See how fast our national debt is growing- by the second. This is eye opening data. Look at the debt per citizen and spending data. The home foreclosures appears to be one per minute. The numbers move so quickly, I get dizzy after a few minutes of viewing.
At the time I wrote this, the national debt is $11,678,051,245,654. Take a look now.
Fed-funds futures indicate that the Fed may raise rates at least 25 basis points by year end and up by 75 basis points by next spring. If the rates do rise, that will push mortgage rates higher also. A quick check today on a conventional (loan amount under $417,000) 30-year fixed loan is available at a rate of 5.625% with 1.0% point. The APR is 5.726%. These rates do move quite a bit, from day to day, and the price last week was 5.2%.
First time home buyers can qualify for a Homebuyer Credit and that credit will expire by year end. Home prices are beginning to rise and many areas have already stabilized. If you are looking to buy a home, this may be the opportune time.
Real estate has always been seen as a hedge against rising inflation. With inflation expected to be rising in 2010 to 2012, this also points to a good reason to buy a home.
The economy is looking better as we turn the corner to the end of the recession. GDP measures of the economy shrank at an annualized rate to 1%, as opposed to the past two quarters, ending June 2009, which had an average loss of 5% per quarter. So, with this improvement in GDP and the recent rally in the stock market, is the recession over?
I recently went to the Coldplay concert at the Verizon Wireless Amphitheater. It was sold out and over 20,000 attended the small venue. All these attendees helped contribute to the spending rate for July.
I was lucky enough to go to the concert in a NASCAR themed limo. This was the talk of the town! As we rode down the freeway, cars pulled up next to us to take pictures of the limo. The theme of the limo, inside and out, is checkered flags and race cars. The next time you need transportation for a group, try this! Our driver was Tony (and the owner) and is a really great guy. www.CaRacingLimosLA.com. The kids really love the limo and the attention it gets!
Back to school shopping is the second busiest selling time period, second to Holiday shopping. Most discount retailers have begun advertising very discounted prices on school supplies, hoping to woo shoppers into the store for other purchases. Wal-Mart is the nations largest discount store and is expecting a five percent drop in year to year sales but they no longer report monthly sales figures.
In the retailers, price is everything and the teen market has been hit particularly hard. Abercrombie and Fitch will have a harder time compared to the cheaper brands, which have lowered their prices and have updated their fashions. Costo, Target, Wal-Mart, J.C.Penney and Kohl's will lead the back to school shopping visits.
Back to school shopping sales have not shown a decline in six years. Sales will be prevalent to move inventory prior to Holiday sales as consumers have reported their intention to spend less.
Today lawmakers announced that a deal had been reached to close California's 26 billion dollar deficit. We are anxiously awaiting the details as voting is scheduled to begin tonight. The final details of the budget will be released in the next couple of days. News reports of the deal show the largest cuts to higher education, prisons, and Medi-Cal. Primary grades will also face large cuts however federal stimulus money will help make up the difference. The cuts will be painful but necessary. The state,like our own households, can't spend beyond their means forever.
We will provide more analysis as the details of the budget are released.
Back in December I blogged about property tax appraisal scams. I want to reemphasize that there is NEVER any fee for the county to review a property tax reassessment or appeal. I just refinanced my house and I have been inundated with offers from these companies that state that if I send money that my property tax will be lowered or reviewed. They actually sent me a copy of my Grant Deed to make it look official. Anyone can get a copy of a Grant Deed or property information from the county. The information is public and fairly easy to access. The only time you send money in regards to your property taxes is when you pay the actual property tax bill. If you have questions about your property value assessment, please go to the county website. The Los Angeles County website is: www.lacountypropertytax.com and the Orange County website is: http://www.ttc.ocgov.com/proptax/
Another scam that is occurring is with loan modifications. These scam artists are targeting at-risk homeowners by getting information in newspapers and public sites about homes in foreclosure status. They use deceptive marketing practices to convince homeowners that they are reputable and that they represent the government. One tip is you should not have to pay for help. The government offers HUD-approved counseling for free. Another tip is to ask for the local address of the company and then go and visit it to see if it is legitimate. Referrals from other clients are also a good source. Just remember, if you or your family or friends are in this situation to be skeptical and cautious if you are asked to pay fees.
Today the Orange County Register's May Housing Report reported a $30,000 rise in the OC median home price from April to May 2009. The reported gain in the median price misleads many into believing the housing market has bottomed. On the contrary, a rise in the median could signal we are headed for more price declines. An understanding of how the median is calculated and the stages of foreclosures in Orange County will help to see what the future holds.
The median home price reflects the exact mid point in a line up of all the homes sold from lowest to highest. For example, consider the 7 home transactions below. The $450,000 house that falls in the middle is the median.
$250,000- $300,000- $300,000- $450,000- $450,000- $550,000- $2,000,000
The flaw with the median is if a few pricier homes outnumber the lower priced homes one month or vice versa the median can rise or fall due to the make up of homes sold. Consider the following make up home sales:
Month 1- Seven homes sell for the following prices:
$200,000- $200,000- $250,000- $250,000 - $300,000- $500,000- $500,000 Median=$250,000
Month 2 - Seven Homes sell for the following prices:
$200,000- $250,000- $250,000- $300,000- $500,000- $500,000- $500,000 Median=$300,000
In this example the median price increased 20% in one month. This can be deceptive, though, because prices could be stagnant with the cause of the increase being due to the fact that one less home sold for $200,000 and one more home sold for $500,000. Another possibility for an increase in the median, and which is the case in Orange County, is when higher priced homes decline it attracts more buyers. So in actuality prices are falling but the median is rising. This makes perfect sense if you consider the cycle of foreclosures the market is going through.
This first wave of foreclosures from 2007 to 2008 was due to sub-prime loans which correspond to the lower tiers of the market. The large price declines at the low end spurred buying among first time buyers and investors. Inventory is declining for the inexpensive homes as the foreclosures in this category begin to tamper off. The higher end homes have yet to correct as much as the entry level homes. The delay is due to the Alt-A and Option Arm loans associated with pricier homes that are just starting to go bad. 2009 is showing record foreclosures in the upper tiers of the market. From April to May Foreclosure Radar reports California foreclosure auctions are up 75% from March to May with distressed sales increasing in the upper tiers of the market. The result is increasing price declines for larger homes. The Register reports that Orange County's pricey coastal region experienced the second to highest price drop from a year ago.
The bottom line is home prices will continue to decline with the largest drops in the higher end and a flattening out of prices in the lower end. The good news is we need home prices to return to an affordable level to diversify our local economy and sustain growth. Homes need to be affordable so enough money is left to spend on other goods and services. The positive effects of affordability returning to the market can already be seen in the rebounds in consumer discretionary spending in the last few months.
Last week, President Obama signed an extension to keep theincreased FDIC limits until December 31, 2013. If you have anaccount insured by the FDIC then you are insured up to $250,000 per depositoror $500,000 for a joint account. Theselimits were originally set to expire at the end of 2009.
President Obama also signed a new credit card law that becomeseffective in 2010. Here are some highlightsof the changes.
CreditCard companies will not be able to raise rates on existing balances except ifthe card has a variable rate or there is a late payment.
Promotionalrates have to last at least 6 months.
Ifa consumer pays more than the minimum then the excess payment must go to payoff the higher interest rate balance first.
Requirespayments due at least 21 days after the bill was mailed.
Requiresanyone receiving a credit card under age 21, they must have parent or legalguardian sign that they are responsible for the debt.
Thereare also limits on fees that can be charged for late payments and over-limitcharges.
The critics think that this will mean that more credit cardswill have annual fees and there will be less reward programs because the creditcard companies will have less revenue sources.
This law only affects credit cards issued by banks. Credit Unions are not affected by thisregulation because they have their own rules and they already had guidelinessimilar to this in place.
The market downturn of the past year will affect future pension payouts. If your company offers a pension plan this will probably affect you. Most pensions allow the retiring employee to choose to receive their pension as a lump sum rollover or as an annuity. The annuity is guaranteed for life, but there is usually no cost of living increases. Most employees opt for the lump sum payout, assuming it can be managed to receive better returns than the company. Also, if you don't think the company will be in business during your entire retirement, this could be due to bankruptcy or a merger or takeover, then the government via the Pension Benefit Guarantee Corporation has to take over the plan. If this happens there is a maximum annual annuity. Currently, the limit is $54,000/year.
A company cannot offer the lump sum payout if the pension is less than 80% funded. Businesses must update their funding status annually by October 1. It is widely believed that many pensions have lost value due to the falling stock market and will fall below the 80% funding limit. This limit is put in place by the Government to prevent pensions from being drained of cash, when assets are low. This law (The Pension Protection Act) has been around since 2006, but hasn't been much of an issue until this year.
If you have a choice, you should analyze the different pay-out alternatives before you decide. It is a very important decision and you should consult a Certified Financial Planner to help guide you in the decision.
Carol Somoano
A recent survey done by AARP estimated that 10 million American seniors need help with daily activities. The same survey showed that family members find themselves responsible for 80% of such care giving, many of which are overwhelmed or live far away.
Organizations such as Rally Round Non-Medical Home Care can help with services that enable seniors to remain in their homes, while keeping their independence and dignity. These services reduce the burden on the adult children and allow them to spend quality time with their parents. They include:
Rally Round Non-Medical Home Care caregivers complete a training program that helps them understand the challenges seniors faces. They are insured, bonded and hold Red Cross approved certifications in both CPR and First Aid. Many of them have cared for their parents or grandparents and want to help others. For more information or to request a complimentary in person assessment of needs go to www.rallyroundhomecare.com
I have personal knowledge of this company and the owners. I find them to be honest, compassionate and trustworthy- the best qualities to have when working with seniors.
Sandy
