RISMEDIA, February 9, 2010—It looks amazingly real, but it’s as phony as a James Cameron movie set.

Its many moving parts exist only for the purpose of creating the illusion of positive economic activity.

But, when you go behind the scenes, it’s evident that those things that seem so real are merely props and propped up plywood.

Lashed together with synthetic credit default obligations, bankruptcy remote special purpose vehicles and leveraged beyond reason, the set appears massive and foreboding from the front. But, when you go behind the façade, it is apparent that the whole thing is on the very verge of collapse.

Never mind, it was engineered to collapse when the show is over. But, wait! This is a disaster movie, so the set is actually rigged to explode.

The economy is a fantasy woven of greed and collusion, and it is allowing a handful of already wealthy people to concentrate all wealth and power into their hands while destroying everyone and everything else.

Recently, I happened upon a rather esoteric online debate about whether or not the economy is real. One argument was that it exists; therefore, it must be real.

A movie is real, but its components are created, and the story line may be fiction. That is the case with the economy; it is real, but it isn’t at all what it appears to be.

What do we mean when we say “the economy”? What is it? What’s the difference between a good economy and a bad one? There is an old line that when your neighbor loses his job, it’s a recession but when you lose your job, it’s a depression.

The economy is not so much a thing but a reflection, more symptom than cause. It is a measure of how effectively we turn inputs into outputs. The best economy for all parties is generally thought to be one which distributes goods and services the most efficiently.

In theory, improving the efficiencies with which we distribute goods and services within a community should have a positive effect on everyone.

Americans’ wages have been steadily declining in the face of rising prices, unemployment is high, the average work week is 33 hours, millions are losing their homes, and Wall Street CEOs earn huge bonuses for deliberately stealing our prosperity. As more and more capital is concentrated into the hands of a few, it is unlikely we will see any improvement.

In a sense, there are two economies: the one described by economists, politicians, and a lap-dog media, and the one that more and more middle class Americans are living in the real world. One wonders, why the disconnect?

The standard measure of the economy is the (NIPAs), National Income and Product Accounts produced by the Bureau of Economic Analysis (BEA).

According to the BEA, “The NIPAs are a set of economic accounts that provide information on the value and composition of output produced in the United States during a given period and on the distribution and uses of the income generated by that production.”

We often hear references to the Gross Domestic Product or GDP, which is featured in the NIPAs. GDP is not the only component. GDP measures the value of the goods and services produced by the U.S. economy in a given time period.

Who uses the GDP? Well, Wall Street for one, and the Federal Reserve to formulate monetary policy. The White House and Congress use the GDP to prepare the federal budget.

The GDP is the measure of the total of all the money spent during a given period to determine the direction and pace of production. And, if this period shows an increase over the prior period, we are presumed to have a good economy.

But is it accurate? Heck no! These books are as cooked as our collective gooses.

It’s what they don’t tell you. They don’t tell you that the GDP counts liabilities as assets, just like Wall Street. They don’t tell you that a cancer patient in their last year of life boosts the GDP more than a family of four who stays home and has dinner together. Going out and eating fast food, wasting gas, and the associated health problems are all good for the GDP.

One thing it doesn’t do is measure waste; it only measures growth of selected outputs.

It wasn’t really developed as an economic tool but as a way of identifying, locating and enumerating what could be taxed. What began as a sort of property census has become the accepted measure of our economy.

People talk about the economy with the same sort of resolute helplessness they express toward the weather.

But, economies are man-made and despite the almost patriotic assertion otherwise, ours is not a free one. If we have learned anything over the last ten years, is that the entire system has been hi-jacked by counterfeiters.

Since economies apparently always function to the benefit of the major stakes holders, we can only assume that there is a great deal of cooperation among these entities in order to influence the performance of economies in ways that benefit them.

But, what if there were another economy that we knew nothing about? An economy that makes nothing, does nothing but simply gobbles up the output and feeds off the real economy,

Some have referred to a “shadow banking system.” These financial intermediaries avoid all of the regulation in the traditional banking system and are subject to no oversight.

“At their most basic level, innovations like the ones that triggered the global collapse—credit-default swaps and collateralized debt obligations—were employed for the primary purpose of synthesizing out of thin air those revenue flows that our dying industrial economy was no longer pumping into the financial blood stream.” Matt Taibbi, Wall Streets Naked Swindle, Rolling Stone.

I always thought the word “avatar” had some sort of mystical meaning, but the first time I recall someone actually using the word “avatar” was several years ago.

IBM ran a television commercial in which a character with chin whiskers creates an avatar of him authentic down to the Billy-goat beard, living on a virtual island on his IBM computer.

The other character asks the point of an avatar and when the bearded dude says, “To make money” the other character asks, “Are you making any money on your island?” Bearded dude, “Real money or virtual money?”

Virtual money?

Well, why not? Like a derivative? A thing whose value is not it’s own but based on something else. Like an avatar.

George W. Mantor is known as “The Real Estate Professor” for his consumer education efforts including a long-running radio program, monthly workshop series, public appearances, and frequent articles.

During a career dating back to 1978, he has amassed experience in new home and resale residential real estate, resort marketing and commercial and investment property.

Prior to starting his own real estate and mortgage brokerage in 1992, he had been Director of Training and Customer Service for Great Western Real Estate. In addition, he has served on virtually every real estate committee, including a term as a Director of the California Association of REALTORS.

George is a nationally respected authority on all areas of real estate and is frequently quoted in a wide range of publications. He is an oft invited guest of Fox Business Network and for many years, he was the host of “Keepin’ It Real…Real talk about the real thing, real estate” on KCEO radio.

The Real Estate Professional includes him in “a directory of the Nation’s outstanding authors, columnists, and speakers. His articles have also recently appeared in Real Estate Finance, The Real Estate Professional, National Real Estate Investor, Broker Agent News, and Realty Times. His blog is, http://www.realtown.com/gwmantor/blog.

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Michael Lea came to San Diego State University’s newly established Corky McMillin Center for Real Estate with a résumé full of casualties he witnessed firsthand: Imperial Savings, a San Diego thrift that went belly-up in the ’80s; Freddie Mac, the secondary lender where he served as chief economist long before it went into receivership; and Countrywide Financial, taken over by Bank of America … View full post on Yahoo! News Search Results for real estate

RISMEDIA, February 8, 2010—(MCT)—On his road to homeownership, Scott Leibfried has learned one thing: Expect the unexpected. He and his wife had an offer accepted on a home, only to later find that foreclosure proceedings were about to begin on it. That’s after they considered another home that was aesthetically pleasing but had major issues that came to light upon closer inspection.

In the meantime, they’re trying to estimate the money they will need for closing costs and any future expenses, hoping they won’t eat too much into their financial cushion.

“There are always going to be things that come up,” Leibfried said. That statement could describe homeownership in general. Allan Glass, a Los Angeles-based real estate agent who works with the couple, says the biggest mistake buyers make is underestimating the costs of buying a house and maintaining it over time.

Homeowners should have 1% of the purchase price of their home in savings for improvements and surprise expenses, he said. “That is the absolute minimum. It’s better to have 2-3% socked away somewhere.” The cushion often isn’t easy for first-time home buyers to have—especially after they’ve scrimped and saved for their down payment. And there are many first-time buyers in the market now, due to affordable prices, low interest rates and the federal tax credit.

“Some people walk away from closing with a nickel and a stick of gum, and that’s probably not going to be a good idea,” says Dale Robyn Siegel, president of Circle Mortgage Group, in Harrison, N.Y. She recommends having at least six months of mortgage payments in the bank after closing on a house “especially now, with such an iffy job market.”

To get a better handle on where the house stands, buyers should attend a home inspection and ask questions, says Bill Richardson, a home inspector in New Mexico and president of the American Society of Home Inspectors. That way, they can get tips and recommendations from the inspector as he or she is working. They should keep the inspection report handy for reference. For existing homes, an inspector will estimate the age of major components, giving the home buyer a sense of when they will need replacing. A furnace, for example, often lasts between 12 and 15 years; a water heater from 10 to 12 years.

Once you know what you’re dealing with—and perhaps what the sellers will repair or pay for before the sale is final—look five years out and make a list of big-ticket home issues that you’ll need to address, says Kelly Rogers, director of education for the Consumer Credit Counseling Service of Orange County, based in Santa Ana, Calif. Make a timeline for those expenses.

And don’t count on borrowing money needed for repairs. “The banks have really tightened up, so it’s harder and harder to get a home-equity line of credit,” Richardson said. “If you don’t budget for repairs, you will never get the repairs done when you need it.”

When small problems pop up, it’s important to address them before they become large-scale projects. Consider the tile in the bathroom: As soon as there’s deterioration or cracking, address it, Richardson said. “If the toilet is loose to the floor, it doesn’t seem like a big deal, but it can leak and rot the floor,” he said. “What could be a $15 repair could end up being a $700 repair or more.” Richardson suggests planning for a $500 to $1,000 annual general maintenance budget for most starter homes, which would cover everything from painting a room to caulking the bathtub. “Buying a home is one of the largest investments you’re going to make,” he said, “If it’s done wisely and with lots of thought, it can be a huge asset. If it’s not well thought out, it can become a huge burden to you.”

Estimating monthly expenses can often trip up new home buyers as well. As renters, people are accustomed to paying rent and likely utilities—phone, Internet service and cable. As a homeowner, however, there will be other utility costs such as water, sewer and trash collection. Then there are property taxes, homeowner’s insurance and possible homeowner’s association dues. There also can be expenses unique to your location. In Los Angeles, for example, water restrictions are such that if you go over a certain cap of usage, you face a penalty. You also can have miscellaneous expenses such as snow removal and lawn service, if you don’t plan on doing them yourself, Siegel said.

(c) 2009, MarketWatch.com Inc.

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Professionals connected to commercial real estate want to know two things right now, says the chief economist at Texas A&M:”Are my buildings going to fill up?” and “What’s happening to the value of my buildings?”Mark Dotzour of A&M’s Real Estate Research Center should know. By his count, in the past dozen years he has made 920 presentations like the one he’ll give Feb. 17 to the 2010 Commercial … View full post on Yahoo! News Search Results for real estate

RISMEDIA, February 3, 2010—(MCT)—This may be the tax season where even die-hard do-it-yourselfers break down and hire a preparer or at the very least invest in some tax software.

Taxes are more complicated than usual with all the new deductions and credits created last year to stimulate the economy. And in some instances, Congress went back to revise and expand the tax breaks. The popular home buyer credit, for instance, is on its third version.

“You can’t just sit down with last year’s return and make sure you fill in the same lines and think you got everything coming to you,” says Harris Abrams, a senior tax analyst with Thomson Reuter’s Tax & Accounting.

Fortunately, many of the new tax breaks are credits, which are better than a deduction because they reduce your bottom-line tax bill dollar-for-dollar. So before you fill out your return, here’s a refresher on some of the key tax breaks this season:

Donations to Haiti
If you made a charitable donation for earthquake relief in Haiti, you can deduct it on your 2009 itemized return instead of waiting until next year. This applies to cash gifts—not clothes or other property—made by check, text message or credit cards before March 1, 2010. As usual, donations must go to qualified charities, and you’ll need a receipt. For donations made via text message, a phone bill with the name of the charity and details of the gift will suffice.

Making work pay credit
This credit is worth up to $400 a year for singles and $800 for joint filers within certain income limits. It was designed to put money quickly into consumers’ hands by having employers reduce the amount of taxes withheld in paychecks.

Even though you got some or all of the money last year, you will need to fill out the new Schedule M if filing a Form 1040 or 1040A to officially claim the credit.

That said, more than 15 million taxpayers are in for an ugly surprise, according to an estimate by the Treasury Inspector General for Tax Administration. Their refunds may be reduced or they might owe more in taxes because their employers wound up taking out too little for taxes. This can happen to workers with multiple jobs, two-income couples or dependents with wages, says Melissa Labant, technical manager for the American Institute of Certified Public Accountants. Something similar can happen to workers with multiple employers reducing withholdings, Labant says. And dependents don’t qualify for the credit, so they may have to make up for a shortfall in tax withholdings, she says. The Making Work Pay credit is in effect for this year, too. If you didn’t have enough taxes withheld last year, adjust your W-4 now so your employer increases your tax withholdings.

Home buyer credit
Originally, the $8,000 credit was only for first-time home buyers. Now, long-time homeowners can get a credit of up to $6,500 if they bought a new principal residence after Nov. 6 and lived in their old homes for at least five years in a row in the past eight years. The income limits for eligibility also were raised late last year and the deadline extended. You now must have a house under contract by the end of April, and close the deal by the end of June, and you can claim the credit on your 2009 return. But you won’t be able to file a return electronically when claiming the credit. Blame all the fraudulent home buyer claims last year—that cost taxpayers millions of dollars. To fight fraud, the IRS requires that you file a paper return and submit proof that you bought a house. If you’re claiming the $6,500 credit, you’ll need to document that you meet the five-year residency requirement. The IRS will start processing these paper returns in mid-February, and the earliest refunds will go out toward the end of March. If you don’t provide full and accurate information, count on your refund taking longer.

Car sales tax deduction
If you bought a new car, motorcycle or mobile home between Feb. 17 and the end of 2009, you may be able to deduct the sales tax paid on the first $49,500 of the purchase price. You don’t have to itemize to get this deduction. The tax break starts phasing out once income hits $125,000 for singles and $250,000 for joint filers.

Energy credits
Congress expanded these for energy-conscious homeowners. For 2009 and this year, claim a credit worth up to 30% of the cost—not to exceed $1,500 over the two years—of adding energy-efficient windows, doors, heaters, air conditioners, water heaters and heating systems. Add a solar water heater, wind turbine, geothermal heat pump, solar electric systems, and the credit is worth 30% of the cost with no dollar limit.

Help for the unemployed
For 2009 only, you won’t have to pay income taxes on the first $2,400 of unemployment benefits received. Also worth noting is the recent expansion of the COBRA subsidy, although this isn’t a tax break. Uncle Sam has been paying 65% of the health insurance premiums for unemployed workers buying coverage under COBRA, the federal law that allows ex-employees to remain on an old employer’s health plan for up to 18 months. This subsidy was recently expanded by six months so unemployed workers can receive assistance for a total of 15 months. It applies to workers who lost their jobs from Sept. 1, 2008, through the end of next month.

Education credit
The $2,500 American Opportunity Tax Credit for higher education improves upon the old Hope Scholarship credit. “For most people, it’s going to be the credit of choice in the education area,” says Mark Luscombe, principal tax analyst with CCH, publisher of tax information. The Opportunity credit covers the first $2,000 spent on tuition, fees, books and required materials, and 25% of the next $2,000 in expenses. You can claim it in any of the first four years of college. And 40% of the credit is refundable, so if you don’t owe any taxes you can get as much as $1,000 back in a refund. The credit begins to disappear once income reaches $80,000 for singles and $160,000 for joint filers.

Boost your savings
For the first time, you will be able to direct the IRS to use all or part of your refund to buy U.S. Savings Bonds. You can buy up to $5,000 worth of Series I bonds designed as a hedge against inflation. The bonds, sold in multiples of $50, will be mailed to you later. To buy the bonds or have the IRS split your refund among different bank accounts, fill out Form 8888.

(c) 2010, The Baltimore Sun.

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Click on the attached chart to see a summary of the 2009 real-estate market in the Seattle area, based on data from the Northwest Multiple Listing Service and research by Seattle Times business reporter Eric Pryne and graphic by Seattle Times artist Gabriel Campanario. View full post on Yahoo! News Search Results for real estate

RISMEDIA, February 6, 2010—(MCT)—If you have a good job and good credit, the next few months might be a good time to go house hunting. Fence-sitters take the risk that Congress may let a rich tax credit expire, and that interest rates may rise. Buyers and sellers should consider the following factors as they consider jumping into the housing market.

-Mortgage rates are blissfully low, and that may not last. The rate on a 30-year mortgage averaged 5% last week, according to Freddie Mac. Rates are low in part because the Federal Reserve has been buying up about $3 trillion in mortgage-backed securities and mortgage agency debt. The aim is to hold down interest rates and keep mortgages available. But the Fed is slowly removing that financial crutch as the economy improves. It has no plans to buy any more past March 30, 2010. The likely result is an uptick in rates. Meanwhile, the recovering economy by itself should raise rates as the year goes on. Economists at the Mortgage Bankers Association expect to see a 6.1% rate by year end. Such a rise would add about $104 to the monthly payment on a $150,000 mortgage

-The home buyer tax credit expires on April 30, 2010 and no one knows if Congress will renew it a second time. Expect a clash between the real estate lobby and fiscal conservatives worried about the $1.35 trillion federal deficit. To qualify for the credit, you must sign a purchase contract by April 30, 2010 and close by July 1, 2010. First-time buyers get up to $8,000. “First-time” is defined as someone who hasn’t owned a home in three years. Move-up buyers get up to $6,500 when they purchase a new primary residence. To get the credit, you have to have lived in the old home for at least five out of the last eight years. The credits start phasing out at $125,000 in adjusted gross income for singles and $225,000 for joint filers.

-There are indications that home prices are near a bottom in some areas and may actually be rising a bit. That statement is dicey, because conditions vary by neighborhood and the data can be tricky.

Things might look different if you’re a seller though. Do you want to put your house on the market near the bottom of a price cycle? Homeowners who have a choice in the matter—those who can still pay their mortgages—are largely saying no. Inventories of homes for sale are down about 10% from this time last year, and 30% from the mid-decade peak of the housing boom, says Kevin Cottrell, chief economist at Kelsey Cottrell Realty Group. On the other hand, if you’re planning to move up to something grander, you might find a bigger bargain when you buy. And that $6,500 tax credit could swing a close decision.

Home sales peaked in some areas October and November, as buyers raced the expiration date of the original first-time home buyer’s credit. Congress later extended and expanded it. That rush satisfied some pent-up demand, but real estate agents are hoping for another rush around April. “People will wait to the very last second,” said Mike Travaglini, a vice president of Coldwell Banker Gundaker’s office in south St. Louis County.

Mortgage lenders have been tightening credit standards, which means fewer eligible buyers, says John Frank, president of Paramount Mortgage in Creve Coeur. Mo. “It’s getting tighter and tighter,” he said.

Lenders are insisting on credit scores of 640 to 660 for loans sold to Fannie Mae, Freddie Mac and 620 for FHA guaranteed loans. Those standards are higher than the federal agencies themselves insist on. FHA—which guarantees loans for people with low down-payments—has been raising its own insurance charges to borrowers and demanding higher premiums from people with poor credit scores.

(c) 2010, St. Louis Post-Dispatch.

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Looking at the real estate listings here is like stepping back in time to the unreal, giddy world of three years agoand that has ominous implications for the rest of us. View full post on Yahoo! News Search Results for real estate

RISMEDIA, February 5, 2010—(MCT)—Baby boomer buyers fueled a big run-up in U.S. home construction and sales in the 1970s and 1980s. Now beleaguered homebuilders say they’re hoping aging boomers, who are just entering retirement age, will once again give them robust housing sales.

“We believe this segment of the market is going to lead the housing industry toward recovery as the market turns around,” said Sharon Dworkin Bell, a senior staff vice president of the National Association of Home Builders.

The 55-plus home buyer is being targeted by builders all over the country and was a focus of the industry’s annual conference recently in Las Vegas. The numbers are certainly there. By 2014, a quarter of the U.S. population—more than 85 million people—will be 55 or older. “The number of people in that age group is increasing, and there is a lot of promise out there,” builders’ association economist David Crowe said recently.

While more than 60% of 55-plus homeowners say they want to keep their current homes, the rest say they are interested in alternatives. Builders anticipate that buyers in this age group will account for almost 270,000 house purchases by next year. Even in the down market, some 55-plus buyers move and downsize.

“The good news is they usually have a lot of home equity and can get a mortgage,” Crowe said. “The bad news is they have to sell a house.” That worked out for Hunter and Judy Whitney, who sold their home in Pennsylvania just before the housing market took a downturn. The couple, both in their 60s, moved into a new house in Del Webb’s Frisco Lakes development in Frisco, Texas, two years ago. “When we decided to retire and relocate, we decided on the Dallas area,” Hunter said. “Two of our three kids and six of our eight grandkids live in the area.”

Moving closer to family is one of the top reasons 55-plus buyers move. The Whitney’s were wowed by the age-restricted Frisco development. “We looked at a lot of places—the new construction,” he said. “This is more than buying a house. You end up with a sense of community.” “We are one of the few places in North Texas still selling a ton of homes,” said Mike Sander, divisional sales manager with Del Webb owner Pulte Homes. “We get a lot of out-of-state residents—probably 30-40%. Most of the buyers are in their early 60s, Sander said. “About 30-40% of our residents still work in some fashion,” he said. “But they want to downsize and get into a nice neighborhood.”

Former Plano, Texas, resident Jim Boyd and his wife downsized twice before moving into a 1,505-square-foot Frisco Lakes home in 2006. “It was at the time in our lives we had begun to consider something other than a traditional single-family dwelling,” said Boyd. “We liked the quality and variety of the community.”

More than 75% of 55-plus buyers say they want a home in the suburbs. But that doesn’t mean they want a big house. Surveys show older buyers are more frugal about housing needs. “The 55-plus buyers are not interested in growing their house size,” Crowe said. “They are asking for about a 1,900-square-foot home” on average. “They’re worried about energy costs.” Most older homebuyers surveyed are holding down their cost expectations, industry research shows. “When we asked the consumer, ‘What are you willing to pay?’ they said $190,000,” Crowe said. “And when we asked the builders, ‘What are you building for this market?’ they said $287,000. “Obviously, there’s a real big problem there.”

Indeed, builders say they are in a quandary over what kind of housing to produce for 55-plus buyers. “The baby boomers are absolutely unpredictable,” said Andy White, a South Carolina developer. “There is no model to say what we ought to build. If a consultant comes to you and says they know what to build, they are lying,” said White, whose company has been building developments targeted to older adults since the 1980s.

White said there are many risks for builders who might design the wrong product in the wrong place. “Let’s give it a few years and see what happens when the leading edge of the baby boomers reaches 70 years old, which is in 2016,” he said.

Builders who aim at older buyers agree that it’s a tougher sell with the recessions and housing market crash. “Don’t assume at all that everyone over 55 is looking for a luxury purchase or has unlimited funds to spend,” said Atlanta builder Jim Chapman. “Their existing homes are worth less,” he said. “Some of them are afraid to put their homes on the market.” Many of these buyers are coming from nearby. “They still want to go to the same shopping centers and see their friends,” Chapman said. “The others are moving from out of the area to be near their children.”

Builders who market age-restricted projects to older adults say they’ve seen an increase in demand for speculative houses. “They are kind of flying off the shelf to people who have sold a home and are ready to do business,” said Chris Harrison of Arizona-based Robson Communities. “We are seeing more activity,” Harrison said. “Texas for us did not have the big run-up in home pricing seen in other areas of the country.”

(c) 2010, The Dallas Morning News.

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Dubai’s battered real estate market got more bad news Wednesday when a leading property company said it saw little hope soon of a rebound after office leasing rates plunged more than half in a year. View full post on Yahoo! News Search Results for real estate