According to a new study from the National Association of Home Builders (NAHB), a proposal to eliminate tax deductions for mortgage interest and real estate taxes would raise taxes disproportionately for middle-class households and make the income-tax system less progressive.
The study found that primarily middle-class taxpayers, with incomes between $50,000 and $200,000, benefit from the real-estate-related deductions; and larger households and families, such as those with children, earn the greatest benefits.
“Proposals to reduce or eliminate the mortgage interest deduction are short-sighted and would harm the economy and job creation at a time when housing is poised for recovery,” says NAHB Chairman Bob Nielsen. “The deduction is the mainstay of our housing policies and tampering with it would break faith with the millions of families who rely upon it to meet their household expenses – and with millions more who one day would like to be able to afford to own a home of their own.”
According to the study, taxpayers earning less than $200,000 claim 68 percent of mortgage-interest-deduction benefits and 77 percent of real estate tax benefits. The same people pay only 43 percent of all income taxes.”
Using data from the nonpartisan Joint Committee on Taxation (JCT), the report detailed the tax liability, mortgage interest deduction and real estate tax deduction for five income groups. The report found that the shares of the total benefits of the two housing deductions exceeded the shares of taxes paid for every income class except the last one, those earning $200,000 or more.
These data “demonstrate that the mortgage interest and real estate tax deductions make the U.S. tax system more progressive, not less, as is often claimed,” the report says.
The report adds that “for taxpayers with less than $200,000 in adjusted gross income (AGI), the average tax benefit of the mortgage interest deduction is equal to 1.76 percent of AGI. For taxpayers with more than $200,000 in AGI, it is equal to 1.5 percent. This is clearly indicative of a progressive tax benefit.”
The study also examines the relationship between housing tax benefits and household size to addresses the criticism that the mortgage interest deduction compels people to purchase a larger, more expensive home than they need.
Using the IRS data from 2004, the study found that the average benefit of the mortgage interest deduction rose fairly steadily with the size of the household. “These results are consistent with intuition,” the study says. “Larger households and families require larger homes. And larger homes require additional mortgage debt to finance, particularly for younger homebuyers, who are or may be in the process of having children. These greater home finance costs imply larger deductions for mortgage interest and real estate taxes.”
The entire report: Who Benefits From the Housing Tax Deductions? is available on NAHB’s website.
Source: Florida Realtors®
Monday, January 31, 2011
The home’s changing role in family finances
Homeownership used to be the bedrock of the American dream, but the economic storm and its lasting effects have radically changed how everyone – no matter what stage of life they’re in – looks at their home.
Many potential homebuyers are now hesitating, taking a closer look at their options. “People are starting to realize that the American dream of homeownership is not right for everyone,” Kim McGrigg, community manager at Money Management International, a non-profit consumer credit counseling service.
And those who already own homes may have hit a snag or readjusted their expectations. Five years ago, as a young married couple, Joe and Cheryl Shaw bought a charming historic home in St. Charles, Mo. They have a 9-month-old daughter and a 3-year-old son. They want to have more children, but the home is too small.
Unfortunately, they paid $222,000 for the home and still owe $203,000. Its estimated value is now only about $185,000.
“We are outgrowing the house, and are ready to move on,” says Joe Shaw, 40, who is an assistant principal in the Francis Howell School District. “But we’re in the hole, so much so that I’m not sure that we can afford to move on.”
A hole in retirement plans
The Shaws are in better shape than homeowners who have lost their homes to foreclosure. And many other families can no longer count on their home value as part of their retirement nest egg.
Nolan Heiter, a business systems analyst at SunTrust Bank in Richmond, Va., says that his and his wife’s retirement plan always had included their home equity. That has to be adjusted now because the home’s value has dropped.
“Our vision had always been that we’d be able to sell the house and get enough out of it to pay cash for a smaller retirement home and have no mortgage,” says Heiter, who is now nearly 50 and doesn’t think the value will turn around before he retires. “We may be facing a situation where we have to use some of our retirement income to pay for a mortgage.”
Even those who can easily afford a home are rethinking their dreams. The McMansion era may be on its way out. Homes are shrinking: The median size of single-family homes declined from its peak of 2,268 square feet in 2006 to 2,100, according to a study based on Census Bureau 2009 statistics by the National Association of Home Builders.
At the same time, multigenerational households are making a comeback. In 2008, a record 16.1 percent of the U.S. population lived in extended families, with at least two adult generations or a grandparent and at least one other generation, a Pew Research Center found. That is up from 12 percent in 1980.
That increase, in part, is because many unemployed adult children are moving back home with their parents. And large family homes are more available to them because many parents are not able to sell them and move to retirement condos.
“There may be a multigenerational household for a period of time until the financial situation changes and is on more solid ground,” says Elinor Ginzler, AARP senior vice president. But some owners are choosing to live in an extended family.
About two years ago, when home prices were going down, Dan and Lauri Pratt sold their home in Kaysville, Utah, and bought a larger home in nearby Farmington. It had a large walkout basement, which they have turned into a small apartment for one of their sons, who is still going to college and is married and has a baby. “One reason for the basement was that it would help them save some money on rent and utilities,” says Dan, 51, a construction manager. “And my wife is able to watch our granddaughter without the hassle of dropping her off and paying for day care.” Pratt expects the apartment could be used again for some of their four younger children or his mother-in-law.
The risks of homeownership
Even though it’s a buyer’s market, a growing number of people are deciding to rent. Some have no choice because they do not qualify for a mortgage, while others don’t want homeownership. In the third quarter of 2010, 59 percent of renters said they were more likely to continue to rent in their next move, vs. 54 percent in January, a Fannie Mae study about homeownership found.
The housing crisis has shown that owning a home comes with risk. “Many who bought homes as investments have gotten quite burned on that,” says Eleanor Blayney, consumer advocate for Certified Financial Planner Board of Standards.
The changes are not only related to the economic crisis. Some Americans are reinventing their homes to be more energy efficient. Others are looking for ways to make their existing homes safe and livable. About one-third of Americans 45 and older said they have made changes to their current home so they could stay longer, the AARP survey found.
Even when the economy improves, home buying may not return to normal. “We need to rethink housing in the 21st century,” Blayney says. People should always remember that there is a potential downside as well as an upside. And homes are not a piggy bank. So people should not assume their home value will help pay for their children’s college education or their retirement.
“It’s a whole new ballgame,” says Sid Davis, a real estate broker and author of A Survival Guide for Buying a Home.
Source: USA TODAY, a division of Gannett Co. Inc., Christine Dugas.
Many potential homebuyers are now hesitating, taking a closer look at their options. “People are starting to realize that the American dream of homeownership is not right for everyone,” Kim McGrigg, community manager at Money Management International, a non-profit consumer credit counseling service.
And those who already own homes may have hit a snag or readjusted their expectations. Five years ago, as a young married couple, Joe and Cheryl Shaw bought a charming historic home in St. Charles, Mo. They have a 9-month-old daughter and a 3-year-old son. They want to have more children, but the home is too small.
Unfortunately, they paid $222,000 for the home and still owe $203,000. Its estimated value is now only about $185,000.
“We are outgrowing the house, and are ready to move on,” says Joe Shaw, 40, who is an assistant principal in the Francis Howell School District. “But we’re in the hole, so much so that I’m not sure that we can afford to move on.”
A hole in retirement plans
The Shaws are in better shape than homeowners who have lost their homes to foreclosure. And many other families can no longer count on their home value as part of their retirement nest egg.
Nolan Heiter, a business systems analyst at SunTrust Bank in Richmond, Va., says that his and his wife’s retirement plan always had included their home equity. That has to be adjusted now because the home’s value has dropped.
“Our vision had always been that we’d be able to sell the house and get enough out of it to pay cash for a smaller retirement home and have no mortgage,” says Heiter, who is now nearly 50 and doesn’t think the value will turn around before he retires. “We may be facing a situation where we have to use some of our retirement income to pay for a mortgage.”
Even those who can easily afford a home are rethinking their dreams. The McMansion era may be on its way out. Homes are shrinking: The median size of single-family homes declined from its peak of 2,268 square feet in 2006 to 2,100, according to a study based on Census Bureau 2009 statistics by the National Association of Home Builders.
At the same time, multigenerational households are making a comeback. In 2008, a record 16.1 percent of the U.S. population lived in extended families, with at least two adult generations or a grandparent and at least one other generation, a Pew Research Center found. That is up from 12 percent in 1980.
That increase, in part, is because many unemployed adult children are moving back home with their parents. And large family homes are more available to them because many parents are not able to sell them and move to retirement condos.
“There may be a multigenerational household for a period of time until the financial situation changes and is on more solid ground,” says Elinor Ginzler, AARP senior vice president. But some owners are choosing to live in an extended family.
About two years ago, when home prices were going down, Dan and Lauri Pratt sold their home in Kaysville, Utah, and bought a larger home in nearby Farmington. It had a large walkout basement, which they have turned into a small apartment for one of their sons, who is still going to college and is married and has a baby. “One reason for the basement was that it would help them save some money on rent and utilities,” says Dan, 51, a construction manager. “And my wife is able to watch our granddaughter without the hassle of dropping her off and paying for day care.” Pratt expects the apartment could be used again for some of their four younger children or his mother-in-law.
The risks of homeownership
Even though it’s a buyer’s market, a growing number of people are deciding to rent. Some have no choice because they do not qualify for a mortgage, while others don’t want homeownership. In the third quarter of 2010, 59 percent of renters said they were more likely to continue to rent in their next move, vs. 54 percent in January, a Fannie Mae study about homeownership found.
The housing crisis has shown that owning a home comes with risk. “Many who bought homes as investments have gotten quite burned on that,” says Eleanor Blayney, consumer advocate for Certified Financial Planner Board of Standards.
The changes are not only related to the economic crisis. Some Americans are reinventing their homes to be more energy efficient. Others are looking for ways to make their existing homes safe and livable. About one-third of Americans 45 and older said they have made changes to their current home so they could stay longer, the AARP survey found.
Even when the economy improves, home buying may not return to normal. “We need to rethink housing in the 21st century,” Blayney says. People should always remember that there is a potential downside as well as an upside. And homes are not a piggy bank. So people should not assume their home value will help pay for their children’s college education or their retirement.
“It’s a whole new ballgame,” says Sid Davis, a real estate broker and author of A Survival Guide for Buying a Home.
Source: USA TODAY, a division of Gannett Co. Inc., Christine Dugas.
State Farm wants to raise average rates by 28%
State Farm Florida Insurance, the state’s largest private property insurer, wants to raise rates by a statewide average of 28 percent.
Although Florida has dodged a direct hit by hurricanes the past five years, the company says the increase is needed to cover rising losses for claims unrelated to storms such as sinkholes. The increase comes after the company received approval in 2009 to raise average statewide rates by 28 percent and approval in November to raise them by 6.6 percent.
State Farm had 678,849 residential property insurance policies in the state as of late last year, including 128,506 in Broward, Palm Beach and Miami-Dade counties and 175,084 in the Orlando area.
The Office of Insurance Regulation will review the request at a hearing on Feb. 15. An actuary from the office wrote in an e-mail late Friday that it appears the proposal is driven by higher claims costs and a higher “profit and contingency” factor, which is, in part, for emergencies or unforeseen events. Just because the request was filed “does not necessarily mean the Office will approve it,” he wrote.
If approved, some policyholders would see increases that are higher than the state average, and others would see lower increases or even decreases.
In early 2009, State Farm threatened to leave Florida’s property insurance market after the state rejected its request for rate increases of either 47 percent or 67 percent. That year, legislators passed a measure to effectively allow the largest home insurers to charge as much as they wanted, but Gov. Charlie Crist vetoed the legislation.
In July 2009, regulators agreed to allow State Farm to eliminate some discounts it had been providing, which resulted in higher rates on average statewide. The company agreed to stay in the state in December 2009 if it was allowed to shed 125,000 policies over several years and raise rates by an average 14.8 percent.
Last year, regulators allowed the company to reduce some discounts it gives homeowners for fortifying their homes against hurricanes, effectively raising statewide average rates by 6.6 percent, said State Farm spokesman Michael Grimes.
Grimes said State Farm, which had reported its premiums weren’t keeping pace with claims and other expenses, helped improve its finances by dropping some policies. It now has about 130,000 fewer residential property insurance policies than it did in late 2009 when it agreed to stay in Florida.
The rate increase also would help, Grimes said. “To ensure State Farm Florida has the resources to sufficiently protect its customers’ property, the premiums need to adequately reflect the risk inherent in providing property insurance coverage in Florida,” he said. “Non-catastrophe loss per policy is up 94 percent the past three years. Much of the insurance losses can be attributed to sinkhole claims.”
The company spent $351 million to cover sinkhole claims from 2007 to October 2010, according to Grimes.
Information about the rate hearing is available at the Office of Insurance Regulation’s website.
Source: Sun Sentinel, Fort Lauderdale, Fla., Julie Patel. Distributed by McClatchy-Tribune Information Services.
Although Florida has dodged a direct hit by hurricanes the past five years, the company says the increase is needed to cover rising losses for claims unrelated to storms such as sinkholes. The increase comes after the company received approval in 2009 to raise average statewide rates by 28 percent and approval in November to raise them by 6.6 percent.
State Farm had 678,849 residential property insurance policies in the state as of late last year, including 128,506 in Broward, Palm Beach and Miami-Dade counties and 175,084 in the Orlando area.
The Office of Insurance Regulation will review the request at a hearing on Feb. 15. An actuary from the office wrote in an e-mail late Friday that it appears the proposal is driven by higher claims costs and a higher “profit and contingency” factor, which is, in part, for emergencies or unforeseen events. Just because the request was filed “does not necessarily mean the Office will approve it,” he wrote.
If approved, some policyholders would see increases that are higher than the state average, and others would see lower increases or even decreases.
In early 2009, State Farm threatened to leave Florida’s property insurance market after the state rejected its request for rate increases of either 47 percent or 67 percent. That year, legislators passed a measure to effectively allow the largest home insurers to charge as much as they wanted, but Gov. Charlie Crist vetoed the legislation.
In July 2009, regulators agreed to allow State Farm to eliminate some discounts it had been providing, which resulted in higher rates on average statewide. The company agreed to stay in the state in December 2009 if it was allowed to shed 125,000 policies over several years and raise rates by an average 14.8 percent.
Last year, regulators allowed the company to reduce some discounts it gives homeowners for fortifying their homes against hurricanes, effectively raising statewide average rates by 6.6 percent, said State Farm spokesman Michael Grimes.
Grimes said State Farm, which had reported its premiums weren’t keeping pace with claims and other expenses, helped improve its finances by dropping some policies. It now has about 130,000 fewer residential property insurance policies than it did in late 2009 when it agreed to stay in Florida.
The rate increase also would help, Grimes said. “To ensure State Farm Florida has the resources to sufficiently protect its customers’ property, the premiums need to adequately reflect the risk inherent in providing property insurance coverage in Florida,” he said. “Non-catastrophe loss per policy is up 94 percent the past three years. Much of the insurance losses can be attributed to sinkhole claims.”
The company spent $351 million to cover sinkhole claims from 2007 to October 2010, according to Grimes.
Information about the rate hearing is available at the Office of Insurance Regulation’s website.
Source: Sun Sentinel, Fort Lauderdale, Fla., Julie Patel. Distributed by McClatchy-Tribune Information Services.
Friday, January 28, 2011
Global survey: U.S. homes are most affordable
United States real estate offers a lot of bang for your buck, according to a new survey that shows U.S. homes are the cheapest relative to incomes among English-speaking nations.
Australian homes – which have a median price of $454,000 – were found to be the most unaffordable among English-speaking nations, according to the report by consulting firm Demographia, which examined affordability in the third quarter of 2010. The median home in Australia costs 6.1 times the gross annual median household income. What’s more, 85 percent of the homes in Australia’s major cities were more than 5.1 times average income, according to the survey.
On the other hand, U.S. homes have a median home price of $168,000 and homes cost only three times yearly income or less.
Australia has gone from being “the exemplar of modestly priced, high-quality middle-class housing, to now the most unaffordable housing market in the English-speaking world,” the report noted. “Each of the least affordable markets were characterized by more restrictive land use regulation, which materially increases the price of land and makes housing less affordable.”
The priciest city for real estate, in general: Hong Kong, with homes costing 11.4 times income. (The report considers any markets where home prices are 5.1 times household income or more very unaffordable.) Prices in Hong Kong have increased by more than 50 percent in the past two years due to low interest rates, an expanding economy and buyers flooding in from China.
The United States boasted the most affordable major markets. Atlanta was the most affordable big city, in which the median home price is $129,000.
Meanwhile, the most unaffordable markets in the U.S. were mostly found in California: San Francisco (homes cost 7.2 times income), San Jose (6.7 times), San Diego (6.2 times), New York (6.1 times), and Los Angeles (5.9 times).
Source: INFORMATION, INC. Bethesda, MD
Australian homes – which have a median price of $454,000 – were found to be the most unaffordable among English-speaking nations, according to the report by consulting firm Demographia, which examined affordability in the third quarter of 2010. The median home in Australia costs 6.1 times the gross annual median household income. What’s more, 85 percent of the homes in Australia’s major cities were more than 5.1 times average income, according to the survey.
On the other hand, U.S. homes have a median home price of $168,000 and homes cost only three times yearly income or less.
Australia has gone from being “the exemplar of modestly priced, high-quality middle-class housing, to now the most unaffordable housing market in the English-speaking world,” the report noted. “Each of the least affordable markets were characterized by more restrictive land use regulation, which materially increases the price of land and makes housing less affordable.”
The priciest city for real estate, in general: Hong Kong, with homes costing 11.4 times income. (The report considers any markets where home prices are 5.1 times household income or more very unaffordable.) Prices in Hong Kong have increased by more than 50 percent in the past two years due to low interest rates, an expanding economy and buyers flooding in from China.
The United States boasted the most affordable major markets. Atlanta was the most affordable big city, in which the median home price is $129,000.
Meanwhile, the most unaffordable markets in the U.S. were mostly found in California: San Francisco (homes cost 7.2 times income), San Jose (6.7 times), San Diego (6.2 times), New York (6.1 times), and Los Angeles (5.9 times).
Source: INFORMATION, INC. Bethesda, MD
Rate on 30-year fixed mortgage rises to 4.80%
The average rate on a 30-year fixed mortgage rose for the second week in a row, buoyed by higher bond yields.
Freddie Mac said Thursday that the average rate rose to 4.80 percent this week from 4.74 percent the previous week. The average rate on the 15-year loan, a popular refinance option, inched up to 4.09 percent from 4.05 percent.
Mortgage rates have changed little in the new year after spiking more than half a percentage point in the last two months. Investors sold off Treasurys bonds during that stretch, driving yields lower. Mortgage rates tend to track the yield on the 10-year Treasury note.
The 30-year loan rate reached a 40-year low of 4.17 percent in November, and the 15-year mortgage rate fell to 3.57 percent, the lowest level on records dating back to 1991.
Record high foreclosures, a weak job market and expectations that prices will fall further have convinced potential buyers to hold off on purchasing homes. And historically low rates have done little to boost demand.
Fewer people bought previously owned homes last year than in any year since 1997, according to the National Association of Realtors. Sales fell 4.8 percent last year to 4.91 million units, the worst level in 13 years.
And sales of newly built homes fared even worse, sinking last year to the lowest level on records going back 47 years.
Still, sales of previously occupied homes showed some improvement in December, rising to the strongest pace since May, while sales of new homes jumped to the highest level since April.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage rose to 3.70 percent from 3.69 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans edged up to 3.26 percent from 3.25 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year and 15-year loan in Freddie Mac’s survey was 0.7 point. The average fee for the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
Source: The Associated Press, Alex Veiga, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Freddie Mac said Thursday that the average rate rose to 4.80 percent this week from 4.74 percent the previous week. The average rate on the 15-year loan, a popular refinance option, inched up to 4.09 percent from 4.05 percent.
Mortgage rates have changed little in the new year after spiking more than half a percentage point in the last two months. Investors sold off Treasurys bonds during that stretch, driving yields lower. Mortgage rates tend to track the yield on the 10-year Treasury note.
The 30-year loan rate reached a 40-year low of 4.17 percent in November, and the 15-year mortgage rate fell to 3.57 percent, the lowest level on records dating back to 1991.
Record high foreclosures, a weak job market and expectations that prices will fall further have convinced potential buyers to hold off on purchasing homes. And historically low rates have done little to boost demand.
Fewer people bought previously owned homes last year than in any year since 1997, according to the National Association of Realtors. Sales fell 4.8 percent last year to 4.91 million units, the worst level in 13 years.
And sales of newly built homes fared even worse, sinking last year to the lowest level on records going back 47 years.
Still, sales of previously occupied homes showed some improvement in December, rising to the strongest pace since May, while sales of new homes jumped to the highest level since April.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage rose to 3.70 percent from 3.69 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans edged up to 3.26 percent from 3.25 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year and 15-year loan in Freddie Mac’s survey was 0.7 point. The average fee for the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
Source: The Associated Press, Alex Veiga, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Deal may help turtles, hinder insurance
A settlement in a federal lawsuit could help protect turtles that nest on Florida beaches but also potentially make it tougher for some landowners to get federal flood insurance – particularly for new development.
The agreement was announced Wednesday by two environmental groups – the National Wildlife Federation (NWF) and Florida Wildlife Federation – that contend federal emergency managers have rubber-stamped insurance for coastal construction without studying the impacts on the primary nesting grounds of five species of threatened or endangered sea turtles.
Manley Fuller, president of the Florida Wildlife Federation, said the National Flood Insurance Program amounted to a taxpayer-supported subsidy that encourages construction where it shouldn’t be – at the edge of Florida’s hurricane vulnerable beaches. “What we’re trying to do ultimately is reduce exposure of the public to this liability,” he said. “We need to pull back a little further from the beaches.”
The two groups, along with the Sea Turtle Conservancy, say the settlement is one step in a broader effort needed to protect sea turtle species – loggerhead, green, hawksbill, leatherback and Kemp’s Ridleys – that face mounting threats from development, oil spills and other pollution, fishing gear and seawalls and other armoring designed to protect coastal structures from storms and rising sea levels.
‘A tough year’
“Turtles have had a tough year in Florida,” said Gary Appelson, policy coordinator for the Sea Turtle Conservancy. Hundreds were recovered from waters and beaches tainted by the Gulf of Mexico oil spill, and cold snaps last year left hundreds more stunned or dead.
The settlement between the groups and the Federal Emergency Management Agency (FEMA), approved last week by U.S. District Court Judge Michael Moore in Miami, doesn’t provide turtles any additional protections on its own. It asks FEMA, which oversees the flood insurance program, to ask two other agencies that share responsibility for protecting sea turtles to scrutinize the flood insurance program.
Those agencies, the Fish and Wildlife Service and National Marine Fisheries Service, will then have 11 months to issue a detailed “biological assessment” of any impacts.
FEMA responded to questions with a brief statement from Brad Carroll, a spokesman in Washington, confirming that the agency had agreed to the assessment in exchange for the environmental groups dropping their civil lawsuit.
Jim Murphy, lead counsel for the NWF, admitted it was difficult to predict how the settlement might affect the controversial federal flood insurance program, which is running about $18 billion in the red in large part because of losses associated with Hurricane Katrina.
But the settlement could – at least potentially – have serious implications for Florida, the state with the largest number of flood policies.
The groups stressed that they weren’t aiming to eliminate flood insurance from areas already heavily developed, such as Miami Beach or Fort Lauderdale, but they do want FEMA to stop issuing new policies – particularly in flood-prone areas. They also want to end policy renewals for coastal structures heavily damaged by storms or erosion – a step that would force landowners to rebuild at their own risk.
“It would be our hope that any restrictions on development would be minimal and target the highest-risk properties in Florida,” Murphy said.
Similar suit
In 2005, the NWF won a similar suit that affected the Florida Keys. Moore, who also heard that case, blocked new construction in the Florida Keys from receiving federal flood insurance in places where rare creatures such as the Key deer roam. His ruling, upheld on appeal, affected several hundred acres of privately owned land in the Keys.
Environmentalists also called on the state to strengthen policies to protect beaches and turtle nesting, including more purchases of undeveloped coastal land and more limits on lighting.
Environmentalists say limiting coastal development will pay off in the long run by protecting landscape that draws tourists.
“We need to protect our beach,” he said. “What’s good for sea turtles is good for Florida’s economy.”
Source: The Miami Herald, Curtis Morgan. Distributed by McClatchy-Tribune Information Services.
The agreement was announced Wednesday by two environmental groups – the National Wildlife Federation (NWF) and Florida Wildlife Federation – that contend federal emergency managers have rubber-stamped insurance for coastal construction without studying the impacts on the primary nesting grounds of five species of threatened or endangered sea turtles.
Manley Fuller, president of the Florida Wildlife Federation, said the National Flood Insurance Program amounted to a taxpayer-supported subsidy that encourages construction where it shouldn’t be – at the edge of Florida’s hurricane vulnerable beaches. “What we’re trying to do ultimately is reduce exposure of the public to this liability,” he said. “We need to pull back a little further from the beaches.”
The two groups, along with the Sea Turtle Conservancy, say the settlement is one step in a broader effort needed to protect sea turtle species – loggerhead, green, hawksbill, leatherback and Kemp’s Ridleys – that face mounting threats from development, oil spills and other pollution, fishing gear and seawalls and other armoring designed to protect coastal structures from storms and rising sea levels.
‘A tough year’
“Turtles have had a tough year in Florida,” said Gary Appelson, policy coordinator for the Sea Turtle Conservancy. Hundreds were recovered from waters and beaches tainted by the Gulf of Mexico oil spill, and cold snaps last year left hundreds more stunned or dead.
The settlement between the groups and the Federal Emergency Management Agency (FEMA), approved last week by U.S. District Court Judge Michael Moore in Miami, doesn’t provide turtles any additional protections on its own. It asks FEMA, which oversees the flood insurance program, to ask two other agencies that share responsibility for protecting sea turtles to scrutinize the flood insurance program.
Those agencies, the Fish and Wildlife Service and National Marine Fisheries Service, will then have 11 months to issue a detailed “biological assessment” of any impacts.
FEMA responded to questions with a brief statement from Brad Carroll, a spokesman in Washington, confirming that the agency had agreed to the assessment in exchange for the environmental groups dropping their civil lawsuit.
Jim Murphy, lead counsel for the NWF, admitted it was difficult to predict how the settlement might affect the controversial federal flood insurance program, which is running about $18 billion in the red in large part because of losses associated with Hurricane Katrina.
But the settlement could – at least potentially – have serious implications for Florida, the state with the largest number of flood policies.
The groups stressed that they weren’t aiming to eliminate flood insurance from areas already heavily developed, such as Miami Beach or Fort Lauderdale, but they do want FEMA to stop issuing new policies – particularly in flood-prone areas. They also want to end policy renewals for coastal structures heavily damaged by storms or erosion – a step that would force landowners to rebuild at their own risk.
“It would be our hope that any restrictions on development would be minimal and target the highest-risk properties in Florida,” Murphy said.
Similar suit
In 2005, the NWF won a similar suit that affected the Florida Keys. Moore, who also heard that case, blocked new construction in the Florida Keys from receiving federal flood insurance in places where rare creatures such as the Key deer roam. His ruling, upheld on appeal, affected several hundred acres of privately owned land in the Keys.
Environmentalists also called on the state to strengthen policies to protect beaches and turtle nesting, including more purchases of undeveloped coastal land and more limits on lighting.
Environmentalists say limiting coastal development will pay off in the long run by protecting landscape that draws tourists.
“We need to protect our beach,” he said. “What’s good for sea turtles is good for Florida’s economy.”
Source: The Miami Herald, Curtis Morgan. Distributed by McClatchy-Tribune Information Services.
Thursday, January 27, 2011
Google to Drop Real Estate Listings
Google announced that it will drop real estate listings that real estate professionals upload to its classified site Google Base, as well as any for-sale, foreclosure, or rental properties through its search function on Google Maps.
The real estate listings at the site will discontinue by Feb. 10, 2011.
Google officials say they decided to stop featuring the real estate listings because of low usage and the popularity of other property-search tools on real estate Web sites. Google Base also is being replaced by Google Shopping APIs, which will not support real estate listings.
Google says visitors still will be able to be use Google to find real estate information and Web sites and explore neighborhoods through Google Street View.
"This does not come as a surprise to me,” Pete Flint, CEO of property search site Trulia, told Inman News. “Even with Google's huge audience, it shows having listing data is clearly not enough to deliver a good real estate search experience and build audience."
Source: “Google Drops Real Estate Listings,” Inman News (Jan. 26, 2011)
The real estate listings at the site will discontinue by Feb. 10, 2011.
Google officials say they decided to stop featuring the real estate listings because of low usage and the popularity of other property-search tools on real estate Web sites. Google Base also is being replaced by Google Shopping APIs, which will not support real estate listings.
Google says visitors still will be able to be use Google to find real estate information and Web sites and explore neighborhoods through Google Street View.
"This does not come as a surprise to me,” Pete Flint, CEO of property search site Trulia, told Inman News. “Even with Google's huge audience, it shows having listing data is clearly not enough to deliver a good real estate search experience and build audience."
Source: “Google Drops Real Estate Listings,” Inman News (Jan. 26, 2011)
Pending home sales continue uptrend
Pending home sales improved further in December, marking the fifth gain in the past six months, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index (PHSI), a forward-looking indicator, increased 2 percent to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2 percent below the 97.8 mark in December 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
“Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions,” says Lawrence Yun, NAR chief economist. “Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit.
“In the past two years, homebuyers have been very successful, with super-low loan default rates, partly because of stable home prices during that time. That trend is likely to continue in 2011 as long as there is sufficient demand to absorb inventory,” Yun said. “The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year.”
The PHSI in the Northeast increased 1.8 percent to 73.9 in December but is 5.3 percent below December 2009. In the Midwest, the index rose 8.0 percent in December to 84.6 but is 5.1 percent below a year ago.
Pending home sales in the South jumped 11.5 percent to an index of 101.9 and are 1.7 percent above December 2009. In the West, the index fell 13.2 percent to 105.8 and is 10.7 percent below a year ago.
Source: Florida Realtors®
The Pending Home Sales Index (PHSI), a forward-looking indicator, increased 2 percent to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2 percent below the 97.8 mark in December 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
“Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions,” says Lawrence Yun, NAR chief economist. “Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit.
“In the past two years, homebuyers have been very successful, with super-low loan default rates, partly because of stable home prices during that time. That trend is likely to continue in 2011 as long as there is sufficient demand to absorb inventory,” Yun said. “The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year.”
The PHSI in the Northeast increased 1.8 percent to 73.9 in December but is 5.3 percent below December 2009. In the Midwest, the index rose 8.0 percent in December to 84.6 but is 5.1 percent below a year ago.
Pending home sales in the South jumped 11.5 percent to an index of 101.9 and are 1.7 percent above December 2009. In the West, the index fell 13.2 percent to 105.8 and is 10.7 percent below a year ago.
Source: Florida Realtors®
Wednesday, January 26, 2011
New home sales jump 17.5% in Dec.
While 2010 was not a stellar year for new home sales, it ended on a positive note: December home sales rose 17.5 percent over November home sales on a seasonally adjusted basis, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
In December, there were 329,000 home sales on a seasonally adjusted basis, strongly surpassing economists’ predictions of 299,000 sales.
While a strong uptick in new home sales marked a positive end for 2010, however, the year ended up as the slowest one on record. The estimated total of new homes sold in 2010 was 14.4 percent below the 2009 level, according to the report.
Source: Florida Realtors®
In December, there were 329,000 home sales on a seasonally adjusted basis, strongly surpassing economists’ predictions of 299,000 sales.
While a strong uptick in new home sales marked a positive end for 2010, however, the year ended up as the slowest one on record. The estimated total of new homes sold in 2010 was 14.4 percent below the 2009 level, according to the report.
Source: Florida Realtors®
IRS app lets you check refund status
The IRS unveiled a smartphone app Monday that will let taxpayers check the status of their tax refunds and get other information about their tax returns. The app, IRS2Go, can be downloaded for free on iPhones and Androids, the IRS said.
Taxpayers will need to provide some basic information to check the status of their refund on the app. They’ll need to enter their Social Security number, which will be masked and encrypted for security purposes, the IRS said. After that, they’ll need to select the filing status they used on their tax return and enter the amount of refund they expect to receive.
For taxpayers who e-file, the refund function of the smartphone app will work within about 72 hours after they receive an e-mail acknowledgment from the IRS confirming receipt of their return. Taxpayers who file paper tax returns will need to wait three to four weeks to check their refund status, the IRS said.
App users can also sign up to receive daily tax tips from the IRS via e-mail.
Earlier this month, TurboTax, the nation’s largest tax software provider, released a mobile application that allows taxpayers who file a 1040EZ to prepare and file their federal and state income taxes on their smartphones. Customers can download the SnapTax app for free but will have to pay $14.99 to file their tax returns.
“This phone app is a first step for us,” IRS Commissioner Doug Shulman said. “We will look for additional ways to expand and refine our use of smartphones and other new technologies to help meet the needs of taxpayers.”
Source: 2011 USA TODAY, a division of Gannett Co. Inc.
Taxpayers will need to provide some basic information to check the status of their refund on the app. They’ll need to enter their Social Security number, which will be masked and encrypted for security purposes, the IRS said. After that, they’ll need to select the filing status they used on their tax return and enter the amount of refund they expect to receive.
For taxpayers who e-file, the refund function of the smartphone app will work within about 72 hours after they receive an e-mail acknowledgment from the IRS confirming receipt of their return. Taxpayers who file paper tax returns will need to wait three to four weeks to check their refund status, the IRS said.
App users can also sign up to receive daily tax tips from the IRS via e-mail.
Earlier this month, TurboTax, the nation’s largest tax software provider, released a mobile application that allows taxpayers who file a 1040EZ to prepare and file their federal and state income taxes on their smartphones. Customers can download the SnapTax app for free but will have to pay $14.99 to file their tax returns.
“This phone app is a first step for us,” IRS Commissioner Doug Shulman said. “We will look for additional ways to expand and refine our use of smartphones and other new technologies to help meet the needs of taxpayers.”
Source: 2011 USA TODAY, a division of Gannett Co. Inc.
Humasan Real Estate is fully integrated with Google Apps Enterprises
FOR IMMEDIATE RELEASE
PRESS RELEASE
01/26/2011
Mami‚ FL − 01/26/2011 − We at Humasan Real Estate are pleased to announce that the brokerage firm is fully integrated with Google Apps Enterprises; this is a significant step toward converting the brokerage firm into the Cloud. This technology addition will enable us to ingrate all our system under one umbrella, providing more tools to our Associates "ALL IN ONE STOP" which will streamline their business and be more efficient, in addition having all the tools "ON THE GO".
Integrating Google Apps Enterprises to Humasan Real Estate operations is part of the culture and vision that will put us as a leading Real Estate Brokerage firm in the State of Florida, allowing us to be competitive, cost control, and offer more to our associates for their day to day business.
Some of the benefits for the brokerage and the associates are:
-Remote access from anywhere in the World!
-25G of Email Storage per each Associate
-Brokerage Intranet-Site ("ALL IN ONE STOP" that contain Industry Useful Links, Collaboration, Pre-Writing Marketing Letters for Sales, Buyers, FSBO, Expires and much more!!!)
-Access to Google Apps and Affiliates
-Access to the Android Market and use of the same for the business integrated with Humasan Real Estate-Google Apps Enterprises system
Our Vision
Preserving our Fundamentals, while enhancing your Real Estate Experience.
PRESS RELEASE
01/26/2011
Mami‚ FL − 01/26/2011 − We at Humasan Real Estate are pleased to announce that the brokerage firm is fully integrated with Google Apps Enterprises; this is a significant step toward converting the brokerage firm into the Cloud. This technology addition will enable us to ingrate all our system under one umbrella, providing more tools to our Associates "ALL IN ONE STOP" which will streamline their business and be more efficient, in addition having all the tools "ON THE GO".
Integrating Google Apps Enterprises to Humasan Real Estate operations is part of the culture and vision that will put us as a leading Real Estate Brokerage firm in the State of Florida, allowing us to be competitive, cost control, and offer more to our associates for their day to day business.
Some of the benefits for the brokerage and the associates are:
-Remote access from anywhere in the World!
-25G of Email Storage per each Associate
-Brokerage Intranet-Site ("ALL IN ONE STOP" that contain Industry Useful Links, Collaboration, Pre-Writing Marketing Letters for Sales, Buyers, FSBO, Expires and much more!!!)
-Access to Google Apps and Affiliates
-Access to the Android Market and use of the same for the business integrated with Humasan Real Estate-Google Apps Enterprises system
Our Vision
Preserving our Fundamentals, while enhancing your Real Estate Experience.
Tuesday, January 25, 2011
Cities where it’s cheaper to buy than rent
It’s cheaper to buy a home rather than rent one in 72 percent of the 50 largest U.S. cities, according to Trulia’s rent vs. buy index, which compares the total cost of homeownership to the cost of renting.
“Since the start of the ‘Great Recession,’ many former homeowners have flooded the rental market,” Pete Flint, CEO of Trulia, said in a news release about the index. “Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets.”
The index compares the median sales price of homes with the median rent on two bedroom apartments, condos, and townhomes that were listed on Trulia as of Jan. 10, 2011.
Here are the top 10 cities where it’s best to buy than rent, according to the index:
1. Miami
2. Las Vegas
3. Arlington, Texas
4. Mesa, Ariz.
5. Phoenix, Ariz.
6. Jacksonville, Fla.
7. Sacramento, Calif.
8. San Antonio, Texas
9. Fresno, Calif.
10. El Paso, Texas
Source: INFORMATION, INC. Bethesda, MD
“Since the start of the ‘Great Recession,’ many former homeowners have flooded the rental market,” Pete Flint, CEO of Trulia, said in a news release about the index. “Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets.”
The index compares the median sales price of homes with the median rent on two bedroom apartments, condos, and townhomes that were listed on Trulia as of Jan. 10, 2011.
Here are the top 10 cities where it’s best to buy than rent, according to the index:
1. Miami
2. Las Vegas
3. Arlington, Texas
4. Mesa, Ariz.
5. Phoenix, Ariz.
6. Jacksonville, Fla.
7. Sacramento, Calif.
8. San Antonio, Texas
9. Fresno, Calif.
10. El Paso, Texas
Source: INFORMATION, INC. Bethesda, MD
Home prices fall in major U.S. cities
Home prices are falling across most of America’s largest cities, and average prices in eight major markets have hit their lowest point since the housing bust.
The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday fell 1 percent in November from October. All but one city, San Diego, recorded monthly price declines.
Eight others sank to their lowest levels since prices peaked in 2006 and 2007: Atlanta, Charlotte (North Carolina), Las Vegas, Miami, Portland (Oregon), Seattle, Tampa (Florida), and Detroit, which saw the largest drop at 2.7 percent from the previous month.
Millions of foreclosures are forcing prices down, and many people are holding off making purchases because they fear the market hasn’t hit bottom yet. Many analysts expect home prices to keep falling through the first six months of this year.
“With these numbers, more analysts will be calling for a double-dip in home prices,” said David Blitzer, chairman of S&P’s Index Committee.
Over the past year, prices have risen in four major metro areas. Prices rose 3.5 percent in Washington, the largest gain. Los Angeles, San Diego and San Francisco also posted gains.
Some of the worst declines have come in cities hard hit by foreclosures.
As of November, average home prices in Las Vegas have fallen 57.2 percent from their peak in August 2006 and are back to where they were in late 1999. Another foreclosure hotbed, Phoenix, is down 53.9 percent from its June 2006 peak. Average home prices there are back to where they were in 2000.
Miami has fallen 48.8 percent from its peak in December 2006, and is selling at late 2002 levels.
The 20-city index has risen 3.3 percent from its April 2009 bottom. But it remains well below its July 2006 peak.
Source: The Associated Press, Alex Veiga, AP real estate writer.
The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday fell 1 percent in November from October. All but one city, San Diego, recorded monthly price declines.
Eight others sank to their lowest levels since prices peaked in 2006 and 2007: Atlanta, Charlotte (North Carolina), Las Vegas, Miami, Portland (Oregon), Seattle, Tampa (Florida), and Detroit, which saw the largest drop at 2.7 percent from the previous month.
Millions of foreclosures are forcing prices down, and many people are holding off making purchases because they fear the market hasn’t hit bottom yet. Many analysts expect home prices to keep falling through the first six months of this year.
“With these numbers, more analysts will be calling for a double-dip in home prices,” said David Blitzer, chairman of S&P’s Index Committee.
Over the past year, prices have risen in four major metro areas. Prices rose 3.5 percent in Washington, the largest gain. Los Angeles, San Diego and San Francisco also posted gains.
Some of the worst declines have come in cities hard hit by foreclosures.
As of November, average home prices in Las Vegas have fallen 57.2 percent from their peak in August 2006 and are back to where they were in late 1999. Another foreclosure hotbed, Phoenix, is down 53.9 percent from its June 2006 peak. Average home prices there are back to where they were in 2000.
Miami has fallen 48.8 percent from its peak in December 2006, and is selling at late 2002 levels.
The 20-city index has risen 3.3 percent from its April 2009 bottom. But it remains well below its July 2006 peak.
Source: The Associated Press, Alex Veiga, AP real estate writer.
Friday, January 21, 2011
3 Budget-Friendly Decorating Tips With Impact
You don’t have to spend a fortune to create a well designed, inviting home. Interior designer Lili Diallo, deputy style editor at Country Living magazine, often uses what home owners already own and just tweaks it to create an inviting space.
Here are a few of her budget-friendly tips for home decorating:
1. Move one piece of furniture.
Just moving one furniture item can drastically change the energy and look of a room. Instead of a sofa against the wall, pull the sofa into the room with a console and two lamps behind it.
2. Update the windows.
Window treatments can make a big statement in a room and simply changing them out can give a room an entirely new look. Try white muslin, or loose, white sheer linen panels so the light will come through them and soften the room, she suggests.
3. Add a large rug.
You don’t need two or three small area rugs in one room. Instead, swap them out for one large rug to unify and pull the room together and even enlarge it, she says.
Source: “Decorating Without Breaking the Budget,” The Washington Post (Jan. 20, 2011)
Here are a few of her budget-friendly tips for home decorating:
1. Move one piece of furniture.
Just moving one furniture item can drastically change the energy and look of a room. Instead of a sofa against the wall, pull the sofa into the room with a console and two lamps behind it.
2. Update the windows.
Window treatments can make a big statement in a room and simply changing them out can give a room an entirely new look. Try white muslin, or loose, white sheer linen panels so the light will come through them and soften the room, she suggests.
3. Add a large rug.
You don’t need two or three small area rugs in one room. Instead, swap them out for one large rug to unify and pull the room together and even enlarge it, she says.
Source: “Decorating Without Breaking the Budget,” The Washington Post (Jan. 20, 2011)
Property insurance redo set for hearing next week
An ambitious property insurance rewrite with everything including the kitchen sink(hole) has been filed and will get its first public hearing next week as lawmakers again try to reduce costs for the industry.
From making it harder for public adjusters to re-open old claims to holdbacks of payouts pending proof of repairs, the bill (SB 408), sponsored by Sen. Garrett Richter, R-Naples, bears many similarities to legislation vetoed by Gov. Charlie Crist last year. During his independent campaign run for the U.S. Senate, Crist said that the bill would have raised rates during difficult times.
Richter, chairman of the Senate Banking and Insurance Committee, said the bill is a template for a final product that may not emerge until well into the session. The bill is expected to get its first hearing on Tuesday before Richter’s committee.
“I’m sure we’re going to see many changes between the bill that’s filed and the bill that we finally come up with,” Richter said earlier this month. “This bill is a starting point in that discussion.”
Among the provisions are:
• Allow insurance companies to hold back a portion of claims payments until the policyholder shows proof that repairs and replacements are actually being done. Insurers have argued that Florida is one of the few states that requires insurers to pay claims upfront and does not require proof that homeowners haven’t simply pocketed the money without making repairs.
• Reduce to three years the length of time a policyholder can re-file a claim, down from the five-year window now on the books.
• Shift the burden of proof in contested sinkhole cases. Under the bill, a policyholder must prove that home damage resulted from a sinkhole; currently, the burden of proof falls on insurers to prove that damage was not caused by a sinkhole. It also would require sinkhole work to be under contract before full payment is made.
• Place restrictions on public adjuster advertising and cap commissions public adjusters can take on re-opened claims.
• Allow an insurer to cancel a policy within 45 days if state regulators determine the cancellation serves the public or policyholder’s interest.
The industry backed the similar broad bill last year and was disappointed by Crist’s veto. However, new Gov. Rick Scott is thought to be more sympathetic to the industry. Scott hasn’t specifically commented on the new legislation.
One notable omission in the new proposal from last year’s bill: It does not include a provision allowing insurers to raise rates up to 10 percent annually to adjust for inflation and changing reinsurance costs without going through full-blown hearings before the Office of Insurance Regulation, which annually calculates increases in those cost drivers.
Source: News Service of Florida, Michael Peltier.
From making it harder for public adjusters to re-open old claims to holdbacks of payouts pending proof of repairs, the bill (SB 408), sponsored by Sen. Garrett Richter, R-Naples, bears many similarities to legislation vetoed by Gov. Charlie Crist last year. During his independent campaign run for the U.S. Senate, Crist said that the bill would have raised rates during difficult times.
Richter, chairman of the Senate Banking and Insurance Committee, said the bill is a template for a final product that may not emerge until well into the session. The bill is expected to get its first hearing on Tuesday before Richter’s committee.
“I’m sure we’re going to see many changes between the bill that’s filed and the bill that we finally come up with,” Richter said earlier this month. “This bill is a starting point in that discussion.”
Among the provisions are:
• Allow insurance companies to hold back a portion of claims payments until the policyholder shows proof that repairs and replacements are actually being done. Insurers have argued that Florida is one of the few states that requires insurers to pay claims upfront and does not require proof that homeowners haven’t simply pocketed the money without making repairs.
• Reduce to three years the length of time a policyholder can re-file a claim, down from the five-year window now on the books.
• Shift the burden of proof in contested sinkhole cases. Under the bill, a policyholder must prove that home damage resulted from a sinkhole; currently, the burden of proof falls on insurers to prove that damage was not caused by a sinkhole. It also would require sinkhole work to be under contract before full payment is made.
• Place restrictions on public adjuster advertising and cap commissions public adjusters can take on re-opened claims.
• Allow an insurer to cancel a policy within 45 days if state regulators determine the cancellation serves the public or policyholder’s interest.
The industry backed the similar broad bill last year and was disappointed by Crist’s veto. However, new Gov. Rick Scott is thought to be more sympathetic to the industry. Scott hasn’t specifically commented on the new legislation.
One notable omission in the new proposal from last year’s bill: It does not include a provision allowing insurers to raise rates up to 10 percent annually to adjust for inflation and changing reinsurance costs without going through full-blown hearings before the Office of Insurance Regulation, which annually calculates increases in those cost drivers.
Source: News Service of Florida, Michael Peltier.
Installing a Spa on Your Deck
Evaluate the cost of purchasing, installing, and maintaining an outdoor spa to decide if it's a worthwhile addition to your deck.
Hot tubs and spas come in an array of shapes and sizes, and can be equipped with scores of accessories. Accordingly, they have a wide range of prices. Choosing the right spa depends on its intended use, how big your deck is, and what structural alterations will be required for your deck. In addition, you'll need to know the cost of installation, day-to-day expenses, and how much you can expect to recoup on your investment should you sell your home.
Different types of spas and their costs
It started with that icon of laid-back living, the redwood hot tub. Before long, fiberglass versions with circulating jets appeared called "spas." Today the terms "hot tub" and "spa" are used interchangeably, but because most units are jetted, spa is the term more commonly used. Spas range in size from two-person models costing about $2,000, to 20-foot-long swim spas costing $18,000 or more. In between are those most popular for decks: 4- to 8-person models costing from $2,500 to $10,000.
Choosing a spa can be challenging. You'll need to select from a dazzling number of accessories, including cup holders, colored LED lights, iPod docks, stereo systems, pop-up TV screens, and even waterproof keyboards.
"The gadgetry is there to catch your eye while shopping," cautions Erich Johanson, an experienced spa installer in Olympia, Wash. He recommends choosing established manufacturers and narrowing your choice from there. "Look at the national brands and find one you like," he says. "Then chose a model that has the features you want."
His top recommendation is for "full-foam" insulation-a high-density, closed-cell polyurethane foam that fills the cavity between the fiberglass tub shell and the outer cabinet and helps reduce heat loss. In addition, full-foam insulation helps reduce noise and adds stability to the entire unit.
Check installation costs as well. They'll be dependent on the size of the spa and the ease of getting it where it needs to be. In some cases, limited access may require the use of a crane to lower the spa into place. For an 8-person spa, expect about $300 for delivery and setup.
Adding structural components to carry the weight
The safest-and most cost-effective-location for a spa is the lower level of a deck. A deck only a few steps above ground, if built to code, should be able to support 100 lbs per sq. ft.-a filled 8 x 8 spa at 6,000 lbs. works out to about 94 lbs per sq. ft., just within limits. Check your local codes for any restrictions governing the installation of a spa on a deck.
Even better is a reinforced concrete pad, a great option if you're planning a new deck or intend to add on to an existing deck. A 4-inch slab will safely bear 115 lbs per sq. ft.
If you want the tub on a deck more than a couple of feet above ground or on an upper level of a deck, things get more complicated. You'll need to hire a structural engineer to provide specs for a site-specific framing structure to support the weight. Expect to pay an engineer $300 to $500 for these services. The necessary framing for a typical backyard deck may cost only a few hundred dollars, but expect to pay much more if your deck is a high-flying structure perched on a slope.
Accessing power and water
Spas require a nearby source of electricity. Because water is involved, any electrical hookup for a spa must include ground-fault circuit interrupter (GFCI) protection. This nifty device shuts down the system within milliseconds if it detects the tiniest change in current flow caused by a short circuit. Some spas come with an extension cord with a GFCI built in that can be plugged into a 110-volt, 20-amp circuit.
Larger units require at least one dedicated 220-volt, 50-amp circuit. In addition, there must be an emergency shutoff within sight of the spa, but not closer than 5 feet or farther than 50 feet. A new circuit and shutoff will cost about $800.
Water access is simple; spas fill with an outdoor hose. The spa then heats and circulates the water. Insulated tub covers limit evaporation, but the tub will need occasional topping off. When it's time to empty the unit, all spas have built-in hose bibs so you can drain the water.
Safety
Getting in and out of a spa provides opportunities for mishaps. A handrail is a good idea for older-and younger-users. A cover with a lock is must if you have children (http://www.hottubliving.com/safety.aspx).
If you plan to build your spa into the deck, it may seem best to drop it into the deck so that the rim of the tub sits on the decking. Unfortunately, this makes it easy for people to fall in or step on the cover, and also complicates getting into the tub. The ideal arrangement is to set the spa partially into the deck so the rim is 17 to 24 inches above the decking. That way, bathers can sit on the rim, swing their feet over, and enter the water.
Hot water feels great, but needs to be indulged with caution. The Association of Pool & Spa Professionals (http://www.apsp.org/default.aspx) recommends keeping the water temperature between 100°F and 102°F, with 104°F as a maximum. A safe soaking duration is 15 minutes. To keep the spa free of bacteria, you must be clean it regularly and add sanitizing chemicals.
Anticipating the cost and value of a spa
It costs as little 50¢ a day to run a spa. That amount can vary according to the amount of use, your local energy costs, the quality of insulation in your spa, and the quality of the cover. Covers typically come with spas, but consider upgrading to a higher efficiency type. The additional cost is modest and the better-insulated covers are often lighter, making them easier to remove.
If you live in a region with a climate moderate enough for year-round use, a deck equipped with a spa should give you a slight edge in selling a home. John Tripp, an appraiser with Foundation Trust in San Jose, Calif., says that spas "normally are assets as long as they have been properly maintained and there is no evidence of leakage or deferred maintenance."
In other areas of the country, don't expect much of a return. "They don't have the payback to meet the cost," says Richard Koestner, an appraiser with Koestner, McGiven & Associates in Davenport, Iowa. "If they do add any value it would be in the upper price range. It could be detriment if they aren't in the right market."
People react differently to the prospect of purchasing a house that has a spa. Some buyers may ask that it be removed as a condition of sale. Others will hardly be able to wait for that first soothing soak.
Dave Toht has written or edited more than 60 books on home repair and remodeling, including titles for The Home Depot, Lowe's, Better Homes & Gardens, Sunset, and Reader's Digest. A former contractor, Dave was editor of Remodeling Ideas magazine and continues to contribute to numerous how-to publications.
Source: HouseLogic.com
Hot tubs and spas come in an array of shapes and sizes, and can be equipped with scores of accessories. Accordingly, they have a wide range of prices. Choosing the right spa depends on its intended use, how big your deck is, and what structural alterations will be required for your deck. In addition, you'll need to know the cost of installation, day-to-day expenses, and how much you can expect to recoup on your investment should you sell your home.
Different types of spas and their costs
It started with that icon of laid-back living, the redwood hot tub. Before long, fiberglass versions with circulating jets appeared called "spas." Today the terms "hot tub" and "spa" are used interchangeably, but because most units are jetted, spa is the term more commonly used. Spas range in size from two-person models costing about $2,000, to 20-foot-long swim spas costing $18,000 or more. In between are those most popular for decks: 4- to 8-person models costing from $2,500 to $10,000.
Choosing a spa can be challenging. You'll need to select from a dazzling number of accessories, including cup holders, colored LED lights, iPod docks, stereo systems, pop-up TV screens, and even waterproof keyboards.
"The gadgetry is there to catch your eye while shopping," cautions Erich Johanson, an experienced spa installer in Olympia, Wash. He recommends choosing established manufacturers and narrowing your choice from there. "Look at the national brands and find one you like," he says. "Then chose a model that has the features you want."
His top recommendation is for "full-foam" insulation-a high-density, closed-cell polyurethane foam that fills the cavity between the fiberglass tub shell and the outer cabinet and helps reduce heat loss. In addition, full-foam insulation helps reduce noise and adds stability to the entire unit.
Check installation costs as well. They'll be dependent on the size of the spa and the ease of getting it where it needs to be. In some cases, limited access may require the use of a crane to lower the spa into place. For an 8-person spa, expect about $300 for delivery and setup.
Adding structural components to carry the weight
The safest-and most cost-effective-location for a spa is the lower level of a deck. A deck only a few steps above ground, if built to code, should be able to support 100 lbs per sq. ft.-a filled 8 x 8 spa at 6,000 lbs. works out to about 94 lbs per sq. ft., just within limits. Check your local codes for any restrictions governing the installation of a spa on a deck.
Even better is a reinforced concrete pad, a great option if you're planning a new deck or intend to add on to an existing deck. A 4-inch slab will safely bear 115 lbs per sq. ft.
If you want the tub on a deck more than a couple of feet above ground or on an upper level of a deck, things get more complicated. You'll need to hire a structural engineer to provide specs for a site-specific framing structure to support the weight. Expect to pay an engineer $300 to $500 for these services. The necessary framing for a typical backyard deck may cost only a few hundred dollars, but expect to pay much more if your deck is a high-flying structure perched on a slope.
Accessing power and water
Spas require a nearby source of electricity. Because water is involved, any electrical hookup for a spa must include ground-fault circuit interrupter (GFCI) protection. This nifty device shuts down the system within milliseconds if it detects the tiniest change in current flow caused by a short circuit. Some spas come with an extension cord with a GFCI built in that can be plugged into a 110-volt, 20-amp circuit.
Larger units require at least one dedicated 220-volt, 50-amp circuit. In addition, there must be an emergency shutoff within sight of the spa, but not closer than 5 feet or farther than 50 feet. A new circuit and shutoff will cost about $800.
Water access is simple; spas fill with an outdoor hose. The spa then heats and circulates the water. Insulated tub covers limit evaporation, but the tub will need occasional topping off. When it's time to empty the unit, all spas have built-in hose bibs so you can drain the water.
Safety
Getting in and out of a spa provides opportunities for mishaps. A handrail is a good idea for older-and younger-users. A cover with a lock is must if you have children (http://www.hottubliving.com/safety.aspx).
If you plan to build your spa into the deck, it may seem best to drop it into the deck so that the rim of the tub sits on the decking. Unfortunately, this makes it easy for people to fall in or step on the cover, and also complicates getting into the tub. The ideal arrangement is to set the spa partially into the deck so the rim is 17 to 24 inches above the decking. That way, bathers can sit on the rim, swing their feet over, and enter the water.
Hot water feels great, but needs to be indulged with caution. The Association of Pool & Spa Professionals (http://www.apsp.org/default.aspx) recommends keeping the water temperature between 100°F and 102°F, with 104°F as a maximum. A safe soaking duration is 15 minutes. To keep the spa free of bacteria, you must be clean it regularly and add sanitizing chemicals.
Anticipating the cost and value of a spa
It costs as little 50¢ a day to run a spa. That amount can vary according to the amount of use, your local energy costs, the quality of insulation in your spa, and the quality of the cover. Covers typically come with spas, but consider upgrading to a higher efficiency type. The additional cost is modest and the better-insulated covers are often lighter, making them easier to remove.
If you live in a region with a climate moderate enough for year-round use, a deck equipped with a spa should give you a slight edge in selling a home. John Tripp, an appraiser with Foundation Trust in San Jose, Calif., says that spas "normally are assets as long as they have been properly maintained and there is no evidence of leakage or deferred maintenance."
In other areas of the country, don't expect much of a return. "They don't have the payback to meet the cost," says Richard Koestner, an appraiser with Koestner, McGiven & Associates in Davenport, Iowa. "If they do add any value it would be in the upper price range. It could be detriment if they aren't in the right market."
People react differently to the prospect of purchasing a house that has a spa. Some buyers may ask that it be removed as a condition of sale. Others will hardly be able to wait for that first soothing soak.
Dave Toht has written or edited more than 60 books on home repair and remodeling, including titles for The Home Depot, Lowe's, Better Homes & Gardens, Sunset, and Reader's Digest. A former contractor, Dave was editor of Remodeling Ideas magazine and continues to contribute to numerous how-to publications.
Source: HouseLogic.com
Rate on 30-year fixed mortgage rises to 4.74%
The average rate on a 30-year fixed mortgage rose slightly this week, following increases in Treasury yields.
The average rate rose to 4.74 percent this week from 4.71 percent the previous week, Freddie Mac said Thursday. The average rate on the 15-year loan, a popular refinance option, slipped to 4.05 percent from 4.08 percent.
Mortgage rates have changed little in the new year after spiking more than half a percentage point in the last two months. Investors sold off Treasurys bonds during that stretch, driving yields lower. Mortgage rates tend to track the yield on the 10-year Treasury note.
The 30-year loan rate reached a 40-year low of 4.17 percent in November, and the 15-year mortgage rate fell to 3.57 percent, the lowest level on records dating back to 1991.
Historically low rates have done little to boost the struggling housing market. Fewer people bought previously owned homes last year than in any year since 1997, the National Association of Realtors said Thursday.
The group said sales fell 4.8 percent last year to 4.91 million units. That was a few thousand homes lower than sales levels in 2008, making it the worst level in 13 years.
Record high foreclosures, a weak job market and expectations that prices will fall further have convinced potential buyers to hold off on purchasing homes.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage slipped to 3.69 percent from 3.72 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans rose to 3.25 percent from 3.23 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year and 15-year loan in Freddie Mac’s survey was 0.8 point. The average fee for the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
Source: The Associated Press, Janna Herron (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The average rate rose to 4.74 percent this week from 4.71 percent the previous week, Freddie Mac said Thursday. The average rate on the 15-year loan, a popular refinance option, slipped to 4.05 percent from 4.08 percent.
Mortgage rates have changed little in the new year after spiking more than half a percentage point in the last two months. Investors sold off Treasurys bonds during that stretch, driving yields lower. Mortgage rates tend to track the yield on the 10-year Treasury note.
The 30-year loan rate reached a 40-year low of 4.17 percent in November, and the 15-year mortgage rate fell to 3.57 percent, the lowest level on records dating back to 1991.
Historically low rates have done little to boost the struggling housing market. Fewer people bought previously owned homes last year than in any year since 1997, the National Association of Realtors said Thursday.
The group said sales fell 4.8 percent last year to 4.91 million units. That was a few thousand homes lower than sales levels in 2008, making it the worst level in 13 years.
Record high foreclosures, a weak job market and expectations that prices will fall further have convinced potential buyers to hold off on purchasing homes.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage slipped to 3.69 percent from 3.72 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans rose to 3.25 percent from 3.23 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year and 15-year loan in Freddie Mac’s survey was 0.8 point. The average fee for the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
Source: The Associated Press, Janna Herron (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Thursday, January 20, 2011
December Existing-Home Sales Jump
Existing-home sales rose sharply in December, when sales increased for the fifth time in the past six months, according to the National Association of REALTORS®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3 percent to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9 percent below the 5.44 million pace in December 2009.
Lawrence Yun, NAR chief economist, said sales are on an uptrend. “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said. “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”
The national median existing-home price for all housing types was $168,800 in December, which is 1.0 percent below December 2009. Distressed homes rose to a 36 percent market share in December from 33 percent in November, and 32 percent in December 2009.
“The modest rise in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price in December, but the flat price trend continues,” Yun explained.
Inventory Levels
Total housing inventory at the end of December fell 4.2 percent to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.
NAR President Ron Phipps said buyers are responding to very good affordability conditions despite tight mortgage credit. “Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” Phipps said. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.71 percent in December from 4.30 percent in November; the rate was 4.93 percent in December 2009.
Transaction Types
A parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in December, up from 32 percent in November, but are below a 43 percent share in December 2009.
Investors accounted for 20 percent of transactions in December, up from 19 percent in November and 15 percent in December 2009; the balance of sales were to repeat buyers. All-cash sales were at 29 percent in December, compared with 31 percent in November, but up from 22 percent a year ago. “All-cash sales have been consistently high at about 30 percent of the market over the past six months,” Yun said.
Single-family home sales jumped 11.8 percent to a seasonally adjusted annual rate of 4.64 million in December from 4.15 million in November, but are 2.5 percent below the 4.76 million level in December 2009. The median existing single-family home price was $169,300 in December, down 0.2 percent from a year ago.
Existing condominium and co-op sales surged 16.4 percent to a seasonally adjusted annual rate of 640,000 in December from 550,000 in November, but remain 5.2 percent below the 675,000-unit pace one year ago. The median existing condo price was $165,000 in December, which is 7.4 percent below December 2009.
Performance by Region
Regionally, existing-home sales in the Northeast jumped 13.0 percent to an annual pace of 870,000 in December but are 5.4 percent below December 2009. The median price in the Northeast was $237,300, which is 1.4 percent below a year ago.
Existing-home sales in the Midwest rose 11.0 percent in December to a level of 1.11 million but are 4.3 percent below a year ago. The median price in the Midwest was $139,700, up 3.3 percent from December 2009.
In the South, existing-home sales increased 10.1 percent to an annual pace of 1.97 million in December but are 2.5 percent below December 2009. The median price in the South was $148,400, unchanged from a year ago.
Existing-home sales in the West surged 16.7 percent to an annual level of 1.33 million in December but remain 1.5 percent below December 2009. The median price in the West was $204,000, down 5.6 percent from a year ago.
Source: NAR
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3 percent to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9 percent below the 5.44 million pace in December 2009.
Lawrence Yun, NAR chief economist, said sales are on an uptrend. “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said. “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”
The national median existing-home price for all housing types was $168,800 in December, which is 1.0 percent below December 2009. Distressed homes rose to a 36 percent market share in December from 33 percent in November, and 32 percent in December 2009.
“The modest rise in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price in December, but the flat price trend continues,” Yun explained.
Inventory Levels
Total housing inventory at the end of December fell 4.2 percent to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.
NAR President Ron Phipps said buyers are responding to very good affordability conditions despite tight mortgage credit. “Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” Phipps said. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.71 percent in December from 4.30 percent in November; the rate was 4.93 percent in December 2009.
Transaction Types
A parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in December, up from 32 percent in November, but are below a 43 percent share in December 2009.
Investors accounted for 20 percent of transactions in December, up from 19 percent in November and 15 percent in December 2009; the balance of sales were to repeat buyers. All-cash sales were at 29 percent in December, compared with 31 percent in November, but up from 22 percent a year ago. “All-cash sales have been consistently high at about 30 percent of the market over the past six months,” Yun said.
Single-family home sales jumped 11.8 percent to a seasonally adjusted annual rate of 4.64 million in December from 4.15 million in November, but are 2.5 percent below the 4.76 million level in December 2009. The median existing single-family home price was $169,300 in December, down 0.2 percent from a year ago.
Existing condominium and co-op sales surged 16.4 percent to a seasonally adjusted annual rate of 640,000 in December from 550,000 in November, but remain 5.2 percent below the 675,000-unit pace one year ago. The median existing condo price was $165,000 in December, which is 7.4 percent below December 2009.
Performance by Region
Regionally, existing-home sales in the Northeast jumped 13.0 percent to an annual pace of 870,000 in December but are 5.4 percent below December 2009. The median price in the Northeast was $237,300, which is 1.4 percent below a year ago.
Existing-home sales in the Midwest rose 11.0 percent in December to a level of 1.11 million but are 4.3 percent below a year ago. The median price in the Midwest was $139,700, up 3.3 percent from December 2009.
In the South, existing-home sales increased 10.1 percent to an annual pace of 1.97 million in December but are 2.5 percent below December 2009. The median price in the South was $148,400, unchanged from a year ago.
Existing-home sales in the West surged 16.7 percent to an annual level of 1.33 million in December but remain 1.5 percent below December 2009. The median price in the West was $204,000, down 5.6 percent from a year ago.
Source: NAR
Owners, renters agree: Owning a home is a smart decision
A substantial majority of both homeowners and current renters agree that owning a home is a smart decision over the long term, according to the results of a National Association of Realtors® (NAR) survey of 3,793 adults conducted online by Harris Interactive.
The American Attitudes About Homeownership survey found that 95 percent of owners and 72 percent of renters believe that, over a period of several years, it makes more sense to own a home. In addition, a large majority of homeowners are happy with the decision to own – 93 percent surveyed would buy again.
“Homeowners and renters agree that homeownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy,” says NAR President Ron Phipps. “The results of this survey illustrate just how important issues related to homeownership are to people in this country.”
The survey uncovered some differences between homeowners and renters, as well. While more than half of owners are “very” or “extremely” satisfied with the overall quality of their family life, only one-third of renters report the same levels of satisfaction. Similarly, 43 percent of homeowners are very/extremely satisfied with their community life, compared with 30 percent of renters.
A majority of renters – 63 percent – said that it was at least somewhat likely that they would purchase a home at some point in the future. Among this group, young adults (18-29 years old) have the strongest aspirations for homeownership; only 8 percent of young adults said that it was “not at all likely” that they would purchase a home at some point in the future.
In today’s market, many aspiring homeowners are faced with worries about job security and creditworthiness. Among renters who are very or extremely likely to buy a home in the future, three out of five consider confidence in job security and creditworthiness to be an obstacle.
One point of agreement between renters and homeowners was support of the mortgage interest deduction (MID). Seventy-four percent of owners and 62 percent of renters say it’s “extremely” or “very” important that the MID remain in place.
“At a time when the middle class is under increasing economic pressures, both homeowners and renters agree that the mortgage interest deduction should not be targeted for change,” said Phipps. “Given strong public support of and aspirations toward owning a home, we need to keep policies in place that support and encourage responsible, sustainable homeownership for our future.”
This survey was conducted online within the U.S. and fielded October 6-20, 2010. A total of 3,793 adults, 18 and older were surveyed, including 1,880 homeowners, 1,115 renters, and 798 young adults. All samples came from the Harris Poll online database and were weighted for age, sex, race/ethnicity, education, region and household income to be representative of the U.S. general population of adults 18 and older. Propensity score weighting was also used to adjust for respondents’ propensity to be online. Results are available online.
Source: Florida Realtors®
The American Attitudes About Homeownership survey found that 95 percent of owners and 72 percent of renters believe that, over a period of several years, it makes more sense to own a home. In addition, a large majority of homeowners are happy with the decision to own – 93 percent surveyed would buy again.
“Homeowners and renters agree that homeownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy,” says NAR President Ron Phipps. “The results of this survey illustrate just how important issues related to homeownership are to people in this country.”
The survey uncovered some differences between homeowners and renters, as well. While more than half of owners are “very” or “extremely” satisfied with the overall quality of their family life, only one-third of renters report the same levels of satisfaction. Similarly, 43 percent of homeowners are very/extremely satisfied with their community life, compared with 30 percent of renters.
A majority of renters – 63 percent – said that it was at least somewhat likely that they would purchase a home at some point in the future. Among this group, young adults (18-29 years old) have the strongest aspirations for homeownership; only 8 percent of young adults said that it was “not at all likely” that they would purchase a home at some point in the future.
In today’s market, many aspiring homeowners are faced with worries about job security and creditworthiness. Among renters who are very or extremely likely to buy a home in the future, three out of five consider confidence in job security and creditworthiness to be an obstacle.
One point of agreement between renters and homeowners was support of the mortgage interest deduction (MID). Seventy-four percent of owners and 62 percent of renters say it’s “extremely” or “very” important that the MID remain in place.
“At a time when the middle class is under increasing economic pressures, both homeowners and renters agree that the mortgage interest deduction should not be targeted for change,” said Phipps. “Given strong public support of and aspirations toward owning a home, we need to keep policies in place that support and encourage responsible, sustainable homeownership for our future.”
This survey was conducted online within the U.S. and fielded October 6-20, 2010. A total of 3,793 adults, 18 and older were surveyed, including 1,880 homeowners, 1,115 renters, and 798 young adults. All samples came from the Harris Poll online database and were weighted for age, sex, race/ethnicity, education, region and household income to be representative of the U.S. general population of adults 18 and older. Propensity score weighting was also used to adjust for respondents’ propensity to be online. Results are available online.
Source: Florida Realtors®
Florida’s existing home, condo sales up in Dec. and for 2010
Jan. 20, 2011 – Sales of existing homes and condominiums in Florida rose in December, a positive trend also reported at the close of 2010 as statewide sales activity posted gains over the previous year, according to the latest housing data released by Florida Realtors®.
A total of 15,550 existing single-family homes sold statewide in December, up 4 percent from the 14,923 homes sold in December 2009. The statewide existing home median sales price last month was $133,100; in December ’09 it was $139,800 for a 5 percent decrease, according to Florida Realtors’ data. However, December’s statewide existing home median price was higher than the $132,700 reported in November 2010. The national median existing single-family home price was $171,300 in November, according to the latest data available from the National Association of Realtors® (NAR). The median is the midpoint; half the homes sold for more, half for less.
In December, 12 of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales and 14 MSAs reported higher existing condos sales. In the year-to-year comparison for statewide existing condo sales, a total of 6,673 units changed hands last month, up 12 percent from the 5,955 condos sold in December 2009. The statewide existing condo median sales price in December was $88,100; in December ’09 it was $106,700 for a 17 percent decrease. The national median existing condo price was $165,300 in November, according to NAR.
Looking back on 2010, Florida’s existing home sales rose 5 percent for the year, with a total of 170,848 homes sold compared to 162,873 homes sold in 2009. Statewide existing home sales activity in 2010 also was 37.5 percent higher than 2008 statewide sales, records show. The statewide existing home median price for 2010 was $136,500; it was $142,500 in 2009 for a 4 percent decrease.
“It’s encouraging to close out the year for Florida’s housing market with increased sales activity,” said 2011 Florida Realtors President Patricia “Pat” S. Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound. “The homebuyer tax credits helped to fuel home and condo sales during the first half of 2010, while favorable affordability conditions and historically low mortgage rates continued to bring buyers into the market in the waning months of the year.
“Looking to the future, 2011 is going to be a year of opportunity for buyers and sellers,” Fitzgerald added. “Industry analysts report seeing steady economic improvements, including more jobs and stronger consumer confidence, which will have a positive, stabilizing impact on the housing market.”
In Florida’s condo market, a total of 72,050 units sold statewide in 2010, a gain of 29 percent compared to 55,900 units sold in 2009. Statewide existing condo sales activity in 2010 was up 90.6 percent over the 2008 sales level, records show. The statewide existing condo median price in 2010 was $91,300; it was $108,000 in 2009 for a 15 percent decrease.
The latest industry outlook from NAR offers positive predictions for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” said NAR Chief Economist Lawrence Yun. “All the indicator trends are pointing to a gradual housing recovery.”
In December, the interest rate for a 30-year fixed-rate mortgage averaged 4.71 percent, down from the 4.93 percent average during the same month a year earlier, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Source: Florida Realtors®
A total of 15,550 existing single-family homes sold statewide in December, up 4 percent from the 14,923 homes sold in December 2009. The statewide existing home median sales price last month was $133,100; in December ’09 it was $139,800 for a 5 percent decrease, according to Florida Realtors’ data. However, December’s statewide existing home median price was higher than the $132,700 reported in November 2010. The national median existing single-family home price was $171,300 in November, according to the latest data available from the National Association of Realtors® (NAR). The median is the midpoint; half the homes sold for more, half for less.
In December, 12 of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales and 14 MSAs reported higher existing condos sales. In the year-to-year comparison for statewide existing condo sales, a total of 6,673 units changed hands last month, up 12 percent from the 5,955 condos sold in December 2009. The statewide existing condo median sales price in December was $88,100; in December ’09 it was $106,700 for a 17 percent decrease. The national median existing condo price was $165,300 in November, according to NAR.
Looking back on 2010, Florida’s existing home sales rose 5 percent for the year, with a total of 170,848 homes sold compared to 162,873 homes sold in 2009. Statewide existing home sales activity in 2010 also was 37.5 percent higher than 2008 statewide sales, records show. The statewide existing home median price for 2010 was $136,500; it was $142,500 in 2009 for a 4 percent decrease.
“It’s encouraging to close out the year for Florida’s housing market with increased sales activity,” said 2011 Florida Realtors President Patricia “Pat” S. Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound. “The homebuyer tax credits helped to fuel home and condo sales during the first half of 2010, while favorable affordability conditions and historically low mortgage rates continued to bring buyers into the market in the waning months of the year.
“Looking to the future, 2011 is going to be a year of opportunity for buyers and sellers,” Fitzgerald added. “Industry analysts report seeing steady economic improvements, including more jobs and stronger consumer confidence, which will have a positive, stabilizing impact on the housing market.”
In Florida’s condo market, a total of 72,050 units sold statewide in 2010, a gain of 29 percent compared to 55,900 units sold in 2009. Statewide existing condo sales activity in 2010 was up 90.6 percent over the 2008 sales level, records show. The statewide existing condo median price in 2010 was $91,300; it was $108,000 in 2009 for a 15 percent decrease.
The latest industry outlook from NAR offers positive predictions for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” said NAR Chief Economist Lawrence Yun. “All the indicator trends are pointing to a gradual housing recovery.”
In December, the interest rate for a 30-year fixed-rate mortgage averaged 4.71 percent, down from the 4.93 percent average during the same month a year earlier, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Source: Florida Realtors®
Wednesday, January 19, 2011
Officials looking at ways to protect housing market
Federal officials took two steps Tuesday to attempt to reduce the likelihood of a second financial crisis caused in large part by large declines in the housing market.
The first would try to tackle the problem of foreclosures. The Federal Housing Finance Agency, which oversees the massive mortgage finance companies Fannie Mae and Freddie Mac, said it would consider a new approach to how home loans are managed by banks. Critics say the current system makes it more lucrative for a bank to foreclose than to find ways to modify loans to allow struggling borrowers to stay in their homes.
The second would try to curtail reckless mortgage lending by more tightly regulating what firms can do with the loans they make. Currently, banks can pool mortgage loans together into an investment and sell that to investors around the globe, passing on all the risk associated with the loans. But a report released by the Treasury Department, as required by the Dodd-Frank law overhauling financial regulation, endorsed the law’s prescription that banks be forced to hold on to a portion of the investment, making it difficult for a bank to ignore the risks associated with lending.
Recognizing that private firms and government programs have had difficulty carrying out a large number of modifications to mortgages to avoid foreclosures, the FHFA said it would consider several approaches to how banks should manage home loans. Studies have shown that foreclosure is often more profitable for a company, known as a mortgage servicer, that collects the monthly payments on mortgages and passes them on to investors who own the mortgages.
However, it is often not the best path for borrowers, who lose their homes, or investors, who lose money.
When a loan is modified, payments to a servicer can decline. But if the borrower is in default, the servicer adds fees on the account and can collect when the house is sold, even at foreclosure.
Among other proposals, the FHFA said that it would consider a new compensation structure for servicers whereby they would receive fees for restructuring mortgages to avoid foreclosures.
“As the recent problems in managing mortgage delinquencies suggest, the current servicing compensation model was not designed for current market conditions,” said Edward J. DeMarco, the FHFA’s acting director. “The goal of this joint initiative is to explore alternative models for single-family mortgage servicing compensation that better address the needs of borrowers, servicers, originators, investors and guarantors.”
The FHFA cautioned that it would not expect any servicing model to be in place before summer 2012.
Senior Obama administration officials hailed the proposal.
“It is clear that the mortgage servicing compensation model is broken and should be fixed,” Treasury Secretary Timothy F. Geithner and Secretary of Housing and Urban Development Shaun Donovan said in a letter Tuesday. “That is why we support your decision today to review the structural flaws in the current mortgage servicing compensation model.”
The Securities and Financial Markets Association, a lobby representing many firms involved in the buying and trading of mortgages, said the agency was taking a balanced approach and considering the needs of all parties involved in mortgage servicing.
Meanwhile, the Treasury Department released a report endorsing a proposed rule requiring that banks that pool mortgages into securities and sell them to investors retain a portion of the investment and thus share in the risk. The Dodd-Frank law required that banks retain at least 5 percent of the risk a particular investment would default.
Certain assets that meet very high standards are exempted.
During the years leading up to the financial crisis, lenders and banks pooled risky home loans into securities and sold the securities to investors, which let the lenders book a profit and release the risk.
Some banks have warned that too stringent risk-retention requirements could gum up the financial markets, making banks wary of selling securities.
The report recognized this danger, saying: “If risk retention requirements are too stringent, they could constrain lending, and consequently, the formation of credit.”
The report suggested approaches to avoid this possibility and create standards by which the risk-retention requirement could be waived if, for instance, borrowers commit a large enough down payment or have a very high credit score in combination with other factors.
“This study broadly endorses the concept of risk retention, but it also recognizes the risk of applying it to every loan,” said Jaret Seiberg, an analyst with the Washington Research Group, a policy analysis firm.
Source: washingtonpost.com
The first would try to tackle the problem of foreclosures. The Federal Housing Finance Agency, which oversees the massive mortgage finance companies Fannie Mae and Freddie Mac, said it would consider a new approach to how home loans are managed by banks. Critics say the current system makes it more lucrative for a bank to foreclose than to find ways to modify loans to allow struggling borrowers to stay in their homes.
The second would try to curtail reckless mortgage lending by more tightly regulating what firms can do with the loans they make. Currently, banks can pool mortgage loans together into an investment and sell that to investors around the globe, passing on all the risk associated with the loans. But a report released by the Treasury Department, as required by the Dodd-Frank law overhauling financial regulation, endorsed the law’s prescription that banks be forced to hold on to a portion of the investment, making it difficult for a bank to ignore the risks associated with lending.
Recognizing that private firms and government programs have had difficulty carrying out a large number of modifications to mortgages to avoid foreclosures, the FHFA said it would consider several approaches to how banks should manage home loans. Studies have shown that foreclosure is often more profitable for a company, known as a mortgage servicer, that collects the monthly payments on mortgages and passes them on to investors who own the mortgages.
However, it is often not the best path for borrowers, who lose their homes, or investors, who lose money.
When a loan is modified, payments to a servicer can decline. But if the borrower is in default, the servicer adds fees on the account and can collect when the house is sold, even at foreclosure.
Among other proposals, the FHFA said that it would consider a new compensation structure for servicers whereby they would receive fees for restructuring mortgages to avoid foreclosures.
“As the recent problems in managing mortgage delinquencies suggest, the current servicing compensation model was not designed for current market conditions,” said Edward J. DeMarco, the FHFA’s acting director. “The goal of this joint initiative is to explore alternative models for single-family mortgage servicing compensation that better address the needs of borrowers, servicers, originators, investors and guarantors.”
The FHFA cautioned that it would not expect any servicing model to be in place before summer 2012.
Senior Obama administration officials hailed the proposal.
“It is clear that the mortgage servicing compensation model is broken and should be fixed,” Treasury Secretary Timothy F. Geithner and Secretary of Housing and Urban Development Shaun Donovan said in a letter Tuesday. “That is why we support your decision today to review the structural flaws in the current mortgage servicing compensation model.”
The Securities and Financial Markets Association, a lobby representing many firms involved in the buying and trading of mortgages, said the agency was taking a balanced approach and considering the needs of all parties involved in mortgage servicing.
Meanwhile, the Treasury Department released a report endorsing a proposed rule requiring that banks that pool mortgages into securities and sell them to investors retain a portion of the investment and thus share in the risk. The Dodd-Frank law required that banks retain at least 5 percent of the risk a particular investment would default.
Certain assets that meet very high standards are exempted.
During the years leading up to the financial crisis, lenders and banks pooled risky home loans into securities and sold the securities to investors, which let the lenders book a profit and release the risk.
Some banks have warned that too stringent risk-retention requirements could gum up the financial markets, making banks wary of selling securities.
The report recognized this danger, saying: “If risk retention requirements are too stringent, they could constrain lending, and consequently, the formation of credit.”
The report suggested approaches to avoid this possibility and create standards by which the risk-retention requirement could be waived if, for instance, borrowers commit a large enough down payment or have a very high credit score in combination with other factors.
“This study broadly endorses the concept of risk retention, but it also recognizes the risk of applying it to every loan,” said Jaret Seiberg, an analyst with the Washington Research Group, a policy analysis firm.
Source: washingtonpost.com
Fla. insurance on Chinese drywall axed?
Florida’s public insurance company has again reversed course on its coverage for homes with tainted Chinese drywall, telling some owners it will suspend such policies, an attorney for the victims said Monday.
Attorney David Durkee, who represents about 300 people with homes containing the defective materials, said Citizens Property Insurance Corp., a state-backed insurer of last resort, has begun issuing notices to alert policy holders their coverage will be dropped.
Citizens did not respond to a phone message and e-mail Monday. If the insurer is issuing such notices en masse, it would mark a return to its earlier attempt to not cover homes with Chinese drywall.
“When clients who are already victims are getting letters that are threatening to take away their homeowners insurance, it’s like pouring gasoline on the fire,” Durkee said.
Among those receiving a letter from Citizens was James Ivory, who bought a three-bedroom Punta Gorda retirement home with his wife in 2009, but was unable to live there more than two months because of the drywall. They began suffering headaches, dizziness, nosebleeds and rashes and noticed a rotten-egg smell, among other clues.
In October 2009, Citizens informed the Ivorys it would drop their policy over the drywall issue, but then backpedaled after bad publicity over the decision. Now, a letter dated Jan. 11 informs them Citizens intends to drop their coverage in March.
“You try to do everything, you try to save your money to have a retirement home in Florida, and now I can’t even live in it,” said Ivory, a 68-year-old retired mechanic. “It’s tearing me up.”
Thousands of homeowners nationwide who bought houses built with the defective materials are finding their lives in limbo as hundreds of lawsuits work through the courts. Insurers are in a quandary over the drywall issue. Some say they can’t continue providing insurance until the problem is fixed, something some say could cost homeowners more than they paid for their homes.
Source: The Associated Press, Matt Sedensky.
Attorney David Durkee, who represents about 300 people with homes containing the defective materials, said Citizens Property Insurance Corp., a state-backed insurer of last resort, has begun issuing notices to alert policy holders their coverage will be dropped.
Citizens did not respond to a phone message and e-mail Monday. If the insurer is issuing such notices en masse, it would mark a return to its earlier attempt to not cover homes with Chinese drywall.
“When clients who are already victims are getting letters that are threatening to take away their homeowners insurance, it’s like pouring gasoline on the fire,” Durkee said.
Among those receiving a letter from Citizens was James Ivory, who bought a three-bedroom Punta Gorda retirement home with his wife in 2009, but was unable to live there more than two months because of the drywall. They began suffering headaches, dizziness, nosebleeds and rashes and noticed a rotten-egg smell, among other clues.
In October 2009, Citizens informed the Ivorys it would drop their policy over the drywall issue, but then backpedaled after bad publicity over the decision. Now, a letter dated Jan. 11 informs them Citizens intends to drop their coverage in March.
“You try to do everything, you try to save your money to have a retirement home in Florida, and now I can’t even live in it,” said Ivory, a 68-year-old retired mechanic. “It’s tearing me up.”
Thousands of homeowners nationwide who bought houses built with the defective materials are finding their lives in limbo as hundreds of lawsuits work through the courts. Insurers are in a quandary over the drywall issue. Some say they can’t continue providing insurance until the problem is fixed, something some say could cost homeowners more than they paid for their homes.
Source: The Associated Press, Matt Sedensky.
2010 ends as 2nd worst year for home construction
Builders began work last year on the second-fewest number of homes in more than half a century, as the weak economy kept Americans from buying houses.
Builders broke ground on a total of 587,600 homes in 2010, just barely better than the 554,000 started in 2009. Those are the two worst years on records dating back to 1959.
And the pace is getting worse. The Commerce Department reported Wednesday that builders started work at a seasonally adjusted annual rate of 529,000 new homes and apartments last month. That’s a drop of 4.3 percent from November and the slowest pace since October 2009.
In a healthy economy, builders start about one million units a year. They built twice as many in 2005, at the height of the housing boom. Since then the market has been in decline.
One positive sign is that builders appear to be planning more projects in 2011. Building permits, considered a good barometer for future activity, rose 16.7 percent in December to a seasonally adjusted annual rate of 635,000, the best pace since March.
But builders likely pulled more permits in California, New York and Pennsylvania ahead of code changes in 2011 — a factor that likely influenced the spike.
“Some builders went ahead in December with projects to beat the change,” said Jennifer Lee, an analyst at BMO Capital Markets. Lee points out that the biggest gains were in the Northeast, which was up 80.6 percent, and the West, up 43.9 percent.
People are buying fewer single-family homes, which represent nearly 80 percent of the market. Demand fell 9 percent to an annual rate of 417,000 units. Apartment building increased 17.9 percent to an annual rate of 112,000 units.
Housing construction fell in all parts of the U.S. in December except the West where activity surged 45.8 percent. Construction dropped 38.4 percent in the Midwest and was down 24.7 percent in the Northeast and 2.2 percent in the South. Severe winter weather likely affected activity in the Northeast and Midwest.
The collapse of the housing market helped push the country into a deep recession and more than a year after the recession, housing is still struggling.
Unemployment remains high. Record numbers of foreclosures have forced home prices down and tight credit has made mortgages tough to come by.
Source: The Associated Press, Martin Crutsinger, AP economics writer.
Builders broke ground on a total of 587,600 homes in 2010, just barely better than the 554,000 started in 2009. Those are the two worst years on records dating back to 1959.
And the pace is getting worse. The Commerce Department reported Wednesday that builders started work at a seasonally adjusted annual rate of 529,000 new homes and apartments last month. That’s a drop of 4.3 percent from November and the slowest pace since October 2009.
In a healthy economy, builders start about one million units a year. They built twice as many in 2005, at the height of the housing boom. Since then the market has been in decline.
One positive sign is that builders appear to be planning more projects in 2011. Building permits, considered a good barometer for future activity, rose 16.7 percent in December to a seasonally adjusted annual rate of 635,000, the best pace since March.
But builders likely pulled more permits in California, New York and Pennsylvania ahead of code changes in 2011 — a factor that likely influenced the spike.
“Some builders went ahead in December with projects to beat the change,” said Jennifer Lee, an analyst at BMO Capital Markets. Lee points out that the biggest gains were in the Northeast, which was up 80.6 percent, and the West, up 43.9 percent.
People are buying fewer single-family homes, which represent nearly 80 percent of the market. Demand fell 9 percent to an annual rate of 417,000 units. Apartment building increased 17.9 percent to an annual rate of 112,000 units.
Housing construction fell in all parts of the U.S. in December except the West where activity surged 45.8 percent. Construction dropped 38.4 percent in the Midwest and was down 24.7 percent in the Northeast and 2.2 percent in the South. Severe winter weather likely affected activity in the Northeast and Midwest.
The collapse of the housing market helped push the country into a deep recession and more than a year after the recession, housing is still struggling.
Unemployment remains high. Record numbers of foreclosures have forced home prices down and tight credit has made mortgages tough to come by.
Source: The Associated Press, Martin Crutsinger, AP economics writer.
Tuesday, January 18, 2011
Formal living rooms and mansions on way out
The American home of the future will be smaller, more energy efficient and apt to have a combined great room-kitchen area, says a survey Thursday by the National Association of Home Builders.
Single-family homes, after ballooning in size for decades, began shrinking in 2008 and will continue that downward trend for years, says the survey released at the trade group’s annual International Builders Show.
Completed new homes, only 1,500 square feet in 1970, peaked at an average of 2,520 square feet in 2007 but fell to 2,377 square feet last year, the NAHB reports, citing U.S. Census Bureau data. Their average size will drop to 2,150 square feet in 2015, according to its survey of 238 builders, architects, manufacturers and designers.
Part of the downsizing may be temporary, due to recession-pinched pocketbooks, but several trends such as the “huge desire to keep energy costs down” suggest it will continue in a stronger economy, NAHB’s Rose Quint says.
“Demographics are long term on the side of smaller homes,” she says, pointing to the increasing number of young adults seeking energy efficiency and senior citizens wanting less space. She cites Census data that show people 65 and older will account for 20 percent of the U.S. population in 2050, up from 13 percent last year.
“Let’s buy what we need,” is a common new attitude, Quint says, noting consumers are viewing homes less as long-term investments and more as places to live than they did in the housing boom.
Yet Americans, after two years of belt-tightening, are starting to dream a bit bigger, says Jill Waage of Better Homes and Gardens, which Thursday released a December survey of 2,000 of its readers. They now say they want a home with a median square footage of 1,914 square feet, up slightly from 1,864 square feet last year.
“They are dreaming again but their dreams are definitely reality-based,” Waage says. In her survey, 74 percent of consumers say affordability remains a high priority as they look to remodel or buy a home. So, too, does energy efficiency, cited by 68 percent.
NAHB reports that the average size of new U.S. homes started but not completed last year actually increased a tad – 14 square feet – from 2009. Its survey notes the U.S. increase was due almost entirely to changes in the South.
“By no means is it a national phenomenon,” says Quint, an economics researcher.
In NAHB’s survey, 52 percent of participants say they plan to build smaller homes in 2011, compared with 2010, and 59 percent plan lower-priced models. Only 7 percent say they plan to build larger or higher-priced homes.
As for the near future, in 2015, 74 percent say single-family homes will be smaller and 68 percent say they’ll have more “green” features such as low-flow faucets, dual-flush toilets, better windows and whole-house Energy Star efficiency ratings.
Losing favor is the formal living room, which 82 percent say will either vanish or merge with other spaces in 2015. In contrast, survey respondents say a great room combined with a kitchen will “very likely” be part of the average new home.
Source: USA TODAY, a division of Gannett Co. Inc., Wendy Koch.
Single-family homes, after ballooning in size for decades, began shrinking in 2008 and will continue that downward trend for years, says the survey released at the trade group’s annual International Builders Show.
Completed new homes, only 1,500 square feet in 1970, peaked at an average of 2,520 square feet in 2007 but fell to 2,377 square feet last year, the NAHB reports, citing U.S. Census Bureau data. Their average size will drop to 2,150 square feet in 2015, according to its survey of 238 builders, architects, manufacturers and designers.
Part of the downsizing may be temporary, due to recession-pinched pocketbooks, but several trends such as the “huge desire to keep energy costs down” suggest it will continue in a stronger economy, NAHB’s Rose Quint says.
“Demographics are long term on the side of smaller homes,” she says, pointing to the increasing number of young adults seeking energy efficiency and senior citizens wanting less space. She cites Census data that show people 65 and older will account for 20 percent of the U.S. population in 2050, up from 13 percent last year.
“Let’s buy what we need,” is a common new attitude, Quint says, noting consumers are viewing homes less as long-term investments and more as places to live than they did in the housing boom.
Yet Americans, after two years of belt-tightening, are starting to dream a bit bigger, says Jill Waage of Better Homes and Gardens, which Thursday released a December survey of 2,000 of its readers. They now say they want a home with a median square footage of 1,914 square feet, up slightly from 1,864 square feet last year.
“They are dreaming again but their dreams are definitely reality-based,” Waage says. In her survey, 74 percent of consumers say affordability remains a high priority as they look to remodel or buy a home. So, too, does energy efficiency, cited by 68 percent.
NAHB reports that the average size of new U.S. homes started but not completed last year actually increased a tad – 14 square feet – from 2009. Its survey notes the U.S. increase was due almost entirely to changes in the South.
“By no means is it a national phenomenon,” says Quint, an economics researcher.
In NAHB’s survey, 52 percent of participants say they plan to build smaller homes in 2011, compared with 2010, and 59 percent plan lower-priced models. Only 7 percent say they plan to build larger or higher-priced homes.
As for the near future, in 2015, 74 percent say single-family homes will be smaller and 68 percent say they’ll have more “green” features such as low-flow faucets, dual-flush toilets, better windows and whole-house Energy Star efficiency ratings.
Losing favor is the formal living room, which 82 percent say will either vanish or merge with other spaces in 2015. In contrast, survey respondents say a great room combined with a kitchen will “very likely” be part of the average new home.
Source: USA TODAY, a division of Gannett Co. Inc., Wendy Koch.
Judge rules bank failed to prove ownership of couple’s mortgage
The facts aren’t unusual: In 2008, a couple in Reddick defaulted on a home mortgage and the bank pursued foreclosure. The couple contested the action.
But the outcome defies the usual pattern. The defendants prevailed at a non-jury trial and, to date, have been allowed to keep the home.
According to the attorney handling the homeowners’ case, this didn’t happen because of some groundbreaking ruling or unexpected turn of events during litigation. Rather, it’s a sign that judges are starting to hold more plaintiffs accountable in foreclosure actions.
“We’re all in agreement that the borrower owes the bank the money, but the issue becomes, does the bank have the ability to prove, in a court of law, that the borrower does owe the money? In this case, they failed to do that,” said Matt Englett, a partner with the Orlando law firm of Kaufman, Englett and Lynd.
The scramble to clear the thousands of foreclosure cases clogging Florida’s court dockets has been tempered recently by allegations of improperly prepared paperwork and so-called “robo-signing” at large foreclosure law firms, four of which in Florida have come under investigation by the state Attorney General’s Office. One of them includes the law firm involved in this case.
In addition, several major banking institutions, including Bank of America and JPMorgan Chase, briefly imposed a moratorium on foreclosures late last year after reports of such shortcuts surfaced.
The effect of such troubling news, even as Marion County grapples with a large foreclosure caseload, appears favorable for the homeowner. At least it was for Phillip E. and Viva M. Evans.
Since May 2008, the Reddick couple has owed $482,170 on their home. Chase Home Finance, LLC filed a foreclosure lawsuit in August 2008. The case went all the way to a bench trial before Circuit Judge Brian Lambert in August 2010. The couple had a private attorney.
One month before the trial, however, U.S. Bank National Association, the new lender, and therefore the new plaintiff, filed an affidavit acknowledging the loss of the original promissory note.
It had been delivered to the law offices of Marshall C. Watson in October 2008 via Federal Express, then “placed in a secured and locked vault” in Fort Lauderdale.
The note had been “inadvertently lost or destroyed,” according to an affidavit. The note could not be located.
“They [plaintiffs’ attorneys] can do very sloppy work and no one knows about it because no one contests it,” Englett said. “When you contest it, the wheels really come off because they’re not used to it and it throws a wrench into the system.”
This past December, Lambert issued a final judgment in favor of the homeowners, saying that the plaintiff had failed to meet its burden of proof of showing that Chase – the previous lender and plaintiff – had standing to bring the lawsuit. He also ruled that U.S. Bank failed to meet its burden of proof re-establishing the mortgage note or that it was the owner of the note at the time of trial.
“The court ruled they don’t have the ability to foreclose on it,” Englett said. “If [the Evanses] were to sell the house, they would have to pay the mortgage off, but the bank can’t bring this same action again. Until then, they can live in the house and just not make a mortgage payment.”
According to Englett, the percentage of foreclosure cases that even head to trial are “miniscule.” The volume of cases readily disposed of early on in the process, he added, has resulted in a complacent system that is gradually changing as judges monitor cases more closely.
“I think the judges have been giving the banks the benefit of the doubt with these foreclosures and I think they’ve learned a valuable lesson with that,” he said. “You have to make them prove up their case and I think judges are starting to do that.”
In his Dec. 17 order, Lambert ruled only that the bank lacked the standing to bring this particular foreclosure lawsuit against the Evanses; he did not cancel the underlying mortgage obligation altogether, nor did he find in favor of the couple when it came to their affirmative defenses, such as asserting predatory lending violations or violation of the federal Truth in Lending Act.
Roger S. Rathbun, an attorney with the Law Offices of Marshall C. Watson who pursued the Evans case on behalf of U.S. Bank, expressed caution when it comes to these types of judgments.
“I wish the tenants luck,” he said Friday. “I don’t expect the banks to give them a free house. I expect the bank to re-file the case. Even if the foreclosure was invalid, I can file under a different equitable theory and still take the property.”
Source: Ocala Star-Banner, Fla., Suevon Lee. Distributed by McClatchy-Tribune Information Services.
But the outcome defies the usual pattern. The defendants prevailed at a non-jury trial and, to date, have been allowed to keep the home.
According to the attorney handling the homeowners’ case, this didn’t happen because of some groundbreaking ruling or unexpected turn of events during litigation. Rather, it’s a sign that judges are starting to hold more plaintiffs accountable in foreclosure actions.
“We’re all in agreement that the borrower owes the bank the money, but the issue becomes, does the bank have the ability to prove, in a court of law, that the borrower does owe the money? In this case, they failed to do that,” said Matt Englett, a partner with the Orlando law firm of Kaufman, Englett and Lynd.
The scramble to clear the thousands of foreclosure cases clogging Florida’s court dockets has been tempered recently by allegations of improperly prepared paperwork and so-called “robo-signing” at large foreclosure law firms, four of which in Florida have come under investigation by the state Attorney General’s Office. One of them includes the law firm involved in this case.
In addition, several major banking institutions, including Bank of America and JPMorgan Chase, briefly imposed a moratorium on foreclosures late last year after reports of such shortcuts surfaced.
The effect of such troubling news, even as Marion County grapples with a large foreclosure caseload, appears favorable for the homeowner. At least it was for Phillip E. and Viva M. Evans.
Since May 2008, the Reddick couple has owed $482,170 on their home. Chase Home Finance, LLC filed a foreclosure lawsuit in August 2008. The case went all the way to a bench trial before Circuit Judge Brian Lambert in August 2010. The couple had a private attorney.
One month before the trial, however, U.S. Bank National Association, the new lender, and therefore the new plaintiff, filed an affidavit acknowledging the loss of the original promissory note.
It had been delivered to the law offices of Marshall C. Watson in October 2008 via Federal Express, then “placed in a secured and locked vault” in Fort Lauderdale.
The note had been “inadvertently lost or destroyed,” according to an affidavit. The note could not be located.
“They [plaintiffs’ attorneys] can do very sloppy work and no one knows about it because no one contests it,” Englett said. “When you contest it, the wheels really come off because they’re not used to it and it throws a wrench into the system.”
This past December, Lambert issued a final judgment in favor of the homeowners, saying that the plaintiff had failed to meet its burden of proof of showing that Chase – the previous lender and plaintiff – had standing to bring the lawsuit. He also ruled that U.S. Bank failed to meet its burden of proof re-establishing the mortgage note or that it was the owner of the note at the time of trial.
“The court ruled they don’t have the ability to foreclose on it,” Englett said. “If [the Evanses] were to sell the house, they would have to pay the mortgage off, but the bank can’t bring this same action again. Until then, they can live in the house and just not make a mortgage payment.”
According to Englett, the percentage of foreclosure cases that even head to trial are “miniscule.” The volume of cases readily disposed of early on in the process, he added, has resulted in a complacent system that is gradually changing as judges monitor cases more closely.
“I think the judges have been giving the banks the benefit of the doubt with these foreclosures and I think they’ve learned a valuable lesson with that,” he said. “You have to make them prove up their case and I think judges are starting to do that.”
In his Dec. 17 order, Lambert ruled only that the bank lacked the standing to bring this particular foreclosure lawsuit against the Evanses; he did not cancel the underlying mortgage obligation altogether, nor did he find in favor of the couple when it came to their affirmative defenses, such as asserting predatory lending violations or violation of the federal Truth in Lending Act.
Roger S. Rathbun, an attorney with the Law Offices of Marshall C. Watson who pursued the Evans case on behalf of U.S. Bank, expressed caution when it comes to these types of judgments.
“I wish the tenants luck,” he said Friday. “I don’t expect the banks to give them a free house. I expect the bank to re-file the case. Even if the foreclosure was invalid, I can file under a different equitable theory and still take the property.”
Source: Ocala Star-Banner, Fla., Suevon Lee. Distributed by McClatchy-Tribune Information Services.
Monday, January 17, 2011
Southeast Florida Monthly Market Update
December, 2010 Market Update for the "BIG 5" Hialeah, Miami Lakes, Miami Gardens, Miramar and Pembroke Pines in Florida
Market update for the cities of Hialeah, Miami Lakes, Miami Gardens:
Area 20
Total Active Listings: 220
Total Value Dollar Volume: $34,387,870.00
Average List Price: $156,308.50
Median List Price: $78,500.00
Total Sold Properties: 184
Total Dollar Volume Sold: $23,706,999.00
Average Sold Price: $128,842.39
Median Sold Price: $87,000.00
Total Pending Sale: 183
Total Dollar Pending Volume: $24,280,751.00
Average Pending Price: $132,681.70
Median Pending Price: $84,900.00
Market update for the cities of Miramar and Pembroke Pines:
Area 3990
Total Active Listings: 55
Total Value Dollar Volume: $10,224,513.00
Average List Price: $185,900.24
Median List Price: $205,918.00
Total Sold Properties: 31
Total Dollar Volume Sold: $7,968,724.00
Average Sold Price: $257,055.61
Median Sold Price: $249,999.00
Total Pending Sale: 35
Total Dollar Pending Volume: $8,888,512.00
Average Pending Price: $253,957.49
Median Pending Price: $237,600.00
Total Sold for Dade and Broward Counties
Dade County
Total Sales Count: 2360
Total Sales Dollar Volume: $679,254,547.00
Broward County
Total Sales Count: 2568
Total Sales Dollar Volume: $485,622,231.00
For an update on your market area please contact us
Take hold of your previous Monthly Market Update here http://humasanre.housingtrendsenewsletter.com?Newsletter ...
Market update for the cities of Hialeah, Miami Lakes, Miami Gardens:
Area 20
Total Active Listings: 220
Total Value Dollar Volume: $34,387,870.00
Average List Price: $156,308.50
Median List Price: $78,500.00
Total Sold Properties: 184
Total Dollar Volume Sold: $23,706,999.00
Average Sold Price: $128,842.39
Median Sold Price: $87,000.00
Total Pending Sale: 183
Total Dollar Pending Volume: $24,280,751.00
Average Pending Price: $132,681.70
Median Pending Price: $84,900.00
Market update for the cities of Miramar and Pembroke Pines:
Area 3990
Total Active Listings: 55
Total Value Dollar Volume: $10,224,513.00
Average List Price: $185,900.24
Median List Price: $205,918.00
Total Sold Properties: 31
Total Dollar Volume Sold: $7,968,724.00
Average Sold Price: $257,055.61
Median Sold Price: $249,999.00
Total Pending Sale: 35
Total Dollar Pending Volume: $8,888,512.00
Average Pending Price: $253,957.49
Median Pending Price: $237,600.00
Total Sold for Dade and Broward Counties
Dade County
Total Sales Count: 2360
Total Sales Dollar Volume: $679,254,547.00
Broward County
Total Sales Count: 2568
Total Sales Dollar Volume: $485,622,231.00
For an update on your market area please contact us
Take hold of your previous Monthly Market Update here http://humasanre.housingtrendsenewsletter.com?Newsletter ...
Free Federal Reserve brochure explains credit decisions
Lenders usually consider a consumer’s credit history or credit score when deciding whether to extend credit and at what interest rate. A new Federal Reserve publication available online helps consumers understand the new notices they may receive from lenders when credit reports or credit scores affect a decision to grant credit.
The publication, “What You Need to Know: New Rules about Credit Decisions and Notice,” describes the types of notices consumers may receive. It includes links to sample notices, information on what consumers should do if they receive a notice, and instructions on how to dispute credit report errors.
The notices are now required by rules issued by the Federal Reserve Board and the Federal Trade Commission. The new rules took effect Jan. 1, 2011.
Under the rules, a creditor must provide a notice to the consumer when, based on the consumer’s credit report, the creditor offers loan terms that are less favorable than terms provided to other consumers. Consumers who receive this “risk-based pricing” notice have a right to get a free credit report to check the lender’s accuracy.
As an alternative to providing risk-based pricing notices, creditors can choose to give credit applicants a free credit score and information about their score.
Today, most consumers must pay a fee to obtain their credit score. While the free credit reports contain information about payment history and other details used to create a credit score, they do not include the numbers that lenders use to determine an interest rates.
To download the report that can be given to homebuyers, go to the Federal Reserve’s website.
Source: Florida Realtors®
The publication, “What You Need to Know: New Rules about Credit Decisions and Notice,” describes the types of notices consumers may receive. It includes links to sample notices, information on what consumers should do if they receive a notice, and instructions on how to dispute credit report errors.
The notices are now required by rules issued by the Federal Reserve Board and the Federal Trade Commission. The new rules took effect Jan. 1, 2011.
Under the rules, a creditor must provide a notice to the consumer when, based on the consumer’s credit report, the creditor offers loan terms that are less favorable than terms provided to other consumers. Consumers who receive this “risk-based pricing” notice have a right to get a free credit report to check the lender’s accuracy.
As an alternative to providing risk-based pricing notices, creditors can choose to give credit applicants a free credit score and information about their score.
Today, most consumers must pay a fee to obtain their credit score. While the free credit reports contain information about payment history and other details used to create a credit score, they do not include the numbers that lenders use to determine an interest rates.
To download the report that can be given to homebuyers, go to the Federal Reserve’s website.
Source: Florida Realtors®
2011 mortgage trends: jumbo loans, cash buys
The number of mortgage applications for home purchases is expected to become a bigger part of the mortgage market in 2011 as home prices stabilize, predicts the Mortgage Bankers Association. Refinancing has mostly dominated in recent months as homeowners looked to lock-in low interest rates, but experts predict refinancing to slow as new mortgage shoppers dominate.
Real estate analysts predict several other trends in the mortgage market for 2011:
• Rates on the rise. The Mortgage Bankers Association predicts mortgage rates to rise slightly in 2011 and hover around 5 percent. They expect rates to increase to about 6 percent in 2012.
• Jumbo loans become more attractive. Jumbo loans (loans over $417,000 in most housing markets and above $729,750 in high-cost housing markets) are expected to pick up pace in the next few months. Jumbo loans often have higher mortgage rates than conforming loans. However, with mortgage rates on jumbo loans dropping, experts predict a hike in refinancing and purchase applications for high-end housing.
• All-cash purchases. All-cash purchases represented about a quarter of all existing home purchases in the last four months of 2010, according to Lawrence Yun, chief economist of the National Association of Realtors®. He expects all-cash purchases to continue to represent a big part of the real estate landscape in 2011.
• Slow and complex mortgage loan process. The time between application and closing can take as much as 60 days and that’s not expected to get any faster, experts say. Lenders often recommend borrowers lock in a loan 60, 75 or 90 days to help ensure the loan process will be completed within that lock-in period. The industry’s new levels of documentation and verification are causing lengthy delays in the loan process, experts say.
Source: INFORMATION, INC. Bethesda, MD
Real estate analysts predict several other trends in the mortgage market for 2011:
• Rates on the rise. The Mortgage Bankers Association predicts mortgage rates to rise slightly in 2011 and hover around 5 percent. They expect rates to increase to about 6 percent in 2012.
• Jumbo loans become more attractive. Jumbo loans (loans over $417,000 in most housing markets and above $729,750 in high-cost housing markets) are expected to pick up pace in the next few months. Jumbo loans often have higher mortgage rates than conforming loans. However, with mortgage rates on jumbo loans dropping, experts predict a hike in refinancing and purchase applications for high-end housing.
• All-cash purchases. All-cash purchases represented about a quarter of all existing home purchases in the last four months of 2010, according to Lawrence Yun, chief economist of the National Association of Realtors®. He expects all-cash purchases to continue to represent a big part of the real estate landscape in 2011.
• Slow and complex mortgage loan process. The time between application and closing can take as much as 60 days and that’s not expected to get any faster, experts say. Lenders often recommend borrowers lock in a loan 60, 75 or 90 days to help ensure the loan process will be completed within that lock-in period. The industry’s new levels of documentation and verification are causing lengthy delays in the loan process, experts say.
Source: INFORMATION, INC. Bethesda, MD
Friday, January 14, 2011
How to Help Expand Waste Recycling Programs
Using tips and resources from the experts, work with local government to expand waste recycling programs in your community.
Most neighborhoods and communities have programs for recycling plastic and paper. But what about the whole range of other materials filling your local landfill? Increasing the amount and types of household waste that can be recycled can help preserve your community's precious open space and natural resources, and save your town money now spent on landfilling trash.
Point your city or town toward a cost-effective, expanded waste recycling program, and you may be putting more green in your own pocket as you protect property values.
Recycling programs (http://www.houselogic.com/articles/5-programs-improving-local-waste-recycling/) that go beyond the standard paper-plastic-cans variety can help preserve the natural resources that help attract new residents and protect property values in your community. Such programs can also reduce the cost of rubbish hauling for both municipalities and community associations, according to the U.S. Environmental Protection Agency.
As an individual homeowner, you can have a major impact on the size and shape of your local recycling program. Of course, in these days of reduced municipal tax income, you may have to try a number of alternative approaches to get your local officials' to increase recycling options, but the result should be well worth your effort.
"One of the best things individuals can do is to become champions for expanded recycling programs. It's amazing how much you can accomplish in a short space of time," says Jacob Hassan, an EPA environmental scientist.
Pat Cosby of Columbus, Ga., is a perfect example (http://earth911.com/blog/2009/01/26/how-one-man-started-a-recycling-program/) of individual success in influencing recycling programs. Working with a local recycler, the media, and city officials, he launched a Christmas wrapping paper recycling program that aims to take in more than 1,000 pounds of paper every holiday season. His story proves that individuals really can dramatically impact recycling programs in their own communities.
How to become a champion
Hassan points out that, as elected officials, municipal leaders are often more approachable than you'd think. If you follow a few simple steps, you can convince them that an expanded recycling program would benefit the community and improve their own chances of being re-elected. And it can all be accomplished with a minimum expenditure of time, effort, and money.
Come to your meeting with the mayor, city council, or board of selectmen armed with details. You should know:
Which materials will have the greatest impact on the environment, while also providing an improved revenue stream from buyers of recycled materials. For example, metals like copper and aluminum can often yield dependably high market prices for a community. For a quick reference guide to materials and their market value, download this PDF (http://www.epa.gov/waste/partnerships/wastewise/pubs/howtopdf.pdf) provided by the EPA.
How to access the resources municipalities need to develop an expanded program. For example, the EPA provides a Municipal Government Toolkit (http://www.epa.gov/region4/waste/rcra/mgtoolkit/improving.html#remind) with step-by-step instructions for expanding and improving municipal programs.
How to resolve issues blocking the way to expanded programs. If you live in a remote area or small town, where the cost of transporting recycled materials is high, suggest developing a cooperative hauling arrangement with other towns in the area. Or, advise officials to include incentives for transportation services in the town's next hauling contract.
Team up with other groups
Within every community, there are groups actively working to promote green efforts in all their forms-including recycling. Three national organizations with whom you might join forces to help lobby local officials are The Sierra Club (http://www.sierraclub.org/), Conservation International (http://www.conservation.org/Pages/contact_us.aspx), and TakePart (http://web3.takepart.com/issues/recycling/13874). All are experienced recycling activists.
Of course, the ultimate partnership is probably with the EPA, whose WasteWise (http://www.epa.gov/osw/partnerships/wastewise/index.htm) partnership program aims to reduce municipal waste. Working with 1,700 businesses, institutions, and local governments, the program has reduced solid waste by 120 million tons since its inception in 1994.
Bring along an expert
You can't expect local officials to be experts in waste management. Consider bringing along to your meeting an environmental scientist or waste management expert who can explain some of the science behind program expansion. One place to find such experts is your local university.
"An environmental scientist can explain the trade-offs and costs of either expanding, or not expanding, a program," comments Myrna Hall, research associate and director of the Center for the Urban Environment, College of Environmental Science and Forestry, State University of New York at Syracuse. "Just last week my husband and I testified at a local hearing for a company that turns waste into energy."
By following these steps, and with very little time or financial commitment, you can promote expanded recycling in your community, making it a more attractive place to live, the first step toward increasing your property values. Although lean city coffers may mean you'll have to expend a little more effort, your government relations work should pay off in the end.
Sue Mellen is a longtime writer and editor who splits her time between a townhome in Massachusetts and a bungalow in a deed-restricted neighborhood in Florida.
Source: HouseLogic.com
Most neighborhoods and communities have programs for recycling plastic and paper. But what about the whole range of other materials filling your local landfill? Increasing the amount and types of household waste that can be recycled can help preserve your community's precious open space and natural resources, and save your town money now spent on landfilling trash.
Point your city or town toward a cost-effective, expanded waste recycling program, and you may be putting more green in your own pocket as you protect property values.
Recycling programs (http://www.houselogic.com/articles/5-programs-improving-local-waste-recycling/) that go beyond the standard paper-plastic-cans variety can help preserve the natural resources that help attract new residents and protect property values in your community. Such programs can also reduce the cost of rubbish hauling for both municipalities and community associations, according to the U.S. Environmental Protection Agency.
As an individual homeowner, you can have a major impact on the size and shape of your local recycling program. Of course, in these days of reduced municipal tax income, you may have to try a number of alternative approaches to get your local officials' to increase recycling options, but the result should be well worth your effort.
"One of the best things individuals can do is to become champions for expanded recycling programs. It's amazing how much you can accomplish in a short space of time," says Jacob Hassan, an EPA environmental scientist.
Pat Cosby of Columbus, Ga., is a perfect example (http://earth911.com/blog/2009/01/26/how-one-man-started-a-recycling-program/) of individual success in influencing recycling programs. Working with a local recycler, the media, and city officials, he launched a Christmas wrapping paper recycling program that aims to take in more than 1,000 pounds of paper every holiday season. His story proves that individuals really can dramatically impact recycling programs in their own communities.
How to become a champion
Hassan points out that, as elected officials, municipal leaders are often more approachable than you'd think. If you follow a few simple steps, you can convince them that an expanded recycling program would benefit the community and improve their own chances of being re-elected. And it can all be accomplished with a minimum expenditure of time, effort, and money.
Come to your meeting with the mayor, city council, or board of selectmen armed with details. You should know:
Which materials will have the greatest impact on the environment, while also providing an improved revenue stream from buyers of recycled materials. For example, metals like copper and aluminum can often yield dependably high market prices for a community. For a quick reference guide to materials and their market value, download this PDF (http://www.epa.gov/waste/partnerships/wastewise/pubs/howtopdf.pdf) provided by the EPA.
How to access the resources municipalities need to develop an expanded program. For example, the EPA provides a Municipal Government Toolkit (http://www.epa.gov/region4/waste/rcra/mgtoolkit/improving.html#remind) with step-by-step instructions for expanding and improving municipal programs.
How to resolve issues blocking the way to expanded programs. If you live in a remote area or small town, where the cost of transporting recycled materials is high, suggest developing a cooperative hauling arrangement with other towns in the area. Or, advise officials to include incentives for transportation services in the town's next hauling contract.
Team up with other groups
Within every community, there are groups actively working to promote green efforts in all their forms-including recycling. Three national organizations with whom you might join forces to help lobby local officials are The Sierra Club (http://www.sierraclub.org/), Conservation International (http://www.conservation.org/Pages/contact_us.aspx), and TakePart (http://web3.takepart.com/issues/recycling/13874). All are experienced recycling activists.
Of course, the ultimate partnership is probably with the EPA, whose WasteWise (http://www.epa.gov/osw/partnerships/wastewise/index.htm) partnership program aims to reduce municipal waste. Working with 1,700 businesses, institutions, and local governments, the program has reduced solid waste by 120 million tons since its inception in 1994.
Bring along an expert
You can't expect local officials to be experts in waste management. Consider bringing along to your meeting an environmental scientist or waste management expert who can explain some of the science behind program expansion. One place to find such experts is your local university.
"An environmental scientist can explain the trade-offs and costs of either expanding, or not expanding, a program," comments Myrna Hall, research associate and director of the Center for the Urban Environment, College of Environmental Science and Forestry, State University of New York at Syracuse. "Just last week my husband and I testified at a local hearing for a company that turns waste into energy."
By following these steps, and with very little time or financial commitment, you can promote expanded recycling in your community, making it a more attractive place to live, the first step toward increasing your property values. Although lean city coffers may mean you'll have to expend a little more effort, your government relations work should pay off in the end.
Sue Mellen is a longtime writer and editor who splits her time between a townhome in Massachusetts and a bungalow in a deed-restricted neighborhood in Florida.
Source: HouseLogic.com
Rate on 30-year fixed mortgage dips to 4.71%
Rates on fixed mortgages dipped for the second straight week as Treasury yields fell.
Freddie Mac said Thursday the average rate on the 30-year mortgage dropped to 4.71 percent this week from 4.77 percent the previous week. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year loan slipped to 4.08 percent from 4.13 percent. It reached 3.57 percent in November, the lowest level on records starting in 1991.
Treasury yields dropped after the December employment report came in weaker than expected. That drove investors to buy safer Treasury bonds, driving up prices and lowering the yields. Mortgage rates tend to track the yield on the 10-year Treasury note.
Rates had been rising since November. Investors shifted money out of Treasurys and into stocks on expectations of faster economic growth and higher inflation. Yields tend to rise on inflation fears.
The recent dip in rates has persuaded some borrowers to refinance, but would-be buyers remain hesitant. The number of homeowners looking to refinance rose last week, the Mortgage Bankers Association said Wednesday. But the ranks of people applying for a purchase mortgage slipped from the week before.
Mortgage rates aren’t expected to revisit last year’s historically low rates, unless the economy takes a sharp turn for the worst. And even if they do, low mortgage rates did little last year to spark flagging home sales.
Higher rates are just another obstacle facing the beleaguered housing market. High unemployment, elevated foreclosures and falling home prices are other drags on the market’s recovery.
RealtyTrac Inc. said Thursday that banks took back more than 1 million homes last year, the highest tally on records dating back to 2005. One in 45 U.S. households received a foreclosure filing in 2010, up 1.67 percent from the year before. The foreclosure listing firm expects bank repossessions to peak this year at 1.2 million.
Foreclosures typically sell at a steep discount of up to 50 percent in some of the hardest-hit regions. That lowers prices of similar homes in the area. Experts predict prices will drop nationally another 5 to 10 percent before bottoming out midyear.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage slipped to 3.72 percent from 3.75 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans fell to 3.23 percent from 3.24 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year loan in Freddie Mac’s survey was 0.8 point. The average fee for the 15-year fixed loan and the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
Source: The Associated Press, Janna Herron, AP real estate writer.
Freddie Mac said Thursday the average rate on the 30-year mortgage dropped to 4.71 percent this week from 4.77 percent the previous week. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year loan slipped to 4.08 percent from 4.13 percent. It reached 3.57 percent in November, the lowest level on records starting in 1991.
Treasury yields dropped after the December employment report came in weaker than expected. That drove investors to buy safer Treasury bonds, driving up prices and lowering the yields. Mortgage rates tend to track the yield on the 10-year Treasury note.
Rates had been rising since November. Investors shifted money out of Treasurys and into stocks on expectations of faster economic growth and higher inflation. Yields tend to rise on inflation fears.
The recent dip in rates has persuaded some borrowers to refinance, but would-be buyers remain hesitant. The number of homeowners looking to refinance rose last week, the Mortgage Bankers Association said Wednesday. But the ranks of people applying for a purchase mortgage slipped from the week before.
Mortgage rates aren’t expected to revisit last year’s historically low rates, unless the economy takes a sharp turn for the worst. And even if they do, low mortgage rates did little last year to spark flagging home sales.
Higher rates are just another obstacle facing the beleaguered housing market. High unemployment, elevated foreclosures and falling home prices are other drags on the market’s recovery.
RealtyTrac Inc. said Thursday that banks took back more than 1 million homes last year, the highest tally on records dating back to 2005. One in 45 U.S. households received a foreclosure filing in 2010, up 1.67 percent from the year before. The foreclosure listing firm expects bank repossessions to peak this year at 1.2 million.
Foreclosures typically sell at a steep discount of up to 50 percent in some of the hardest-hit regions. That lowers prices of similar homes in the area. Experts predict prices will drop nationally another 5 to 10 percent before bottoming out midyear.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage slipped to 3.72 percent from 3.75 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans fell to 3.23 percent from 3.24 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year loan in Freddie Mac’s survey was 0.8 point. The average fee for the 15-year fixed loan and the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
Source: The Associated Press, Janna Herron, AP real estate writer.
Thursday, January 13, 2011
Zillow unveils real estate agent rating system
Real estate website Zillow.com today launched a program that allows homebuyers and sellers to search for and find local real estate agents based on ratings and reviews from former clients.
Thousands of consumers have rated and reviewed agents since Zillow launched the ability to review agents in December, but the website now allows visitors to search for a real estate agent through the Zillow Directory and use the ratings and reviews as a way to select representation. Zillow claims over 13 million visitors to its website each month.
“Agent Reviews are another huge step towards transparency for buyers and sellers,” says Zillow CEO Spencer Rascoff. “For good agents, it’s a terrific way to stand out from the crowd – the next best thing to a referral. “
When visitors use the Zillow Directory to search for a real estate agent by area, agents with the highest overall ratings and greatest number of reviews show up first. Ratings are based on a consumer’s likelihood to recommend an agent to other buyers or seller on a scale of 1 to 5, with 5 being “very likely” and 1 “very unlikely.” Consumers can compare agents’ based on their overall ratings, or they can compare ratings across several categories of service including: process expertise, local knowledge, responsiveness and negotiation skills.
Along with ratings, Zillow visitors can read “qualitative reviews” that clients have written about their real estate agent. Zillow users can access these agent ratings and reviews everywhere they interact with agents on Zillow.com – directly through for-sale listings, for example, or when agents answer questions in Zillow Advice.
The review process is retroactive, Zillow says. Former clients can also rate and review their agents who have profiles on Zillow by searching for the agent in the Zillow Directory.
Source: Florida Realtors®
Thousands of consumers have rated and reviewed agents since Zillow launched the ability to review agents in December, but the website now allows visitors to search for a real estate agent through the Zillow Directory and use the ratings and reviews as a way to select representation. Zillow claims over 13 million visitors to its website each month.
“Agent Reviews are another huge step towards transparency for buyers and sellers,” says Zillow CEO Spencer Rascoff. “For good agents, it’s a terrific way to stand out from the crowd – the next best thing to a referral. “
When visitors use the Zillow Directory to search for a real estate agent by area, agents with the highest overall ratings and greatest number of reviews show up first. Ratings are based on a consumer’s likelihood to recommend an agent to other buyers or seller on a scale of 1 to 5, with 5 being “very likely” and 1 “very unlikely.” Consumers can compare agents’ based on their overall ratings, or they can compare ratings across several categories of service including: process expertise, local knowledge, responsiveness and negotiation skills.
Along with ratings, Zillow visitors can read “qualitative reviews” that clients have written about their real estate agent. Zillow users can access these agent ratings and reviews everywhere they interact with agents on Zillow.com – directly through for-sale listings, for example, or when agents answer questions in Zillow Advice.
The review process is retroactive, Zillow says. Former clients can also rate and review their agents who have profiles on Zillow by searching for the agent in the Zillow Directory.
Source: Florida Realtors®
Research: 55-plus market changing
A joint study by the 50+ Housing Council of the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute shows the recession has made 55-plus buyers more practical when selecting a new home. Design considerations have become less important, and financial concerns have become more prominent.
Previous studies from the two organizations found that most 55-plus buyers depended on home sale proceeds to finance a new purchase. The most recent data shows that option diminished during the economic downturn.
The study, “Housing Trends Update for the 55-plus Market,” uses recently released housing data from the Census Bureau’s 2009 American Housing Survey (AHS) on the 55-plus demographic. The report focuses especially on households living in active adult communities, either age-qualified active adult communities where at least one resident must be age 55-plus, other non-age-qualified 55-plus owner-occupied communities (not explicitly restricted to 55-plus households but nevertheless occupied primarily by people age 55-plus), or age-restricted rental communities.
“By the year 2020, as baby boomers move into this age bracket, almost 45 percent of all U.S. households will include someone at least 55 years old,” said David Crowe, NAHB’s chief economist. “The number of those households seeking housing better suited to their changing needs will therefore rise dramatically.”
Crowe noted that about 54,000 housing starts are projected in 55-plus communities this year, a 30 percent rise from estimated 2010 levels but still relatively modest production. Starts in 55-plus communities are projected to increase another 46 percent to roughly 79,000 housing units in 2012.
In 2009, only 55 percent of new age-qualified active adult homebuyers reported that their downpayment came from a previous home sale, significantly down from 100 percent of respondents in 2005 and 92 percent in 2007. In 2005 and 2007, no active adult community buyers reported having to tap cash or savings for a downpayment. In 2009, 45 percent of the average buyer’s downpayment came from cash or savings.
While median prices for new 55-plus homes remain lower than 2005’s peak, a look at average home prices shows a big difference between buyers in age-qualified active adult communities and other 55-plus community buyers. Average prices for 55-plus homes dropped in 2007 and partially rebounded in 2009. But prices for age-qualified communities more than bounced back; they set a record with an average price of $319,000. Buyers in that group were more affluent, with average incomes of more than $80,000 a year. Twenty-seven percent reported earning $100,000 or more compared to fewer than five percent of such buyers in 2001.
“Most 55-plus consumers – those who chose to move and those who stay in their homes – report that they are happy with their homes and communities,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. “But those who did move to an age-qualified community – about 3 percent – reported the greatest satisfaction, rating their homes and communities at nine on a one-to-ten scale.”
The desire to be near family and friends is the mature mover’s overwhelming motivation, according to the report. The design, amenities and appearance of the residence and the community remain important, but less so than before the recession. 55-plus buyers moving into rental homes, both multi-family and single-family, cited a desire for less expensive housing as second in importance to living near friends and family.
Those who can afford to buy a home are now getting much more for less. In 2009, more than half of 55-plus buyers said they were moving into better homes, but fewer than half reported that their new homes cost more than the old ones.
“Proximity to work” was more important than in the past for those relocating to age-qualified, active adult communities – 12 percent in 2009 versus 2 percent in 2001 – underscoring the trend toward delayed retirement. There was also a reported increase in the share of 55-plus single-family homeowners who say they work at home, which may be a trend noteworthy to home designers.
A small, but growing share of older households is taking advantage of the ability to convert some of their home equity into a reverse mortgage or home equity conversion mortgage. They tend to be older, single-person households with lower household income and longer housing tenure. Those with reverse or home equity conversion mortgages represented more than 241,000 households in 2009, a 54 percent increase since 2007.
“Housing Trends Update for the 55-plus Market” can be downloaded through NAHB’s website.
Source: Florida Realtors®
Previous studies from the two organizations found that most 55-plus buyers depended on home sale proceeds to finance a new purchase. The most recent data shows that option diminished during the economic downturn.
The study, “Housing Trends Update for the 55-plus Market,” uses recently released housing data from the Census Bureau’s 2009 American Housing Survey (AHS) on the 55-plus demographic. The report focuses especially on households living in active adult communities, either age-qualified active adult communities where at least one resident must be age 55-plus, other non-age-qualified 55-plus owner-occupied communities (not explicitly restricted to 55-plus households but nevertheless occupied primarily by people age 55-plus), or age-restricted rental communities.
“By the year 2020, as baby boomers move into this age bracket, almost 45 percent of all U.S. households will include someone at least 55 years old,” said David Crowe, NAHB’s chief economist. “The number of those households seeking housing better suited to their changing needs will therefore rise dramatically.”
Crowe noted that about 54,000 housing starts are projected in 55-plus communities this year, a 30 percent rise from estimated 2010 levels but still relatively modest production. Starts in 55-plus communities are projected to increase another 46 percent to roughly 79,000 housing units in 2012.
In 2009, only 55 percent of new age-qualified active adult homebuyers reported that their downpayment came from a previous home sale, significantly down from 100 percent of respondents in 2005 and 92 percent in 2007. In 2005 and 2007, no active adult community buyers reported having to tap cash or savings for a downpayment. In 2009, 45 percent of the average buyer’s downpayment came from cash or savings.
While median prices for new 55-plus homes remain lower than 2005’s peak, a look at average home prices shows a big difference between buyers in age-qualified active adult communities and other 55-plus community buyers. Average prices for 55-plus homes dropped in 2007 and partially rebounded in 2009. But prices for age-qualified communities more than bounced back; they set a record with an average price of $319,000. Buyers in that group were more affluent, with average incomes of more than $80,000 a year. Twenty-seven percent reported earning $100,000 or more compared to fewer than five percent of such buyers in 2001.
“Most 55-plus consumers – those who chose to move and those who stay in their homes – report that they are happy with their homes and communities,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. “But those who did move to an age-qualified community – about 3 percent – reported the greatest satisfaction, rating their homes and communities at nine on a one-to-ten scale.”
The desire to be near family and friends is the mature mover’s overwhelming motivation, according to the report. The design, amenities and appearance of the residence and the community remain important, but less so than before the recession. 55-plus buyers moving into rental homes, both multi-family and single-family, cited a desire for less expensive housing as second in importance to living near friends and family.
Those who can afford to buy a home are now getting much more for less. In 2009, more than half of 55-plus buyers said they were moving into better homes, but fewer than half reported that their new homes cost more than the old ones.
“Proximity to work” was more important than in the past for those relocating to age-qualified, active adult communities – 12 percent in 2009 versus 2 percent in 2001 – underscoring the trend toward delayed retirement. There was also a reported increase in the share of 55-plus single-family homeowners who say they work at home, which may be a trend noteworthy to home designers.
A small, but growing share of older households is taking advantage of the ability to convert some of their home equity into a reverse mortgage or home equity conversion mortgage. They tend to be older, single-person households with lower household income and longer housing tenure. Those with reverse or home equity conversion mortgages represented more than 241,000 households in 2009, a 54 percent increase since 2007.
“Housing Trends Update for the 55-plus Market” can be downloaded through NAHB’s website.
Source: Florida Realtors®
Wednesday, January 12, 2011
2011 Mortgage Trends: Jumbo Loans, Cash Buys
The number of mortgage applications for home purchases is expected to become a bigger part of the mortgage market in 2011 as home prices stabilize, predicts the Mortgage Bankers Association. Refinancing has mostly dominated in recent months as home owners looked to lock-in low interest rates, but experts predict refinancing to slow as new mortgage shoppers dominate.
Real estate analysts predict the other following trends in the mortgage market for 2011:
Rates on the rise. The Mortgage Bankers Association predicts mortgage rates to rise slightly in 2011 and hover around 5 percent. They expect rates to increase to about 6 percent in 2012.
Jumbo loans become more attractive. Jumbo loans (loans over $417,000 in most housing markets and above $729,750 in high-cost housing markets) are expected to pick up pace in the next few months. Jumbo loans often have higher mortgage rates than conforming loans. However, with mortgage rates on jumbo loans dropping, experts predict a hike in refinancing and purchase applications for high-end housing.
All-cash purchases. All-cash purchases represented about a quarter of all existing home purchases in the last four months of 2010, according to Lawrence Yun, chief economist of the National Association of REALTORS®. He expects all-cash purchases to continue to represent a big part of the real estate landscape in 2011.
Slow and complex mortgage loan process. The time between application and closing can take as much as 60 days and that’s not expected to get any faster, experts say. Lenders often recommend borrowers lock in a loan 60, 75, or 90 days to help ensure the loan process will be completed within that lock-in period. The industry's new levels of documentation and verification that is now required is causing lengthy delays in the loan process, experts say.
Source: “7 Mortgage Trends to Expect in 2011,” MSNBC (Jan. 10, 2011)
Real estate analysts predict the other following trends in the mortgage market for 2011:
Rates on the rise. The Mortgage Bankers Association predicts mortgage rates to rise slightly in 2011 and hover around 5 percent. They expect rates to increase to about 6 percent in 2012.
Jumbo loans become more attractive. Jumbo loans (loans over $417,000 in most housing markets and above $729,750 in high-cost housing markets) are expected to pick up pace in the next few months. Jumbo loans often have higher mortgage rates than conforming loans. However, with mortgage rates on jumbo loans dropping, experts predict a hike in refinancing and purchase applications for high-end housing.
All-cash purchases. All-cash purchases represented about a quarter of all existing home purchases in the last four months of 2010, according to Lawrence Yun, chief economist of the National Association of REALTORS®. He expects all-cash purchases to continue to represent a big part of the real estate landscape in 2011.
Slow and complex mortgage loan process. The time between application and closing can take as much as 60 days and that’s not expected to get any faster, experts say. Lenders often recommend borrowers lock in a loan 60, 75, or 90 days to help ensure the loan process will be completed within that lock-in period. The industry's new levels of documentation and verification that is now required is causing lengthy delays in the loan process, experts say.
Source: “7 Mortgage Trends to Expect in 2011,” MSNBC (Jan. 10, 2011)
Less worried about layoffs, jobholders spend more
A steady decline in layoffs is giving the vast majority of adult Americans who have jobs the confidence to spend more freely and help energize the economy. They no longer worry so much about losing their jobs.
Their renewed confidence has boosted retail sales – just what’s needed to spark what economists call a “virtuous cycle”: Higher consumer spending raises company profits, which spurs hiring, which fuels more spending and growth.
Consumer spending is critical because it powers about 70 percent of the U.S. economy. It rose for five straight months through November, kicking off the strongest holiday shopping season since 2006. Many shoppers are showing enough confidence to splurge on new cars: Auto sales rebounded 11 percent in 2010, the first increase since 2005.
“The strongest showing for consumers since the peak years of the last expansion signals that the broader economy is near a threshold of self-sustaining growth,” analysts at Citi Investment Research & Analysis wrote last week.
Federal Reserve Chairman Ben Bernanke echoed that point Friday. He told a Senate panel he sees evidence that a “self-sustaining” recovery is taking hold because consumers and businesses are spending more.
Morgan Stanley economists say 4 percent growth is “likely, perhaps even conservative” in 2011, up from an estimated 3.1 percent last year. Late this month, the government will estimate economic growth for the final quarter of 2010.
Consumer spending is rising because the vast majority of working-age Americans are now breathing easier, despite 9.4 percent unemployment. People who had jobs feared being laid off during the recession, which ended in June 2009, and for months after that. Fewer worry now because most companies have stopped cutting staff.
Workers who survived the job cuts of the past three years have begun to conclude: “If they haven’t fired me by now, they’re not going to,” says Michael Koskuba, portfolio manager with Victory Capital Management.
By October 2010, layoffs and other dismissals had sunk to their lowest point since August 2006. In December, employers added just 103,000 jobs – too few even to keep up with population growth. But that was mainly because they’re still reluctant to hire, not because they’re still cutting jobs.
The number of people applying for unemployment benefits – a proxy for the pace of layoffs – has dropped in the past four months. And economists think employers will finally ramp up hiring this year.
“You’ve got 10 percent unemployment, and you add another 5 or 10 percent” for discouraged workers or those stuck in part-time positions, because they can’t find full-time work, says Doug Hart, a retail specialist at the consulting firm BDO USA. But the remaining 80 percent, having survived the worst of the layoffs, “are feeling more secure about their jobs.”
In 2009, consumers across all income groups froze spending. The Labor Department’s Bureau of Labor Statistics recorded the first annual drop in consumer spending in records dating to 1984.
Now, BDO’s Hart says, “The fear factor has subsided.”
That’s evident among consumers like Monique Aguilar, 27, of Saugus, Mass. Aguilar put off a car purchase last year after the restaurant chain where she’s a manager announced layoffs. But there she was Friday at a Chevrolet dealership in neighboring Lynn, Massachusetts, shopping for a new Malibu.
What’s changed? She doesn’t worry so much about being let go. Her employer’s sales have improved, and she’s encouraged by reports of slowing layoffs and of companies starting to hire.
“In general, I feel like we’re going in the right direction,” Aguilar says. “That makes me comfortable in my purchase.”
Many households also feel better able to spend because they’ve sharply reduced credit card and other debt they ran up during the mid-2000s.
Economists say consumers seem increasingly divided into “haves” and “have-nots.” The haves are more secure in their jobs. Their finances are solid. So is their credit.
They dominate the highest-earning 20 percent of Americans, who contribute nearly 40 percent of consumer spending. Among managers and professionals, for instance, unemployment in December was just 4.6 percent – less than half the overall unemployment rate.
The have-nots are struggling with shaky finances and job security. Unemployment is running at 12 percent for transportation workers, for example. It exceeds 20 percent for construction workers.
A 20 percent run-up in the Dow Jones industrial average since July has also skewed the consumer rebound in favor of upper-income shoppers – and the luxury stores that serve them.
“It’s a two-tier market,” says Doug Roberts, chief investment strategist for Channel Capital Research. The affluent “are beginning to feel more confident because their (stock) portfolios are up.”
During the holidays, high-end retailers like Nordstrom Inc. and Saks Inc. reported the strongest sales. Michael Niemira, chief economist at the International Council of Shopping Centers, says luxury sales rise and fall almost in lockstep with the stock market.
After hunkering down during the recession, for example, Jerrie McKennon of Burleson, Texas, last year splurged on a Lexus and two expensive vacations. The main reason was that most of her investment portfolio had recovered from its losses during the financial crisis.
“I loosened up in 2010,” she says. “The money we lost came back.”
Few expect a return to the carefree spending of the mid-2000s. Falling home prices are weighing on consumers’ confidence and their ability to borrow. Nearly one in four homeowners owe more on their mortgage than their homes are worth. Rising gasoline prices and the prospect of higher food prices are also likely to limit spending in 2011.
But analysts at Barclays Capital say a cut in Social Security taxes for workers this year will help them absorb higher gasoline prices. That tax break will put more money in people’s pockets – $1,000 more for an individual earning $50,000 a year.
Higher spending and growth don’t mean the unemployment rate will fall significantly this year. Most economists think it will remain around 9 percent at year’s end. Bernanke said Friday it could take up to five years for unemployment to drop to a historically normal rate of around 6 percent.
Still, economists say, more consumers are confident the worst of the job cuts are over. And that points to a stronger economy ahead.
“If you think back to a year ago, we were still questioning whether we’d seen the end of the recession,” Niemira says. “So we’ve come a long way.”
Source: The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed, Paul Wiseman, AP economics writer. Associated Press Writers Jay Lindsay in Boston, Joshua Freed in Roseville, Minnesota, Ellen Gibson in New York and Alex Veiga in Los Angeles contributed to this report.
Their renewed confidence has boosted retail sales – just what’s needed to spark what economists call a “virtuous cycle”: Higher consumer spending raises company profits, which spurs hiring, which fuels more spending and growth.
Consumer spending is critical because it powers about 70 percent of the U.S. economy. It rose for five straight months through November, kicking off the strongest holiday shopping season since 2006. Many shoppers are showing enough confidence to splurge on new cars: Auto sales rebounded 11 percent in 2010, the first increase since 2005.
“The strongest showing for consumers since the peak years of the last expansion signals that the broader economy is near a threshold of self-sustaining growth,” analysts at Citi Investment Research & Analysis wrote last week.
Federal Reserve Chairman Ben Bernanke echoed that point Friday. He told a Senate panel he sees evidence that a “self-sustaining” recovery is taking hold because consumers and businesses are spending more.
Morgan Stanley economists say 4 percent growth is “likely, perhaps even conservative” in 2011, up from an estimated 3.1 percent last year. Late this month, the government will estimate economic growth for the final quarter of 2010.
Consumer spending is rising because the vast majority of working-age Americans are now breathing easier, despite 9.4 percent unemployment. People who had jobs feared being laid off during the recession, which ended in June 2009, and for months after that. Fewer worry now because most companies have stopped cutting staff.
Workers who survived the job cuts of the past three years have begun to conclude: “If they haven’t fired me by now, they’re not going to,” says Michael Koskuba, portfolio manager with Victory Capital Management.
By October 2010, layoffs and other dismissals had sunk to their lowest point since August 2006. In December, employers added just 103,000 jobs – too few even to keep up with population growth. But that was mainly because they’re still reluctant to hire, not because they’re still cutting jobs.
The number of people applying for unemployment benefits – a proxy for the pace of layoffs – has dropped in the past four months. And economists think employers will finally ramp up hiring this year.
“You’ve got 10 percent unemployment, and you add another 5 or 10 percent” for discouraged workers or those stuck in part-time positions, because they can’t find full-time work, says Doug Hart, a retail specialist at the consulting firm BDO USA. But the remaining 80 percent, having survived the worst of the layoffs, “are feeling more secure about their jobs.”
In 2009, consumers across all income groups froze spending. The Labor Department’s Bureau of Labor Statistics recorded the first annual drop in consumer spending in records dating to 1984.
Now, BDO’s Hart says, “The fear factor has subsided.”
That’s evident among consumers like Monique Aguilar, 27, of Saugus, Mass. Aguilar put off a car purchase last year after the restaurant chain where she’s a manager announced layoffs. But there she was Friday at a Chevrolet dealership in neighboring Lynn, Massachusetts, shopping for a new Malibu.
What’s changed? She doesn’t worry so much about being let go. Her employer’s sales have improved, and she’s encouraged by reports of slowing layoffs and of companies starting to hire.
“In general, I feel like we’re going in the right direction,” Aguilar says. “That makes me comfortable in my purchase.”
Many households also feel better able to spend because they’ve sharply reduced credit card and other debt they ran up during the mid-2000s.
Economists say consumers seem increasingly divided into “haves” and “have-nots.” The haves are more secure in their jobs. Their finances are solid. So is their credit.
They dominate the highest-earning 20 percent of Americans, who contribute nearly 40 percent of consumer spending. Among managers and professionals, for instance, unemployment in December was just 4.6 percent – less than half the overall unemployment rate.
The have-nots are struggling with shaky finances and job security. Unemployment is running at 12 percent for transportation workers, for example. It exceeds 20 percent for construction workers.
A 20 percent run-up in the Dow Jones industrial average since July has also skewed the consumer rebound in favor of upper-income shoppers – and the luxury stores that serve them.
“It’s a two-tier market,” says Doug Roberts, chief investment strategist for Channel Capital Research. The affluent “are beginning to feel more confident because their (stock) portfolios are up.”
During the holidays, high-end retailers like Nordstrom Inc. and Saks Inc. reported the strongest sales. Michael Niemira, chief economist at the International Council of Shopping Centers, says luxury sales rise and fall almost in lockstep with the stock market.
After hunkering down during the recession, for example, Jerrie McKennon of Burleson, Texas, last year splurged on a Lexus and two expensive vacations. The main reason was that most of her investment portfolio had recovered from its losses during the financial crisis.
“I loosened up in 2010,” she says. “The money we lost came back.”
Few expect a return to the carefree spending of the mid-2000s. Falling home prices are weighing on consumers’ confidence and their ability to borrow. Nearly one in four homeowners owe more on their mortgage than their homes are worth. Rising gasoline prices and the prospect of higher food prices are also likely to limit spending in 2011.
But analysts at Barclays Capital say a cut in Social Security taxes for workers this year will help them absorb higher gasoline prices. That tax break will put more money in people’s pockets – $1,000 more for an individual earning $50,000 a year.
Higher spending and growth don’t mean the unemployment rate will fall significantly this year. Most economists think it will remain around 9 percent at year’s end. Bernanke said Friday it could take up to five years for unemployment to drop to a historically normal rate of around 6 percent.
Still, economists say, more consumers are confident the worst of the job cuts are over. And that points to a stronger economy ahead.
“If you think back to a year ago, we were still questioning whether we’d seen the end of the recession,” Niemira says. “So we’ve come a long way.”
Source: The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed, Paul Wiseman, AP economics writer. Associated Press Writers Jay Lindsay in Boston, Joshua Freed in Roseville, Minnesota, Ellen Gibson in New York and Alex Veiga in Los Angeles contributed to this report.
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