Ron Lee Homes Blog

Housing Has Turned the Corner, But Is Still Struggling With Jobs and Low Home Prices

Rebekah Collins — Wed, 30 Jun 2010 19:29:43 -0500

       Housing has turned the corner of the worst downturn in more than 60 years, but the market is still grappling with high unemployment and sharply lower home prices, according to “The State of the Nation’s Housing 2010,” which was released by the Joint Center for Housing Studies of Harvard University on June 14.

       “The strength of job growth is now key to how quickly loan distress subsides and how fully markets recover,” the report says.

       “If history is a guide, what happens with jobs will matter the most to the strength of the housing rebound,” says Eric Belsky, executive director of the Joint Center. “Right now, economists expect the unemployment rate to stay high, but if employment growth surprises on the upside or downside, housing numbers could too.”

       First-time home buyers drove the improvements that began to be seen by the middle of last year, triggered by improved affordability and the first-time home buyer tax credit, and they were responsible for all of the gains in existing home sales in 2009, the study says.

       “As a result of lower home prices and interest rates, mortgage payments on a median-priced home (assuming a 90% loan-to-value ratio) dropped below 20% of median household income — the lowest level on record dating back to 1971,” according to the center.

       The report notes that in April there were 7.8 million fewer jobs than in December 2007, and “unfortunately, most economists predict that the unemployment rate will remain elevated as discouraged workers reenter the labor force amid slow gains in jobs.”

       The overhang of vacant units for rent, for sale or held off the market is another “serious concern,” the report says.

       “Despite production cuts of more than 70% since 2005, the overall vacancy rate hit a record in 2009. In addition, many current owners are effectively trapped in homes that are worth less than the amount owed on their mortgages. If these distressed owners want or need to sell, their only choices are to walk away from their homes or write a check at the closing table. This will inhibit a recovery in repeat home sales.”

       Citing statistics from First American CoreLogic, the center says that falling home prices left 11.2 million home owners underwater on their loans — with no home equity and unable to tap traditional markets — as of the end of the first quarter of 2010. Housing was adding significantly less to the pocketbooks of consumers, as well, with Freddie Mac reporting that total real home equity cashed out at refinancing dropped 25% in 2009 and stood below $80 billion for the first time since 2000.

       The housing market will also have to weather the expiration of the home buyer tax credit, but the report suggests that the improving labor market may enable housing to avoid a dip similar to what occurred when the first round of credits expired in the fall of 2009.

Declining Incomes and Wealth

       At the outset of the recovery, home builders are also having to contend with a noticeable decline in the income and household wealth of their prospective buyers.

       “After at least three decades of progress, real median household income will almost certainly end the 2000s lower than they started,” the study says. “At last measure, the median for all households was $49,800 in 2008, down from $52,400 in 2000. Even at their last cyclical peak in 2007, real median incomes were 1.2% below 2000 levels.”

       The household wealth of households slid from $503,500 to $486,600 over the decade, according to Harvard.

       “While growth in stock wealth has already started to pick up, housing wealth will take a slower path to recovery. Indeed, despite some painful foreclosure-driven deleveraging, mortgage debt has never been higher relative to home equity. After an $8.2 trillion plunge in housing wealth since the end of 2005, mortgage debt entered 2010 at 163% of home equity.”

       Even outside the cyclical decline in income and wealth, the financial wherewithal of prospective buyers will be a concern for the housing market in the period ahead as it becomes increasingly diverse.

       “At last measure in 2007, minorities accounted for fully 35% of first-time home buyers and 20% of repeat buyers even in the middle of the housing bust. The immigrant share of first-time buyers was 19% and of repeat buyers 12%.”

       The report says that “minority households have lower median incomes than white households. For example, the median income for 35-44 year-old minority-headed households was $45,000 in 2008, compared with $72,900 for whites.”

The Return of Household Growth

       The most optimistic news from this year’s report comes from a longer-range assessment of household growth.

       While there has been much discussion of the impact of the recession on household growth, “it is difficult to judge how big those effects have actually been,” according to the center. The cumulative slowdown over the past four years appears to range from 1.0 million to 2.8 million.

       “The reality could, however, be even worse because household growth estimates depend heavily on net immigration, which is particularly difficult to assess in and around an economic recession.”

       The report observes that it is also hard to sort out how much of the slowdown in household formations has been due to reduced immigration and how much to lower household formation rates caused by doubling up.

       The Current Population Survey from the Bureau of Labor Statistics and the Census Bureau shows foreign-born households under the age of 35 declining by 338,400 from March 2007 to March 2009, compared to a drop of only 2,100 native-born households of the same age.

       “On the other hand, the survey also indicates that headship rates among young adults as a whole declined in the late 2000s, consistent with the expected effects of soaring unemployment within that age group. At the same time, the survey also shows some drop-off in headship rates in older age groups,” the report says.

       “In any case, headship rates may not remain depressed for long given dramatic improvements in affordability for first-time buyers who have jobs, softening rents due to high rental vacancies and the expectation that household growth will return to long-term trend levels when employment growth quickens.

       “But assuming headship rates remain at their slightly lower 2008 levels and that net immigration recovers to its 2000-2005 pace, household growth will average about 1.48 million annually in 2010 to 2020. Even if immigration falls to half the Census Bureau’s currently projected rate, household growth will still average about 1.25 million annually.

       “This low-end estimate puts household growth in the next 10 years on par with the pace in 1995 to 2005, and should support average annual housing completions and manufactured home placements of well over 1.7 million units. The higher-end estimate would likely support production exceeding 1.9 million units per year on average over the coming decade.”

       The study also indicates that builders should be on the lookout for retiring baby boomers, the oldest of whom are just turning 64, with millions soon to follow.

       “Despite their losses in wealth caused by the correction in home and stock prices, the baby boomers will drive demand for senior housing suited to active lifestyles as well as for assisted living facilities,” the report says.

      NAHB and the National Housing Endowment were among the organizations providing funding for the report.

Click Here for the Source of the Information.

Builders Urge Extreme Care in Restoring Housing Finance System

Rebekah Collins — Mon, 10 May 2010 00:00:00 +0000

       As Congress begins to debate how to reform government-sponsored enterprises (GSEs) Fannie Mae, Freddie Mac and the Federal Home Loan Bank System, NAHB on April 14 called on lawmakers to ensure that the federal government continues to provide a backstop for the housing finance system to ensure a reliable and adequate flow of affordable housing credit.

       Testifying before the House Financial Services Committee, NAHB Third Vice Chairman Rick Judson, a builder and developer from Charlotte, N.C., said the need for this support is underscored by the current state of affairs — with the GSEs, Federal Housing Administration and Ginnie Mae acting as the primary conduits for residential mortgage credit.

       “NAHB feels the federal backstop must be a permanent fixture in order to ensure a consistent supply of mortgage liquidity as well as to allow rapid and effective responses to market dislocations and crises,” said Judson.

       Related to the future of Fannie Mae and Freddie Mac, NAHB recommended policy changes to restore and improve the secondary mortgage market and housing finance system:

Degree and structure of government support. While government support is needed to ensure that mortgage credit is available and affordable in all areas of the country under all economic circumstances, support for the conforming conventional mortgage market should not be provided directly to private companies. Instead, the federal government should explicitly guarantee the timely payment of principal and interest on securities backed by conforming conventional mortgages, in the same way that Ginnie Mae now provides guarantees for investors in its securities.
Operation of the conforming conventional mortgage market. NAHB envisions private companies — conforming mortgage conduits (CMCs) — being chartered to purchase conforming conventional loans originated by approved mortgage lending institutions such as banks, savings and loan associations, mortgage banking companies and credit unions and then issuing securities backed by those mortgages.

CMCs would guarantee the timely payment on the mortgages that are pooled in the government-guaranteed securities and would be required to be well-capitalized and to maintain reserves at levels appropriate for their risk exposure. However, CMCs and the mortgages backing their securities would not have implicit or explicit support from the federal government. A fund would be established by the government to provide a guarantee of timely payment of principal and interest to investors in the securities. The CMCs would pay a fee to capitalize the fund, which would be designed to mitigate the federal government’s risk so that it would only be exposed in the case of a “catastrophic” occurrence.

Conforming conventional mortgages. Mortgages eligible for inclusion in securities receiving an explicit federal guarantee should have well-understood risk characteristics. This would include fixed-rate and standard adjustable-rate mortgages and selected multifamily mortgage loans.

NAHB is in the process of updating its policy on the future of the Federal Home Loan Bank System and believes that policymakers must take into account its significant structural and operational differences from Fannie Mae and Freddie Mac when considering the future make-up of the housing finance system.

With Fannie Mae and Freddie Mac now operating under conservatorship and experiencing severe financial pressures, NAHB urged Congress to proceed with caution as lawmakers take steps to transition to a new housing finance system.

“Any changes should be undertaken with extreme care and with sufficient time to ensure that U.S. home buyers and renters are not placed in harm’s way and that the mortgage funding and delivery system operates efficiently and effectively as the old system is abandoned and a new system is put in place,” said Judson.

Click Here for the Source of the Information.

Ron Lee Attends the 2010 NAHB Legislative Conference

Rebekah Collins — Fri, 30 Apr 2010 03:10:00 +0000

Ron Lee, as the President of the St. Tammany/Washington Parishes Home Builders Association (ST/WHBA), attended the 2010 National Association of Home Builders (NAHB) Legislative Conference in Washington, D.C. last week. The Louisiana Home Builders Association (LHBA) spent an entire "Day on the Hill" speaking with the following congressional delegates: Senator David Vitter, Senator Mary Landrieu, Representative Steve Scalise, Representative Charlie Melancon, Congressman Ahn "Joseph" Cao, Congressman Rodney Alexander, Congressman Bill Cassidy, Congressman Charles Boustany and Congressman John Fleming.

During this conference, some of the many topics that were discussed are listed below. Click on the highlighted topics to read more about them with the information coming directly from the National Association of Home Builders' website. Ron Lee and his companies Ron Lee Homes and Hearthstone Homes by Ron Lee take pride in keeping up with the most currently real estate industry information in order to assist builders and home buyers with buying a new home, especially in this challenging economy. Please Contact Us Directly at 985-626-7619, or vial e-mail at info@ronleehomes.com for more information regarding these and other home building industry related topics.

The national economy will not recover until housing recovers. Now is the time for Congress to reaffirm the vital part housing plays in the overall economy and its role in a national economic recovery.
Support retrofit incentive for consumers in existing homes to improve energy efficiency to create jobs and save energy in the housing sector.
Overly conservative appraisals are limiting sales and refinance opportunities.
Builders and developers are facing excessive credit restriction, where lenders are cutting off loans for viable new housing projects and producing unnecessary foreclosures and losses on AD&C loans.

Housing Not Up to Its Usual Role of Leading Economic Recovery, NAHB Study Says

Rebekah Collins — Fri, 30 Apr 2010 03:05:00 +0000

Housing - which has consistently led the way to higher ground following economic recessions in the U.S. at least since the 1960s - won’t be playing that role this time as the economy emerges from its worst slump since the Great Depression of the 1930s, according to new research on housing and the gross domestic product (GDP) from NAHB’s Housing Economics.

“There are indications that housing is providing weaker support to economic growth in this cycle, with residential fixed investment (RFI) and GDP returning to positive growth in the third quarter of 2009,” writes Peter Grist, the author of the study.

“Further, housing starts are still at unprecedentedly low levels and will experience several years of recovery before returning to normal levels,” he says. “Unlike past economic recoveries, housing construction will grow alongside other sectors rather than leading the recovery.”

In the first half of 2004, when the nation’s economy was growing strongly at a rate of more than 4%, housing construction was well above the long-term average rate of the prior two decades and residential fixed investment was growing at an annual pace of more than 10%, the report says.

That surge began to unravel at the end of 2005, when a progressive decline in housing affordability resulting from an uncharacteristically sharp climb in home prices in key markets began putting downward pressure on those prices. As house prices continued to decline, housing construction plummeted and RFI dropped almost 75%.

“The fall in house prices led to a sharp increase in mortgage delinquencies and foreclosures,” the study says. “This put significant stain on financial markets, leading to the near collapse of the banking sector” and 6.4% shrinkage in GDP at the trough of the cycle in the first quarter of 2009.

Residential fixed investment includes the construction of new single-family and multifamily houses, manufactured housing (or mobile homes) and home improvements. Also included are brokers’ commissions on sales, net purchases of used structures and residential equipment.

From a historical peak of 2.27 million units at a seasonally adjusted annual rate, housing starts plunged to a low of 488,000 units at the bottom of the trough in January 2009, a decrease of almost 80%.

“While housing construction has recovered slightly to 591,000 units in January of 2010, it is still at a level not seen since detailed records began to be collected in 1959,” the report says. “With the dramatic decline in housing starts, residential fixed investment fell sharply, down 54% from a peak of $775 billion or 6.1% of GDP in 2005, to a low of $359 billion (in 2005 dollars), or 2.8% of GDP in 2009.

Single-family home building, which is responsible for more than half of the value of RFI, fell from $434 billion worth of annual construction at the peak of the housing cycle, or 3.4% of GDP, to $109 billion in 2009 and a contribution to GDP of only 0.8%.

The value of multifamily construction peaked at $48 billion - or 0.37% of GDP - in 2006, and subsequently lapsed to $26 billion in 2009, at 0.2% of GDP.

The study identifies home improvements, refurbishment and remodeling of residential structures as the second largest component of residential fixed investment, typically contributing around a quarter of its value.

“Despite the sharp reduction in housing construction, investment in home improvements has experienced only a modest decrease from $164 billion (1.3% of GDP) in 2005-2006 to $148 billion (1.1% of GDP) in 2009. As a result, its share of residential fixed investment increased to almost one-third in 2009,” the study says.

By comparison, housing services have proven to be a highly stable component of the U.S. economy, the report says.

“In the past three years, despite the boom and bust in the United States economy and housing sector, housing services have experienced only a small reduction in value and their overall contribution to GDP,” according to the NAHB research. This lack of volatility largely can be explained by the size of the existing housing stock — 129.7 million units in June 2009 in the estimation of the Census Bureau — compared to only a 1.2% annual rate of the stock’s expansion, with new construction averaging around 1.5 million units per year.

Housing services include:

The imputed value of owner-occupied rents, which were almost $1.1 trillion in 2009, or 8.4% of GDP.
Rent from tenant-occupied housing, which in 2009 was valued at $295 billion and contributed 2.3% of GDP.
Household utilities — such as water supply and sewage, garbage collection, electricity and gas. In 2009, household utilities were valued at $249 billion, or 2% of GDP.
Total housing services were valued at $1.66 trillion in 2009, representing 18% of personal consumption expenditures (which comprise around 70% of GDP) and contributing 12.8% of GDP.

To read "Housing and GDP" in its entirety, click here.

For more information, e-mail Peter Grist at NAHB, or call him at 800-368-5242 x8697.

Click Here for the Source of the Information.

Builders Commend Proposed Energy Efficiency Incentives

Rebekah Collins — Tue, 16 Mar 2010 23:25:00 +0000

Ron Lee of Ron Lee Homes and Hearthstone Homes by Ron Lee has achieved a designation from the National Association of Home Builders (NAHB) for a Certified Green Professional (CGP). Designations from the NAHB are equivalent to "Grad School" for builders. These designations are designed to teach qualified builders in detail about specific aspects of the real estate industry. The owners of Hearthstone Homes by Ron Lee attend these designation courses throughout each year in an attempt to become educated in different fields such as builder certification, sales professionalism, and current marketing techniques. Below is an article from the NAHB about the popularity of green building, especially for qualified builders. Ron Lee is a Certified Green Builder in St. Tammany Parish, so if you are interested in purchasing a new home that is built with "green techniques," Contact Ron Lee Homes at 985-626-7619 or e-mail info@ronleehomes.com

When the President announced a proposed home energy efficiency initiative recently in South Carolina, he was joined on the stage by Hilton Head builder Howard Feldman.

Feldman, co-founder of Coastal Green Building Solutions, said he told the President before the event that the home building industry has “a good supply of ready and willing skilled workers, innovative manufacturers and knowledgeable suppliers.”

Feldman, the 2010 secretary/treasurer of the Hilton Head Area Home Builders Association, is a HERS (Home Energy Rating System) rater and an EarthCraft technical advisor. He is a founder and current chairman of the HBA’s green building council.

“Weatherization and energy efficiency retrofits is an emerging industry,” Feldman said. “The Administration’s initiative fits right into that. It provides opportunities for workers and manufacturers. It helps people save on energy costs. It makes for healthier places to live. And at a national level it improves energy independence.”

Speaking on March 2 in Savannah, Ga., the President outlined a $6 billion proposal to provide cash rebates to homeowners who make energy-saving home improvements.

"This has the potential to be a real shot in the arm for the home building industry," said NAHB Chairman Bob Jones. "It would help put America back to work and it will help families save on monthly energy bills."

NAHB economists estimate that every $1 billion in remodeling and home improvement activity generates 11,000 jobs, $527 million in wages and salaries and $300 million in business income.

Administration officials estimate that up to four million households could benefit from the program, officially known as Homestar, but dubbed "Cash for Caulkers" by many in Congress and the media.

"Making the existing housing stock more energy-efficient is one of the most effective ways to achieve national energy conservation goals," Jones added. "In the long run this can be an important step in reducing the nation's dependence on foreign energy supplies."

A program managed by the Builders Association of Minnesota (BAM) could serve as a model for the President's proposed initiative, Jones said. That program - Project ReEnergize - has served as the conduit for federal stimulus program funds provided to the state for its energy-efficiency programs. The association has trained 1,000 remodelers and other residential contractors and funneled the money to 1,400 Minnesota home owners to help them make needed improvements.

Minnesota home owners received extra incentives for choosing projects like attic insulation, which some consumers don't undertake because its benefits are not immediately apparent, but when combined with incentives can bring a payback on utility bills within a year or two, depending on the climate.

"The President and Congress should look to the Minnesota program as an excellent example of how the proposal could work nationally," Jones said.

While NAHB supports the President's residential retrofitting initiative, there are concerns about some of the details proposed in various legislative drafts to implement the program.

"For this effort to be successful, the opportunities must be equally accessible to everyone," Jones said. "We need to make sure that Congress does not put up barriers that would keep this program from reaching its full potential."

For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132.

Click Here for the Source of the Information.

Economist predicts continued job growth in Louisiana in 2010

Rebekah Collins — Mon, 30 Nov 2009 20:17:59 +0000

The Monroe metropolitan area will be the fastest growing in the state with 1,900 new jobs in 2010 and 1,500 in 2011, said economist Loren Scott at a luncheon for business leaders held in Baton Rouge on October 7, 2009. Scott said Investments in the Foster Farms chicken processing plant, the V-Vehicle manufacturing facility, additional employment at Gardner Denver Thomas as well as construction work have significantly brightened the Monroe area's outlook. Other highlights from his economic forecast include:

New Orleans, the largest MSA in the state, will add only 3,000 jobs in 2010 and 2,500 in 2011. While most of the growth will be driven by construction, upcoming layoffs at Lockheed Martin Space Systems and weak tourism numbers will offset many of the construction gains in the region.
Lake Charles will add 1,000 new jobs in 2010 with 1,700 jobs in 2011. The growth, which will make Lake Charles the second fastest-growing MSA in the state, will be driven by construction on the Sugarcane Bay Casino resort, the Shaw Group’s Global Modular Solutions, which will build nuclear power plant modules, and several other large-scale construction projects.
Monroe will be the fastest growing MSA in the state with 1,900 new jobs in 2010 and 1,500 in 2011. Investments in the Foster Farms chicken processing plant, the V-Vehicle manufacturing facility, additional employment at Gardner Denver Thomas as well as construction work have significantly brightened the MSA’s outlook.
Shreveport/Bossier will have split growth, adding 3,000 jobs in 2010 because of expansions at Barksdale Air Force Base, exploration if the Haynesville Shale, an injection of highway funds and construction at the SWEPCO power plant. However, the GM Shreveport plant is set to close by 2012, leaving the MSA to grow by only 1,200 jobs in 2011.
The Lafayette MSA will have 700 new jobs in 2010 and 1,000 in 2011 -- a much weaker forecast that assumes a proposed federal tax on the oil and gas extraction industry passes.
That potential tax will also chill employment numbers in the Houma MSA, which is forecast to add 900 new jobs in 2010 and 800 in 2011. The shipbuilding sector and a boost from construction will help offset the impact.
Alexandria will add 600 new jobs in 2010 and 600 in 2011. There are few sources of new growth in this MSA, although it gets a boost from construction spending at Fort Polk as well as $208.4 million in planned state road projects.

Click Here for the Source of the Information.

Remodeling, Like New-Home Building, Boosts Local Economies

Rebekah Collins — Mon, 26 Oct 2009 15:21:46 -0700

The following is excerpted from a presentation to the Home Builders Association of Greater Peoria, Ill., earlier this year on the economic benefits of the remodeling industry.

       Just like new construction, remodeling injects a tremendous amount of money into the local economy.

       Whether you build a $300,000 house or do a $300,000 remodeling job, both put money into the hands of local tradesmen, in the form of wages; local suppliers, in the form of purchases; and local governments, in the form of permits and sales taxes.

       And, once in the economy, that money creates a ripple as it passes from person to person.

       For example, a tradesman may spend part of his paycheck at a local restaurant. The waitress may then spend some of her salary and tips to get her car fixed and the mechanic who installs her new brake pads and rotors may spend part of his income going to a chiropractor. While these transactions may be small, together they add up.

       On average, every $100 million spent on additions and alterations creates 690 full time jobs — 480 construction jobs, 110 wholesale and retail trade jobs and 70 jobs in business and professional services like accounting — plus $36.7 million of local income and $3.2 million in local taxes.

       Then there’s the all important ripple effect. Remember, the ripple occurs because the local economy has increased by almost $40 million in taxes and local income ($36.7 million in local income and $3.2 million in local taxes) because of the additions and alterations that were performed.

       Once earned, this nearly $40 million gets spent, much of it in the local economy. And, in the process, this creates another 320 jobs — 70 in the wholesale and retail trade; 60 in local government; 30 in restaurants, bars and other eating establishments; 30 in healthcare, education and social services; and many other jobs in other sectors — not to mention $1.7 million more in taxes and another $17.5 million of local income.

       Combined, the direct and ripple phases from additions and alterations result in 1,010 jobs, $4.9 million in local taxes and $54.2 million in local income.

       Thought of another way, every 10 jobs created building additions and making alterations leads to almost five more jobs through remodeling’s ripple phase — and every $10 of tax revenue generated initially creates another $5.40 due to the ripple.

       Moreover, for every $10 of local income generated during the remodeling phase, $4.80 in additional local income is created courtesy of its ripple. In short, no matter how you look at it, the ripple phase is about half as big as the initial additions and alterations phase.

       Lastly, while additions and alterations always result in a temporary boost to the local economy, there is likely to be a permanent boost, too. If the additions and alterations result in a permanent addition to the structure, then its taxable value rises and the flow of property taxes to all local governments rises.

Elliot Eisenberg is a senior economist at NAHB. For more information, e-mail Eisenberg, or call him at 800-368-5242 x8398.

Click Here for the Source of the Information.

Nationwide Home Sales Rebound Strongly in September

Rebekah Collins — Fri, 23 Oct 2009 11:15:31 -0700

With homebuyers rushing to complete their purchases before a tax credit for first-time owners expires, a report Friday is expected to show strong September sales

       Home resales are expected to show an almost 5 percent increase to a seasonally adjusted annual rate of 5.35 million, up from 5.1 million in August, according to economists polled by Thomson Reuters. If the report meets forecasts it would be the best month for home sales in more than two years.

Michael Conroy / AP Photo A "sold" sign is shown in front of a home in Carmel, Ind.

       The National Association of Realtors' report is scheduled for 10 a.m. EDT.

       The sales jump, however, could be far larger than Wall Street expects, according to a monthly survey of 1,500 real estate agents for Campbell Communications, a research firm. That's because foreclosure sales are booming in cities like Los Angeles, San Diego and Las Vegas.

       "There's a mini-boom going on in the housing market," said Thomas Popik, who conducted the survey for Campbell and expects a double-digit increase.

       First-time homebuyers and investors are snapping up those homes and taking advantage of low mortgage rates. These buyers can also take advantage of a tax credit of 10 percent of the sales price, up to $8,000, if the deal is completed by the end of November.

       The tax credit is so important to some buyers that they are adding a clause to their contracts, allowing them to back out if the sale doesn't close by Nov. 30.

       While home sales and housing construction have risen steadily after hitting bottom earlier this year, most economists believe that the worst isn't over for home values. In August, the median price was $177,700, down from the peak of $230,300 in July 2006, but still above the bottom of $164,800 in January, according to the Realtors group.

       Prices could see a double dip because rising unemployment is having a ripple effect on foreclosures. The jobless rate, currently at 9.8 percent is expected to rise as high as 10.5 percent next year, causing more people to be unable to afford their monthly mortgage payment.

       "There's more supply that's going to come into the marketplace," said Stan Humphries, chief economist at real estate Web site Zillow.com. "That additional supply will outpace demand."

       Some signs of softer prices may already be appearing. A government index released Thursday showed U.S. home prices dipped 0.3 percent from July to August.

       That drop "supports our view that the housing recovery will be slow and bumpy," wrote Paul Dales, U.S. economist with Capital Economics.

       With concerns about the housing market still prominent, Congress is considering several proposals to extend the tax credit for first-time buyers. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.

       One potential roadblock, however, emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent.

       At a hearing before a House subcommittee Thursday, J. Russell George, the Treasury Department's inspector general for taxes, questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18. The youngest taxpayers to apply for the credit were 4 years old, his office said.

       While the program has widespread support in Congress, there are growing concerns about the costs. The cause, said Sen. Jack Reed, D-R.I., "is a worthy one." But "I hope we can find ways to pay for it."

Associated Press Writer Alan Zibel wrote this report. Writer Jim Abrams contributed.

Click Here for the Source of the Information.

Builder Confidence Continues Upward in August

Rebekah Collins — Thu, 27 Aug 2009 14:23:34 +0000

       Builder confidence in the market for newly built, single-family homes rose one point in August to its highest level in more than a year, according to the latest reading of the NAHB/Wells Fargo Housing Market Index (HMI), which was released on Aug. 17. Building on a two-point gain in July, the HMI reached 18 this month, its highest point since June of 2008.

       “Home builder expectations have been buoyed by the success of the first-time home buyer tax credit and its anticipated boost to buying activity leading up to the Nov. 30 expiration date,” said NAHB Chairman Joe Robson. “The question is what happens after that — whether there will be enough momentum to keep us moving toward a recovery, particularly in light of significant headwinds such as the severe credit crunch for housing production loans and inappropriate appraisal practices that are scuttling a quarter of all new-home sales. Unless Congress and the Administration focus their attention on housing right now, this improvement may well be short-lived,” he said.

       “One very positive aspect of today’s report is the big gain registered in the component gauging home builders’ expectations for the next six months,” noted NAHB Chief Economist David Crowe. “This reflects anticipated sales stemming from the tax credit as well as recent signs that an economic recovery has begun. There is definitely a sense of hope among builders that the worst of the downturn is over and that a turning point is near at hand. Meaningful action by Congress could ensure that this upward momentum continues and that housing can help push the economy back onto solid ground.”

       NAHB is calling on Congress to extend the first-time home buyer tax credit for another year and to offer it to all income-eligible buyers. In addition, NAHB is urging Congress to help eliminate the credit crunch, correct faulty appraisal practices and expand Net Operating Loss tax provisions that can help avoid more layoffs. Each of these actions would generate thousands of new jobs and provide a much-needed boost to economic recovery.

       Derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

       Two out of three of the HMI’s component indexes recorded substantial gains in August. The biggest boost, of four points, was for sales expectations in the next six months, which rose to 30. The index gauging traffic of prospective buyers climbed three points to 16 and the index on current sales conditions held unchanged at 16.

       Regionally, all but the South recorded HMI gains in August. The index rose eight points to 24 in the Northeast, two points to 16 in the Midwest and three points to 17 in the West. The South posted a one-point decline to 18.

Population Growth Along the 10/12 Corridor is Going to Continue

Rebekah Collins — Sun, 23 Aug 2009 23:21:01 +0000

       New official state projections indicate the populations of Livingston, Ascension and St. Tammany parishes are expected to more than double by 2030. But here's the most startling prediction: In just 20 years, St. Tammany may have more residents than East Baton Rouge. If projections bear true, St. Tammany could be home to 459,160 people - up from 219,870 in the year before Katrina.Livingston's population is projected to climb to 242,780 - up from 109,030. And Ascension could expect 196,140 residents - up from 90,450 before the storms. Moderate growth over the next 20 years is projected for Lafayette Parish - about 25,000 people.

       Meanwhile, the population of East Baton Rouge Parish is projected to reach a high of 433,700 in 2010 before losing 12,200 people by 2030. Population is also expected to decline somewhat in Calcasieu.

       Dr. Troy Blanchard, an associate professor of sociology at LSU who produced the projections, says the numbers are based on birth, death and migration trends in those parishes from 2000 to 2005, using the 2000 Census and 2005 Census estimates. However, he cautions that when looking at projections this far out, birth and death rates typically remain fairly constant, while migration patterns - which can be influenced by everything from hurricanes to the economy - are unpredictable and could significantly alter the numbers.

       "What we're saying is that if these measurements stay exactly the same as they were during that particular period, this is what will happen," Blanchard says. "Right now, our best guess at what will happen in the future is what has happened in the past." The state projections indicate that from 2005 to 2010, Ascension, Livingston, St. Tammany, Tangipahoa and St. John the Baptist will emerge as the fastest-growing parishes. Between 2010 and 2020, Livingston, St. Tammany, Ascension, St. John the Baptist and Plaquemines likely will enjoy the highest growth.

       State demographer Karen Paterson says the projections are used by state agencies to plan things like new programs, transportation and schools. Businesses also consider them in selecting optimum locations.

Listed below are some websites containing additional resource information for homebuyers in the Northshore region:

St. Tammany Economic Development Foundation

Tangipahoa Economic Development Foundation

Washington Parish Economic Development Foundation

Click Here for the Source of the Information.

Is Buying a Home in Today's Economy a Good Idea?

Rebekah Collins — Mon, 20 Jul 2009 14:27:43 +0000

       As a long-term investment, homeownership is still one of the best investments for individual households. “Why” you may ask? After all, the headlines say the housing market is down and out, with defaults rising at an alarming rate, and mortgage markets so frozen that buyers can’t get a home loan at any price.

       What buyers need to realize is that housing markets, like all markets, inevitably have their ups and downs. And homeownership has a track record that is virtually unmatched by any other purchase in terms of its real benefits.

       Despite the turmoil in mortgage lending, if you have good credit, a job and steady income, you will find there is still plenty of mortgage credit to be had at good rates. For well-qualified buyers, rates are running at near historical lows.

Homeownership’s Real Value

Here are a few examples of why, dollar for dollar, homeownership is a solid stepping stone to a future of financial security and the single largest creator of wealth for many Americans. Over the long-term real estate has consistently appreciated, even through periodic adjustments in local markets in response to economic conditions. On a national level, home appreciation has historically increased 5-6 percent annually, report economists at the National Association of Home Builders.

Five percent may not seem much at first, but here’s an example that will put it into perspective: Say you put 10 percent down on a $200,000 house, for an investment of $20,000. At a 5 percent annual appreciation rate, that $200,000 home would increase in value $10,000 during the first year. Earning $10,000 on an investment of $20,000 is an extraordinary 50 percent annual return. In contrast, putting that $20,000 down payment into the stock market and getting a 5 percent gain would only yield a $1,000 profit.

Compared to Stocks

Looking at it another way, over a longer period of time, if someone put $10,000 into the stock market in 1996, the average annual S&P return would make that investment worth $21,500 today—an increase of $11,500. The median home price in 1996 was $140,000.

Today, that same home would have gained nearly $100,000 in value. Don’t miss out on the benefits of homeownership.

Housing Starts and Permits Post Gains in May

Rebekah Collins — Fri, 26 Jun 2009 22:32:36 +0000

       Nationwide housing starts rebounded in May from record lows in the previous month, posting a 17.2% gain to a seasonally adjusted annual rate of 532,000 units, according to U.S. Commerce Department figures released on June 16.

       While driven largely by a double-digit gain in the volatile multifamily sector, the uptick also reflected a substantial gain on the single-family side and applied consistently to all regions of the country.

       “Having drawn down standing inventories to very thin levels over the past year, some home builders are now carefully replenishing their supplies in response to demand from smart buyers who are taking advantage of low interest rates and prices,” said NAHB Chairman Joe Robson.

       “The May report showing three consecutive months of gains in single-family housing starts and two consecutive months of gains in single-family permits is a very welcome sign that the market may be nearing a turning point,” said NAHB Chief Economist David Crowe.

       “That said, our recent surveys tell us that builders remain very cautious about the future, and that they are aware of the upcoming expiration of the first-time buyer tax credit at the end of November,” Crowe added. “Homes that get started now should be able to close by that deadline, and this may be spurring some of the latest construction activity.”

       Single-family housing starts gained 7.5% in May, breaking the 400,000 mark for the first time since November 2008 to reach a seasonally adjusted annual rate of 401,000 units. Meanwhile, starts in the much more volatile multifamily sector posted a 77% gain following a nearly equivalent decline in the previous month, for a seasonally adjusted annual rate of 124,000 units.

       Building permit issuance, which can be an indicator of future building activity, rose 4% overall in May to a seasonally adjusted annual rate of 518,000 units. On the single-family side, permits rose 7.9% to 408,000 units, while on the multifamily side, they declined 8.3% to 110,000 units.

       Both housing starts and permits were up across every region in May. Starts rose 2% in the Northeast, 11.1% in the Midwest, 16.8% in the South and 28.6% in the West.

Permits rose 5.7% in the Northeast, 8.9% in the Midwest, 2.3% in the South and 3.8% in the West.

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Click Here to View the Source of the Information.

The President Proposes Sweeping Financial Overhaul

Rebekah Collins — Tue, 23 Jun 2009 22:38:23 +0000

       The President on June 17, 2009, announced a sweeping financial reform plan that is intended to restore confidence in the integrity of the U.S. and global financial system.

       When unveiling the proposal, the President emphasized that the proposed reforms seek to build a new foundation for financial regulation and supervision that is simpler and more effectively enforced, protect consumers and investors, reward innovation and adapt and evolve with changes in the financial market.

       The plan, which the President wants to complete this year, centers on expanding the power of the Federal Reserve to police large, systemically important institutions and on allowing the government to break firms apart, implement new rules for complex financial instruments and create a new federal agency to oversee consumer products such as mortgages and credit cards.

       The National Association of Home Builders (NAHB) is currently reviewing the far-ranging proposal — which would touch almost every corner of financial markets, from tougher consumer-protection policies to stricter rules over exotic financial products such as credit derivatives.

        The proposed reform also would bring many of the products and companies that previously operated outside of the banking system under federal scrutiny.

         The Administration's blueprint would give the government the power to take over and wind down a large financial company — a power that government officials lacked last year when the financial crisis was intensifying.

         The plan would also give the central bank more power over the payments and settlements systems in U.S. financial markets to prevent a breakdown that officials fear could destabilize the economy.

The plan proposes reforms to meet the following five key objectives:

    * Promote robust supervision and regulation of financial firms
    * Establish comprehensive regulation of financial markets
    * Protect consumers and investors from financial abuse
    * Provide the government with the tools it needs to manage financial crises
    * Raise international regulatory standards and improve international cooperation

       The Administration has not submitted legislative language and significant changes to such a plan will probably be made as it works its way through Congress.

        While the President would like a reform plan to be enacted this year, the congressional agenda is already full and that timing appears unlikely.

        A delay until next year should give the NAHB enough time and ample opportunities to weigh in during the debate.

       Details of the Administration’s proposal are outlined in an 80-plus page white paper. The white paper and fact sheets on the five major components of the plan are posted on the Treasury’s Web site at www.ustreas.gov/news/index1.html.

For more information, e-mail David Ledford at NAHB, or call him at 800-368-5242 x8265.

Click Here to View the Source of This Information.

Key Provisions of the American Recovery and Reinvestment Act

Rebekah Collins — Thu, 28 May 2009 19:23:50 +0000

Tax Provisions:

$8,000 first-time home buyer, true tax credit (no repayment) for the purchase of a principle residence between January 1 and December 1, 2009. Recaptured if home is sold within three years. Removes the restriction on the use of tax credit proceeds with Housing Finance Agency-issued tax exempt mortgage revenue bonds.
Short-term gap financing for Low Income Housing Tax Credit (LIHTC) projects:

1. Provision allowing states to turn in portion of 2009 LIHTC allocations for cash.
2. Special appropriation of $2 billion in HOME funds.

Up to a ten-year deferral of tax from business debt cancelled as part of a repurchase or restructuring.
5-year carryback of 2008 net operating losses for businesses with gross receipts of less than $15 million (three year average).
Extension of enhanced bonus depreciation.
Extension of increased small business expensing.
Enhancements to the section 25C program for energy efficiency remodeling improvements to existing homes.
One-year patch of the Alternative Minimum Tax.
Increase New Markets Tax Credit allocating authority for 2008 and 2009.
Delays for one year the start of 3% government contractor withholding requirement.

Appropriations Provisions:

$2 billion for full year payments to owners of Section 8 project based rental assistance properties.
$2.25 billion through HOME program and Low Income Housing Tax Credit program to fill financing gaps.
$1 billion for CDBG.
$2 billion for Neighborhood stabilization program.
$1.5 billion for homelessness prevention activities (help with rents, etc).
$250 million for energy retrofitting and green investments in HUD assisted projects.
$1 billion for Section 502 direct loans under the Rural Housing Service.
$10.4 billion for Section 502 guaranteed loans under the Rural Housing Service.
$27.5 billion for highway spending.

Other Key Provision:

Increases in FHA, Fannie Mae and Freddie Mac loan limits to 2008 levels.

What is Your Price Per Square Foot?

Rebekah Collins — Thu, 28 May 2009 19:20:00 +0000

Pricing by the square foot of a new home can be very misleading. It could be compared to purchasing a car by the pound: A Farrari vs. Honda 2000. Both are sports cars and their weight is similar. Yet, the cost per pound would be tremendously different.

The same is true when designing and building a new custom home. Each home has different conditions: the site and/or the amenities. These items include fixed costs.

Fixed costs are features such as fireplaces, appliances, cabinets, light fixtures, baths, site conditions, etc. These would also be considered your interior amenities.

Examples of site conditions include:

    Utility runs – from street service to home
    Trees – more or less, large or small
    Elevation
    Length of Drive
    Location – far out in the country vs. in town

Most homes in the same price range will have the same quantity of these items. There is usually only one kitchen per home and therefore a similar number of appliances and cabinets. Many homes have 2 baths even though they may have 3 or 4 bedrooms. Therefore, the cost is the same for those baths even though the square footage of the 4 bedroom home is probably more.

50% to 65% of the cost of a home is made up of fixed costs.   If this is spread over fewer square feet, obviously the cost per square foot rises. For example: If those costs are $200,000 notice the difference in price per square foot

Home Size	3,500 sq. ft. home	3,000 sq. ft. home
Fixed Costs Per Square Foot	$57.14 per sq. ft.	$66.67 per sq. ft.

These two homes could be next door in the same subdivision, but yet the smaller home’s cost per square foot of living area is $9.53 higher.

Also, if living area only is used, the cost of porches and garages is included in the per square foot cost. The cost per square foot of this area is substantial. As the size of garages and porches increase the amount per square foot increases even though living area is the same. For example: a home may have a front porch and rear porch where the home next door has only a rear porch. In this case the cost of the front porch area in the first home will be spread over the same square footage as the home next door without a front porch.

The cost per square foot varies according to the incremental size of the “All Other” areas. Assuming that an additional porch in the front in the example above costs $10,000:

Home Size	3,500 sq. ft. home	3,000 sq. ft. home
Cost Per Square Foot for Added Porch	$2.86 per sq. ft.	$3.33 per sq. ft.

Again, for example, the subject home’s cost is around $3 more per square foot than the home next door without a front porch.

We are not suggesting that we should not build porches. Today’s relaxed lifestyle lends itself to more use of the porches and other areas. Therefore, we are suggesting that pricing a home per square foot does not always give you the true picture. Each individual has his own way of expressing himself in his home thru the use of amenities and space.

At Hearthstone Homes by Ron Lee and Ron Lee Homes we use a great deal of custom amenities in each home. Therefore, there are times when our price may seem a bit higher than our competition. We pride ourselves on creating a home that functions in every way and in every square foot. Not just one or two splashy extras.

Some of Our Extras You Need to Compare with Other Builders:

A Watchful Eye on Construction

Higher Quality Lumber

Top-Notch Bracing

Tight Envelope – Insulation, Sealing, Mech. Equip

Secluded Bedrooms Without Wasted Space

30” Ovens

Upgraded Media Wiring

We like to ask these 3 questions in order to understand where you need to be and how we can help you create your new home:

1. How much would you like to spend?
2. How much could you spend if you pulled out all stops?
3. What would you be willing to spend to get most of the amenities and finishes you want in your new home?

We encourage you to consider this information when you are ready to buy or design a new custom home in the St. Tammany Parish area. For More Information, Contact Us Directly at 985-626-7619 or e-mail info@ronleehomes.com.

Ron Lee Homes Blog

Housing Has Turned the Corner, But Is Still Struggling With Jobs and Low Home Prices

Builders Urge Extreme Care in Restoring Housing Finance System

Ron Lee Attends the 2010 NAHB Legislative Conference

The national economy will not recover until housing recovers. Now is the time for Congress to reaffirm the vital part housing plays in the overall economy and its role in a national economic recovery.

Support retrofit incentive for consumers in existing homes to improve energy efficiency to create jobs and save energy in the housing sector.

Overly conservative appraisals are limiting sales and refinance opportunities.

Builders and developers are facing excessive credit restriction, where lenders are cutting off loans for viable new housing projects and producing unnecessary foreclosures and losses on AD&C loans.

Housing Not Up to Its Usual Role of Leading Economic Recovery, NAHB Study Says

Builders Commend Proposed Energy Efficiency Incentives

Economist predicts continued job growth in Louisiana in 2010

Remodeling, Like New-Home Building, Boosts Local Economies

Nationwide Home Sales Rebound Strongly in September

Builder Confidence Continues Upward in August

Population Growth Along the 10/12 Corridor is Going to Continue

Is Buying a Home in Today's Economy a Good Idea?

Homeownership’s Real Value

Compared to Stocks

Today, that same home would have gained nearly $100,000 in value. Don’t miss out on the benefits of homeownership.

Housing Starts and Permits Post Gains in May

The President Proposes Sweeping Financial Overhaul

Key Provisions of the American Recovery and Reinvestment Act

Tax Provisions:

Appropriations Provisions:

Other Key Provision:

What is Your Price Per Square Foot?