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It’s not a fiscal cliff—it’s an austerity crisis. | Katonah Realtor

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Reading the headlines this week, you might get the impression that the country was hurtling towards a huge deficit catastrophe on Dec. 31. From the front page of Thursday’s New York Times (“Back to Work: Obama Greeted by Looming Fiscal Crisis”) to today’s Wall Street Journal (“Pressure Rises on Fiscal Crisis”), the rhetoric suggests that the U.S. is facing a crisis akin to problems that have engulfed Europe. (A Yahoo headline from 2011: “The U.S. Fiscal Crisis: Just Like Greece, With One Exception.”)

In fact, the problem with the fiscal cliff is precisely the opposite: The tax hikes and automatic spending cuts that would kick in after Dec 31 would sharply curb our federal deficit through enacting major, sudden austerity measures that would save the U.S. government about $720 billion in 2013 alone, according to the Bank of America’s estimates, which would be about 5.1 percent of GDP.

“If we let all of those changes [happen], there would be a sharp reduction in the budget deficit—in decline in debt to GDP, falling deficits as a share of GDP,” says Chad Stone, chief economist at the Center for Budget and Policy Priorities. “It’s all a dream for people who want really sharp austerity.”

So the reason that the fiscal cliff could push us into another recession in 2013 is because it enacts too much deficit reduction upfront, not too little. By contrast, the reason that Europe became mired in a fiscal crisis in the first place is because profligate nations haven’t done enough to curb their spending and raise revenue to their more fiscally responsible neighbors’ satisfaction.

The folks who want to avoid the fiscal cliff for fear of its impact on a still-faltering economy are effectively arguing that now isn’t the time to enact austerity measures: Instead of taking money out of government programs and people’s paychecks, the government should be putting that money into the economy. And certain parts of the fiscal cliff bring more bang for the buck than others, CBBP’s Stone points out: Payroll tax cuts and unemployment benefits are more effective way to boost economic growth in the short-term than the Bush tax cuts for upper-income Americans, according to a new report from the Congressional Budget Office.

So if it’s immediate austerity that we want to avoid, and stimulus that should take its place, why is there so much talk about the need for major deficit reduction as a solution to the fiscal cliff? It’s because lawmakers decided months and years ago that they wanted this austerity crisis to happen as a way of creating leverage for more sensible, long-term deficit reduction measures.

Despite all their hand-wringing over the fiscal cliff, it was Congress and the White House that decided in the summer of 2011 that we would raise the debt ceiling only on the condition of reducing the deficit by over $2 trillion, with some cuts upfront and the rest attached to the supercommittee with a sequester trigger. (As President Obama reminded us in his speech today, “Last year, we cut more than $1 trillion in spending that we couldn’t afford.”) It’s also because lawmakers decided nearly a decade ago that the Bush tax cuts would be phased out in 2010, which Obama and Congress then extended for another two years because of the weakness of the economy.

The essential dilemma, as both the U.S. and European countries like Greece have begun to discover, is that weak economies don’t respond well to immediate austerity measures. The deficit hawks arguing for a bipartisan “grand bargain” or similarly ambitious deficit-reduction plan want to replace the kind of austerity that we’re facing now with austerity that takes effect further down the road, not undo it altogether. Others simply want to put austerity off for at least a year by extending all the tax cuts and suspending the sequester.

All of these solutions affirm one underlying truth: The reason the fiscal cliff is so scary is that it’s an austerity crisis.

via washingtonpost.com

Quick tip: Top 5 social media faux pas for real estate pros | Chappaqua NY Homes

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When it comes to social media there are a lot of articles telling real estate professionals what they need to do, but it is just as important to know what not to do.

Just like in any social situation, there are some important social norms you need to know and a few faux pas’ you need to avoid.

Here are my top 5 social media faux pas you need to avoid:

  1. Don’t outsource your social media. Many real estate professionals want to hire someone to “do it for them.” You wouldn’t outsource taking your best client to dinner would you? Then don’t outsource one of the biggest opportunities you have to connect and build relationships with past, present and future clients.
  2. Don’t automate it. Turn off those automatic notifications, they are considered spammy and no one wants to look spammy – especially as a first impression!
  3. Don’t sync your Facebook to your Twitter and vice versa. Many real estate pros do this in an effort to save time. Don’t do this – it looks lazy. Plus, the language and conversation on Facebook and Twitter is very different. You can certainly post the same type of content to each channel, but do so separately and make sure to use the right lingo for each network.
  4. Don’t just promote your listings. There is nothing worse than only seeing a feed of listings on a real estate professionals Facebook or Twitter feed. To talk about your listings on social media – highlight an amazing photo using Instagram, or take a quick 15 second video of the home or homeowner using an app like Tout, Ptch or Videolicious. Social media is the place to get creative when talking about real estate – not the “same old, same old.”
  5. Don’t be a broken record. No one wants to hear the same things over and over from your or your brand. This is where having a content strategy really comes into play. Take the time to brainstorm all of the different things you could talk about on your social channels and then make sure you have a nice balance day to day of content.
Did I miss any social media faux pas? I’d love to hear from you, leave me a comment below!
via next.inman.com

Canada’s housing market cools, trade gap narrows | Cross River NY Real Estate

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Canadian housing starts fell more sharply than expected in October, according to data on Thursday that confirms a welcome slowing in the country’s once-booming property market after the government repeatedly tightened mortgage rules.

Other data from Statistics Canada showed new home prices continued their modest rise in September while the trade deficit narrowed in that month on an oil-led export recovery.

Markets focused on the housing starts, which were down 8.9 percent from a year earlier as both single and multiple urban housing starts slumped, Canada Mortgage and Housing Corp (CMHC) said.

The seasonally-adjusted annualized rate of housing starts was 204,107 units in October, down from 223,995 in September and 18.9 percent below the cyclical peak reached in April.

“The October move was the most decisive one yet that a housing correction is under way,” said Jonathan Basile, director of economics at Credit Suisse Canada.

Analysts polled by Reuters had forecast starts would decline to 211,500 in October.

The report echoes a string of data that the Canadian housing market is cooling, but does not appear to be heading for a crash landing as happened in the United States.

Housing prices and construction roared higher in 2011 and the first half of 2012, aided by low interest rates. The market started slowing after the government tightened rules on mortgage lending in July for the fourth time since 2008 in a bid to prevent home buyers from taking on too much debt.

The most scrutinized aspect of the CMHC report was the sharp drop in starts of multiple-family units, as analysts look for clues that overbuilding in the Toronto condo market is waning.

In urban areas, starts fell 10.1 percent at a seasonally adjusted annual rate, to 182,134 units in October. Urban singles starts decreased 7.6 percent while multiple urban starts dropped 11.4 percent.

“While multi-unit starts are extremely volatile month-to-month, this downshift to the lowest level since February could be an early indication that momentum is fading in the sector,” said Robert Kavcic, economist at BMO Capital Markets.

While fading momentum is what policymakers hope for, it also means the housing market will not be as powerful a driver of economic growth as it was.

“The sector will likely remain a drag on growth through much of 2013, a stark shift from recent years,” Kavcic said.

Prices of new homes in Canada rose for the 18th consecutive month in September, increasing by 0.2 percent from August and by 2.4 percent on the year.

EXPORTS

Canada’s struggling exports are also expected to be a drag on growth in the third quarter as the trade deficit grew in volume terms even though it narrowed in dollar terms.

The trade deficit narrowed unexpectedly to C$826 million ($826 million) in September as exports increased by 1.9 percent while imports were unchanged. Canada’s surplus with the United States grew to C$3.47 billion from a revised C$3.25 billion in August.

The overall increase in exports reflected a 4.2 percent jump in energy shipments, mainly crude oil and crude bitumen. But much of the export gain was due to price hikes, and export volumes were much less impressive.

“Today’s report suggested that the hit to growth will likely be larger than previously estimated,” said Dawn Desjardins, assistant chief economist at RBC Economics.

Imports were flat, with higher imports of metals and chemicals compensating for lower shipments of consumer goods and motor vehicles.

($1=$1 Canadian)

via reuters.com

Obama’s Housing Policy: Fix Is Crucial To President’s Economic Legacy | Katonah NY Real Estate

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President Barack Obama secured reelection while managing to talk around one area of economic policy in which experts frequently charge him with failure: managing the national housing crisis.

In a campaign dominated by talk of joblessness and what to do about it, the president hardly mentioned the epidemic of foreclosures, the fact that roughly one-fifth of all homeowners with mortgages owe the bank more than their properties are worth, or the uncomfortable reality that the American housing market is now largely propped up by taxpayers via public control of the mortgage finance giants Fannie Mae and Freddie Mac.

But while ignoring these issues was apparently a successful electoral strategy — Obama carried most of the “Foreclosure Belt” states, including California, Nevada, Colorado and Florida — that option is unlikely to be available to the president as he begins his second term. The stakes are high. Some experts see Obama’s ability to rejuvenate the housing market as directly influencing his legacy as a failed or successful steward of the American economy.

“There are very important questions left unresolved regarding the future of the housing finance system,” said Julia Gordon, the director of housing policy at the Center for American Progress, a left-leaning think tank. “The answers matter not just for the housing market but for the future of economic growth and the future of the middle class.”

Gordon and other housing experts say they expect that with the market stabilized — prices have ticked up 3.5 percent since the market bottomed out in October of last year — the administration will turn to the biggest unresolved housing conundrum: what to do with Fannie Mae and Freddie Mac, wards of the state since a bailout in 2008 that has cost $188 billion.

After the bailout, Congress created a new regulator-overlord, the Federal Housing Finance Agency, to limit further losses and get taxpayers off the hook. The financial bleeding has stopped, but Fannie and Freddie now hold even greater sway than before. Along with the Federal Housing Administration, which backs riskier loans, Fannie and Freddie own or insure more than 90 percent of all new loans made in the United States. In short: they are the mortgage market.

So what comes next? For a while, many Republicans clamored for rapid elimination of the companies, but the prospect of no housing finance system at all seems to have cooled their ardor, though Fannie and Freddie remain popular punching bags. Obama’s win all but guarantees some level of government support going forward, even if Fannie and Freddie don’t survive.

“There is a clear understanding that the government has to play a role in the mortgage finance system,” said Mark Zandi, chief economist at Moody’s Analytics. “Without that support, the 30-year fixed-rate mortgage, the mainstay of the system, can’t exist.”

Given the stark ideological differences between the president and a severely conservative House of Representatives, and the looming fiscal cliff that will dominate everyone’s attention for the rest of this year, a permanent fix to the Fannie and Freddie problem is probably still far off. In the meantime, the advocates for partial debt forgiveness, or principal reduction, for underwater homeowners will be watching closely to see what becomes of the enemy within: Edward DeMarco, a conservative career bureaucrat who has held the “temporary” job of acting director of the Federal Housing Finance Agency for three years.

DeMarco, in the past year, has resisted intense pressure from the Obama administration to allow principal reduction on Fannie and Freddie loans, even when a private bank or another arm of the federal government would foot the bill.

Debt forgiveness, when combined with other relief, such as a lower interest rate, can bring monthly mortgage payments down dramatically. A study by DeMarco’s own agency found that targeted principal reduction could save taxpayers as much as $1 billion.

Stan Humphries, the chief economist at Zillow, recently told The Huffington Post that the large supply of underwater homes means that fewer are on the market at any given time. As a result, despite the high foreclosure rate, inventory in many areas is actually very tight. Humphries compared it to a stock with few available shares for trade, a situation that can lead to price volatility and continued disruption in the housing market — and in the economy.

DeMarco, though, has said that bailing out homeowners poses a “moral hazard” that could encourage homeowners still current on their loans to intentionally default in order to cash in on the aid. His obstinance has delighted Senate Republicans, and all but ensures that the Senate will kill any nominee Obama puts forward to replace him as head of the agency.

Recently, some have speculated that Obama will fire DeMarco, though that course poses its own challenges. DeMarco is a bureaucrat, not a political appointee, and would need to be fired for cause. Moreover, those who work under him, and would be next in line to replace him as acting director, share his views, according to two sources familiar with the inner workings of the agency.

For all his power, it isn’t clear whether replacing DeMarco with an administration loyalist would move the scale much for underwater borrowers hoping to see some of their debt slashed. Banks pledged to spend at least $10 billion earlier this year as part of the national mortgage settlement to write down the debt on some of these loans.

By the time a replacement for DeMarco is found, there might not be much left for borrowers with Fannie or Freddie loans. Moreover, there doesn’t seem to be much inclination within the administration to use any of the $40 billion or so in unspent dollars from the Troubled Asset Relief Program that was pledged for housing support to jumpstart a new underwater relief program.

Instead, administration is promoting a bill before Congress that would expand its existing refinance program.

Still, housing advocates want to see DeMarco gone. One of their biggest beefs is that thanks to his effort to save every penny for taxpayers, Fannie and Freddie have abandoned their mission to provide broader access to the housing market for middle and low-income borrowers.

Under DeMarco, the two companies have tightened lending standards to exclude all but those with the very best credit from participating. The average Fannie Mae borrower credit score from 2001 to 2004 was 718, a few points less than the median credit score of all U.S. consumers. By 2011, the average score had soared to 762, which is at the very top end of the range and is considered “excellent” by the rating services.

This means far fewer people are qualifying for a Fannie or Freddie mortgage, and even those who do qualify report long waits for approval. The United States doesn’t need another housing bubble, but it needs a system that allows financing for people with the ability to repay what was borrowed, said John Taylor, president of the National Community Reinvestment Coalition, a group that advocates for low-income borrowers. That’s good for families and good for the economy, he said.

For more than 70 years, since Fannie Mae was established during the Great Depression, it and its later-arriving cousin Freddie Mac provided this vital role, Taylor said. It wasn’t until they tried to catch up with the Wall Street subprime machine that they went off course, he said. A readjustment given the horror of the housing crash makes sense, he said, “but the pendulum has swung too far.”

via huffingtonpost.com

Spanish Woman Commits Suicide As Foreclosure Agents Walk Into Her Apartment | Chappaqua Real Estate

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English: Gas station and crossroads at Megapar...

The Spanish city of Barakaldo, in the Basque country

The intensification of the financial crisis in Spain, and across Europe, is having very real effects on the lives of people.  Beyond the rise in the unemployment rate, widespread foreclosures across Spain have caused at least two suicides over the past few weeks, along with an unsuccessful attempt in the city of Valencia.  The latest case, reported on Friday, involved a 53-year-old woman who jumped from her sixth-story balcony in the Basque city of Barakaldo as foreclosure agents forced open her door.

Spain has been one of the hardest hit victims of the European sovereign debt crisis.  Mired in a deep recession, the Iberian nation has seen the unemployment rate skyrocket above 25%, with youth joblessness reaching 50%.  The consequence of a real estate bubble, Spain’s crisis has led to a slew of foreclosures across the nation.

The latest victim has been Amaya Egaña, a former municipal councilwoman for the Socialist Party of Prime Minister Mariano Rajoy.  According to Spanish daily El Pais, Egaña jumped to her death from a sixth-floor balcony on Friday as a legal team from the local court walked into her apartment to foreclose on her.  Receiving no response after ringing the bell and knocking on the door, a locksmith opened the door, only to find Egaña standing on a chair to jump from her balcony.  Egaña was found alive, but paramedics had no chances of saving her life.

Egaña’s suicide isn’t the first related to foreclosures in Spain.  Just a few weeks ago, on October 25, 53-year-old Jose Miguel Domingo was found dead hours before foreclosure agents arrived at his apartment.  Domingo hung himself after not having been able to pay interest payments on a €240,000 mortgage that went sour in 2009.

A day after, a man whose name hasn’t been disclosed jumped from his window in the city of Valencia.  The man attempted to commit suicide minutes before foreclosure agents arrived at his apartment; this time, though, paramedics managed to save his life.

The suicide of Egaña has been like the straw that broke the camel’s back.  A social repudiation of banks’ foreclosure practices has made its way to Madrid, where the Administration of Mariano Rajoy is working on a plan to give subprime debtors some relief.  According to El Pais, Rajoy is looking to put into place a two year foreclosure moratorium for subprime debtors.

Spanish banks are in dire need of cash.  Despite a €100 billion bailout-pledge by the EU, institutions like Bankia and BBVA are struggling to plug holes in their finances.  Much like in the U.S., they are doing whatever they can to extract payment from debtors.

In the U.S., banks’ attempts to speed up the foreclosure processes resulted in the robo-signing scandal, by which major mortgage originators were using fraudulent protocols to processes thousands of mortgages in record time.  Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial were forced to fork over $25 billion to settle a suit brought Attorneys General from across the nation.

With Spain falling even deeper into the rabbit hole, as Rajoy refuses to take a bailout and borrowing costs rise, the situation could deteriorate further.  Beyond economic losses, Friday’s events are direct evidence that financial crises have the potential to destroy the lives of ordinary individuals.

via forbes.com

3 Reasons to Keep Going to Open Houses After You Purchase | Chappaqua NY Real Estate

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Years ago, after closing on your American Dream with a 30-year fixed loan, you probably didn’t think much about the home’s value until you were ready to sell. Today, there’s so much more information available to home buyers. Markets move quickly, and life happens a lot faster.

And so, many people have become hyper-aware of their real estate investments, frequently watching the rise and fall of market values well after the close. Listing e-mails flow daily, and the Zillow app likely sits prominently on many homeowners‘ smartphones and tablets. Good real estate agents compile “mini CMAs” (Comparative Market Analysis) for their past clients, too, updating them yearly on the latest comps and values.

While it helps to be mindful of your home’s value, you shouldn’t obsess over it. A better strategy is to stay abreast of the local real estate market, just as you’d keep an eye on any long-term investment. Have an idea what’s selling and what’s not. Know what the trends and changes are in your neighborhood, school district or town.

One of the best ways to do this is to go to open houses. Here are three reasons why.

You can learn a lot from listing agents

Open houses aren’t just for buyers. Often, would-be sellers and nearby homeowners represent a large portion of open house traffic. Use the open house not only to see what’s for sale and the price of comparable homes but also to learn about the market. Pick the brain of the listing agent to get his or her take on what’s happening in your area. Real estate agents tend to be aware of market changes well before the mainstream press.

You’ll stay current with the latest home design trends

Sellers generally put their best foot forward. Some go as far as making cosmetic updates or design/staging changes before putting their homes on the market. They likely rely on their real estate agent to suggest the latest and greatest in the market. So if you bought a home that needs updating, or you aren’t sure where to begin when it comes to choosing paint colors, countertops or bath fixtures, going to open houses will allow you to see styles and designs.

You can get referrals for local real estate specialists, contractors or designers

Want to be connected to a good local designer or contractor? Ask the real estate agent selling the home you liked if they can get you the contact information. Though getting referrals from friends is also a good idea, seeing the finished product in an open house can inspire you to replicate what that owner did and how they did it.

Never forget: Your home is an investment

Ultimately, the property you’ve purchased is your home. You should make remodeling or upgrade choices according to your wishes, without forgetting that your home is also an investment. Try to find a balance between whatever personal choices you have in mind and what might appeal to potential buyers down the road. For example, painting a room a dark red color or choosing highly taste-specific fixtures or designs may appeal to your taste buds — but will likely alienate a potential buyer down the road. Of course, it’s not uncommon for homeowners to make last-minute changes to their home to make it “market ready.”

via zillow.com

Big real estate investors say Sandy hurts lower Manhattan values | Chappaqua Homes

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Lower Manhattan office building values are likely to suffer as a result of damage inflicted by Superstorm Sandy that has left thousands of downtown Manhattan workers unable to return to their offices, major real estate executives said at a conference on Wednesday.

“I think there’s been value erosion downtown,” Howard Lutnick, chairman and CEO of Cantor Fitzgerald LP and BGC Partners Inc, said during the New York University Schack Institute of Real Estate Capital Markets in Real Estate conference. “It had just started to come back. The concept now of fear of flooding is going to affect values.”

About 500 of his employees are unable to return to the three floors they occupy at 199 Water Street. Lutnick expect that to continue for six weeks to two months. Meanwhile his staff has been doubling up at the company’s midtown offices and trading floors at 499 Park Avenue and its connected building at 110 East 59th Street.

Nearly one-third of the 101 million square feet of office space in downtown Manhattan either was closed, powered by generators or had no heat due to the flooding Sandy inflicted last week, said Jones Lang LaSalle Inc. There was no correlation between the age of the building and the damage suffered, the real estate services company said.

Lutnick, unfortunately, knows about disasters. The company occupied floors 101 through 105 of One World Trade when it was destroyed on Sept. 11, 2001. Cantor Fitzgerald lost 658 of its 960 employees who worked there.

“All disaster recovery plans are a disaster,” he told about 475 real estate investors, bankers and students at the conference.

Cantor Fitzgerald’s lease at 199 Water Street expires in about 15 months, he said, and the company has yet to decide whether to renew it. Lutnick said downtown landlords may have to make more concessions and ultimately take in less rent to convince tenants to stay.

“They’ll have to offer more value to get them to stay,” he said.

The destruction and prolonged building closings and heating and electrical interruptions will take their toll on property values, Darcy Stacom, CBRE Group Inc vice chairman, said later at the conference.

“Will investors think about this when they look at buildings in hard-hit areas? Yes,” she said.

HUDSON YARDS

The repercussions from Sandy could reach well past downtown. Part of Hudson Yards, the office and housing development planned for midtown’s far west side, is also in the flood zone. That could prompt some changes to the plans.

“It is a subject that we and our partner will definitely be talking about,” said Andrew Trickett, senior vice president, U.S. region, for Oxford Property Group, the real estate arm of Canadian pension fund Ontario Municipal Employees Retirement System. Oxford is Related Companies’ equity partner in Hudson Yards.

Stephen Ross, Related’s chairman, said if Hudson Yards had been built already, it would not have had many problems.

“We have plans for backup generators for the entire project,” he said of the planned 6 million square feet of office space, 5 million square feet of housing, and 1 million square feet of retail space.

It will take public and private money to prevent another disaster, real estate experts said, and will require regulatory and zoning changes determining how things are built and where they are located.

It will take even more money to prevent storm surges and rebuild the city’s old infrastructure.

“If they could do it in New Orleans, they certainly can do it in New York,” Ross said, referring to the infrastructure built after Hurricane Katrina.

The rebuilding could stir demand for professions and trade workers who were hit hard by the recession that dried up financing for development projects.

“Construction workers who have been sitting on the bench for five or six years, they’ll be in demand,” said William Rudin, chief executive and vice chairman of Rudin Management Co Inc. “They’ll be able to get back to work, so will the architects, the engineers, the contractors. You go down the line, one of our strengths is that we have these industries here.”

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The iPhone’s Hidden Costs | Chappaqua NY Real Estate

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The iPhone 5 is a C-average student. At least, that’s the grade InsuranceQuotes awarded the smartphone, based on its effect on public health, the environment and the U.S. economy.

In the video above, the insurance news publisher weighed the pros and cons of newer iPhone models and gave them a solid C+ grade. Apple has come a long way in making its mobile devices more environmentally friendly, but poor conditions in Chinese manufacturing plants have led to employee suicides and protests.
Likewise, InsuranceQuotes found the cost to charge a smartphone over the course of a year to be negligible, but the overall cost of maintaining an iPhone is high — more than 4% of the average American’s salary, including the cost of data plans, accessories and those addictive apps.

Take a look at some of the other factors InsuranceQuotes considered in the video above. And tell us what grade you would give your smartphone in the comments section below.

 

via mashable.com