All Posts Tagged With: "housing market"
Taxes in some states have become so bad due to deficits. Is there an end in sight?
Jennifer McClelland | RSS | Wed, Dec 23 2009 | 2 Comments
Most of the states across the country have come to a conclusion: They have to raise taxes to help with the budget deficits.
The five states hit hardest by new taxes as written by SmartMoney are:
1) California – This state has a HUGE deficit. It has gotten so bad in California that they the state is starting to pay for things with IOUs. The state deficit estimate for 2010 is almost $25 billion with the state and local tax burden being 10.5%. Voters in the state voted against sales and income tax increases, and with unemployment there nearing 12% and the worst housing market in the country, anyone could understand their unwillingness to vote FOR higher taxes. One of the things on the table now for the state to start raising some extra tax money? Legalize marijuana…
2) New York – With a state deficit estimate for 2010 at $17.6 billion and the state and local tax burden of 11.7%, this state ranks number two in SmartMoney’s poll. The governor of New York, David Paterson has unsuccessfully tried to pass an 18% tax on soft drinks, however he was able to raise taxes on cigarettes and wine. New Yorkers have the second highest tax burden due to the income tax rate of 7.85% for those earning more than $200K a year.
3) Florida – Florida’s deficit estimate for 2010 is $6 billion and the state and local tax burden is 7.4%. In May, Florida passed next year’s budget and included a $1 per pack increase on cigarettes as well as new and higher fees to renew a driver’s license or register a vehicle. While Florida does have the third lowest tax burden in the nation, the state has been hit hard by decreasing home values and huge budget deficit as a result. The deficit could mean more taxes in the future.
4) Massachusetts – Massachusetts has a state deficit estimate for 2010 of $3 billion and a state and local tax burden of 9.5%. While right now, it is middle of the road when it comes to it’s tax burden ranking (23rd in the nation), it is getting ready for some hefty tax increases. When the budget was passed last week, it included new taxes including a 1.25% increase in the sales tax from 5% to 6.25%. Satellite television subscribers will also be tinged with a 5% tax on satellite services.
5) Nevada – With a deficit of $1.2 billion and a state and local tax burden of 6.6%, it doesn’t seem like Nevada is doing that badly, but it had the same major problem that California did: rapidly decreasing property values. It also had a history of low taxes, there was no personal income tax and it imposed some of the lowest taxes on businesses in the country. It once got the majority of its revenue from tourism, so it wouldn’t have to tax residents as heavily. In Nevada, the sales tax is going up along with hotel taxes. It also has the highest deficit to budget ratio of 32%.
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Tags: housing market, tax burden, tax money
Fifty percent of mortgages could be for more than the value of the house it covers by 2011
Jennifer McClelland | RSS | Wed, Oct 14 2009 | 0 Comments
The number of United States homeowners that owe more than their home is worth will likely double to 48% in 2011 from 26% at the conclusion of March. This would lead to another blow to the housing market. This is all according to Deutsche Bank.
Home prices have been on a huge decline and will have the biggest impact on prime loans that have met the underwriting and size requirements of Fannie Mae and Freddie Mac. Prime loans make up 2/3 of mortgages and tend to be less risky because of their harsher requirements for someone to get a loan.
Analysts Karen Weaver and Ying Shen said, “We project the next phase of the housing decline will have a far greater impact on prime borrowers.” Of the loans they are talking about, 41% will likely be underwater by the first quarter in 2011, while only 16% will be underwater by the end of 2009.
The weird thing about this news coming out is that news has been coming out for months that report a stabilization of the housing market after three straight years of price declines.
Also, a very popular index showed (in July) that home prices rose for the first time since 2006 in May.
Of course, the decline in home prices across the country has led to further foreclosures because some people just can’t afford to pay what they owe on the house when the house isn’t worth what they paid. For example, in California are bad. People were paying $500,000 to $1 million for homes that are worth half of what they were when the owner purchased them. The people who bought their houses at that time are the ones facing the greatest losses.
The places that are having the worst negative equity are places in Florida, Arizona, Ohio, California, Nevada, Massachusetts, Illinois, West Virginia, and Wisconsin. Some homeowners in Florida and California will see 90 percent of the homes in their areas with underwater mortgages.
This is a huge problem for everyone who holds a mortgage currently. Even as the economy has started to improve, little by little, there isn’t too much good news in the way of home prices. In reality, home prices are still on the decline in a lot of areas across the country. In the areas where unemployment is still rampant and jobs are being lost twice as fast as they are being gained, home prices are still slipping.
I hope this isn’t true. I would prefer for mortgages to be worth at least the value of the home. Then again, the bank had to be referring to the full amount of the mortgage and not the principle that remains on the balance. I know that there are a lot of people who put a lot of money down on their mortgages, and have been paying on the mortgages for years. Unless they simply paid nothing but interest or have a 100% mortgage, then maybe their balance won’t be “underwater.”
Related posts:Housing is becoming more affordable
Housing prices are on the decline nationwide
Tags: mortgages, borrowers, freddie mac
Rules to follow when buying a new home
Jennifer McClelland | RSS | Fri, Sep 18 2009 | 7 Comments
After the housing market collapsed, followed by the credit crunch, it became quite difficult for people to buy homes. However, now, while still tight, it is becoming easier (than a few months ago) to find a mortgage. So how do you know what to get and what will you be happy in?
Here are some tips from the New York Times:
1) Start with the basics. Put 20% down on your home, get a fixed rate mortgage, and make sure that your mortgage is no more than 35% of your pretax income.
2) Consider your income. Being overconfident in your income will only get you in trouble when it comes to buying a home. You need to make sure that you’re still able to save money every month in addition to paying the mortgage.
3) Bow to the Unknowns. There may come a time when you decide to have children or change your career. If or when this happens, you need to make sure that you’re not caught up in a mortgage that keeps you from doing what is truly rewarding to you.
4) The 8 Hour Rule. If you can’t sleep through the night because you’re worried about how much you’re going to pay for the mortgage or worried about how to pay for the mortgage you shouldn’t be getting the house. If you have to take sleeping pills to help yourself get to bed at night, then perhaps it’s time to rethink the entire home purchase.
There are three more rules along with much more detail about each tip at the article source at the bottom of the post.
I think that there are a lot of things to consider when buying a home; all of these tips are great. Mortgages are not something that should be entered into lightly and should really be thought about because when you’re unable to pay your mortgage then you’re going to have credit problems for a long time and you will also find yourself in a lot of heartache about what was supposed to be your “dream”.
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Tags: new york times, housing market, housing
Sales of homes in 39 states rose in the second quarter
Jennifer McClelland | RSS | Wed, Aug 12 2009 | 0 Comments
In the United States, home sales finally rose in the second quarter in 39 states. This is one of the factors indicating that the housing market may be perking up a bit after the sub prime lending mess hit it hard.
Quarterly sales for the housing market overall rose 3.8%. This equates to a seasonally annual rate that is 4.76 million. Although the number is around 3% below the same quarter a year ago, the number is up from 4.58 million in the first quarter. The figures have proven to be a welcomed sign by economists who are now saying that the worst part of the housing recession is over and we have hit bottom and are finally starting to see an increase in sales. Even though they say that we’ve bottomed out, foreclosures are still expected to rise well into next year.
Alaska, Wyoming, California, Colorado and Michigan are still being hit pretty hard by falling housing prices and their sales have dropped by at the very least 6% each. However, in states such as Idaho, New York, Wisconsin, and Nebraska, sales have increased 20% or more.
Over the entire country, over 1/3 of the sales that were being reported were from foreclosures and other types of distressed sales in the second quarter.
Hopefully people will learn from all the mistakes they made leading up to the most recent housing crash. If people will learn not to ask for mortgages that they know they can’t afford and banks will learn that they aren’t going to be making money off the people who can’t afford the houses and to stop making out mortgages that are not only deceitful, but also stop “liar loans” then maybe we can avoid the same situation from happening again. Maybe.
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Tags: second quarter, york wisconsin, quarterly sales
The United Kingdom is showing signs of housing recovery
Jennifer McClelland | RSS | Tue, Aug 11 2009 | 3 Comments
The United Kingdom has had some new figures come out that show that there might be some recovery in the housing market in that country. The new figures that have come out show that the annual rate of the decline of housing prices has slowed down to 11.3% from 15%. Right now the average price for a home in the country is 154,016 pounds; the highest housing prices the country witnessed was 186,044 pounds on average and that was in October 2007; a 17% increase from the lowest point seen.
The problem with these prices is that not only did they happen so quickly, but the homeowners are having serious issues dealing with negative equity in their homes. Negative equity happens when the mortgage that the homeowner has on the house is worth more than the actual property is appraised for. This means that if the homeowner wants to move or sell their house, they will not get what they paid for it, and may end up owing the bank even when they don’t live in the house anymore.
Statistics that have been released from the Council of Mortgage Lenders showed that 900,000 homeowners are having problems with negative equity. The 900,000 homeowners equals to 5% of all the homeowners in the United Kingdom. However, of all homeowners in the country, there is around 2 trillion pounds of equity that hasn’t been mortgaged. Again, this figure means little to nothing to those struggling with negative equity in their own homes.
Right now, there is an improvement in the sales to house stock ratio due to fewer houses being listed through real estate agents. There are a few things that are coming together to help with the recovery. First of all, there aren’t as many homeowners that are willing to sell their houses when the property market is at the bottom. Secondly, there are fewer new homes coming up due to the higher risk that is associated by property investment. The National House-Building Council has sown that new property construction is down 53% since just last year.
Overall, it is nice to see some kind of improvement throughout the housing market, not only in the United States but also abroad. There will always be homeowners that overpay for their homes no matter if there is a recession or not. What these homeowners will have to do is hold on to their homes until the equity in the house builds up. Eventually, these homeowners will find themselves in the black.
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The English population is expected to increase; housing will follow
Fifty percent of mortgages could be for more than the value of the house it covers by 2011
Tags: negative equity, new homes, council of mortgage lenders
