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Delinquency Rate Drops Below 5 Percent For First Time Since 2007

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Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

Thee nationwide mortgage delinquency rate fell to an eight-year low following its largest month-over-month decline in nine years, according to Black Knight Financial Services‘ “First Look” at Mortgage Data for March 2015 released Wednesday.

The delinquency rate (percentage of residential mortgage loans 30 days or more past due but not in foreclosure) dropped to 4.70 percent for March (approximately 2.38 million loans), the first time the rate has been below 5 percent since August 2007. The rate fell by 12 percent since February, the largest month-over-month decline in nine years.

The percentage of loans 90 days or more delinquent but not in foreclosure also declined substantially month-over-month and year-over-year in March by 96,000 and 228,000, respectively, down to 971,000 loans. The number of residential properties with loans 30 days or more overdue or in foreclosure was 3.16 million for March, a decline of 350,000 from February and from 678,000 in March 2014.

Meanwhile, the monthly prepayment rate, which is historically a good indicator of refinance activity, increased by 40 percent from February to March and by a whopping 103 percent year-over-year in March, up to 1.62 percent.

Although foreclosure starts spiked by 18 percent month-over-month up to 94,100 for March, the overall picture for foreclosure data was bright. The foreclosure rate, or the percentage of residential mortgage loans in some state of foreclosure, declined by 27 percent year-over-year in March down to 1.55 percent. That represented approximately 782,000 loans, the lowest total since December 2007.

“Black Knight data shows that the national delinquency rate dropped 12 percent in March, marking the largest monthly decline in 9 years and pushing delinquencies below 5 percent for the first time since August 2007,” Trey Barnes, Black Knight’s SVP of Loan Data Products. “While foreclosure starts did spike 18 percent from the month prior, the increase doesn’t seem to be driven by seasonality or any other clear influencer. Starts are actually trending slightly downward over the past two years, so we may be looking at a one month anomaly in March.”

Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.  Check back tomorrow.

Author: Brian Honea – http://dsnews.com/news/04-22-2015/delinquency-rate-drops-below-5-percent-for-first-time-since-2007

7.3 Million Boomerang Buyers Poised to Recover Homeownership in Next 8 Years

The first wave of 7.3 million homeowners who lost their home to foreclosure or short sale during the foreclosure crisis in 2015 are now past the seven-year window they conservatively need to repair their credit and qualify to buy a home. More waves of these potential boomerang buyers will be moving past that seven-year window over the next eight years corresponding to the eight years of above historically normal foreclosure activity from 2007 to 2014.

While millennials have gotten a lot of attention lately as the generation whose below-normal homeownership rates are changing the landscape of the U.S. real estate market, the boomerang buyers — who are primarily Generation Xers or Baby Boomers — represent a massive wave of potential pent-up demand that could shape the housing market in the short term even more dramatically. U.S. Census data shows home ownership rates for those ages 35 to 44 — roughly Generation X — were 11 percent below historical averages going back to 1994 in the third quarter of 2013, while home ownership rates for the below age 35 cohort were 10 percent below historical averages.

RealtyTrac analyzed foreclosure, affordability and demographic data to provide predictions of when and where these boomerang buyers are most likely to materialize. Nearly 7.3 million potential boomerang buyers nationwide will be in a position to buy again from a credit repair perspective over the next eight years. Here’s how those emerging boomerang buyers break down by year.

Markets with Most Potential Boomerang Buyers

Markets with the most potential boomerang buyers over the next eight years among metropolitan statistical areas with a population of at least 250,000 were not surprisingly in some of the nation’s largest markets that were also hardest hit by the housing crisis. These are primarily in the Sun Belt and Rust Belt.

Markets with Highest Share of Potential Boomerang Buyers

A similar set of markets show up in the list of those with the highest rate of potential boomerang buyers as a percentage of total housing units, with markets that were once epicenters of the foreclosure problem showing up in the top five.

Markets Where Boomerang Buyers Most Likely to Materialize

Markets most likely to see the boomerang buyers materialize are those where there are a high percentage of housing units lost to foreclosure but where current home prices are still affordable for median income earners and where the population of Gen Xers and Baby Boomers — the two generations most likely to be boomerang buyers — have held steady or increased during the Great Recession.

There were 22 metros among those with at least 250,000 people where this trifecta of market conditions is in place, making these metros the most likely nationwide to see a large number of boomerang buyers materialize in 2015 and beyond. For all the markets on this list potential boomerang buyers represent at least 5 percent of all housing units, house payments on a median priced home require 28 percent or less of the median household income, and the population of Gen Xers and Baby Boomers combined has stayed steady or increased between 2007 and 2013.

Methodology: The Millennial generation is defined as someone who was born between the years 1977 to 1992. In 2013 Millennials would have been between the ages of 21 to 36. In 2007 the Millennial generation was between the ages of 15 to 30. The Generation X generation is defined as someone who was born between the years 1965 to 1976. In 2013 Generation Xers would have been between the ages of 37 to 48. In 2007 Generation Xers were between the ages of 31 to 42. The Baby Boomer generation is defined as someone who was born between the years 1945 to 1964. In 2013 Baby Boomers would have been between the ages of 49 to 68. In 2007 Baby Boomers were between the ages of 43 to 62.

http://www.realtytrac.com/news/foreclosure-trends/boomerang-buyers/

Report: President to Announce Reduction in FHA Premiums

Bloomberg reported Wednesday that FHA will cut its mortgage insurance premiums to 0.85 percent, a 0.5 percentage point reduction. Obama is expected to make the announcement on Thursday in a scheduled speech on the housing market in Phoenix, Arizona.

FHA raised premiums in response to its declining mortgage insurance fund, which forced the agency to take a $1.7 billion bailout in 2013. Since then, it has rebuilt its capital, spurring some commentators to call for a cut.

When reached for comment, a HUD representative said he could not comment or confirm that the FHA premiums would be cut. A separate source familiar with the matter was able to confirm it, however.

The announcement would come as welcome news to many of housing’s biggest trade organizations, who have been vocal in the past few months about the consequences of higher premiums.

In a statement to DSNews, Chris Polychron, president of the National Association of Realtors (NAR), said the group is hopeful at the rumor, adding that current premiums “have priced too many potential homeowners out of the market.” NAR estimates that in 2014 alone, nearly 234,000 creditworthy borrowers were priced out of the housing market because of high FHA premiums.

“By lowering its fees, FHA will provide greater access to homeownership for historically underserved groups,” Polychron said. “I look forward to attending the speech … and sharing our views with President Obama.”

Housing analysts have also joined the rising chorus of those urging for lower premiums. In a report put out before Wednesday’s announcement, researchers Laurie Goodman, Bing Bai, and Jun Zhu at the Urban Institute argue that FHA could still net at least $2 billion in 2015 with premiums as low as 0.9 percent annually, allowing the agency to continue rebuilding its insurance fund.

“It makes sense to make up the shortfall more slowly, pricing new business more appropriately for the risk,” the group said. “Thus, rather than attempting to make $5.7–$6.8 billion with its 2015 book of business … it would serve the FHA better to lower the premiums and achieve the reserve at a more gradual pace.”

Author: Tory Barringer January 7, 2015 http://dsnews.com/news/01-07-2015/report-president-announce-reduction-fha-premiums

Come back tomorrow to http://www.AshfordCP.com/blog  where Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

Former Countrywide Exec to Collect $57 Million for Whistle-Blower Suit

Whistle-Blower Edward O'Donnell CountrywideFormer Countrywide executive Edward O’Donnell will receive $57 million for his role in filing a whistle-blower lawsuit against Bank of America over the sale of faulty mortgage-backed securities, according to a report from Bloomberg News.

A second suit O’Donnell filed against Countrywide was partly responsible for a record $16.65 billion settlement that Bank of America reached with the government in August 2014. Bank of America acquired Countrywide for $4 billion in 2008. That acquisition has cost Bank of America many more billions in settlements, legal fees, and loan buybacks in the last six years.

The whistle-blower lawsuit, which was filed under the False Claims Act, accused Countrywide of misrepresenting the mortgage-backed securities it sold to GSEs Fannie Mae and Freddie Mac through a program known as the High Speed Swim Lane (HSSL, or “Hustle”). O’Donnell filed the suit in 2012 when he learned that Bank of America was in talks with the Justice Department over a possible settlement, according to the report.

A judge levied a $1.27 billion penalty against Bank of America in July for the “Hustle” case. The bank has been fighting to overturn that verdict in the months since, claiming that the program ended prior to its acquisition of Countrywide.

According to newly released documents, O’Donnell field a second suit in June against a separate Countrywide division over the sales of toxic loans to the GSEs. Bank of America agreed to pay $350 million to settle that claim as part of a much larger settlement – a record $16.65 billion in August, according to the report.

Under the False Claims Act, whistle-blowers can collect between 15 and 25 percent of the money the government recovers.

Author: Brian Honea December 20, 2014 http://dsnews.com/news/12-20-2014/former-countrywide-exec-collect-57-million-whistle-blower-suit

Come back tomorrow to http://www.AshfordCP.com/blog  where Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

OCC Report Shows Improvement in First-Lien Mortgages for Q3

OCC Report Mortgage Loan PerformanceThe OCC Mortgage Metrics Report, Third Quarter 2014, released Friday by the Office of the Comptroller of the Currency (OCC), showed improvement in the performance of first-lien mortgages serviced by seven national banks and one federal savings association.

The report found that out of a portfolio totaling 23.6 million loans with a combined unpaid principal balance of about $4.0 billion (about 46 percent of residential mortgages in the U.S.), the percentage of current and performing mortgages increased both quarter-over-quarter (from 92.9 percent to 93.0 percent) and year-over-year (from 91.4 percent to 93.0 percent) in Q3.

Mortgages that were 30 to 59 days delinquent made up 2.4 percent of the portfolio, which was an increase of 1.9 percent from Q2 to Q3 but a decline of 8 percent from the same quarter in 2013. The percentage of seriously delinquent mortgages, which are defined by OCC as 60 or more days past due or held up by bankrupt borrowers whose payments are 30 days or more past due, declined by 0.9 percent quarter-over-quarter and 14.5 percent year-over-year in Q3 2014.

Delinquent mortgages were not the only category that saw a decline in the report, however. The overall number of homes in the process of foreclosure took a big tumble year-over-year of 41.5 percent in Q3, down to 353,906. This number represented 1.5 percent of all mortgages. Foreclosures initiated by servicers during the quarter also experienced a significant year-over-year decline of 36.7 percent in Q3, down to 82,668. Completed foreclosures performed likewise, falling 45.4 percent year-over-year in Q3 down to 45,245. OCC attributed the large decline in foreclosure activity to improved economic conditions and foreclosure prevention assistance.

Another positive sign for the housing market in the OCC’s report was the number of home retention actions implemented by servicers in Q3, which outpaced the number of forfeiture actions by nearly a four to one ratio. Home retention actions, which include modifications, trial-period plans, and shorter-term payment plans, totaled 205,689 for Q3, compared with 58,214 home forfeiture actions, which include completed foreclosures, short sales, and deeds-in-lieu of foreclosures. The disparity between home retention actions and home forfeiture actions was still nearly four to one despite a 1.2 percent decline quarter-over-quarter and a 34.3 percent decline year-over-year in Q3.

More than 90 percent of modifications in Q3 reduced monthly principal and interest payments, and 55.1 percent of modifications resulted in a reduced payment of 20 percent or more. Modifications made under the government’s Home Affordable Modification Program (HAMP) reduced homeowners’ payments by an average of $284 per month.

Out of the nearly 3.6 million modifications implemented during the six-and-a-half year period between January 1, 2008, and June 30, 2014, about 57 percent of them were still active as of the end of Q3 2014, while nearly 43 percent of them had exited reporting institutions’ portfolios through either payment in full, involuntary liquidation (foreclosure, short sale, or deed-in-lieu of foreclosure), or transferring their loans to a non-reporting servicer.

Of the approximately 2.04 million modifications that were active as of the end of Q3 2014, nearly 69 percent were current and performing, according to OCC’s report. About 25.6 percent of those modifications were delinquent and about 5.7 percent were in foreclosure.

Author: Brian Honea December 19, 2014 http://dsnews.com/news/12-19-2014/occ-report-shows-improvement-first-lien-mortgages-q3?utm_source=DSNews.com&utm_campaign=80495f1a9e-Your_Daily_Dose12_17_2014&utm_medium=email&utm_term=0_1924082bfe-80495f1a9e-175200045

Come back tomorrow to http://www.AshfordCP.com/blog where Kennesaw’s Ashford Capital Partners’ Managing Partners Matthew Riedemann brings you news you can use.

Foreclosure Prevention Counseling Program Has Helped 1.8 Million Homeowners

NeighborWorks America National Foreclosure Mitigation Counseling Program

 

 

 

 

 

 

Washington, D.C.-based NeighborWorks America, one of the nation’s largest community development corporations, announced that more than 1.8 million homeowners have received foreclosure prevention counseling through the association’s National Foreclosure Mitigation Counseling Program (NFMC) as of July 31, 2014.

Distressed homeowners have utilized local nonprofits, national intermediaries, and state housing finance agencies to receive housing counseling through the NFMC Program, which has facilitated the awarding of more than 13,300 scholarships to pay for counselor training and the certification in foreclosure prevention counseling for more than 10,200 people.

“The rate of home foreclosure is down dramatically from its peak across the country, but there still are hundreds of thousands of homeowners in hardest hit parts of the country who would benefit from working with nonprofit housing counselors to find the best solution to their mortgage troubles,” said Chuck Wehrwein, acting CEO for NeighborWorks America.

An NFMC Program Congressional Report determined that low mortgage rates hovering around 4 percent for several years now have not been helpful to approximately 18 percent of homeowners. The report said that an average of about three in five homeowners who approach the NFMC for foreclosure prevention counseling have a mortgage interest rate of 8 percent or greater.

“A number of factors keep homeowners from reducing their mortgage interest rate – whether they face foreclosure or not – according to research conducted by the University of Chicago in partnership with NeighborWorks network member, Neighborhood Housing Services of Chicago,” Wehrwein said. “The report found that many homeowners didn’t believe that the programs that they heard about actually could deliver. Dispelling the myths about foreclosure prevention programs is a key benefit of working with an NFMC counselor.”

Homeowners participating in housing counseling through NFMC are three times more likely to save money through loan modification and twice as likely to get current on their mortgage payments without a loan modification, according to an analysis of NFMC by the Urban Institute. The UI found in its analysis that homeowners who worked with a housing counselor in the NFMC program to avoid foreclosure with a loan modification saved an average of about $5,000 per year.

Come back tomorrow to http://www.AshfordCP.com/blog  where Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

Author: Brian Honea December 12, 2014 http://dsnews.com/news/12-12-2014/foreclosure-prevention-counseling-program-helped-1-8-million-homeowners?utm_source=DSNews.com&utm_campaign=80a4d6c05f-Your_Daily_Dose12_15_2014&utm_medium=email&utm_term=0_1924082bfe-80a4d6c05f-175200045

Survey: Mortgage Professionals Believe Business Is Better Than Last Year

Collingwood Group Mortgage Business ConditionsDespite persistent concerns about risk and regulatory compliance, the majority of mortgage professionals agree that business conditions today are better now than they were a year ago.

According to survey results released by the Collingwood Group this week, 33 percent of mortgage lenders, servicers, and other industry professionals believe business conditions are “a little better” than they were last year. That compares to 31 percent of respondents who said the same thing in October.

As with October, more than half of those surveyed said conditions are either a little worse or a little better, “signaling that the industry has not seen a significant improvement or decline over the last year,” the Collingwood Group said.

According to the firm, comments offered from lenders mostly point to more stable and consistent purchase volumes, though some also said they’ve had a better experience packaging and selling mortgages as a result of regulatory guidelines implemented this year.

“[Qualified mortgage] and [ability-to-repay rules] have affected our ability to sell loans on the secondary market and directly to Freddie Mac which has increased our portfolio production by twenty-five percent this year,” one anonymous respondent said.

On the other hand, those citing worse conditions said they are struggling to contend with lower average loan amounts and more underwriting challenges.

The six-month outlook was slightly improved compared to October, with 64 percent of professionals expecting business conditions to improve.

Author: Tory Barringer December 9, 2014 – http://dsnews.com/news/12-09-2014/survey-mortgage-professionals-believe-business-better-last-year?utm_source=DS+Weekly&utm_campaign=86e9ef6597-DS_Weekly&utm_medium=email&utm_term=0_cc3ebd2b74-86e9ef6597-175429429

Come back tomorrow to http://www.AshfordCP.com/blog  where Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

 

Millennials Expected to Power Housing Market in 2015

Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

2015 Housing Forecast MillennialsThe year 2015 is gearing up to be a stronger, more expensive housing market powered for the first time by new millennial buyers, according to the Realtor.com 2015 Housing Forecast.

Among its five largest predictions for next year, Realtor.com expects first-time buyers will return to the market in full force after years of retrenchment that has dampened the recovery of the housing market. This push will be led by millennials, now settling into their families, careers, and 30s, who are eager to buy into the American dream.

This prediction mirrors that of Zillow, which earlier this month forecast that millennial buyers will become the driving force behind the American housing market in 2015.

According to that report, 42 percent of millennials say they want to buy a home within the next five years. Millennials have, according to most accounts, stayed away from buying because they have eschewed settling into marriages and families until later in their lives.

With millennial family growth on the rise and economic conditions improving for younger Americans and the nation in general, Realtor.com foresees more buying among the under-35 set.

“In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery,” said Jonathan Smoke, chief economist for Realtor.com. “If access to credit improves, we could see substantially larger numbers of young buyers in the market.”

Smoke predicts that millennials will drive two-thirds of household formations over the next five years. Next year’s addition of 2.75 million jobs and increased household formation will be the two key factors driving first-time buyer sales, he said. “However, given a high dependency on financial qualifications, this activity will be skewed to geographic areas with higher affordability, such as the Midwest and South.”

The report sees Dallas, Atlanta, Denver, Des Moines, and Houston as the most promising growth areas in 2015, and expects between 5 and 14 percent growth in home sales in these areas.

And though the site expects homeownership overall to decrease, despite a growth in ownership for those under 35, Realtor.com predicts that existing-home sales will increase 8 percent as buyers become more motivated by the belief that rates and prices will continue to rise. The increase in home sales year-over-year will be similar to 2012, but this time the composition of properties sold will be more normal with minimal levels of distressed properties, the report noted.

Overall, Realtor.com expects home prices to increase 4–5 percent nationally, which in turn will help make homes 5 to 10 percent less affordable in 2015. On the mortgage front, Smoke expects fixed rates to top out at 5 percent by year’s end, as rates on adjustable-rate mortgages will increase little.

Author: Scott Morgan December 5, 2014 http://dsnews.com/news/12-05-2014/millennials-expected-power-housing-market-2015?utm_source=DS+Weekly&utm_campaign=86e9ef6597-DS_Weekly&utm_medium=email&utm_term=0_cc3ebd2b74-86e9ef6597-175429429

Come back tomorrow to http://www.AshfordCP.com/blog  where Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

Is Real Estate Ownership Now Beyond Reach?

Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

Real estate predictions for the coming year suggest both increased sales and higher prices, but will that be the case?

According to the National Association of Realtors 2015 should see home sales grow from 4.9 million  units to 5.3 million, a nice increase. As well, the Realtors predict that real estate values will increase 4 percent, about twice the current rate of inflation. If correct, that would mean more equity and increased buying power for millions of homeowners.

“Low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery,” adds David Crowe, chief economist with the National Association of Home Builders.

The alternative view works like this: Despite remarkably-low interest levels existing home sales in 2014 fell. Worse, sales to first-time buyers are at their lowest levels in nearly three decades, meaning that existing owners cannot move-up or move out without replacement owners to take their place.

The central problem is not interest rates (around 4 percent at year end) or home prices (still 19 percent below August 2006 when values were at their peak, according to RealtyTrac. Instead, the issue is affordability.

Name one thing today which is cheaper than in 1999 and then consider this reality: Household incomes today are lower than 15 years ago, according to the U.S. Census Bureau.

How can we have more home sales in 2015 while at the same time household incomes are in a financial ditch?

The solution — at least for the moment — is two-fold:

First, we have lower mortgage rates. You can get 4 percent, 30-year fixed-rate financing at this time versus 7.44 percent in 1999. The difference is huge: Borrow $200,000 today at 4 percent and the monthly cost for principal and interest is $954.83 versus $1,390.22 at 7.44 percent. That’s an annual savings of $5,225.

Second, with lower home prices we have less mortgage debt. In 2009, total U.S. mortgage debt stood at $10.4 trillion versus $9.375 billion in mid-2014.

Combine lower rates with less debt and affordability levels should soar but they’re  offset in many markets because of high local costs.

RealtyTrac has found major 98 counties where affordability is falling and buyers are being frozen out of the marketplace, areas with a combined population of nearly 62 million people. The counties with falling affordability include Los Angeles County, Calif., Harris County, Texas in the Houston metro area, Orange County, Calif., in the Los Angeles metro area, Kings County (Brooklyn), N.Y., Dallas County, Texas, Bexar County, Texas in the San Antonio metro area, Alameda County, Calif., in the San Francisco metro area, Middlesex County, Mass., in the Boston metro area, Oakland County, Mich., in the Detroit metro area and Travis County, Texas, in the Austin metro area.

Of the 475 counties reviewed, “one in five markets have now exceeded their historical affordability norms, which is a strong sign that either a new home price bubble is forming in those markets or that home price appreciation will soon plateau until incomes can catch up,” said Daren Blomquist, vice president at RealtyTrac.

The Employment Illusion
According to government figures, the country added 314,000 jobs in November, the best result since the 1990s. The White House adds that “the private sector has added 10.9 million jobs over 57 straight months of job growth, extending the longest streak on record.”

That sounds great but the White House also said this: “The average workweek in the private sector rose to 34.6 hours in November, the highest since 2008.”

It’s surely good that we have more people working, but the definition of a “job” is plainly not 40 hours. If people are not working full-time they can’t maximize their income, get to the promised land of overtime for hourly work or afford a mortgage in many markets.

There were 6.9 million who were “employed part time for economic reasons,” said the Bureau of Labor Statistics. “These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.”

Non-farm workers had an average income of $24.66 per hour. For a 40-hour workweek that’s $986. With a 34.6 hour workweek wages fall to $853 or $44,356 per year. According to the Census Bureau, the median household income in 2013 — the income for a “household” not just a single worker — was $51,939.

Despite puffed-up job claims the bottom-line is that a lot of people don’t have the income necessary to comfortably make a long-term homeownership commitment. Worse, for a growing number of non-owners, the possibility of ownership is slipping away.

“If a renter hasn’t owned a home by age 45, then chances are they will continue to rent throughout their lifetime,” says a new study from Freddie  Mac.

Major Markets Off-Limits
A December market research report from Deutsche Bank by Ying Shen and Richard  Mele says “we expect about half of 25 large markets to be unaffordable in the next three years for the median income home buyer.”

The catch is that the lack of affordability could grow substantially if mortgage rates increase. Even without any price rises, the researchers expect that a 1-percent interest increase would make 21 of the 25 largest markets unaffordable for the median income home buyer, meaning huge numbers of us.

If affordability forces out the poor and the middle class from major metro areas  then who drives the ambulances, teaches the children, fixes the plumbing or paves the roads? As John Kennedy said at his inauguration, “if a free society cannot help the many who are poor, it cannot save the few who are rich.”

Mortgage Rates
If we leave the cozy and comfy world of today’s ultra-low mortgage rates, if home values increase, or both, then the affordability picture becomes even darker. This brings us to a looming problem, a deliberate effort to raise interest rates.

The effective Fed funds rate is currently at .09 percent but Standard & Poor’s says its “economists now expect a rate hike in second-quarter 2015 and see the Fed funds rate reaching 1.25 percent by year-end 2015, which will slowly climbing until it reaches the so-called ‘exit rate’ of 3.75 percent by third-quarter 2017. Still, we also believe the problems — or successes — in other economies will factor into the Fed’s policy decisions. Indeed, with the Eurozone struggling and facing the threat of falling back into recession, the possibility that U.S. central bankers will wait longer to raise rates remains on the table.”

The company adds that “it has been 10 long years since the Fed last embarked on a rate hike cycle, so standing finally on the threshold of another one has banks keenly focused on the variety of impacts higher rates are likely to have on them. Will significant amounts of deposits, particularly noninterest-bearing deposits, move away from banks to places that offer higher yields? And what if the Fed doesn’t raise rates after all in 2015?”

An alternative question is this: Will so much cash flood the US financial system that rates can’t rise? This is a very real possibility given economic slowdowns in Europe, Japan and Asia as well as the fall of oil prices worldwide plus open warfare and civil unrest in large swaths of the Middle East.

A Nation of Renters?
If ownership is unaffordable then the alternatives are renting and multi-generational housing. Both options mean less ownership and less ownership means less wealth.

“Renting,” says The New York Times, “can make sense as a lifestyle choice or because of income constraints. As a means to building wealth, however, there is no practical substitute for homeownership.”

“Since the housing bust,” said the paper in a recent editorial, “renting has been in and owning a home has been out, especially among young adults who in earlier decades would have been first-time home buyers. As the rate of homeownership has declined, from a peak of nearly 70 percent in 2004 to a 20-year low of 64.3 percent recently, the number of owner-occupied homes has barely budged, while the number occupied by renters has increased by nearly 25 percent.”

We need more and better jobs so people can afford homes even if real estate values increase and mortgage rates rise. Today’s employment numbers mask the realities of a fragile economy, one that for millions of people is not generating the hours and wages needed to justify the quest for real estate ownership. Without a stronger job base the housing sector simply can’t move forward on a sustained  basis.

December 9, 2014 –  By Peter Miller – http://www.realtytrac.com/content/news-and-opinion/is-real-estate-ownership-now-beyond-reach-8197

Come back tomorrow to http://www.AshfordCP.com/blog  where Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

House Approves Tax Extenders Bill

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Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.

By a wide bipartisan 378-46 margin, the House last night approved H.R. 5771, the Tax Increase Prevention Act, which will renew scores of temporary tax provisions known as “tax extenders” that expired this year, including several of interest to the housing community. The one-year retroactive renewal is through 2014 and dates back to Jan. 1.

NAHB is disappointed that a longer term deal was not reached, but the political situation and the calendar have forced Congress into a one-year deal everyone hoped to avoid.

Just one week ago, Congress was headed to a bipartisan, bicameral deal which would have extended all of the expired provisions for two years through 2015. The agreement also would have also made a handful of extenders, such as the research and development tax credit, permanent.

Just hours after word of the agreement leaked out, the White House scuttled the deal by announcing the President would veto any bill that contained these permanent provisions.

In a letter to the House prior to the bill’s passage, NAHB urged lawmakers to support the legislation. We also expressed concern that these short-term tax bills create difficulties for our members by denying builders the certainty needed to finance complex projects and called on Congress to act quickly on a longer-term deal in early 2015

Key provisions in the tax extenders package for 2014 (retroactive to Jan. 1) include:

  • Section 45L Tax Credit for Energy Efficient New Homes. Provides builders a $2,000 tax credit for exceeding energy standards by 50%. The base energy code is the 2006 International Energy Conservation Code plus supplements. Section 45L is expected to save home builders $267 million in taxes for 2014 construction activity.
  • Fixed Credit Rate for 9% Low Income Housing Tax Credit projects. The bill will renew the 9% fixed rate, but only for 2014 allocations.
  • Section 25C Tax Credit for Qualified Energy Efficiency Improvements. This is a credit worth up to $500 (subject to a $500 lifetime cap), with lower caps for certain products like windows, for consumers to install qualified energy efficient upgrades. Remodelers often leverage 25C tax credits when working with clients. Section 25C is expected to save home owners who remodel $832 million in taxes for 2014 improvements.
  • Section 179D Energy Efficient Commercial Buildings Deduction. Provides a deduction up to $1.80 per square foot for commercial buildings, including multifamily buildings built under the commercial code, that exceed specific energy efficiency minimums.
  • Section 163 Deduction for Private Mortgage Insurance. Allows taxpayers, subject to an income cap, to deduct premiums paid for private mortgage insurance. The deduction for PMI is expected to save home owners $919 million for tax year 2014.
  • Bonus Depreciation. Extends the 50% bonus depreciation.
  • Section 179 Expensing. Increases the maximum expensing amount to $500,000 for qualified property on up to $2 million in property placed in service.
  • Short-sale mortgage debt forgiveness. The provision would extend through 2014 the exclusion from gross income of a discharge of qualified principal residence indebtedness due to a short sale.

The Senate is expected to take up and pass H.R. 5771 next week.

Filed in Capitol Hill by on December 4, 2014 http://nahbnow.com/2014/12/house-approves-tax-extenders-bill/?utm_source=newsletter&utm_medium=email&utm_campaign=mmb1208

Come back tomorrow to http://www.AshfordCP.com/blog  where Kennesaw’s Ashford Capital Partners’ Managing Partners Matt Riedemann brings you news you can use.