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Death Spiral Map

Death Spiral States: Forbes Says 11 States are in a Downward Spiral with More Takers than Makers

Eleven states made it on the list of Forbes Death Spiral. What is does death spiral mean? It means that the state can look forward to a rising tax burden, deteriorating state finances and an exodus of employers.

Those eleven death spiral states are California, New York, Illinois, Ohio, Kentucky, South Carolina, Alabama, Mississippi, New Mexico, Maine and Hawaii.

What’s driving the Death Spiral in 11 states?

“There are a lot of economic factors that are built into the death spiral,” says William Baldwin of Forbes. “The essential one, is whether the state has more takers than makers. A taker is someone who draws money from the government, as an employee, pensioner or welfare recipient. A maker is someone gainfully employed in the private sector. Let us give those takers the benefit of our sympathy and assume that every single one of them is a deserving soul. This person is either genuinely needy or a dedicated public servant or the recipient of a well-earned pension.”

The states and their taker/maker ratio, with the worst of the “death spiral” states was New Mexico, with 1.53 takers for every 1 maker.

Mississippi 1.49, California 1.39, Alabama 1.10, Maine 1.07, New York 1.07, South Carolina 1.06, Kentucky 1.05, Illinois 1.03, Hawaii 1.02, and Ohio 1.00.

If you live in one of these death spiral states, Forbes says to rent instead of buy a house because property taxes will inevitably rise. William Baldwin of Forbes also says to sell municipal bonds you have in those states because they’re more likely to default and restructure those bonds so that they pay back less.

The second factor that goes into whether or not a state is in a death spiral is a “scorecard of state credit-worthiness done by Conning & Co., a money manager known for its measures of risk in insurance company portfolios,” says Baldwin. “Conning’s analysis focuses more on dollars than body counts. Its formula downgrades states for large debts, an uncompetitive business climate, weak home prices and bad trends in employment.”

Speaker of the South Carolina House Bobby Harrell, R-Charleston, says the article from Forbes is wrong, especially in calling members of the military, public employees and retirees “takers”.

“We have military installations all over South Carolina. Those folks are government employees, but they are certainly the kind of government employees that we want, because we care passionately about the military in South Carolina,” Harrell says. “We have retirees moving here from all over the country, so many that we’ve had to add a seventh Congressional district. We have, according to a tax group who studied this in Washington not too long ago, we have the lowest taxes in the country.”

Do You Live In A Death Spiral State?

Death Spiral States

New Mexico is at the bottom of yet another list, and this one has a grim-sounding name. Forbes Magazine calls us a “death spiral” state.
Forbes lists our state as one of eleven states whose economies are at high risk of going into a tailspin – a death spiral.

Forbes Releases List Of 11 “Death Spiral” States

A writer at Forbes Magazine has identified a phenomenon called the “death spiral states.” The category includes 11 states where private sector workers are outnumbered by people who are dependent on the government. That number would include state workers, and people who are receiving welfare or pension.

What’s Driving “Death Spiral” in 11 States?

Posted in Featured, Finance and Mortgage1 Comment

Peter Chadwick in court

Quee Chadwick Killed By Real Estate Investor Peter Chadwick?

Peter Chadwick in court

It isn’t confirmed without a shadow of a doubt that Peter Chadwick was the killer of Quee Chadwick but police have confirmed Quee Chadwick is dead. The Newport Beach Police Department was quoted telling CBS Los Angeles, “We responded out to the home and found evidence of a possible struggle or foul play. The investigation has revealed that Quee Chadwick is definitely a victim of homicide and although her body has not been located, we are currently searching the areas we believe Mr. Chadwick may have traveled.”

Prosecuters on the case against the Real Estate investor seemed to be pretty certain there was a murder. The Daily Pilot had interviewed one of the Chadwick’s neighbors who said that Quee Chadwick could be heard screaming. The screaming coming from the Chadwick’s house came around 6:30am or 7am Monday or Tuesday. Regardless the neighbor, Yulianna Nikulina said, “Peter [was] always nice, nothing wrong, nothing special. I can only tell you good things about this couple.”

The drama started to unfold when another neighbor noticed the Chadwick’s kids were waiting for a long time at the bus stop. The neighbor that saw the kids waiting called police and alerted them. It was at this point that police went to the multi-million dollar house and noticed there had been a struggle and possible signs of a murder scene.

When Peter Chadwick was attempted to be located he was nowhere to be found. Quee Chadwick was also missing at the scene and anywhere else police searched. By Thursday in the morning police in San Diego got a break in the case when Peter Chadwick called them for a reason that police will not reveal. Mr. Chadwick was soon located on a highway that wasn’t far from the Tijuana border.

Today Peter Chadwick faced a judge and pleaded not guilty. Mr. Chadwick was on a $1.5 million dollar bond and still remains in jail. It has been reported that Mr. Chadwick is charged with a felony count of murder for financial gain. The details of the case will most likely soon unfold as Mr. Chadwick faces a trial.

Posted in Commercial, Featured, Investing0 Comments

Builder Permits for Homes & Apartments Up 4% in May 2012

If you’re looking for a bright side to the real estate market some uplifting numbers aren’t exactly hiding with home builders. There is definitely some confidence going on in the one-family home market as home builders have requested more permits than they have in over 3 years.

Directly from the U.S. Department of Housing and Urban Development report released on Tuesday June 19th, 2012:

Building Permit Growth

Single-family authorizations in May were at a rate of 494,000; this is 4.0 percent (±0.8%) above the revised April figure of 475,000. Authorizations of units in buildings with five units or more were at a rate of 266,000 in May.

Housing Starts Growth

Single-family housing starts in May were at a rate of 516,000; this is 3.2 percent (±12.5%)* above the revised April figure of 500,000. The May rate for units in buildings with five units or more was 179,000.

It was reported by the LA Times that multi-family housing has had trouble growing at the same pace. Last month the rate of multi-family housing saw a major decline of 21.3% and had an effect on overall numbers and optimism. The 3.2% percent increased as quoted above on single-family homes however is now in the third straight increase and looks to be stable in it’s growth.

There are some signs of recovery in the overall numbers and home builder stocks saw some increases today. The end of market numbers had some gains taken away but still are showing signs of support.

DR Horton rose $.22 or 1.3 percent, to $16.72.
Hovnanian Enterprises Inc. fell $.03 or 1.1 percent, to $2.60.
Lennar Corp. rose $.06 or .2 percent, to $27.03.
Pulte Homes Inc. rose $.28 or 3.0 percent, to $9.61.

New Housing Numbers a Mixed Bag

Permit gains offset housing start losses in May’s report, which suggests the housing recovery could be on track.

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United States Housing Market Enjoys a Fruitful Spring

The spring season has been a positive one for the residential real estate market. With record-low mortgage rates, and bargain prices on most properties, buying a home is starting to look like a more attractive, and incredibly affordable option for investors, couples, and families.

In fact, many economists believe that the current spring season will likely be the strongest that the market has seen since crashing five to six years ago. An improving housing market is very good news for the economy as a whole. As home sales increase, sales and profits in other industries will as well. With the residential property market in its most affordable state ever, it should come as no surprise that first-time homebuyers have been making a serious push to enter the market.

Home sales are up by more than ten percent in many areas of the country, and are expected to significantly outpace expectations for the remainder of the year. Many realtors are reporting that each home listed for sale is receiving multiple bids, which are driving the prices upward. For the first time in years, demand is exceeding supply.

While the market is certainly showing promising signs of health, the market is still far off where it was during the peak of the housing bubble. Home prices are still less than half of what they were during those peak months.

Even though the market still hasn’t reached its peak state, there is much to be excited about regarding its health. The fact that inventory levels are recovering across the nation is a good indication that the improvement will continue for months to come.

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Home Prices Increased Slightly Over The Past Two Months

The housing market may be in recovery mode after all. Reports indicate that residential real estate prices have increased slightly nationwide over the last two months in the United States. Even with foreclosures and other distressed home sales factored in, prices have shown small steady gains.

The residential property market rose just over one percent year-over-year in April. Prices also experienced a similar increase year-over-year during the month of March.

While not all areas of the country have shown improvement, many are starting to post very slight gains. Other areas, such as Miami, have been posting strong gains for the last few months.

Even New York’s housing market is starting to show improvement. While the city has always performed well, local suburbs are now starting to show positive growth for the first time in quite a while.

While home prices are starting to increase slightly, buying a home still remains the more affordable option for those looking for housing. With rock-bottom prices, and record-low mortgage rates, many economists and real estate experts are considering the current market ideal for buying. Couple those factors with the fact that rent prices continue to rise throughout the country, and buying a home continues to seem like an attractive option.

With rents on the rise, many renters are starting to gravitate more towards the idea of homeownership, which may, in fact, cause the market to recover even faster than initially planned. Many economists believe that the residential real estate market will see only slight growth throughout this year. However, as prices continue to increase year-over-year, the growth this year may be larger than expected.

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Rockford Achieves Real Estate Milestone

The city of Rockford hit a residential real estate milestone in May, as it enjoyed its twelfth straight month of sales increases. It is the first time since records have been kept that the city has had an increase in sales for twelve months in a row. The milestone comes during a time in which real estate markets in many areas of the United States are struggling to get back on their feet.

In addition to the increase in sales, housing prices have also experienced strong gains in the past few months. The average home price is now up to nearly $105,000.

Sales will likely continue to rise in the near future provided that there is enough sales inventory to provide for any kind of increases. Sales inventory is down in many areas of the country, including Rockford. The record-low mortgage rates and still very affordable prices have led investors and first-time homebuyers to enter the market in droves over the past few months.

Rockford’s success has been duplicated in other areas of the country, particularly in Miami and various cities in Arizona. Other cities in the United States have not shared the same success just yet. However, economists believe that the residential real estate market has already hit its bottom, and that it will, on average, start to see small sales and pricing increases for the rest of the year.

Significant recovery will not likely be seen until 2013 or 2014, though any kind of gain will be welcomed after the last five years of decline.

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Housing Double-Dip Possible in the United States?

Despite the recent positive outlook given to the United States, the latest data indicates that home prices once again decreased nationwide. The most recent decrease brought housing prices to levels that hadn’t been seen in the last decade.

Despite the disheartening news of yet another decline, some economists are still relatively upbeat about the market. These economists are citing the fact that the most recent decline was not nearly as significant as those that most recently came before it.

Those economists believe that the market is, indeed, likely to hit rock bottom in the coming months, and that recovery will begin soon after that moment. Despite that optimism, many have become disenchanted with the idea of recovery, as it has lost any momentum it had gained in the last month or two. Europe’s unstable situation also has made investors worried enough to keep a cautious eye on the potential impact of the situation.

Cities such as Atlanta, Chicago and New York all hit new lows during the latest quarterly report. Only three cities in total posted declines in home values from one year ago: Atlanta, Detroit, and Chicago. On the other hand, the following cities posted gains over last year’s numbers: Phoenix, Miami, Detroit, Dallas, Charlotte, and Denver.

With some cities experiencing strong gains, it is becoming evident that the market is recovering in patches. In certain areas, the market is rapidly regaining strength. On the other hand, it is still struggling to stay afloat in other areas. The areas that are performing well in the current market are those that were hit the hardest during the housing crisis.

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United States Still Struggling with Underwater Mortgages

Although all signs are pointing to growth in the United States residential real estate market, nearly a third of all homeowners are still faced with underwater mortgages. That means that roughly sixteen million people owe more on their home than it is actually worth.

The high number of underwater mortgages continues to be a major factor in preventing any kind of major growth in the market, despite record affordability. Many potential homeowners are hesitant to enter the market after seeing the struggle of those stuck with a loan that is tens of thousands more than the value of their home.

Some economists and residential real estate market analysts, however, believe that the current number of homes listed as underwater is deceivingly high. They believe that the overall percentage will soon drop, as it included those homes that will finally be processed as foreclosures after extensive delays.

Surprisingly, ninety percent of homeowners with underwater mortgages make on-time payments, and have no intentions of foreclosing on their homes. The remaining ten percent have been late on their payments by as many as ninety days.

While some homeowners are stuck with underwater mortgages, investors are now eyeing the market again in hopes of flipping homes for profit. With mortgage rates at all-time lows, and housing prices in many states having just hit what many believe to be the bottom, the market for buying and selling homes looks to be regaining strength. Many investors, however, are opting to rent homes that they buy with the intentions of selling the home for larger profit down the road.

Posted in Finance and Mortgage0 Comments

Housing Market Has Yet to Reach Bottom Claims Regulator

Economists and housing market experts have claimed for the last month or two that the residential real estate market has hit its bottom, and is starting to stabilize. According to one of the deputy comptrollers at the Office of the Comptroller of the Currency, many regional markets have not actually bottomed out, as many believe.

While the growth in some regional markets has offset the declines in others, the comptroller believes that one cannot say that the national housing market has hit its bottom until that is the case for all regional sectors. One of the biggest issues being faced by regional markets is that there is a glut of foreclosures that are being handled at a snail pace.

In addition to the slow handling of foreclosures, overall residential real estate growth has been stunted by the incredibly stringent lending requirements for mortgage loans. While mortgage loans are at their lowest level in history, many potential homeowners across the country cannot take advantage due to the tough lending standards that continue to exist.

There is also fear that the poor investing decisions by the banks may take its toll on the housing recovery in the United States. JPMorgan Chase recently experienced a two billion dollar loss due to faulty and criminally poor investments.

While the strong performing housing markets essentially negate those regions that are performing poorly, this regulator believes that it would not be safe to say that the market has hit its bottom until it is clear that prices in each region have stabilized.

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Economists Have Positive Yet Cautious Outlook on Job and Housing Market

According to the most recent surveys regarding the job and residential real estate markets, economists are still very much upbeat about their growth and overall health. With that being said, however, they are also continuing to urge people to be cautious in their investment activities just in case the nation faces a worst-case scenario.

The majority of economists believe that the market will experience a slight gain for the rest of 2012. The real growth, they believe, will start in 2013. Despite the expected growth, the figures will still be below where they have been historically.

Housing starts are expected to increase by roughly eighteen percent this year, and another twenty percent in 2013. The residential real estate market will experience a strong portion of the market gains. Most of those buying into the real estate market at this point are investors looking to rent out, and then eventually sell the property.

One factor that could expedite growth in the housing market is the easing of lending restrictions of behalf of the banks. While mortgage rates for fixed-rate loans are the lowest that they have ever been, the majority of new homebuyers are unable to secure the financing they need to buy a home.

As the unemployment rate continues to drop, lending restrictions should be lifted. Banks will be less likely to view lenders as risks if the job market as a whole is more stable than it is at the current point in time. Economists believe that the unemployment rate will reach an adequate level by the end of 2013.

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