may worsen the conditions faced by buyers with financial constraints, particularly due to the already limited supply of affordable homes.”
15-year fixed-rate mortgages
The average rate on a 15-year home loan also dropped from 6.10% to 6.03% this week.
This time a year ago, the 15-year fixed-rate averaged 4.92%.
Meanwhile, the median price of an existing home also dropped in May — to $396,100, down 3.1% compared to the same month a year ago, reports the National Association of Realtors (NAR).
That’s the biggest year-over-year decline since December 2011.
Read more: Americans refuse to let higher prices derail their travel plans — 10 tactics to keep your summer vacation on budget
Buying may have faltered, but building picked up
Redfin deputy chief economist Taylor Marr says either a large drop in mortgage rates or a surge of new listings would jumpstart the housing market.
But that’s not what happened this spring. In fact, new listings are down 24% compared to this season last year, while the total number of homes on the market is down 8% — marking the biggest plunge in over a year.
As mortgage rates remain well over 6%, homeowners are reluctant to put their homes for sale and lose their below-market rates.
“But even though there wasn’t much of a spring homebuying season this year, there was a spring building season,” Marr notes. Construction of new single-family homes is close to its highest peak in nearly 20 years.
“That means there’s hope for more listings somewhat soon, with homebuilders working to fill the inventory bucket.”
Mortgage applications slightly increase
Demand for mortgages inched up 0.5% from last week, according to the Mortgage Bankers Association (MBA).
Refinance activity dropped by 2% — and is 40% lower than the same week a year ago.
Joel Kan, vice president and deputy chief economist at the MBA, pointed to a notable 3% gain in loans backed by the Federal Housing Administration.
Since first-time buyers account for a large share of FHA loans, he says, “this increase is a sign that while buyer interest is there, activity continues to be constrained by low levels of affordable inventory.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.