Brian Ripp ~ Your Bay Area & Fremont Real Estate & Financial Agent » 2009 » April

Federal Reserve leaves key interest rate unchanged

Brian Ripp — Wed, 29 Apr 2009 22:36:21 +0000

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of financial and economic developments.

When to switch off your lights

Brian Ripp — Wed, 22 Apr 2009 17:42:20 +0000

Does switching the lights on and off use more energy than leaving them on? The answer is no, despite the common misperception that turning a light on creates a power surge. The thinking is that it’s more economical to just leave a light on rather than pay the costs of flicking it back on.

In reality, that “surge” lasts for only a fraction of second, according to Francis Rubinstein, a staff scientist at Lawrence Berkeley National Laboratory. Any “start-up” energy costs are minuscule at best and are more than offset by the money you save from turning your lights off, even if it’s only for a short time.

So if you’re strictly concerned about saving energy (and money), you should turn your lights out when you’re not using them.

The bigger issue with turning lights on and off frequently, though, has to do with shortening the product’s lifetime, says Christina Kielich at the Department of Energy.

It doesn’t affect the lamp life of an incandescent bulb very much, says Rubinstein. So it makes sense to always turn them off when you a leave room, even if it’s only for a few minutes.

Compact fluorescent light bulbs, on the other hand, are a somewhat different story. Flicking them on and off repeatedly will affect how long they last, although, Rubinstein points out that the impact is minimal for most households.

How much flicking on and off is too much? The general consensus is that it’s best to turn off CFLs when you are leaving for 15 minutes or longer. In fact, Energy Star recommends installing fluorescent bulbs in fixtures that are used for at least 15 minutes at time. So it doesn’t make sense to use them in places where you’d need to switch them on and off constantly.

The rule of thumb is a little different when you’re at the office, according to Rubinstein. Turn out fluorescent lighting when you’re leaving for at least 5 minutes. The reason? Full-size fluorescent systems aren’t as sensitive to frequent cycling as CFLs and won’t impact the life of the bulb as much.

New Home Sales, Traffic & Optimism.

Brian Ripp — Sat, 18 Apr 2009 16:36:43 +0000

RISMEDIA, April 18, 2009-New home sales, traffic and expectations all lifted meaningfully in March. Findings that support this news are detailed in the John Burns Real Estate Consulting April survey of builders across the country. According to the survey, while the improvement can be partially attributed to seasonality, we can also point to a shift in builders’ optimism in many metros. The rating of future sales improved substantially, and expectations rose in every single region except the Northwest.

This month, 233 public and private builder executive representatives from over 160 companies around the country provided market ratings that represent conditions at 1,984 new home communities in 82 unique metros.

“We think the improvement is attributable primarily to improved affordability,” said John Burns, CEO of Irvine, Calif.-based John Burns Real Estate Consulting. “The new home tax credit in California is also helping.”

“Earlier in the year, the gains in traffic and sales were mostly limited to builders at the affordable end, but in April we began to see some gains for move-up builders as well,” said Jody Kahn, vice president. “This trend is still spotty, and limited to a handful of markets, including Raleigh, Atlanta and Nashville.”

Results also showed that builders in a handful of locations have recently purchased land, and that more plan to purchase in the near-term. “We know from prior housing downturns that the resetting of land prices is an important step in the process of clearing the market,” said Kahn.

Sales, Traffic and Expectations Jump: The builders’ rating of current sales reached a record level since our survey’s inception, traffic ticked up in every region but one, and expectations climbed as builders’ outlook appears to be brightening. No region of the country reported declining net sales per community. Average net sales per community rose to 1.7, which is the highest level since September.

Builders Start More Homes: 70% of builders started homes this month, compared to only 59% last month.

Pricing Net of Incentives Inches Toward Flattening: Overall, the direction of new home pricing moved closer to flat, but regions like Southern California report decreasing prices over last month.

Inventory Declining: The average number of unsold, finished units per community is continuing to trend down nationally, to 4.0 units from 4.2 last month. This is the lowest number we have seen in more than six months.

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To Rent or Buy in 2009?

Brian Ripp — Sun, 12 Apr 2009 21:27:06 +0000

Given recent changes in home prices and the current low mortgage rate climate, there have been significant gains in affordability for prospective first-time homeowners. Earlier in 2009, a provision in the Stimulus Bill provided for a first-time Homebuyer Tax Credit of 10 percent of the purchase price of the home up to $8,000. The CALIFORNIA ASSOCIATION OF REALTORS® analyzed the difference between renting and buying a home in light of recent market and policy developments. Housing costs and tax implications of buying a home and renting a home were computed as a part of the analysis.

Assumptions:

• The household currently rents a 3-bedroom, 2-bathroom apartment at the prevailing rent and purchases rental insurance.
The prevailing rent for a 3-bedroom, 2-bathroom apartment was $1,855 per month (Q4 2008, latest available). The household
purchases renter’s insurance at a cost of $247 per year or $20 per month.

• The household considers the purchase of a home at the entry-level price, which is 85 percent of the statewide median price.
The monthly cost of housing is equal to the mortgage payment, taxes, and insurance.

• The entry-level home is priced at $248,000, or 85 percent of the prevailing median-priced home of $291,800.

• The monthly payment including taxes and insurance (PITI) was calculated using a 10 percent down payment, a 40 percent
qualifying ratio, the prevailing one-year ARM mortgage rate, and a 1.038 percent assumed insurance costs and property
taxes. The monthly PITI payment under these assumptions is $1,630.

Tax Benefits of Owning Versus Renting

Existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. In addition, for First-Time Buyers purchasing a home between Jan. 1 and Nov. 30, 2009, the Homebuyer Tax Credit substantially elevates the tax benefit of buying a home this year. For example, consider two households earning the same income—$48,900 a year—which is also the minimum income needed to purchase the statewide entry-level home price of $248,000. The household that purchases a home (First-Time Buyers) at this price along with the prevailing market factors will give that household a tax deduction of over $15,800 in the first year of ownership as well as the one-time tax credit of $8,000 at that home price. The other household that continues to rent (Renters) will most likely only be eligible for the IRS Standard deduction of $10,900, less than that of their home buying counterparts without even factoring in the $8,000 tax credit. In the first year, the taxable income for the First-Time Buyers is roughly $5,000 lower than that for the Renters, and the difference in the tax liability totals over $8,700 in favor of the First-Time Buyers, mainly due to the Homebuyer Tax Credit in 2009.
The tax benefit in subsequent years of homeownership decreases as the mortgage note approaches maturity, the amount of interest declines each year assuming all else remains constant. However, the overall tax liability savings in the first five years of ownership is well over $11,000 for the First-time Buyer household.

Cost of Owning Versus Renting

With the current market environment, prospective first-time buyers will also save when taking into account the monthly out-of-pocket expenses of owning versus renting. Using the same two household scenarios, the First-time Buyer’s monthly PITI is $1,630. That is $250 less than the Renter’s monthly expense of renting a 3-bedroom/2-bathroom apartment including renter’s insurance for $1,875. In 12 months, the First-time Buyer household saves nearly $3,000 in monthly out-of-pocket housing expenses compared to the Renter household. That differential jumps to nearly $15,000 in five years of owning a home.

While these comparisons consider the tax benefits and cost savings homeownership offers prospective home buyers, there are many other nonmonetary benefits of homeownership, including an overall economic stimulus to the lagging economy. In addition, homeownership tends to boost social benefits such as education and civic involvement, as well as lower crime rate and welfare dependency. The many benefits of homeownership coupled with the bargains that can be found in today’s real estate market, makes 2009 a special year to buy a home, especially for first-time buyers.

from: Calif. Association of Realtors. www.car.org

Is FHA the Key to the Housing Rebound?

Brian Ripp — Sat, 04 Apr 2009 17:43:57 +0000

RISMEDIA, April 4, 2009-The Federal Housing Administration (FHA) is a primary source of mortgage financing for millions of America’s families and plays a key role in helping bring stability to the housing market. This is the message that the National Association of Realtors® (NAR) recently delivered to the Senate Appropriations Subcommittee. “Without FHA financing, families would be unable to purchase homes and communities would suffer from continued foreclosures and blight,” said Lennox Scott, a member of NAR’s Real Estate Advisory Board and CEO of John L. Scott Real Estate in Bellevue, Washington. In his testimony, Scott shared NAR’s belief about the importance of FHA and concern for the safety and soundness of its programs due to its dramatic growth over a short period of time.
“We believe that FHA has done a good job stepping up to today’s market challenges. However, along with the dramatic growth in market share comes greater responsibility and the need for increased infrastructure and staff,” Scott said. Over the past 18 months, FHA has handled an increase in volume four times greater than 2007 levels, increasing its market share to over 30%.
NAR suggests a number of FHA improvements that will help maintain safe and affordable FHA loan products. These improvements include investment in staff and technology; increased oversight and risk management; technical correction to help implement FHA programs; and monetizing the $8,000 first-time home buyer tax credit to allow buyers to apply it toward downpayment requirements.
“The U.S. Department of Housing and Urban Development has made a number of important and valuable changes to FHA over the years that has enabled it to stand up to the challenges of today’s mortgage market,” Scott said. “FHA is now a principal source of financing for millions of America’s families, and without it, the economic crisis would be significantly prolonged. This is why it is so important to invest in FHA improvements and advancements.”
NAR pledged to continue to work for FHA reforms that will ensure the continued success, availability and safety of FHA mortgage insurance programs.

source: RISMedia,
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Calif. Association of Realtor offers mortgage protection plan

Brian Ripp — Fri, 03 Apr 2009 21:10:48 +0000

C.A.R. launches mortgage protection plan for first-time home buyers
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) today launched the C.A.R. Housing Affordability Fund Mortgage Protection Program (C.A.R.H.A.F. MPP), for first-time home buyers.Through the Housing Affordability Fund Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive $1,500 per month, for six months, to help make their mortgage payments. A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit.

C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program, and estimates that as many as 3,000 families will benefit from the program this year.

To qualify for the Mortgage Protection Program, applicants must:

· Be a first-time home buyer – someone who has not owned a home in three

or more years

· Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009

· Use a California REALTOR® in the transaction

· Purchase the property in California

· Be a W-2 employee (cannot be self-employed)

To apply for the program, home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR®.

printed from California Association of Realtors, CAR.org