KeNo's Housing and Economic Portal: Friday November 19 Housing and Economic stories

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TOP STORIES:

Executives Collect $2 Billion Running U.S. For-Profit Colleges - (www.bloomberg.com) Strayer Education Inc., a chain of for-profit colleges that receives three-quarters of its revenue from U.S. taxpayers, paid Chairman and Chief Executive Officer Robert Silberman $41.9 million last year. That’s 26 times the compensation of the highest-paid president of a traditional university. Top executives at the 15 U.S. publicly traded for-profit colleges, led by Apollo Group Inc. and Education Management Corp., also received $2 billion during the last seven years from the proceeds of selling company stock, Securities and Exchange Commission filings show. At the same time, the industry registered the worst loan-default and four-year-college dropout rates in U.S. higher education. Since 2003, nine for-profit college insiders sold more than $45 million of stock apiece. Peter Sperling, vice chairman of Apollo’s University of Phoenix, the largest for-profit college, collected $574.3 million. Education corporations, which receive as much as 90 percent of their revenue from federal financial-aid programs, are “private enterprise that’s almost entirely publicly funded,” Henry Levin, director of Columbia University’s National Center for the Study of Privatization in Education, said in a telephone interview.

18.8 Million Vacant Housing Units Mean Housing Bottom Still Far Away - (www.economicpopulist.org) According to the Census Bureau, 18.8 million housing units, or 11% are permanently vacant. With 5.4% of those housing unit vacant being held off the market (read foreclosed inventory). Held off the market is that infamous shadow inventory of homes. Approximately 85.6 percent of the housing units in the United States in the third quarter 2010 were occupied and 14.4 percent were vacant. Owner-occupied housing units made up 57.3 percent of total housing units, while renter-occupied units made up 28.3 percent of the inventory in the third quarter 2010. Vacant year-round units comprised 11.0 percent of total housing units, while 3.4 percent were for seasonal use. Approximately 3.3 percent of the total units were for rent, 1.5 percent were for sale only, and 0.8 percent were rented or sold but not yet occupied. Vacant units that were held off market comprised 5.4 percent of the total housing stock. Of these units, 1.7 percent were for occasional use, 1.0 percent were temporarily occupied by persons with usual residence elsewhere (URE), and 2.7 percent were vacant for a variety of other reasons. So, where did the people go who used to be in these housing units? From the population growth of the U.S., I don't think they died or expatriated.

It seems I'm not alone in wondering where did all the people go? Mortgage Daily, with more graphs and details, also pointed out what homelessness does to a society: An adult without a permanent address has difficulty finding employment, maintaining a healthful lifestyle, or a medical regime. A family without stable and affordable housing cannot access many social and health related services, or provide adequate clothing and nutrition; its children become transient students, frequently with social and psychological problems. Imagine how those individual small human problems impact the schools which must educate the transient and troubled students, a health system that must cope with crisis rather than prevention, an increase the burden on law enforcement and the social network. Imagine if the government simply let the homelessness stay in these houses, rent free? The responsibilities are property upkeep, moving the law, keeping it clean. 18,700,000 housing units could help a hell of a lot of desperate people right now.

1 out of 21 distressed properties show up on the MLS for Pasadena - (www.doctorhousingbubble.com) Here is a home in a nicer part of Pasadena for those that think foreclosure is merely a lower end game. This home sold for $732,000 in 2005. The current list price is set at $635,900 or nearly a $100,000 price cut over five years. That doesn’t seem like price inflation to me. Interestingly enough the MLS only lists 29 homes as foreclosures for Pasadena. I did a quick search on the shadow inventory (NODs, scheduled for auction, and REOs) and pull up 636 homes for Pasadena. In other words, the MLS is only showing us 1 out of every 21 homes in distress for Pasadena. Just for reference, the median household income of Pasadena is $61,000.

Gaming the New Rules of Health Insurance - (www.kiplinger.com) Q: My son is 27, and his employer, a small tech start-up, doesn't offer health insurance. The company has fewer than 50 employees, so under the new health-care law, it won't have to provide health coverage. My son can't go back on my husband's employer-paid policy because he's past the age limit of 26. He makes good money, about $50,000 a year, but says he has no intention of buying individual health insurance -- not even a catastrophic policy that would kick in if his medical bills were to get too high. My son figures he can always get insurance through one of the new high-risk pools if someday he gets really sick and needs it. And he points out that he won't face a personal penalty for not having insurance until 2014, when it will likely be a painless $500 -- a lot less than the cost of an individual policy. I feel it's unethical of him to game the system this way. What do you think?

A: I agree with you. Your son is doing well enough financially to take responsibility for his well-being by buying his own coverage, which he may find quite affordable (see Health Reform, Phase I: What You Will See When). I also believe that his employer, regardless of its exemption from the new employer-coverage mandate, should find a group policy that both the company and its employees can afford. But that's another issue.

Selling $4M-plus house? Wait 6 years! - (lansner.ocregister.com) We found this noteworthy luxury trend in the latest Orange County home inventory report from Steve Thomas at Altera Real Estate — as of October 28: In the highest price spectrum he tracks, homes priced at $4 million and above, it’s gotten so slow that it would, in theory, take sellers six-plus years to move homes! You see, Thomas calculates a “market time” benchmark tracking how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings (for the county, a city or a given price range) at the current pace of pending deals being made. By this Thomas logic, as of last Thursday, there are 4 homes price above $4 million counted as new sales entering escrow (that’s demand) vs. 327 in the price ranged listed for sale (that’s supply!) Thus, the high end gets a market time of 81 months, or 6.8 years! The rest of the market comes in just above 4 months, so in theory its 20 times harder to sell a $4 million-plus home today than anything else in Orange County!