U.S. Senator Johnny Isakson has confirmed that the mortgage interest deduction is 'on the table in tax reform discussions. Speaking recently to a group of real estate journalists, Isakson commented," its got to be on the table like everything else. It has to be evaluated on a cost-benefit analysis."

Isakson made his comments at the National Association of Real Estate Editors (NAREE) annual conference. He argued that if a tax deduction "costs the government more money than it benefits the government, its got to go away."

Isakson, a Georgia Republican, is one of a handful of incumbents who have received strong backing from RPAC, the National Association of Realtors political action committee.

According to Inman News, RPAC made $377,353 in independent expenditures on Isaksons behalf during his successful 2010 reelection campaign. Isakson himself is a former real estate broker who currently serves on four senate committees including education, federal spending, health care, and veterans affairs.

The National Association of Realtors strongly opposes any changes to the mortgage interest deduction, arguing that changes to it could depreciate home prices by up to 15 percent.

NAR spokeswoman Sara Wiskerchen commented, "theres nothing really to say" about any proposed changes to the mortgage interest deduction until Congress introduces specific legislation. She further commented, "...it has always been NARs position that the MID is vital to the stability of the American housing market and economy, and we will remain vigilant in opposing any future plan that modifies or excludes the deductability of mortgage interest."

According to Isakson, the most politically viable solution could be to cap itemized deductions for mortgage interest, charitable contributions, and other deductions at a certain dollar amount or percentage.

Commenting on the importance of resolving this issue, Isakson explained, "we cant return our economy to where wed like to be without mortgage financing and a return of the construction industry."

Photo source: Politic365

Posted in Headlines, Real Estate Industry Trends

Homebuyers in Colorado are willing to pay to live in subdivisions that feature government-protected open spaces, according to a new study released by Colorado State University. Colorado homebuyers are willing to pay premiums ranging from 20 to 29 percent on average, according to the study.

Sarah Reed, a scientist with the Wildlife Conservation Society, explains, "we were not surprised that there was an effect, but we were surprised by the magnitude." Reed was the principal investigator for "Comparative Analysis of Housing in Conservation Developments: Colorado Case Studies."

Many counties across Colorado have adopted land use guidelines in recent year that ask subdivision developers to set aside land for wildlife conservation. The study focuses on 205 "conservation area" subdivisions in five different Colorado counties including Chafee, Douglas, Larimer, Mesa, and Routt. These five counties are considered to be a representative sample of Colorado communities because they had large numbers of conservation developments.

On average, 62 percent of each development site is set aside a protected space for the communities included in the study.

Reed further commented on the trend, explaining, "our hope is that these strong results would give real estate developers more confidence in the value of conservation."

Developers say that in addition to the market benefit of including conservation land in their developments, building in these areas may save on construction costs. This is in large part because clustering homes together can reduce the amount of infrastructure needed to develop a subdivision.

Posted in Headlines, Real Estate Industry, Real Estate Industry Trends

Economists say that although home prices will likely continue to rise over the next several years, the national market is not in danger of becoming a bubble.

Lawrence Yun, chief economist for the National Association of Realtors, commented, "four of the next five years are likely to be improving years in the housing market. I dont say five because theres always the possibility of little hiccups in the housing market....but we will still be shy of the bubble years of 2005."

Yun spoke recently on a panel at the National Association of Real Estate Editors conference in Atlanta.

Jed Kolko, chief economist for Trulia, also sat on the panel and commented, "right now we are not in bubble trouble, even though prices are rising as fast as we saw in last decades bubble."

Currently, home prices are 7 percent undervalued relative to incomes and rents. By contrast, home prices were 39 percent overhauled during the last housing bubble.

Kolko anticipates three factors will stem price appreciation before a bubble would form. These are--higher mortgage rates, fading investor interest and more for-sale inventory.

Yun expects existing-home sales to rise to 6.7 percent this year to 4.97 million before rising to 5.3 million and 6.7 million in 2014 and 2015, respectively.

Regarding the behavior of the lending banks, Mark Fleming of CoreLogic (who also sat on the panel) commented, "the question will be, 'have we learned our lesson in the industry?"

Photo source: Housing bubble

Posted in Headlines, Real Estate Industry, Real Estate Industry Trends, National News

Retail stores across the U.S. reported increased sales during May, according to the International Council of Shopping Centers (ICSC). Revenue at stores that have been open for at least a year rose 3.2 percent in May compared with the same month a year ago.

Many point to consumer confidence in a steadily improving U.S. economy, and improving job picture, a stronger housing market, and stock market rallies as the leading factors behind the spike in sales.

Michael Niemira, chief economist at the ICSC, explains, "some underlying improvement in the U.S. economy along with an improving 'wealth effect from rising stock and home prices is helping to lift the sales pace." Niemira reportedly expects the gradual increase in retail sales to continue, predicting revenue to rise 3 to 3.5 percent in June.

Some of the best retail performers were: Costco Wholesale Corp which reported that revenue for stores open at least a year rose 5 percent. SteinMart saw a spike of 8.2 percent, much higher than the projected 2 percent rise it had anticipated. L Brands Inc., operator of Victorias Secret and Bath and Body Works saw a 3 percent rise in sales. In the teen sector, Buckle Inc., saw a 4.1 percent rise as teens began to purchase spring and summer clothing apparel.

The new data comes just as the Labor Department reported that the number of Americans seeking unemployment benefits fell 11,000 last week to a seasonally adjusted 356,000--a level consistent with steady job growth.

Photo source: Breibart.com

Posted in Headlines, Denver Colorado Real Estate, Real Estate Market Conditions

The real estate market across the U.S. is improving. Banks are lending again. Homeowners are seeing the values of their homes increase as buyers engage in a bidding war for a limited (although expanding) inventory. Many are claiming that we are witnessing the early stages of another housing bubble brought on by the following conditions:

• The home building industry is largely dormant, although were starting to see construction of new developments in the wake of the financial crisis. This has effectively limited the current supply of new homes.
  
• Speculative buyers--who purchased foreclosed homes at extremely low prices during the market crash--are increasingly hesitant to sell as housing prices continue to increase nationally.
  
• Extremely low interest rates have made homeownership an attractive idea to many Americans.
  
• Mortgage defaults have gone down as luxury home sales have gone up.
  
• A general change in attitudes towards the housing market from "wait and see" to "get in now."
  

For sellers, these factors have created an environment where they can sell their homes for prices that were inconceivable just 12-18 months ago.

Meanwhile, buyers are seeing housing prices moving ahead (and far beyond in some situations) of incomes. Many are choosing to wait until supply and demand evens out in the housing market before entering it. According to an article published in Forbes magazine, by that time, "the Federal Reserve may finally return interest rates to near pre-crisis levels, while inventories are more likely to align with demand." Consequently, home prices should become more affordable for buyers trying to enter the market.

Investors, meanwhile, are taking advantage of the bullish conditions of the housing market. According to the Forbes article, the following investments are particularly enticing to investors:

• MGM Resorts International: Luxury gaming destinations have helped to fuel economic rebounding in places like Las Vegas, where stalled projects like City Center have finally managed to turn a profit.
  
• Weyerhaeuser: Investors are starting to invest in the companies that supply materials new home construction, including Weyerhaeuser.
  
• Sherwin-Williams Company: This is another example of a company that supplies materials for new home construction that has the potential to turn substantial profits for investors looking to take advantage of the bullish market conditions.
  
• HCP Inc: As the population continues to age, the demand for assisted-living facilities continues to grow, leading to continued expansion of the industry. According to the Forbes article, "HCP offers a robust upside opportunity on this combined real-estate and demographic trend opportunity, with a solid dividend for investors."
  
• Prologis: The Forbes article explains, "Industrial real estate is also a strong bet for the current real estate surge, providing upside both in terms of real estate assets and in terms of increased corporate spending from an improving economy."
  

The past five years have shown that real estate cycles are unpredictable even to the most trained and skillful economists. Its safe to say, though, that the housing market will likely start to improve for home buyers trying to enter the market as construction of new homes fuels supply and as the aforementioned speculative buyers begin to place their closely help properties onto the market. It is, however, very difficult to predict when these things will happen.

Meanwhile, investors have a tremendous opportunity to focus on investment opportunities that can potentially drive the real-estate market.

Photo source: nytexaminer.com

Posted in Headlines, Denver Colorado Real Estate, Real Estate Investing, Real Estate Market Conditions