Cars who pass busses with children aboard them, drivers who talk on cell phones through school speed zones, they deserve tickets and fines wrapped up in string - these are a few of my "favorite" things...

The Houston Chronicle reports of the spring opening of the 3rd YMCA of The Woodlands in the (still) new Village of Creekside Park, the first Village of The Woodlands on the south side of Spring Creek, which formally lands it in Harris County as opposed to the rest of The Woodlands in Montgomery County.

The Houston Chronicle breathlessly reports that pine beetles have taking advantage of the dry weather recently to eat away at and kill many pine trees. It's not quite a scourge to say the least. It can clearly be seen here and there sparsely -- a totally brown dead pine tree here and there -- but it doesn't look like a wildfire has rampaged anywhere.

In recent years, the real estate website Zillow.com has seen increasing traffic. According to the traffic reporting site Alexa.com, Zillow's traffic is close to reaching, at long last, the venerable and dominant Realtor.com, which in years past we have favored over all other sites, mostly because of its excellent and fair search results (giving users what they need, not what advertisers want), and because of its towering dominance in national listings websites.

Austin is an odd bird in the Texas aviary of real estate, both commercial and residential. The Austin Business Journal is reporting that commercial and residential contracts combined are down almost 50% through August of this year over last year, which itself was not a stellar year.

Nick Timiraos at The Wall Street Journal is reporting about a bill in congress to raise the minimum down payment on an FHA insured loan from the current 3.5% to 5%. Right now it is just a bill. From the article:

Last year, Congress raised the minimum down payment to 3.5% from 3% amid concerns that an uptick in FHA lending could expose taxpayers to losses. Congress also ended a program that had allowed sellers to fund down payments through non-profits and which had been blamed for an outsize share of bad loans. Concerns have mounted in recent weeks because an annual FHA audit is expected to show that projected reserves will fall below 2% of FHA-backed loans outstanding, a level mandated by Congress.

While I agree in principle that loans may be safer the more equity (down payment) a borrower puts down, the FHA program is not a lender program, it is an insurance program, and the best way to manage the risk, I and my colleagues believe, is to focus on the creditworthiness of the mortgage applicants who may be able to buy a home and have the income to support it even with a small down payment. Again from the article:

The boom in business came as the housing market cratered, and Congress, together with the Bush and Obama administrations, have used the agency to help keep a lack of mortgage credit from further choking off a weak housing market. Serious delinquencies on FHA and other government backed loans rose to 7.5% in the second quarter, up from 6.8% in the previous quarter, according to figures released Wednesday by the Office of the Comptroller of the Currency.

So the underlying problem as I see it is that congress loosened the credit requirements for the program and are now seeing mounting losses -- the down payment requirement is not the root cause of any recent rise in defaults. So why would that be the focus of the proposed bill? Here’s Bernanke testifying to congress last week (same article):

[I]t is true that the FHA de facto has replaced … the riskier part of the mortgage market,” said Federal Reserve Chairman Ben Bernanke at a hearing Thursday. “It’s got a very high share now of new mortgages because it’s the only source of mortgages where down payments can be less than basically 20%. And so it is providing mortgage access to a large number of people who could not otherwise buy homes.

I agree with the first part, but it’s not the down payment. It’s the creditworthiness. If congress proceeds with this bill without addressing credit requirements of mortgage applicants in the FHA program, then they have in my view entirely missed the boat. The overall impact on the market however, will not be earth shaking. I foretold of this controversy in a post on this blog last week.

The website alexa.com tracks various statistics regarding web traffic across the Internet worldwide. Its methods are sometimes questioned - full disclosure - they use a large sample of people who download their "toolbar" is how I understand they get their sample. Nonetheless it's a commonly referenced source for Internet traffic statistics.

If you think I've been overly optimistic, please note this. It needs no commentary. From The Houston Chronicle Tuesday:

Toll Brothers, a publicly traded home building company, has earned the industry's top three awards, including America's Best Builder from the National Association of Home Builders, the National Housing Quality Award and Builder of the Year.

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I often tell people the obvious: Houston didn't experience the big ups of the real estate run-up as the east and west coasts saw, and we're not experiencing the big deep lows either. The following chart illustrates nicely. Look at how Houston prices (the lower line) are hovering at about 2007 levels -- most of the nation can't say that:

Some people are worried about the effect of the U.S. economy and the policy responses to it. They worry that the dollar will plummet in value as global investors pull money out of the U.S. economy and decline to invest in U.S. Treasury bonds, the method by which the U.S. government finances annual budget deficits (and refinances older bonds). This worry is not justified. The dynamic described is not happening in any form or fashion.