Price of homeownership wondered by skeptics

Owning a home is a large part of the "American Dream." It’s designed to be a fantastic booster to the financial security of the family unit, or at least that is what many individuals are certainly told. However, there are an increasing quantity of people who assert that buying a home is actually a lousy expense, and the charge comes from individuals who really know what they are talking about. There is some evidence that could support home-ownership skeptics' argument.

Housing costs may not perform that well as assets

The popular belief that homes are a good investment when owned is something finance industry experts are starting to questions, USA Today states. A book on home values from 1890 to 1990 was written by Case-Shiller Index co-founder and Yale economist Robert Shiller in 2000. The real value of a home did not really move. The real value stayed the same. Stocks on the Standard & Poor's index would get an 11 percent return typically while real estate only had a 6 percent return, in accordance with former Federal Reserve economist Jack Francis. Not very many individuals are getting any profit out of their homes considering the change in real estate values in the past few years.

Prices going down and bringing equity with them

Home prices have gone down continuously since 2008. They have not stopped this drop yet. Reuters states that in February 2011, home sales and prices went down. Existing home sales dropped four percent during Feb. 2011, and home costs dropped 5.2 percent between Feb. 2010 and Feb. 2011. The amount of equity in a home is a statistic that isn't looked at very often, but is even worse. In the most recent “Flow of Funds Accounts of the United States” release by the Federal Reserve, the average household was estimated to hold 39.5 percent equity in the family home as of Sept 2010.

Need to try a new model

A home paying off as an expense depends on a lot of assumptions that cannot necessarily be taken for granted. After getting a 15 or 30 year fixed rate mortgage on a home, it can be paid off and then become a way to retire when selling the home. This doesn't happen very often though considering most families have to move a lot. The profit could be nullified if a home sells for more than it was purchased for. The costs to get the home and sell it also add up. This will contain closing costs, real estate agent fees, property taxes and even home repairs. A mortgage that has been defaulted on will mean a loan lender can reposes the home. A foreclosure can also occur. It’s much better to invest in stocks, bonds and mutual funds. They could be sold for money much easier.

Citations

USA Today

usatoday.com/money/economy/housing/2011-03-20-home-ownership.htm

Reuters

reuters.com/article/2011/03/21/us-usa-economy-housing-idUSTRE72F3XG20110321

Federal Reserve

federalreserve.gov/releases/z1/Current/z1r-5.pdf

Federal Reserve

federalreserve.gov/releases/z1/current/default.htm

Applications boom for mortgage modifications due to low rates

Mortgage applications have risen over the past month, largely thanks to more people applying for mortgage modification. The time is nigh for a good refinancing, as home loan rates are near record lows. Sales of homes increased as well. However, the sales increases have been far more modest, as few people are confident enough to purchase homes with falling values.

Low interest rates fuel spike in home loan activity

Bloomberg states that home loan activity has gone up due to the low interest rates. Mortgage applications rose by 15.5 percent during the week that ended March 4, which is the largest increase in mortgage activity since June 11 of 2010. Home loan applications dropped 6.5 percent during the exact same week in 2010. About 65.5 percent of the mortgage applications were for mortgage modifications though. That is up from the week before when it was 64.9 percent. The purchase index went up 12.5 percent in one week also even though the Mortgage Bankers Association doesn't make a differentiation in the existing and new home applications. Existing homes account for most home sales. Currently 90 percent of home sales were already existing homes.

home costs nevertheless drop

Since the peak in 2006, home prices have gone down 31 percent while several expect a double dip to occur. One of the leading proponents of the idea that a double dip is pending is Robert Shiller, co-founder of the Case-Shiller Index, according to CNN. Shiller believes home costs will continue to fall, and the truth that home sales dropped during Jan. 2011 certainly means it is feasible. Getting the lower prices is something most middle class Americans may not be able to do. The standards for financing may soon change.

Freddie and Fannie might take 30 year home loan with them

There has been concern shown in the government lately. It wants Fannie Mae and Freddie Mac out. Freddie and Fannie create capital for loan providers by purchasing mortgages and selling them to investors, keeping the home loan industry flush with money for new loans. Should the home loan houses be done away with, the 30-year fixed home loan might go with them, according to the NY Times. It is very risky to lend a 30 year loan with fixed interest since the future can hold many things. Usually individuals will not stay in a home for 30 years. That means the loan will not get paid off. Adjustable rate mortgages may become more normal in the next decade or 2 because lenders will want to be able to change the interest. Bigger down payments and higher rates of interest will most likely take place. This is just part of the changing industry.

Information from

Bloomberg

bloomberg.com/news/2011-03-09/mortgage-applications-in-u-s-rise-16-biggest-gain-since-june.html

Mortgage Bankers Association

mbaa.org/NewsandMedia/PressCenter/75923.htm

CNN

money.cnn.com/2011/03/03/real_estate/housing_buy_or_not/index.htm

New York Times

nytimes.com/2011/03/04/business/04housing.html?pagewanted=1&_r=1

Android selling far more smartphones than Research in Motion

In the war for supremacy in the market for smartphones, the Android operating system has finally toppled Research in Motion and the Blackberry line. RIM and the Blackberry line were the best supplying smartphone for some time, but after Google’s wildly popular Android line was launched, it quickly began outpacing Microsoft, Apple and now the RIM line in short order. You will find far more than 170 Android devices. Resource for this article – Android selling more smartphones than Research in Motion by MoneyBlogNewz.

Customers not needing Blackberry as much

CNN states the Blackberry mobile phones that Research in Motion created were selling the best for smartphones for a while. The Google based Android platform has surpassed Research in Motion in sales after steadily outpacing all other domestic competition and safely pulling into the lead with far more than 31 percent of product sales. The first phone using the Android OS was the HTC G1, which was released in Nov. 2009 and carried exclusively by T-Mobile. Since the Android came out, it has been growing continuously although it only had a 7 percent industry share for smartphones last year. Over 170 types of phones and tablet computers are using the Android OS now.

Old cell phones might not last long

Of the four popular smartphone platforms in the U.S., the only one that has continuously grown market share is Android. Between February 2010 and January 2011, Research and Motion's smartphone product sales have gone down with Research in Motion from 42 percent of the sector share to 30.4 percent. Windows cell phones have been regularly on the decline, and now make up less than 10 percent of the smartphone industry. The iPhone has been good for Apple, but not good enough. It has stayed at a constant for the market share. An estimated 350,000 new Android devices are activated daily. A larger share of the sector was held by Symbian OS from Nokia than form Android until late 2010. This was when the Android product sales came up and Symbian OS product sales went down.

Chances of Android Nokia phone

Just about every phone business makes an Android phone, as Google licenses it for free, and adapting it’s fairly simple for any developer, but Nokia isn’t really having it, in accordance with the Los Angeles Times. It was recently announced that Nokia is preparing to revamp its offerings by partnering with Microsoft and installing Windows Mobile on Nokia phones. Both businesses may be okay with the deal considering Nokia is getting $1 billion from Microsoft so it can put Windows Phone 7 on Nokia devices.

Information from

CNN

money.cnn.com/2011/03/07/technology/android/index.htm

Los Angeles Times

latimesblogs.latimes.com/technology/2011/03/Microsoft-reportedly-paying-nokia-more-than-1-billion-to-use-windows-phone-os.html

US earnings: thirty-five % welfare, claims research

Here’s something that may not surprise you: 35 % of complete U.S. salary are actually government payouts, like Social Security, Medicare and welfare. This is in accordance with stats from the Bureau of Economic Analysis. This has shocked quite a few economists. CNBC Fast Money Executive Producer John Melloy suggests that this record figure will continue to expand as the majority of the Baby Boom generations retire.

United States wage figures

The U.S. salary survey, which was conducted by TrimTabs Investment Research, indicated that the percentage of wages has grown considerably, even since 2000. In 2000, about 21 % of salary came from government aid which has changed last year to thirty-five %. It was only at 10 % in 1960. The welfare salary is at 44 percent in the U.K. though meaning it isn't that bad.

TrimTabs' Director of Macroeconomic Research, Madeline Schnapp, said that there needs to be less of dependence in the U.S. on the government.

"The U.S. economy has become alarmingly dependent on government stimulus," she said. "Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits."

Increasing wages by thirty-five % (from $6.5 trillion to $8.8 trillion) or a 23 % cut to social welfare payouts (tumbling down 23 % to $1.7 trillion) are the best options accessible, according to Schnapp. Considering that the federal government is already stringing together short-term, shoestring measures to avert a government shutdown, experts believe only a significant compromise will turn the tide for United States salaries versus social welfare services.

Social Security approval in United States

A decision needs to be made easily for the U.S. government. This is because bankruptcy may take place otherwise. A Wall Street Journal/NBC News poll showed the option of reducing Social Security and Medicare isn’t very popular. Much of the age groups checked "unacceptable" in reducing Social Security. This would be a drastic reduction. Even the tea party members checked this box even though typically tea party supporters don't believe in large government. There were 67 of these individuals.

Two choice measures were supported by the poll participants who included 60 percent of votes for cutting Social Security and Medicare repayments to anybody in the United States that has a higher income and increasing retirement age by 2075 to 69. Age 66 is when retirement benefits entirely are in. The age is not scheduled to increase until 2027, and then it can be 67.

Getting the recession back to life

The recession that set in during 2008 hit the United States hard. Thus, it comes as little surprise that welfare payments increased by a mind-boggling $514 billion since then, states TrimTabs. A recovery in the near future is unlikely. The United States housing industry nevertheless needs to shape up. Thus, a cure for the 35 percent welfare salary percentage may still be far away.

Citations

CNBC

cnbc.com/id/41969508

Wall Street Journal

online.wsj.com/article/SB10001424052748704728004576176741120691736.html

For those who can’t afford to work

youtube.com/watch?v=KqdsfPMKnyg

Mortgages are low cost loans because of low interest rates

People who can get the financing can benefit from low interest rates on home loans by getting inexpensive loans. Rates for 30-year fixed, 15-year fixed and five-year adjustable mortgage loans are beginning to slip again after housing data indicates growth has stalled in real estate. However, many see doom and gloom on the horizon. Analysts think a double dip in housing is soon to occur.

Getting a house means a steal

The demand for housing is going down still meaning market rates for home loans are going down. Buyers who are eligible may be able to get some seriously inexpensive loans. The five-year adjustable rate mortgage, ARM, went from 3.80 percent down to 3.72 percent. MSNBC reports that arms are as low as they will get. The five year ARMS have really gone up from Feb. when they were at 3.23 percent. The average rate for a 30-year fixed mortgage hit 4.87 percent, more than the rate observed in November, when 30-year fixed mortgage loans hit a 40-year low of 4.17 percent. Currently, 4.15 percent is what a 15 year fixed mortgage costs.

Possibly even double dip

It is possible that a double dip might take place for the housing market. CNN states the possibilities of this happening. Purchasing a house will always cost more than a cash advance can give. Nevertheless, the housing market may get even worse hurting the real estate industry more than ever. The house costs might end up "falling another 15, 20 or 25 percent," according to Robert Schiller. Shiller co-founded the Case-Shiller Index. Since the 2008 crash, housing prices are at the lowest rate ever. It doesn't seem extremely hard for a double dip to occur. If it were to happen, it could mean further bad news for an already shaky economy. Since states rely partially on property taxes, lower values mean lower revenues and that would lead to more states having serious spending budget woes.

Why you need to rent

Since the latest recession started in the housing industry, it has called into question whether it is better to rent or purchase. If an individual buys a house when the value is down and pays it back when the value is high, then it could be worth it to buy a home. When putting in lots of equity or having paid off the mortgage, it is even a better investment. However, renters pay no property taxes and have to do little, if any, maintenance. Granted renting means; having to part with more instant cash each month than a homeowner.

Citations

MSNBC

msnbc.msn.com/id/38770102/ns/business-real_estate/

CNN

money.cnn.com/2011/03/03/real_estate/housing_buy_or_not/index.htm

Work at home businesses shut down by Federal Trade Commission

More than 90 businesses have been summarily closed by the Federal Trade Commission. Consumers lost millions, perhaps billions of dollars to businesses that defrauded them. Unemployed individuals were often targeted by these businesses. The companies offered work-at-home information and classes, promising thousands of dollars of income in just months. Resource for this article – Federal Trade Commission shuts down work-from-home companies by MoneyBlogNewz.

Concentrating on work from home businesses

The Federal Trade Commission worked with the DOJ to send out to United States work-at-home companies, notices of frozen assets. Due to the Operation Empty promises, these shutdowns along with criminal counts being filed both locally and on the state level have been integrated in an enforcement effort. The businesses supposedly tricked customers into doing work for a profit at home. There were many companies closed. The largest are:

• Ivy Capital
• Darling Angel Pin Creations Inc.
• Global U.S. Resources
• U.S. Work Alliance Inc.
• Preferred Platinum Services Network
• Abili-Staff Ltd.
• Entertainment Work Inc.
• La Asociacion Nacional de Trabajo

How much business fraud can cost a business

Lots of money has been lost by many individuals that have been a part of these fake companies. Classes were offered on "how to start your own business" through these businesses in calls from telemarketers. Usually between $2,000 and $30,000 was paid for these webinars. The telemarketers were responsible for finding out what the credit limit was for charge cards on the account of the cardholder and would charge around there. The majority of the companies did not respond when funds were requested. If they did respond, it was with a few hundred dollars only. About $40 million was earned by targeted business Ivy Capital because of this.

Hitting unemployed with this

By targeting unemployed individuals, these companies are making a bad situation worse. Even though the unemployment rate in the United States is going down, it is not going down easily. The "real" income is going down, even with a rise in jobs, since most people are taking jobst that pay less than they were making. The social service that is losing funding is having a harder time with this jobless recovery. The corporations are definitely being closed. Still, any victims will not be paid compensation more than likely.

Information from

Los Angeles Times

latimes.com/business/la-fi-ftc-scams-20110303,0,4514894.story

PC World

pcworld.com/businesscenter/article/221170/ftc_DOJ_crack_down_on_moneymaking_schemes.html

Jobs statement for Feb. indicates joblessness declining

The February jobs report, recently issued by the Labor Department, shows that joblessness dropped since the January statement, but the decline was compellingly slight. Joblessness dropped 0.1 percent since January, finishing at the end of February at 8.9 percent nationwide. It is the 3rd month in a row that unemployment has reduced.

Job creation up

The Department of Labor released the February jobs statement. It showed that there was, in February, a small increase in jobs. The unemployment rate reduced by a paltry 0.1 %, from 9 % in January to 8.9 % in February, in accordance with CNN. There were more jobs included to the industry improving quite a bit from Jan. About 192,000 jobs were included. The weather going on in Jan led to fewer jobs being included to the economy. Only 63,000 much more jobs were added in that month. Besides an increase in hiring once the snow relented, December and January jobs reports were revised by the Labor Department to reflect that 50,000 brand new hires had gone previously unreported.

Decreasing joblessness shown for a 3rd sequential month

The decrease in the joblessness pace this month was really nice. It was the third month in a row that it has happened. The rate of joblessness has waxed and waned for the past several years, and there have been declines noted all along the way, however the unemployment pace declined almost an entire percentage point from Dec. to February, marking significant progress. Now the joblessness claims have gotten to a three year low down to 368,000. More than 9 million individuals are claiming unemployment benefits, according to Forbes. In the next few months, increasing gas prices will probably trigger some troubles even though initially the Federal Reserve planned on having a 3.5 to 4 % growth in the economy in 2011.

Difficulties seen with government spending reductions

CBS reports that reducing the federal budget is a goal that many Republicans have in mind although economists are worried that might hurt the unemployment rate some more. Mark Zandi, the chief economist for Moody’s Analytics, predicted the House Republican plan to cut $61 billion from the federal spending budget could result in more than 700,000 people losing their jobs. This projection was mirrored fairly closely by Goldman Sachs. You should bear in mind Zandi claimed the stimulus spending would allow unemployment to stay under 8 % while being one of probably the most supportive people of the stimulus packages.

Information from

CNN

cnn.com/2011/03/04/news/economy/february_jobs_report/

Los Angeles Times

latimesblogs.latimes.com/money_co/2011/03/february-unemployment-jobs-economy-recovery-obama.html

Forbes

blogs.forbes.com/heatherstruck/2011/03/04/jobs-report-at-high-end-of-expectations-unemployment-drops-to-8-9/

CBS News

cbsnews.com/8301-503544_162-20037435-503544.html