Sequestration
Only in America
would we desecrate the English language to find a word to describe what our
government is up to. Yes, March 1 is the official sequestration date. But don't
expect the government to declare the next Federal Holiday to be
"Sequestration Day." Here are a couple of points about this word.
First of all, the word sequestration means confiscation or seizure of assets.
No one is proposing a seizure of assets here. What we are talking about is
automatic and severe budget cuts. In this case we will defer to the
Congressional Research Service which has rewritten the dictionary to expand the
definition to mean... the permanent cancellation of budgetary resources by a
uniform percentage. Moreover, this uniform percentage reduction is applied to
all programs, projects, and activities within a budget account.
Okay, now that
we know what it means, the questions that follow are... will it happen and if
it does happen, what affect may it have upon our lives and especially the
economy? There have been many articles written regarding what could happen if
the budget is cut by approximately 10% overnight. These cuts include all
discretionary spending from jobless benefits to food inspections to defense. Not
all cuts would happen immediately. For example, if there are furloughs of
Federal workers, we have read that the furloughs may take 30 days or more to
implement. That gives Congress and the Administration more time to come up with
a solution. And you know what they do when they have extra time? Usually
nothing. There is no doubt that dropping hundreds of millions of dollars out of
the budget will take some steam out of the economy this year. This could lead
to lower rates and oil prices. We just don't think that the cuts will be
allowed to take hold all year. With a compromise of some kind, there will be
some cuts, but how much remains to be seen.
The economic
downturn that ended a few years ago may have soured many consumers on making
significant financial decisions. But as the effects of the recession fade, many
may be more interested in homeownership. That seems particularly true of
younger consumers who may not have been in a position to buy years ago. Today,
the vast majority of consumers between the ages of 25 and 44, comprising both
millennials and those in Generation X, say that homeownership is at least
somewhat important to them, according to a new survey from Prudential Real
Estate. In all, 96 percent of all consumers feel this way. But 77 percent of
those aged 25 to 34, and 78 percent of people between 35 and 44, say it's
"very important." Further, 74 percent say that the current levels of
affordability lent by historically low interest rates mean that now is a great
time for them to buy a home. "Millennials and Generation X -- about 85
million people strong -- face a unique opportunity in U.S. housing," said
Earl Lee, chief executive officer at HSF Affiliates LLC and president of
Prudential Real Estate. "They are generally optimistic about homeownership
and, by nature, share a strong sense of community. As important, many were not
impacted by the real estate downturn and are looking at today's buying
opportunities with keen interest." In addition, 63 percent of those polled
say they currently have a favorable view of the real estate market in general,
and those in the younger generations were typically more enthusiastic about it
than their older counterparts, the report said. Source: AOL Real Estate
A large majority
of people in that field plan to buy as many or more properties in the next 12
months to rent out or sell for profit. That’s one of the findings of a study
released recently that attempted to measure the impact people involved in
income or speculative real estate are having on the housing market. The survey,
sponsored by BiggerPockets.com, the nation’s leading social Web site for real
estate investors, and Memphis Invest, one of the largest providers of
single-family rentals — shows that 65 percent of investors plan to buy a lot
more homes during the next 12 months. The report points out that investors
played a fairly substantial role in the housing recovery. The housing crisis
pushed nearly 4 million foreclosures onto the open market, devastating home
values. This and the coinciding financial crisis squashed homebuyers’ confidence
and their ability to buy. At that time, real estate investors began buying up
the foreclosures when few other people could enter the market. They bought up
so many properties that they established single-family rentals as a $100
billion business. In fact, the report says that single-family rentals now
outnumber apartment units. They are also renovating the homes they buy and
spending an average of $7,500 per home. That totals more than $9.2 billion
every year in construction-related spending, according to the report. This is
critical business for an industry that was hit hard by the recession. In 2008,
Congress approved the Neighborhood Stabilization Program to provide funds to
municipalities and not-for-profit organizations to repair damage to foreclosed
homes. Up to this point, they have spent a total of $7 billion of tax payer
money. Real estate investors are doing more than this every year with their own
money or money that they borrow. Surprisingly, the report finds that only one
in four real estate investors are cash buyers. In fact, slightly more than half
make down payments and finance the rest of the purchase amount. Source: The Washington Post
Consumers need
to be extra vigilant about checking for any errors on their credit reports,
according to the Federal Trade Commission. One in four Americans report they’ve
found an error on their credit report, according to a study conducted by the
FTC, which analyzed 1,001 consumers’ credit reports from the three major
agencies, Equifax, Experian, and TransUnion. Researchers helped the consumers
spot potential errors on their reports. Five percent of the consumers found
such large errors on their report that they could have gotten stuck paying more
for home loans or other financial products, if they hadn’t taken steps to
correct it before applying, according to the study. Twenty percent of the
credit reports studied that were found to have errors in it were ultimately
corrected after the consumer took steps to dispute it, which resulted in about
10 percent of consumers receiving a higher credit score, according to the
study. Consumers are entitled to receive a free copy of their credit report
each year from the three reporting agencies. Source: The Associated Press
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