President Bush Signs Housing Bill

31 07 2008


President Bush signed into law a sweeping housing bill that aims to boost the struggling housing market and bolster mortgage finance giants Fannie Mae and Freddie Mac.

The Senate voted 72-13 in favor of the bill on 6/26/08, after the House passed it three days earlier.

H.R. 3221, the Housing and Economic Recovery Act of 2008 allows first-time home buyers to take a $7,500 tax credit from the purchase of a single-family home, townhome or condominium apartment.

· The cost of the program – which would begin on Oct. 1 and be in place for just a few years – will be funded by fees from Fannie and Freddie, along with fees paid by both lenders and borrowers.

· The law authorizes FHA to insure up to $300 billion in loans.

· A permanent increase in “conforming loan” limits. The law will permanently increase the cap on the size of mortgages guaranteed by Fannie and Freddie to a maximum of $625,500 from $417,000.

· The FHA maximum loan limits for high-cost areas would also increase to a maximum of $625,500. Higher loan limits will make it easier for borrowers to get mortgages, because those mortgages are more likely to be traded if they are considered conforming.

· A new home-buyer credit. The new law includes a tax refund for first-time home buyers worth up to 10% of a home’s purchase price but no more than $7,500.00.

· A new affordable housing trust fund. The law establishes a permanent fund to promote affordable housing. The fund will be paid for by fees from Fannie and Freddie.

· Grants to states to buy foreclosed properties The law grants $4 billion to states to buy up and rehabilitate foreclosed properties.

· Fannie and Freddie guarantee the purchase and trade of mortgages and own or back to $5.2 trillion in mortgages.

Any home buyer who has not owned a home during the past three years and is a U.S. citizen who files taxes is eligible to participate in this program. (Some home buyers who are not citizens may also qualify; see #14 in the questions and answers below.)

To qualify, buyers must actually close on the sale of the home on or after April 9, 2008 and before July 1, 2009. The original eligibility period expired in April 2009, but following a major grassroots campaign from NAHB members, the period was extended to enable home builders to include the credit in their sales and marketing next spring and into the early summer — the peak home buying season.

The program does have income limits. Single or head-of-household filers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000.

Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. The same applies to married couples who earn between $150,000 and $170,000.

The credit is not available for single taxpayers whose AGI is greater than $95,000 and married couples with an AGI exceeding $170,000.

A refundable credit means that if a taxpayer pays less than $7,500 in federal income taxes, the government will write them a check for the difference. For example, if $5,000 in federal taxes is owed, the taxpayer would pay nothing and a $2,500 payment would be received from the IRS. If a qualifying home buyer were owed a $1,000 tax refund, they would receive $8,500.

Buyers can take the tax credit on their 2008 or 2009 tax return. Those who close in 2008 take the credit on their 2008 return. Buyers in 2009 have the option of taking the credit on their 2008 or 2009 returns.

The tax-credit program also has payback provisions.

The credit essentially serves as an interest-free loan to be repaid over 15 years. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. If the home owner sold the home, then the remaining credit would be due from the profit of the home sale.

If there is insufficient profit, then the remaining credit payback would be forgiven.

For more information on NAHB tax credit resources, e-mail NAHB Public Affairs or call 800-368-5242 x8061.

Questions and Answers for Consumers

Following are the “Frequently Asked Questions About the First-Time Home Buyer Tax Credit” that appear on NAHB’s consumer Web site — http://www.federalhousingtaxcredit.com.

1. Who is eligible to claim the $7,500 tax credit?

First time-home buyers purchasing any kind of home — new or resale — are eligible for the tax credit.

2. What is the definition of a first-time home buyer?

The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his or her spouse. For example, if you have not owned a home in the past three years but your spouse has owned one, neither you nor your spouse qualifies for the first-time home buyer tax credit.

3. What types of homes will qualify for the tax credit?

Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses, and condominiums.

4. Are there income limits to determine who is eligible to take the tax credit?

Yes. Home buyers who file their taxes as single or head-of-household taxpayers can claim the credit if their modified adjusted gross income (MAGI) is less than $75,000. For married taxpayers filing a joint tax return, the MAGI limit is $150,000. The limit is based on the buyer’s modified adjusted gross income for the year that the house is purchased, except for certain purchases in 2009.

5. What is “modified adjusted gross income”?

Modified adjusted gross income, or MAGI, is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income,” or AGI, which is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income — including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?

Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.

7. Can you give me an example of how the partial tax credit is determined?

Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicabl
e phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

8. Does the credit amount differ based on tax filing status?

No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files its taxes as “married filing separately” (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.

9. Are there any circumstances under which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?

In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.

10. I heard that the tax credit is refundable. What does that mean?

The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).

11. What is the difference between a tax credit and a tax deduction?

A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15% tax bracket and owes $7,500 in income taxes. If the taxpayer receives a $7,500 deduction, the taxpayer’s tax liability would be reduced by $1,125 (15% of $7,500), or lowered from $7,500 to $6,375.

12. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?

No. The tax credit cannot be combined with the MRB home buyer program.

13. I live in the District of Columbia. Can I claim both the D.C. first-time home buyer credit and this new credit?

No. You can claim only one.

14. I am not a U.S. citizen. Can I claim the tax credit?

Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519 (www.irs.gov/pub/irs-pdf/p519.pdf).

15. Does the credit have to be paid back to the government? If so, what are the payback provisions?

Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.

16. Why must the money be repaid?

The intent of Congress was to provide as large a financial resource as possible for home buyers in the year that they purchase a home. In addition to helping first-time home buyers, this will maximize the stimulus for the housing market and the economy, will help stabilize home prices and will increase home sales. The repayment requirement reduces the impact on the U.S. Treasury and assumes that home buyers will benefit from stabilized and, eventually, rising future housing prices.

17. Because the money must be repaid, isn’t the first-time home buyer program really a zero-interest loan rather than a traditional tax credit?

Yes. Because the tax credit must be repaid, it operates like a zero-interest loan. Assuming an interest rate of 7%, that means the home owner saves up to $4,200 in interest payments over the 15-year repayment period. Compared to $7,500 financed through a 30-year mortgage with a 7% interest rate, the home buyer tax credit saves home buyers more than $8,100 in interest payments. The program is called a tax credit because it operates through the tax code and is administered by the IRS. Also like a tax credit, it provides a reduction in tax liability in the year it is claimed.

18. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 as if the purchase occurred on Dec. 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

19. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?

Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

Source: CNN Money, NAHB





Today’s Crunch Feels Like ’70s

14 07 2008

The Atlanta Journal-Constitution published an article today that is quite catchy. It reads:

High oil prices, a sluggish economy, persistent inflation, an unpopular president and the Eagles are out on tour.

Sounds like a rerun of the 1970s?

But it is also a snapshot from the summer of 2008 —- even if it does conjure images from the past.

“The similarities are there,” said economist Gerald Lynch of Purdue University. “That was a miserable time for the economy. And the clothes were ugly, too.”

Wide ties may not be making a comeback, but hints of the era’s economics are in the air.

One of the stars of that original ’70s show was stagflation, a term invented to describe a mix of rapid inflation and near-stagnant growth. The word has re-entered the economic vocabulary of late.

“As far as I can see, the wheels have fallen off the wagon,” said Peter Miralles, president of Atlanta Wealth Consultants. “This is as close to the ’70s as we have seen in the past couple of decades.”

First, the sluggishness: Gross domestic product the past two quarters has expanded by less than 1 percent. The economy shed 438,000 jobs in the first six months of the year, while the official unemployment rate has climbed to 5.5 percent.

Meanwhile, the official measure of inflation has been running slightly higher than 4 percent per year —- while energy prices have more than doubled.

Yet comparing the current moment to the 1970s can offer some reassurance: Today’s numbers pale beside the Hotel California Era.

In 1975, unemployment peaked at 9 percent, fell for a while and then climbed to 7.8 percent in 1980. Inflation hit double digits in 1974 and 1975, slipped back and then roared up, cresting at more than 13 percent in 1979 and 14 percent in 1980. It was a time, too, when the nightly news rattled the American psyche.

The first half of the decade saw the revolution-promoting Weathermen, Watergate, the bitter, bloody end to the Vietnam War and the Arab oil embargo. The second half of the ’70s brought the Soviet invasion of Afghanistan and the Iranian Revolution.

“There was a kind of extremism in the air,” said Herb London, president of the Hudson Institute, a conservative, Washington-based think tank. “Conditions now are also kind of frightening. But the situation is not as extreme.”

Still, today’s list of potential villains sounds like a cast from the past.

The most obvious repeat offender is oil. Oil prices quadrupled in the mid-1970s, then soared again after the Iranian Revolution in 1979.

Now, U.S. troops are fighting in Iraq and Afghanistan, there is renewed talk about a U.S. conflict with Iran, and oil prices are at it again. Crude has doubled in the past year, and the economy again is struggling.

“Oil was at the scene of the crime in both cases,” said Jared Bernstein, senior economist at the liberal Economics Policy Institute in Washington. “If you have a police lineup, you really want to have oil in it.”

And it’s not just oil —- global demand has shoved prices higher on a range of commodities from rice to steel.

But inflation this time has some brand-new accomplices: the housing crash; the subprime meltdown that followed; and the crunch in credit that the meltdown triggered.

“This is a very different world,” Bernstein said.

For starters, the sources of inflation are different. During the 1970s, workers —- often through powerful unions —- insisted on raises that matched higher consumer prices.

Those higher payroll costs were then added to the prices businesses charged, which were then used by workers to demand higher pay.

“You can’t have a wage-price spiral without wage pressures, and we ain’t got wage pressures,” Bernstein said. “That is a huge difference.”

It’s not just that business costs don’t rise as much. Companies are also less likely to pass them along.

Many are so afraid of losing customers, they don’t dare raise prices as much as their costs. Instead, they slash their own costs or accept a smaller profit margin —- and potential inflation never gets to consumers.

What worries some economists is that, eventually, companies must pass along costs. Other economists argue that the official inflation numbers are wildly understating the pain consumers already feel.

“The part that concerns me the most is that the government numbers do not actually represent what’s going on,” said Miralles of Atlanta Wealth Consultants. “I just don’t buy it.”

If the plot of the rerun does mimic the original, then the pain is only getting started.

Led by then-Chairman Paul Volcker, the Federal Reserve decided that inflation was so dangerous it had to be stopped —- even if that meant choking off growth. So in 1979, interest rates were raised dramatically.

The economy spun into back-to-back recessions starting in January 1980.

As the economy stalled, the inflation rate leapt to a high of 14.6 percent. After the second recession, unemployment climbed to a peak of 10.8 percent.

But the Fed won its war: Inflation was dormant for the next two decades.

Even now, inflation —- at least the official measure of 4 percent —- seems modest enough to let the Fed keep rates low.

In the past two years, the Fed has cut the benchmark rate from 5.25 percent to 2 percent.

Any inflation-fighting would mean moving them upward again, which would likely slow the economy more.

At least some inflation may be coming from a “bubble” —- speculation that could pop if demand slackens.

“If oil is a bubble, and there’s a good chance it is, then its bursting would lessen the inflationary threat a lot,” said Doug Henwood, author of the book “Wall Street: How It Works and for Whom” and editor of the economics newsletter Left Business Observer.

Waiting for the scenario to play out, consumers and companies alike must do their best to plan, hoping to protect and nurture their assets.

“There are quite a few parallels to the ’70s, and that is a concern,” said Frank Butterfield, principal with Atlanta-based wealth managers Homrich & Berg. “The ’70s were a bad time for financial assets. Stocks did poorly, bonds did poorly. That could happen again.”

To navigate long term, Butterfield suggests diversifying portfolios, buying inflation-protected securities, using hedge funds and “rebalancing” investments as you go.

The economic trouble so far has been manageable, he said. “Things were worse in the ’70s than they are now.”

Most experts say the U.S. economy seems stronger than it was in the shaky ’70s, more flexible and —- most important during an energy crisis —- more efficient.

The economy is about half as dependent on oil as it was at the time of the first oil shock in 1973, said Robert Whaples, chairman of the economics department at Wake Forest University.

“The ’70s were a period of pretty slow productivity growth,” he said. “There are important parallels between the two periods, but I don’t think we will get double-digit unemployment or double-digit inflation rate.”

Some things do return. The Eagles, after all, are playing summer concerts and promoting their latest album. But no amount of hindsight can truly tell the future.

As the Eagles themselves put it: “Who is gonna make it? We’ll find out —- in the long run.”

That was 1979.

GASOLINE

Now: Gas prices have doubled in a little more than three years. They are up a little more than one-third in the past year. Gas is costly but plentiful.

Then: Gas prices tripled during the decade, rising almost 50 percent from 1973 to 1975, and by 80 percent in 1979 and 1980. Shortages forced restrictions on sales.

PRESIDENTIAL APPROVAL

Now: 28 percent

Then: 29 percent

IRAN

Now: Tension between the United States and Iran over nuclear programs and U.S. involvement in Iraq has led to higher oil prices.

Then: Iranian Revolution in 1979 overthrew a U.S. ally, led to a long hostage crisis and sent oil prices skyrocketing.

UNEMPLOYMENT

Now: In the past year and a half, official unemployment has increased 25 percent. It remains historically modest: 5.5 percent.

Then: After the Arab oil embargo, unemployment rose by more than 80 percent.

INFLATION

Now: Consumer prices are up 4.1 percent in the past year, the government says, but critics say the data understates reality.

Then: Consumer costs were up an average of 8.12 percent a year through the decade, peaking at 13.3 percent in 1979.

PRODUCTIVITY GROWTH

Now: 2.58, average, 2000-07

Then: 1.73 percent, average 1971-80

Sources: Michael E. Kanell at The Atlanta Journal-Constitution, Bureau of Labor Statistics, Energy Information Administration, Gallup Poll, PollingReport.com





Today’s Crunch Feels Like ’70s

13 07 2008

The Atlanta Journal-Constitution published an article today that is quite catchy. It reads:

High oil prices, a sluggish economy, persistent inflation, an unpopular president and the Eagles are out on tour.

Sounds like a rerun of the 1970s?

But it is also a snapshot from the summer of 2008 —- even if it does conjure images from the past.

“The similarities are there,” said economist Gerald Lynch of Purdue University. “That was a miserable time for the economy. And the clothes were ugly, too.”

Wide ties may not be making a comeback, but hints of the era’s economics are in the air.

One of the stars of that original ’70s show was stagflation, a term invented to describe a mix of rapid inflation and near-stagnant growth. The word has re-entered the economic vocabulary of late.

“As far as I can see, the wheels have fallen off the wagon,” said Peter Miralles, president of Atlanta Wealth Consultants. “This is as close to the ’70s as we have seen in the past couple of decades.”

First, the sluggishness: Gross domestic product the past two quarters has expanded by less than 1 percent. The economy shed 438,000 jobs in the first six months of the year, while the official unemployment rate has climbed to 5.5 percent.

Meanwhile, the official measure of inflation has been running slightly higher than 4 percent per year —- while energy prices have more than doubled.

Yet comparing the current moment to the 1970s can offer some reassurance: Today’s numbers pale beside the Hotel California Era.

In 1975, unemployment peaked at 9 percent, fell for a while and then climbed to 7.8 percent in 1980. Inflation hit double digits in 1974 and 1975, slipped back and then roared up, cresting at more than 13 percent in 1979 and 14 percent in 1980. It was a time, too, when the nightly news rattled the American psyche.

The first half of the decade saw the revolution-promoting Weathermen, Watergate, the bitter, bloody end to the Vietnam War and the Arab oil embargo. The second half of the ’70s brought the Soviet invasion of Afghanistan and the Iranian Revolution.

“There was a kind of extremism in the air,” said Herb London, president of the Hudson Institute, a conservative, Washington-based think tank. “Conditions now are also kind of frightening. But the situation is not as extreme.”

Still, today’s list of potential villains sounds like a cast from the past.

The most obvious repeat offender is oil. Oil prices quadrupled in the mid-1970s, then soared again after the Iranian Revolution in 1979.

Now, U.S. troops are fighting in Iraq and Afghanistan, there is renewed talk about a U.S. conflict with Iran, and oil prices are at it again. Crude has doubled in the past year, and the economy again is struggling.

“Oil was at the scene of the crime in both cases,” said Jared Bernstein, senior economist at the liberal Economics Policy Institute in Washington. “If you have a police lineup, you really want to have oil in it.”

And it’s not just oil —- global demand has shoved prices higher on a range of commodities from rice to steel.

But inflation this time has some brand-new accomplices: the housing crash; the subprime meltdown that followed; and the crunch in credit that the meltdown triggered.

“This is a very different world,” Bernstein said.

For starters, the sources of inflation are different. During the 1970s, workers —- often through powerful unions —- insisted on raises that matched higher consumer prices.

Those higher payroll costs were then added to the prices businesses charged, which were then used by workers to demand higher pay.

“You can’t have a wage-price spiral without wage pressures, and we ain’t got wage pressures,” Bernstein said. “That is a huge difference.”

It’s not just that business costs don’t rise as much. Companies are also less likely to pass them along.

Many are so afraid of losing customers, they don’t dare raise prices as much as their costs. Instead, they slash their own costs or accept a smaller profit margin —- and potential inflation never gets to consumers.

What worries some economists is that, eventually, companies must pass along costs. Other economists argue that the official inflation numbers are wildly understating the pain consumers already feel.

“The part that concerns me the most is that the government numbers do not actually represent what’s going on,” said Miralles of Atlanta Wealth Consultants. “I just don’t buy it.”

If the plot of the rerun does mimic the original, then the pain is only getting started.

Led by then-Chairman Paul Volcker, the Federal Reserve decided that inflation was so dangerous it had to be stopped —- even if that meant choking off growth. So in 1979, interest rates were raised dramatically.

The economy spun into back-to-back recessions starting in January 1980.

As the economy stalled, the inflation rate leapt to a high of 14.6 percent. After the second recession, unemployment climbed to a peak of 10.8 percent.

But the Fed won its war: Inflation was dormant for the next two decades.

Even now, inflation —- at least the official measure of 4 percent —- seems modest enough to let the Fed keep rates low.

In the past two years, the Fed has cut the benchmark rate from 5.25 percent to 2 percent.

Any inflation-fighting would mean moving them upward again, which would likely slow the economy more.

At least some inflation may be coming from a “bubble” —- speculation that could pop if demand slackens.

“If oil is a bubble, and there’s a good chance it is, then its bursting would lessen the inflationary threat a lot,” said Doug Henwood, author of the book “Wall Street: How It Works and for Whom” and editor of the economics newsletter Left Business Observer.

Waiting for the scenario to play out, consumers and companies alike must do their best to plan, hoping to protect and nurture their assets.

“There are quite a few parallels to the ’70s, and that is a concern,” said Frank Butterfield, principal with Atlanta-based wealth managers Homrich & Berg. “The ’70s were a bad time for financial assets. Stocks did poorly, bonds did poorly. That could happen again.”

To navigate long term, Butterfield suggests diversifying portfolios, buying inflation-protected securities, using hedge funds and “rebalancing” investments as you go.

The economic trouble so far has been manageable, he said. “Things were worse in the ’70s than they are now.”

Most experts say the U.S. economy seems stronger than it was in the shaky ’70s, more flexible and —- most important during an energy crisis —- more efficient.

The economy is about half as dependent on oil as it was at the time of the first oil shock in 1973, said Robert Whaples, chairman of the economics department at Wake Forest University.

“The ’70s were a period of pretty slow productivity growth,” he said. “There are important parallels between the two periods, but I don’t think we will get double-digit unemployment or double-digit inflation rate.”

Some things do return. The Eagles, after all, are playing summer concerts and promoting their latest album. But no amount of hindsight can truly tell the future.

As the Eagles themselves put it: “Who is gonna make it? We’ll find out —- in the long run.”

That was 1979.

GASOLINE

Now: Gas prices have doubled in a little more than three years. They are up a little more tha
n one-third in the past year. Gas is costly but plentiful.

Then: Gas prices tripled during the decade, rising almost 50 percent from 1973 to 1975, and by 80 percent in 1979 and 1980. Shortages forced restrictions on sales.

PRESIDENTIAL APPROVAL

Now: 28 percent

Then: 29 percent

IRAN

Now: Tension between the United States and Iran over nuclear programs and U.S. involvement in Iraq has led to higher oil prices.

Then: Iranian Revolution in 1979 overthrew a U.S. ally, led to a long hostage crisis and sent oil prices skyrocketing.

UNEMPLOYMENT

Now: In the past year and a half, official unemployment has increased 25 percent. It remains historically modest: 5.5 percent.

Then: After the Arab oil embargo, unemployment rose by more than 80 percent.

INFLATION

Now: Consumer prices are up 4.1 percent in the past year, the government says, but critics say the data understates reality.

Then: Consumer costs were up an average of 8.12 percent a year through the decade, peaking at 13.3 percent in 1979.

PRODUCTIVITY GROWTH

Now: 2.58, average, 2000-07

Then: 1.73 percent, average 1971-80

Sources: Michael E. Kanell at The Atlanta Journal-Constitution, Bureau of Labor Statistics, Energy Information Administration, Gallup Poll, PollingReport.com





National Home Sales, Prices Continue Decline

10 07 2008

New numbers from the National Association of Realtors show that the housing market is not out of the woods yet.

The association’s Pending Home Sales Index fell to 84.7 in May, down 4.7 percent from an upwardly revised reading of 88.9 in April. The index is 14 percent below its level in May 2007.

The recent decline is steeper than the 2.8 percent fall that economists had forecast, according to a consensus of estimates compiled by Briefing.com.

The index had jumped more than 7 percent in April as falling home prices sparked a bout of bargain hunting. But May’s reading proved the housing slump is far from over.

In the report, the association lowered its existing-home sales outlook for 2008, saying it now expects sales of 5.31 million, down from the 5.39 million forecast in April.

The association says existing home prices also are expected to fall. The aggregate median existing-home price is projected to fall 6.2 percent this year to $205,300, and then rise by 4.3 percent in 2009 to $214,100, the report indicated.

Pending home sales declined in all regions, but the drop was relatively mild in the West, where sales fell just 1.3 percent. Pending home sales were down 2.9 percent in the Northeast, 6 percent in the Midwest and 7.1 percent in the South.

The index is based on a national sample, typically representing about 20 percent of transactions for existing-home sales. A reading of 100 is equal to the average level of activity during 2001, the first year to be examined as well as the first of five consecutive record years for existing-home sales.

Source: National Association of Realtors





National Home Sales, Prices Continue Decline

9 07 2008

New numbers from the National Association of Realtors show that the housing market is not out of the woods yet.

The association’s Pending Home Sales Index fell to 84.7 in May, down 4.7 percent from an upwardly revised reading of 88.9 in April. The index is 14 percent below its level in May 2007.

The recent decline is steeper than the 2.8 percent fall that economists had forecast, according to a consensus of estimates compiled by Briefing.com.

The index had jumped more than 7 percent in April as falling home prices sparked a bout of bargain hunting. But May’s reading proved the housing slump is far from over.

In the report, the association lowered its existing-home sales outlook for 2008, saying it now expects sales of 5.31 million, down from the 5.39 million forecast in April.

The association says existing home prices also are expected to fall. The aggregate median existing-home price is projected to fall 6.2 percent this year to $205,300, and then rise by 4.3 percent in 2009 to $214,100, the report indicated.

Pending home sales declined in all regions, but the drop was relatively mild in the West, where sales fell just 1.3 percent. Pending home sales were down 2.9 percent in the Northeast, 6 percent in the Midwest and 7.1 percent in the South.

The index is based on a national sample, typically representing about 20 percent of transactions for existing-home sales. A reading of 100 is equal to the average level of activity during 2001, the first year to be examined as well as the first of five consecutive record years for existing-home sales.

Source: National Association of Realtors





Developer to Convert Former Race Track to Industrial Park

1 07 2008

Jacksonville Business Journal reported that a Midwestern development company plans to transform a former auto racing track that was once destined to be a residential development into a 1.5-million-square-foot industrial park.

Farmington Hills, Mich.-based Schafer Development acquired the 118-acre property on Pecan Park Road near Interstate 95 June 18 for $4 million, according to the Duval County Property Appraiser’s Office.

The developer responsible for another 2 million square feet of industrial space in the Main Street Commerce Park, the New Berlin Commerce Park and the Faye Road Commerce Park in Jacksonville plans to build another 1.5 million square feet at the newly acquired location.

“Our projects are meeting an anticipated demand for space to support commerce in this region,” said Adam Ossipove, vice president of acquisition for Schafer Development. “It’s a win-win for Jacksonville and its future economic vitality.”

The property served as a raceway from 1968-2004. It was sold to Lennar Homes Corp. for residential development but the project was canceled and that started the process of converting the land use back to industrial in 2006.








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