Castle Wire: Sure, there are the expected smattering...

× Like us and you'll find top breaking news in your Facebook newsfeed. Sign up for our daily email newsletter and get top stories and breaking news delivered to your inbox. Wednesday, January 18, 2012, by Sally Kuchar

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Turf Wars: Mud-Slinging Expected at Planning Commission Over Noe Valley Addition

× Like us and you'll find top breaking news in your Facebook newsfeed. Sign up for our daily email newsletter and get top stories and breaking news delivered to your inbox. Wednesday, November 30, 2011, by Alex Bevk

[Image via SF Planning]

This Thursday’s Planning Commission hearing will feature some NIMBY rage in Noe Valley. The owners of 4366 26th Street want to construct a rear addition to their house, but a neighbor claims it will be an “invasion of privacy” and block light, so the neighbor filed for discretionary review, the ultimate "addition block." But Noe Valley SF points out that the DR requester has existing non-conforming stairs, bedroom and some sort of shed that occupy the same rough footprint of the requested addition and “the applicants moved into their home in 2010 with one child and are expecting twins." Expect an update from us on the ongoing Noe Valley addition saga on Friday.
· This Week at the Planning Commission [Noe Valley SF]
· Opposed To The Proposed Expansion Below Over In Noe Valley [SocketSite]
· 4366 26th Street Discretionary Review Analysis [SF Planning]

4366 26th Street, San Francisco CA

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[1% SpinWatch] Wall Street Bonuses Expected to Fall 20% to 30%

The headlines are screaming today that Wall Street bonuses will be off this year about 20% to 30%. That sounds like a lot, and it is, but its not as much as you would think.

Total compensation for the 1% is something like 40-50% bonus and the rest in salary etc., With the increasing regulatory overlay that Dodd-Frank and other regulations that have brought to Wall Street, the percentage of bonus to total compensation may actually decline (not total compensation).

Most people are reading the press pile-on as a 20% to 30% drop in wages. But its not. There’s a steady stream of blame of this compensation structure as the cause of our economic woes. Certainly some truth to that but not the source of the problem.

The Math

If 50% of compensation is bonus then a 20% to 30% drop in bonus comp is really 10% to 15% drop in total compensation. If 40% of compensation is bonus then the drop is even less.

Translation: Wall Street pay will be down about 10% from last year seems to be a reasonable data point for the 1%.

That may soften the real estate market for the coming year a bit but I am more focused on job retention on the Street.

Compensation is still very near and dear.

Take the Goldman Sachs disclosure last month. Profits plunged 75% but compensation only fell 25% or $292,000 per worker ($540,000 in 2006)

So to repeat. Goldman lost money in the third quarter. It has fewer workers than the same time a year ago because times are tough. But it still found it necessary to allocate a higher portion of revenue for compensation? Come on!

I think I’ve become so cynical about the comp issue and it’s implied impact on the New York City housing market because any negative news such as bonuses or layoffs always seemed to turn out far less damaging than screaming headlines suggest. They are a key economic engine for New York City and yet we don’t really have a grasp on how they are really doing.

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Home Ownership May Fall More Than Expected

Sometimes you hear one thing and don't think much of it, and then you hear another thing that makes the first thing seem much more important.

This morning the Mortgage Bankers Association put out a report from two UCLA researchers (MBA funded the report) saying that the homeownership rate may have bottomed but could still fall another one to two percentage points.

Then JP Morgan's CEO, Jamie Dimon, [JPM  Loading...      ()   ] suggested that his bank could get out of the mortgage ownership business in the future. "Owning consumer assets may be something we don't want to do," Dimon said on the earnings conference call. "It may be we'll originate, securitize, service, but not own" mortgages. He added that they don't have to make a decision on the mortgage business until rules are set, which could be eight years.

Clearly Dimon no longer sees mortgage lending as a particularly lucrative business, which is ironic, given that today's strict underwriting standards have produced the best, safest new crop of mortgages in quite a while. What he's referring to with the rules are risk retention rules and securitization rules that are still being negotiated. These rules could make it less lucrative for banks to originate and own mortgages because they could mandate holding on to 5 percent of the risk of certain loans. They could also make it even tougher for more Americans to obtain loans or to refinance, which would shrink the overall business.

Beyond new rules, though, perhaps Dimon doesn't predict the investor return to the mortgage market upon which so many federal regulators and politicians are depending. As lawmakers debate how to dismantle Fannie Mae and Freddie Mac, the underlying assumption is that the two can easily be replaced by a robust investor market. That market will only return if investors believe that mortgages will once again be a good bet. That's where the MBA study comes in.

The MBA researchers say that demographics, regardless of the recent housing boom, favored a drop in home ownership.

"Between 2000 and 2009 there was a one percentage point increase in the homeownership rate. But, were it not for the shifts in access to homeownership through easier credit and the changes in socioeconomic conditions, the homeownership rate would have actually fallen between 2000 and 2005, rather than increasing," researchers wrote.

This is due to changes in the population's socio-demographic composition and economic attributes. They found that the increase in the homeownership rate during the housing boom was most pronounced among those under the age of thirty; they were the most willing to take on the excess risk of the dicey mortgage products. They did not, however, have the economic standing to back it. So what now?

"If household employment, earnings and other socioeconomic characteristics over the next few years remain similar to those in 2009, then homeownership rates could fall by up to another 1 to 2 percentage points beyond 2011. Those declines are likely to be greatest in cities and regions in which house prices were most volatile in the last decade.”

What researchers leave out of their report, though, is the major shift in attitudes toward homeownership. I've interviewed dozens of younger and older Americans who no longer see any social stigma attached to renting. The rental market is surging across the nation, not just in hard hit housing markets where potential buyers have taken big credit hits; this is a major shift from the last "ownership" decade.

The nation's housing market will recover, I'm not implying that it won't. But for some reason some, including policy makers and federal regulators, think it will just go back to the way it was before the housing boom. I don't think so, and the number one reason is the overhaul of the mortgage market, not that we know what exactly that is yet.

Questions?  Comments?  document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick

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