TOP STORIES - Economic Commentary: Features Short Sales, Economic News, Green Homes, TAX CREDITS, and MORE

These are all indicative of a strong recovery and many were expecting a positive employment report for December. Well, 85,000 jobs lost in December shows that we are not out of the woods yet. The Federal Reserve Board and most economists keep saying that, while things are looking better, the world will not turn rosy for some time. The case of oil prices is one exception. We have had frigid temperatures in many parts of the nation since late December and this has given energy prices a substantive reason for increases on the upside. Not only is this a temporary factor, but higher energy prices such as $3.00 per gallon at a pump can actually slow the economy down as consumers curb spending on other purchases. It is expected that increased energy consumption by buildings will actually give a boost to economic growth in the short run, but once again that is temporary. Expect the sobering but not surprising employment report to spur more stimulus activity such as the "cash for cau! lkers" program as well as more support from the Fed with regard to keeping long-term rates down through purchases on Treasuries and mortgage-backed-securities on the open market. At least until the jobs picture turns positive permanently.

Of the more than 113 million occupied homes covered in the US Census Bureau’s 2008 American Community Survey, 15.6% have more than $2,000 in monthly housing costs. The survey provides a statistical snapshot of the characteristics of the US population in 2008, including the finances of housing consumers. The data collected by Census Bureau officials determines where more than $400 billion goes to state and local governments each year. The Census surveyed roughly 250,000 addresses for the foundation of the data. The total number of family households increased from 2007 by approximately 72,000 units, according to the survey. California homeowners had the highest monthly median housing costs in the country at $2,384. New Jersey narrowly trailed with $2,360. Hawaii, with $2,265, and the District of Columbia, at $2,218, followed. California led all states with 53.3% of the state’s home owners spending 30% of their household’s monthly income on housing costs. Hawaii came in second ! with 49.3% and Florida was third with 49.1%. Minnesota led the nation with 74.7% of its occupied housing units that are owner-occupied. Michigan and West Virginia rounded out the top three with 74% and 73.7%, respectively. At the bottom was the District of Columbia with 43.4%, New York with 53.3% and California with 57%. Source: HousingWire

While obstacles to short sales remain, real estate practitioners say the process is becoming more efficient. Rather than waiting six months or more to push through a deal, agents say banks are more willing to negotiate prices up front. "My gut feeling is that short sales seem to be the preferred avenue for distressed property now," says Cindi Hagley of San Ramon, Calif.-based Windermere Welcome Home. "It’s cheaper for [banks] to do a short sale than go all the way to foreclosure." The short-sale process has become more manageable now that banks are willing to pre-approve prices, reach out to underwater borrowers who have listed their homes for sale, implement Web-based systems that manage the short sale process, and add staff dedicated to short sales. Additionally, the U.S. Treasury is set to implement a streamlined short sales framework and offer incentive payments of $1,500 to home owners and $1,000 to both loan servicers and second-lien holders. Borrowers also prefer shor! t sales because Fannie Mae requires them to wait only two years to own another home or even less than that if they were not delinquent. By contrast, those who lost their homes to foreclosure have to wait five years. Source: San Francisco Chronicle

Despite this being a tough year for home builders, more than 75,000 new homes were designated Energy Star green properties in 2009. These energy efficient properties accounted for nearly 17 percent of all new single-family homes, up from 12 percent in 2007. "Consumer acceptance has been outstanding," says Walter Cuculic of Pulte Homes, which has built 120,000 Energy Star homes. Owners of existing homes also are spending money on things that make their homes more energy efficient. A survey by USA Today showed that 68 percent of those surveyed spent money this year on energy renovations – 68 percent to save money and 26 percent to save the environment. Source: USA Today

Home remodeling business is picking up all over the country. Contractors began noticing the trend at the end of what was a long, slow summer. The reason for the upturn is that home owners, unable to sell properties, are deciding to stay and fix up the deficiencies. An added incentive is the $1,500 federal tax credit for energy-related improvements. The National Association of Home Builders’ Remodeling Market Index, a measure of contractor confidence, rose slightly last month and its futures index also increased, indicating contractors are more confident that business is improving. Kermit Baker, chief economist for the American Institute of Architects and Senior Research Fellow at Harvard University’s Joint Center for Housing Studies, agrees that the remodeling industry hit bottom during the summer, but he doesn’t expect substantial improvement until Spring 2010. Source: CNN/Money.com

The inventory of completed but unsold new houses fell to 239,000 at the end of October, according to the National Association of Home Builders. That’s the fewest since May 1971, when the inventory stood at 236,000. The months’ supply — that is, the amount of time it would take to sell the current inventory at October’s sales rate — fell to 6.7 months, which the NAHB says is "respectable." The historic high was set in January, when the supply topped out at 12.4 months. Meanwhile, the inventory of unsold existing houses fell in October to 3 million, and the month’s supply dipped to 6.8 months. The supply of resale houses hit its cyclical peak in June 2008, when it reached 11 months. Source: National Mortgage News With regard to existing homes, the number of homes for sale declined 2.4 percent in November in the metropolitan areas covered by ZipRealty Inc. In the last 25 years, the decline in November has averaged 1.8 percent. The data doesn’t include New York, but Miller Samue! l Inc., an appraisal firm, reports that inventory was down 7.1 percent from the end of October and down 18 percent compared to November 2008. October was the first month since January to show a rise in bank-owned homes. The number of bank-owned properties declined over the summer because of efforts to prevent foreclosures. As time runs out for many families, the number of foreclosures is increasing. As of the end of October, banks and home-loan investors had 639,000 foreclosed homes for sale across the U.S., Barclays Capital estimates. Source: National Mortgage News and The Wall Street Journal

President Obama proposed a program that would reimburse home owners for installing energy-efficient appliances, windows, and insulation. Under what has been dubbed “Cash for Caulking,” home owners would get a 50 percent rebate on items like energy-efficient air conditioners, heating systems, washing machines and dryers, refrigerators, replacement windows, and insulation up to $12,000, meaning a household could spend $24,000 and get $12,000 back. There will likely be no income restrictions. Steve Nadel, director at the American Council for an Energy-Efficient Economy, who is helping to craft the legislation, says they are contemplating having contractors or retailers pay part of the cost upfront to ease the need for home owners to come up with lots of cash. Source: CNNMoney.com

The IRS has spelled out guidelines for eligibility for the home buyer credit when co-borrowers purchase a property. When a home-owning parent of an adult child co-signs for a home loan and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount. The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit. When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer. Source: Washington Post Writers Group

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