Monday, November 11, 2013

It's OK To Have Nice Stuff?! --Ep. 28

Watch Rachel Cruze talk about having stuff (aka - money management.)

Click here to watch >> Its okay to have stuff. Just don't let your stuff have you.

The "Aha" I took away from this is, "What's my priority with money right now?"
What was your "Aha?"
Good stuff! Make it a great day!

Wednesday, April 10, 2013

Bank of America takes a hit. Military personnel benefit! Improving employment numbers are in jeopardy. And housing recovery still fragile.


Although I see in our local market a robust selling season, it still feels like the real estate market is on shaky ground if one takes time to study up on the U.S financial numbers.
 
Patrick Thurmond
Pat Thurmond Real Estate Group

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News You Can Use From Keller Williams Realty - Lakeland
Chris McLaughlin - Operating Principal 

Bank of America to pay $36.8 million to military members

Bank of America will pay $36.8 million to members of the military it improperly foreclosed on between 2006 and 2010, according to a settlement it reached with the federal government in 2011, the Justice Department announced this week.  Bank of America was already paying 142 military members under the original 2011 agreement, but a further review required by the settlement found 155 additional military homeowners who were subject to improper foreclosures, the Justice Department said. In total, Bank of America will pay more than 300 military members, as Reuters reports:  Each of 316 service members will receive at least $116,785, plus compensation and with interest, for any home equity lost. [...]  “Our men and women in the military should not have to worry about a bank foreclosing on their home while they bravely serve our country,” Eric Halperin, Special Counsel for Fair Lending in the Civil Rights Division, said in a statement.  In 2011, federal regulators said banks may have improperly foreclosed on more than 5,000 members of the military and violated the Servicemembers Civil Relief Act, which provides certain financial protections to military members. Bank of America was also one of the five banks that reached a settlement with the federal government over widespread mortgage and foreclosure abuses. The Justice Department is still reviewing foreclosures from all five banks for violations of the Servicemembers act.

 Why job numbers will get worse

Weak US jobs data on Friday confirmed the worst trading week this year for European and US stocks, and now analysts are warning that investors should brace for further trouble ahead as fiscal tightening begins to take its toll.  "In the labor market, at least, we see a real risk of even worse news down the line," Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors said in a research note on Monday.  Weakening labor demand, not rising layoffs, is the key problem with the US economy, according to Shepherdson. The weakening demand is mostly coming from smaller firms that are below the radar of the Institute for Supply Management (ISM) survey, which reflects national factory activity.  The National Federation of Small Business job survey has done a decent job in foreshadowing movements in payrolls in recent years, according to Shepherdson, and it's this report—due to be released on Tuesday—that's warning of troubled waters ahead, he said.  "While actual job creation appears to be rising, plans to create jobs [in March] took a dive, falling 4 points to a net zero% of small employers who plan to increase total employment. It seems that the stamina for growth is waning," William C. Dunkelberg, chief economist for the NFIB said in a press release last week.  Looking at the figures, Pantheon's Shepherdson said there could be a degree of respite in the official employment numbers for the next couple of months, before a distinct change.

 WSJ - Fed giving housing a "sugar high?"

The US housing market has broken out of a deep slump, and prices are shooting up faster than anyone thought possible a year ago. For many homeowners, that is a cause for celebration.  But the speed at which prices are rising is prompting murmurs of concern that the Federal Reserve's campaign to reduce interest rates could be giving the housing market a sugar high.  Prices of existing homes rose 10% in February nationally from a year ago. They have been rising during the seasonally slow winter months—and they show signs of jumping further as the spring buying season gets under way. What's going on?
First, inventories of homes available to buy have fallen to 20-year lows. Home builders have added little in the way of new construction since 2008. Banks are selling fewer foreclosures. Investors have scooped up more homes, converting them to rentals.  Many borrowers, meanwhile, aren't willing or able to sell at prices that are down sharply from their 2006 highs, despite a greater inclination among banks to approve short sales. Tight lending standards mean some owners will hold back from selling because they aren't sure they would qualify for a mortgage on their next home.  Demand has also revved up, first from investors buying homes below their replacement costs, and later as rising rents and falling interest rates encouraged more first-time buyers to purchase homes that have monthly payments that are less than what it costs to rent.  Improving home-price expectations have also unleashed pent up demand. The US added around 1.3 million households a year for the 10-year period ending in 2007, after which household formation fell to more than half that level. Household formation was lower in the five years following the housing bust than any period since the 1960s, according to Altos Research, an analytics firm in Mountain View, Calif.  But the population never stopped growing. Households simply doubled up. Between 2008 and 2010, the country had around two million households that "couldn't wait to launch on their own," says Mike Simonsen, chief executive of Altos Research. Many of those new households have been renters, but more are opting to buy.
The impact of low mortgage rates is profound. Before the Fed began buying mortgage-backed securities in late 2008, rates for 30-year fixed mortgages stood at around 6.1%, and a borrower who could qualify for a $1,000 monthly payment could get a $165,000 mortgage. Today, that same borrower, at a 3.5% rate, can borrow as much as $222,000. In other words, the Fed's low-rate campaign has increased purchasing power by a third.  So is this the beginning of another bubble? Not really. For now, home prices on a national basis are still below their long-run average relative to incomes. "The recovery is solid. There are pure fundamentals you can point to," says John Burns, chief executive of a real-estate consulting firm in Irvine, Calif.  But he says the housing market is turning up sharply, "hockey-sticking faster than it otherwise would," because of investors, low inventories and low mortgage rates. The worry is that if prices keep rising at their current pace, "we're going to have a real affordability problem" once rates move above 6%, says Mr. Burns.  Buyers face a dilemma: paying more for a home today, compared with a year ago, or paying even more tomorrow at a time when interest rates might also be higher.

 Fed pressured to stop buying

The Fed is holding key interest rates near-zero and buying $85 billion a month in treasuries and mortgage-backed securities. If they keep expanding at this rate, holdings are estimated to grow to 30% of GDP by the end of 2014.  Some Fed governors are starting to talk publicly about tapering off their asset purchases, showing signs they’re growing weary of the impact it’s having on the economy.  "They're becoming increasingly irrelevant over the last couple of years, the economy is flushed with liquidity, rates are already at record-setting lows," says Jim Paulsen, chief investment strategist at Wells Capital Management. “I don’t think they’re improving fundamentals by adding liquidity to the system.”  The March jobs report, which showed only 88,000 new payrolls added and a 7.6% unemployment rate, confirms his view.  “Where there is something they could have an impact with, I believe, is if they would start to normalize monetary policy a little bit to try to build confidence,” he says. “I think that’s what they could still do.”
By most accounts, the Fed has done everything in its power to stimulate the economy, while tripling the size of their balance sheet since the financial crisis. Paulsen admits the Fed was successful in helping along the recovery, but his biggest gripe is that our economy is no longer in recession.  “It’s no longer in crisis like it was in 2008 and 2009, and yet monetary policy in this country is more crisis-like and unconventional, and more massive in scope than it was even in 2009,” he states. “So while the economy has moved on from crisis, the Fed clearly hasn’t and it’s leaving the impression that they’re very scared and they’re very nervous about the future of this economy.”  Actions speak louder than words for this investor, and he’s looking for the Fed to reverse course sooner rather than later. In his view, the rally depends on it.  “If they announce that we’re going to stay accommodative, but we’re going to start to back off and normalize policy away from crisis-like policies, back towards normal economic policies, I think it would help raise private sector confidence and investor confidence. And rather than be a negative for the market, which everyone seems to assume, I think it would be a positive.”

 Housing recovery still fragile

The latest data from the Obama Administration revealed important progress in the housing rebound, but much like the last scorecard, it continues to warn that the overall recovery remains fragile.  "As the March housing scorecard indicates, the Obama Administration’s efforts to speed housing recovery are continuing to show important signs of progress," said the US Department of Housing and Urban Development Deputy Assistant Secretary for Economic Affairs Kurt Usowski.  Home prices continued their upward trajectory — although very slight — with the S&P Case-Shiller home price index up from an index score of 146.0 in January to 146.1. However, this index score is still much higher than the 135.2 mark recorded a year ago.  Existing-home sales rose from a revised 411,700 units in February to 415,000 in the latest Scorecard, according to data gathered from the National Association of RealtorsUS Census Bureau and HUD.  Housing inventory made a U-turn after dropping to a revised 4.3-month supply in February, it rose again to a 4.7-month supply, NAR said.  According to data from CoreLogic, the number of underwater borrowers continued to be chipped away, falling to 10.4 million in the most recent report from 10.6 million in the fourth quarter of 2012.  The number of foreclosure starts increased from February’s 64,800 units to 71,500, according to RealtyTrac.  Usowski added, "In 2012, homeowners' equity grew by more than $1.64 trillion and rising home values lifted 1.7 million of them back above water. Despite the positive news, we have important work ahead since there are so many families and individuals still struggling."

Chris McLaughlin
Keller Williams
Phone: (863) 577-1234
Fax: (863) 577-1240