Shari Olefson's blog

Almost 5 million Americans lost their homes to short sales and foreclosure over the past few years. But now that time has passed many are hoping to be able to own their own home again soon.

Home prices have surged over the past two years. But those price increases seem to be slowing down. And new developments like tougher mortgage rules, growing inventory and rising interest rates may mean that – if you’ve been thinking about selling a home – now’s the time to do it.

Interest rates began rising toward the end of last year and are expected to continuing going up incrementally throughout 2015. Here’s a primer for anyone wondering what they can and should do about rising interest rates.

Why do interest rates go up or down? Interest rates are essentially the price of money or, conversely if you’re talking about your investments, how much you get paid to invest. Without it, people would not be willing to lend or even save their cash, both of which require deferring the opportunity to spend in the present.

Low home builder sentiment is not about cold winter weather. Home builders are doing the math.

Existing Home Sales numbers for the month of January will be released this AM. We can expect US home sales to be down, due in part to seasonal cold winter weather, but more significantly due to cold hard facts.

Wall Street now owns over 200,000 American homes and is raising money to buy more. The impact on neighborhoods, local economies, the future of American homeownership rates and value of your own home could be significant.

Almost 4 million of us have active HAMP and other types of mortgage modifications. But what many don’t realize is that the reduced payments those modifications gave us, don’t last forever. In fact if you got your modification in 2009, you mortgage payment may be going back up again very soon.

With the caveat that I’m not necessarily saying it’s the best option (for a variety of reasons), but unless authorities go after the heads of huge financial institutions, claw back money ill earned, impose realistic criminal penalties, very little of what caused the real estate and banking crises is ever going to change. The culture, the most powerful of influencers, flows from the head down and in this instance is long and deep entrenched 

The recent $13 billon settlement between JP Morgan chase and the Justice Department is a case in point.  Just looking at where that organization is now verses before the crises tells you that their risky behavior was well worth this "punishment."  There has been no real “teaching moment” here.   Incentives and culture (both corporate and broader societal) have been veering off the proverbial tracks for decades.  A few years or rogue repercussions will not change that

When the NEW HOME CONSTRUCTION numbers come out next week will be discussing far more than how many house are being built. Depressed construction activity is expected to continue weighing down both housing as a whole AND the larger economy. In a normal environment, we see 1.7-1.8 million new home build each year. We’re not even close to that rate and won’t be for some time. Construction employment is 1-2 million below trend levels. Consequently, the unemployment rate remains elevated and economic growth lackluster.

Last year Congress passed the Biggert Waters Flood Insurance Reform Act of 2012 designed to make up for the federal government’s financial losses, including from Hurricanes Sandy and Katrina. The problem is this may wreak havoc on home values. 

What exactly is the Biggert Waters Act? 

The federal government is behind all flood insurance. It covers 5.6 million homes in 20,000 communities. Biggert Waters was passed because the flood program was operating at a loss.  The Flood program was set to end in 2012. Congress agreed to extend it for five years but because of the wrestling in DC over a balanced budget the compromise changes the National Flood Insurance Program. You see, for years the federal flood insurance program has been charging premiums that are far below what should be charged in order to reflect actual flood risks and losses. For example, some homeowners have been paying only about 35% of what they should and don’t even know it. That’s because the federal government has been subsidizing the difference. So at this point the flood program owes the US Treasury about $25 billion.

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