The Federal Reserve has acknowledged Wednesday to keep the interest rates low. They said the economy is beginning to look up, especially in the housing industry. They also claimed they will continue to press forward with the stimulus campaign- which will keep interest rates low- until the economy shows more muscle. 

     At the last meeting, the Fed said they would keep rates incredibly low until about mid 2015. A program known as "QE3", in which the Fed buys $40 billion in mortgage backed debt every month, helps keep the rates incredibly low.

     However, on the flip side, the Fed is a bit concerned. In a statement they made recently, they said, "The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions."

     Even though the unemployment still remains high at 7.8 percent, the fiscal cliff still looms at the end of the year, the global economy is struggling, and the U.S. GDP grew only by 1.3 percent for the second quarter.

     Incredibly record low mortgage rates and low home prices aren't enough to encourage Americans to go through the process of buying a house. Even as the market has slightly picked up, still four of five Americans will not buy a house or even refinance their mortgage. A major factor contributing to this is the lack of jobs.

     Economists expected 125,000 new jobs in August, but we were only given 96,000, according to the Labor Department. The unemployment rate fell to 8.1 percent, but only because more discouraged workers left the labor force. So that doesn't really say much. Only workers between the ages of 18-34 were slightly more likely to invest in housing over the next year.

     With record low interest rates, Union Plus launched an awareness campaign for Union members to learn more about the advantages of buying a home. "With only 18% of working families willing to invest in buying new homes, what this tells us is that we need to help working families feel confident about investing in housing" says Union Plus President Leslie Tolf. Confidence comes in knowing the benefits of owning a a home.

APPRECIATION- the largest benefit is appreciation, and right now that's a much better bet than it has been in years. Appreciation occurs when the value of a home increases due to supply and demand, home improvements, and other factors. It acts as interest on an investment. It taps as equity you can use for other investments like starting your own business. sending your kid to college, or other possibilities.

     Acquire enough equity and you can upgrade your house, move to a nicer neighborhood, or even downgrade and save the rest for retirement. many homeowners rely on equity as they nest egg to use during retirement.

TAX BENEFITS- Homeownership is the mother of all tax shelters. The mother of all tax breaks is the deduction...

The average price per square foot for a Louisville home is $130, which is actually up 30% from a year ago for the same period. The median sales price for homes in Louisville was $202,644 (based on 62 home sales). Compared to the same period one year ago, the median home sales prices have increased 47%, however the number of home sales has decreased 96.6%. Currently there are 3,671 resale and new homes on the market in Louisville. The homes in re-sale, foreclosure, and auction are at 2, 864. The average listing prices for Louisville homes for sale are $212,983. This number tells us that there has been a decrease of .3%, or $632 compared to the prior week. The popular neighborhoods in Louisville include Old Louisville, Cherokee Triangle, with the average listing price of $217,777, and $449,094.

Just a little market news.

     Rising home prices have helped nearly a million homeowners emerge from being underwater from their mortgages. But the younger homeowners are still struggling to stay afloat. The percentage of of borrowers who owed more on their homes than what they were worth fell to nearly 31%, which is down a few tenths of  percentage points from the previous months. Of the 15 million owners who were underwater, a significantly large number are under the age of 40.

     Nearly 48% of all underwater homeowners are under the age of 40, which is twice the rate of borrowers that are older. This creates a gridlock which has the potential to hinder the market's recovery.

     You hear about tight inventory in many markets, and it's clear where it is coming from. Having a negative equity is trapping young people in their homes, which prevents them from selling. Most of these homes are the starter-first-time buyer homes. Underwater homes that wish they could be sold have difficult decisions to make. They will either have to pay the mortgage in full at closing (which needs a bundle of cash on hand) or go through a short sale.

      Going through with a short sale however means getting the bank to forgive the difference that you still owe. If the bank won't approve of the short sale, then the sale cannot be completed. even if the sale is completed the seller takes a large dent on their credit score, which is where reluctance kicks in.

     Still many homeowners do not want to absorb the loss, They hang onto their homes hoping the prices will rebound and they can sell above water. This is such that case in states like Florida and California.

     Here's the impact of the underwater generation: This could have horrible ramifications for the economy and borrowers under 40. Many young homeowners bought their homes at the peak of the...

Home purchase mortgage applications last week have risen 7.2 percent. This is the highest level since  December 2, 2011 the Mortgage Bankers Association reports.

They said 'Applications for to buy a home picked up last week, and are running more than two percent above the leve reported at this time last year,' says MBa'S VP of research and economics.

He also said loan application for home buying from conventional loans are ten percent higher than last year. What also increased by ten percent was purchase and refinance applications for government loans. They believe this was caused by borrowers seeking to apply before the scheduled increases in insurance premiums at the start of April.

Overall, mortgage applications for purchase and refinancing increased 4.8 percent last week, and applications for refinancing increased 4 percent from the previous week. this increase is the first increase in six weeks of consecutive declines.

Let's hope this is the start of a popular long-term trend!

US Census Releases News on Housing Starts

November 17, 2011

Released this morning, the US Department of Housing and Urban Development jointly with the US Census Bureau states that building permits and housing starts are up from that of October 2010, overall. Compared are structures of one unit, two to four units, and five or more units. Privately owned new homes with five or more units have increased 62.9% since 2010 in places that require a permit. The south has had an increase of 13% in the permits required for one unit privately owned homes. Authorized, but not started new construction is up 6.1% in the Midwest from last year.

See the breakdown based on region of the United States or just the country as a whole & read the full report:

http://www.census.gov/const/newresconst.pdf

For property investors wondering if the US is the right place to invest at a time like now, I've checked out an international area as an alternative. This area is a condominium development in the suburbs of Taipei, Taiwan. There is no city website for this local area called, 'The City Peak'. What drives this market is the experienced real estate agents, and personal relationships with them, which limits the access of outside investors.

These condominiums are designed so the living space is 20+ floors, and two possible retail stores on the first two floors, which actually is a western building concept. The developer hired an award winning architect and never made his building available to public investors.

The average condo in Taiwan is a wall-to-wall shell with high ceilings and fire retardants. The rest of the space is left to the buyer. The condo is sold on the total square footage as is regional tradition. So a little less than half the the area you buy is made to be the common area. The buyer is still responsible for paying rent, utilities, etc. 

Pretty much, don't move there it sounds like it sucks, and America is much better any day of the week!

The Mortage Interest Deduction is vital in keeping housing prices from plummeting to devestating lows, and potentially damaging the economy even further. So why would preserving the MID be crucial to uphold struggling small businesses and the middle and lower classes? The interest payments on loans are added up at Uncle Sam's collection day (April 15) and that interest is allowed to be subtracted from a citizens total yearly income, giving him/her extra cash in their pocket to put back into the economy if they choose. That is the point of the MID, which has worked so well in the past.

Now we face possible changes or elimation to the tax code by Congress. They are currently considering revising the MID or eliminating it completely. Any changes to this code will have devestating consequences to the American people, especially the middle and lower classes. Changes to this law would decrease the value of homes across the nation destroying the recent progress of the weak housing market, decrease salaries of all families, destroy a few million jobs, and will have other rippling effects. It is our duty and responsibility to make sure Congress does not touch a single word to the tax code laws. To do your part, please contact your state Congressman to insist they leave the MID alone. It would benefit a few while crippling the entire nation even further if these laws are revised.  

LIVING SMALLER

Monday, February 14, 2011