Published on: September 4, 2018


Fannie Mae and Freddie Mac thought they might play a constructive role in the single-family rental market. A test program has led the Federal Housing Finance Agency, which regulates the two Government Sponsored Enterprises (GSEs), to conclude otherwise.

“What we learned as a result of the pilots is that the larger single-family rental investor market continues to perform successfully without the liquidity provided by the Enterprises,” FHFA Director Mel Watt said in a statement.

Despite the entry of several large investors, the FHFA’s analysis concluded, the single-family rental market is still controlled largely by “small” investors, who own between one and 50 properties,

The GSEs’ rental housing initiative had drawn intense criticism from the National Association of Realtors (NAR), among other industry trade groups, which argued that the transfer of single-family homes to the rental market was exacerbating the already critical shortage of homes available for purchase by prospective owners. These critics welcomed the policy reversal.

“With inventory shortages facing housing markets across the country, the National Association of Realtors has long advocated for the FHFA to end its expansion into the single-family rental market and return its focus to promoting a liquid and efficient housing market, as Congress intended,” NAR President Elizabeth Mendenhall said in a statement.

The Community Home Lenders Association], another critic, echoed that sentiment. “The [CHLA] is pleased that FHFA has concluded that GSE financing of large-scale single-family rental portfolios should be ended,” Scott Olson, the association’s executive director, said, adding, “Fannie Mae and Freddie Mac can now go back to focusing on smaller investor loans for affordable single-family rental properties.”


The economy and the housing market, which usually move in the same general direction, if not in lockstep, seem to be following markedly different paths, with the economy strengthening while the housing market shows signs of weakening. Fannie Mae economists note that divergence in a recent research report headlined, “Growth Picks Up as Expected – No Thanks to Housing.“

Consumer spending has fueled economic growth this year, but housing starts, new and existing home sales have all declined. Existing home sales declined for the third consecutive month in June, while new home construction posted its largest monthly decline (more than 12 percent) in more than two years.

For those who prefer symmetry, the Fannie Mae report predicts that the Trump Administration’s trade policies will slow economic growth next year to 2.3 percent compared with the 2.8 percent rate predicted for this year, more closely tracking weakness in the housing market that is expected to continue next year.

Fannie Mae analysts aren’t alone in their dim view of the housing outlook. “The only housing market indicator that has moved decisively higher in 2018 has been prices: Everything else is flat,” Aaron Terrazas, senior economist for Zillow, told Housing Wire. “Whatever progress has been made in new home sales since the economic recovery began, recent data makes it clear that builders have been struggling to ramp up new single-family home construction for years,” he added, and “a few months of incremental gains or losses will not meaningfully change this difficult fact.”


Climate change is eroding home values. That’s the conclusion reached by multiple studies that have found a negative impact on the price of homes located in areas in which flooding risks are high. One study by researchers at the University of Colorado and Pennsylvania State University calculated that vulnerable homes in Charleston, South Carolina sold for an average of 6.6 percent less than identical homes located further from waterways. For the most vulnerable homes, at risk of flooding if sea levels rise by only 1 percent, the gap was almost 15 percent. Researchers attributed the disparity to savvy investors demanding steep discounts to offset perceived flooding risks.

A separate study by the nonprofit First Street Foundation calculated that properties in Charleston have lost $266 million in value since 2005 because of past and projected flooding. (The estimated loss in Miami-Dade County was $465 million.) One percent of the homes in Charleston suffer property damage annually, according to this study, which predicts that ratio will grow to 15 percent over the next 50 years.

Charleston officials say they are working on strategies to reduce those risks. “Our flooding challenges have been around for hundreds of years, because we filled creeks and marshland, before people figured out that wasn’t a particularly wise thing to do,” Charleston Mayor John Tecklenburg told the Washington Post. “So we’re playing catch-up, no doubt about it, and it will take a little time.”


The Department of Housing and Urban Development (HUD), which has been trumpeting policies aimed at scaling back housing assistance programs, is, somewhat uncharacteristically, trying to expand the use of rental housing vouchers by low-income tenants.

Citing studies indicating that “most” landlords are reluctant to accept the vouchers, HUD Secretary Ben Carson has established a “Landlord Task Force” aimed at altering that negative mindset. The task force will hold a series of forums in select markets around the country to solicit input from landlords on ways to increase their participation in the voucher program.

“These studies tell us that we have a lot of work to do to engage more landlords, so our Housing Choice Voucher Program can offer real choice to the families we serve,” Carson said in a press statement.

One of the studies triggering the agency’s initiative was conducted for HUD by the Urban Institute, which identified numerous obstacles to the use of rental vouchers. “We learned that the process of finding an available unit, reaching landlords, finding a landlord to accept vouchers, and then meeting with them to view the available housing was extremely difficult,” the researchers reported. “It takes a lot of work to find housing with a voucher,” they concluded,


Strengthening the rental housing voucher program (see item above) isn’t the only unexpected initiative the Department of Housing and Urban Development (HUD) has undertaken of late. The agency, which has rolled back a sweeping Obama Administration program designed to combat housing discrimination, has filed a complaint accusing Facebook of allowing landlords and homeowners to post discriminatory ads on the social media giant’s advertising platform. The complaint alleges that the platform allows advertisers to illegally target recipients based on their gender, race, religion and other prohibited characteristics by allowing advertisers to:

  • Display housing ads either only to men or women;
  • Withhold ads to Facebook users expressing an interest in an “assistance dog or other facilities and services suggesting they may have a disability;
  • Withhold ads from users Facebook categorizes as interested in “child care” or “parenting,” and/or display ads only to users with children above a specified age;
  • Display or withhold ads based on expressed interest in specific religions, places of worship, or countries; and
  • Withhold ads from users residing in specific zip codes.

While vowing to fight the complaint in court, Facebook has agreed to overhaul its advertising policies. Among other changes, the company says it will now require all advertisers, not just those identifying themselves as offering housing, employment or credit, to abide by its nondiscrimination policies.

Additionally, the company has removed more than 5,000 ad targeting options “to help prevent misuse. While these options have been used in legitimate ways to reach people interested in a certain product or service, we think minimizing the risk of abuse is more important,” the company said in a press statement,


A Canadian regulatory board has ordered a tenant renting a condominium unit to pay its owner more than $4,000 dollars for damages resulting from unauthorized Airbnb rentals.

The U.S. economy has recovered from the recession that felled it a decade ago, but the scars have not completely healed, a study by the Federal Reserve Bank of San Francisco concludes.

Home sizes are shrinking as builders shift their focus from the high end of the market to the entry level.

A change in the way credit reporting agencies treat negative credit information has boosted the credit scores of millions of consumers.

Manufactured homes, damaged by financial abuses preceding the housing downturn, seem to be regaining their appeal.



A sense of timing is helpful in most endeavors, but it is critical in condominium construction defect suits, where strict statutes of limitations on initiating litigation apply. The statute at issue in this Washington State dispute (Burien Town Square Condominium Association v. Burien Town Square Parcel LLC) began to toll when the declarant’s control of the association ended. But there were two declarants – the one who created the condominium and a successor. The key questions before the court: Did the original declarant’s liability for construction defects end when he transferred his development rights to a successor? And, when did the developer’s period of control end?

The time line unfolded as follows: The original developer, Burien Town Square LLC (BTS-LLC), defaulted on a construction loan about a year after selling the first unit in this community (Town Square). After the lender foreclosed in November 2010, BTS Marketing acquired the unsold units and assumed the declarant rights, maintaining control of the association while continuing to market the units.

Owners notified the developer-controlled board of construction defects in August 2013 but took no action at that time. They gained control of the association and elected a board in March 2014, notified the original developer (BTS-LLC) of the defects in February 2015 and filed suit the following month. The developer argued that the four-year statute of limitations had expired and the trial court agreed.

The Appeals Court addressed the competing arguments about how the statutory deadline should be tolled. Beginning with the state condominium law, the court noted that the four-year statute of limitations for filing condominium construction defect suits contains one exception: When dealing with defects in common areas, the litigation window closes one year after the declarant’s period of control ends.

The developer contended that his period of control ended with the foreclosure, when his rights were transferred to a successor; the association argued that the period of developer control continued until owners assumed control of the board, notwithstanding the transfer of rights before that. The court agreed with the association.

A developer who transfers rights to a successor retains liability for defects in the original construction, the court noted.

The argument advanced by BTS-LLC would allow the original developer to escape liability simply by conveying the property to another party, who could maintain control until the statute of limitations expired. This interpretation of the statute would create “a loophole” in the protection the condominium act provides to condominium owners, the court noted.

The developer contended that extending liability beyond the transfer of control was “unfair” and subverted the purpose of a statute of limitations, which is to shield developers from stale claims. But the statute should not shield developers “from all liability,” the court maintained, adding, “We reject an interpretation of [the condominium act] that would allow a statute of limitations for claims involving condominium common elements to expire before the unit owners ever gain control of the unit owners’ association.”

Both the statutory language and public policy support the conclusion that the period of declarant control is “a single period measured by the fact of declarant control, not the term of a specific declarant’s control,” the court stated.

The statute specifies four options for determining that end date; the developer argued that either two of them, which occurred before the transfer of control to owners, should apply: Either “the date on which the declarant records an amendment to the declaration pursuant to which the declarant voluntarily surrenders the right to further appoint and remove officers and members;” or “two years after any development right to add new units was last exercised.”

On the first of those options, option, BTSLLC argued that it relinquished its right to appoint members when BTS Marketing acquired the units post-foreclosure. But the court pointed out that the developer never filed an amendment relinquishing its declarant rights, as the statute requires. Moreover, the court noted, “although BTSLLC gave up the power to appoint and remove officers in November 2010, Marketing acquired that right. The unit owners did not gain control but remained subject to the control of a declarant.” Consequently, the court said, the condition described in [this provision] did not occur when Marketing became successor declarant.”

Under the second option, BTSLLC contended that it never exercised any development rights after the foreclosure date (November 2010). But the court said this reasoning “incorrectly equates exercising [the declarant’s] rights with transferring its rights.” The two “are not synonymous,” the court noted. “The exercise of a development right does not include a transfer of those rights. Nor does the [condominium statute’s] s definition of development rights indicate that conveying property to a successor declarant results in the end of the period of declarant control.”

Beginning the statutory countdown when the owners assumed control made the deadline for filing the association’s claim March 2015, extended to June 11 because the association gave the developer written notice of the claim before filing suit. This put the association’s suit, filed April 29, well within the statutory deadline, the court concluded. “The period of declarant control tolled the statute of limitations,” the court said, “and the association timely filed its [construction defect] claims.”


“While a number of other factors suggest the U.S. economy is still on solid, albeit far from robust footing, weakness in housing raises a large red flag regarding the sustainability of domestic growth heading into the second half of the year.”─ Lindsey Piegza, chief economist for Stifel Financial Group.

Marcus, Errico, Emmer & Brooks specializes in condo law, representing clients in Massachusetts, Rhode Island and New Hampshire.