Reform of the Housing Finance System a Top Priority

The National Association of Home Builders (NAHB) created a white paper in 2012 called “A Comprehensive Framework for Housing Finance System Reform” which recommended utilizing both public and private sources of housing capital to keep the current federal government housing agencies. Recently NAHB has amended the 2012 white paper regarding the advancing of housing finance so there will be a secure and strong national financial market, job market and economic growth.

This is important when it comes to the housing market.  Without housing finance there would be no reason for new

developments and construction of new housing around the country. The home building industry is dependent on the housing finance system. One of the biggest hindrances mentioned in the white paper are the credit challenges home builders and home buyers are still facing that stemmed from the Great Recession.

The white paper clearly defines the importance of federal government support within the new system but limits the extent of the federal government’s duties. Conventional mortgages will be supported by private capital and a privately funded, mortgage-backed insurance fund with a federal government backstop to ensure it will be covered in case of a cataclysmic occurrence such as what happened in 2008.  Now the housing finance will be more private-sector with Fannie Mae and Freddie Mac transforming into a private-sector oriented system.

NAHB has challenged Congress and federal regulators to redefine housing finance reform because every American should have a decent place to live as stated in The Housing Act of 1949. 

Homeownership is one of the best financial decisions one could make and proves to be a stable investment. It provides solid jobs for Americans through home building and manufacturing products used in construction.  Hopefully these steps and challenges will reduce the risk that America will be hit by another Great Recession.

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Green Building – Tax and Rebate Benefit for Homeowners

There are always tax benefits for taxpayers who own their own home. New home buyers and remodeling homeowners can accrue tax credits when using green building techniques. Congress established these energy-efficiency tax incentives in 2005 which include tax code section 45L credit for the construction of energy efficient homes, 25C credit for retrofitting/remodeling existing homes and 25D credit for the installation of power production property in new and existing homes.

The National Association of Home Builders (NAHB) believes that green building is so important that they started to promote the concept in 2004 and created the first certification program for using green building techniques called

Certified Green Builder.  A good majority of new home builders and remodelers are Certified Green Builders which include some of the top builders in St. Tammany Parish. In fact, some of the builders who build homes in Bedico Creek are Certified Green Builders.

There are many green building techniques that are used today which include double and even triple pane energy efficient windows that will keep in heat or keep solar energy out (Low-E and Argon gas windows), green roofs or cool roofs which will either absorb or reflect heat, high performance insulation that is design to seal a home more effectively against elements, enhanced ventilation that moves heat and cool air through the home, ceiling fans, water conservation fixtures, solar power, wind power, thermal solutions (high efficiency HVAC systems and programmable thermostats), ENERGY STAR® appliances and paint which stands up to harsh elements.

Where can we find the residential energy credits? Windows such as Low-E and Argon gas windows, high performance insulation, roof improvements, energy efficient doors, and ENERGY STAR® water heaters / AC’s / heat pumps can be applied toward the 25C credit. Be aware of the rule changes to the 25C credit which include a 10% rate and a $500 lifetime cap. Data indicates that roof improvements are the biggest claims for the 25C credit. The 25D is the more popular of the two tax codes.  The credits can be applied through the use of solar electric, solar water heating, wind turbines, geothermal heat pumps and fuel cells. Solar electrical remodeling won for the most claimed activity for the 25D credit. In 2012, the latest IRS tax data, $1.9 billion cost for solar electric and $700 million for geothermal heat pumps qualified for the 25D credit.  The total for 2012 was $3 billion in qualified installations that were connected to the 25D.

Going green has two great benefits for the consumer as a homeowner and a taxpayer, you not only save on your monthly energy bills but you can save on your taxes with these tax credits. Builders also benefit and should consider incorporating the 25C and 25D qualified green building products into new housing and remodeling projects.

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Housing Finance System to Get a Boost from Ginnie Mae

Federal Home Loan Banks (FHLBanks) are an important component of the housing finance system and were sanctioned by Congress to meet the credit needs of communities everywhere in all economic cycles by providing liquidity for mortgage lending. There are 11 regional FHLBanks which supply low-cost funding to upwards of 7,400 members that include community banks, credit unions, insurance companies and community development financial institutions throughout the United States. The Mortgage Partnership Finance (MPF) programs provide FHLBanks’ members resources to sell their mortgages to secondary market agencies which allow community banks to compete with mortgage loans and competitive pricing. These institutions in turn can provide housing finance for low rates to future homebuyers, better lending standards and community investment opportunities to the local markets.  This program will be a great benefit to departments such as the Department of Rural Development Loans which is committed to the future of rural communities – the role of which is to increase rural residents’ economic opportunities and improve their quality of life.

The FHLBanks have teamed up with Government National Mortgage Association (Ginnie Mae) and created a program that will lend a helping hand to improve liquidity in the mortgage markets, provide more competitive pricing for consumers and increase credit availability. MPF issued its first $5 million security guaranteed by Ginnie Mae which is made up of a mix of loans.  It includes over 50% in the RHS category, a majority of VA loans and the remainder FHA loans. The Federal Home Loan Bank of Chicago and Ginnie Mae already have a program set in place that helps FHLBank members to sell their Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and Rural Housing Services (RHS) loans into Ginnie Mae securities.

“This is an important milestone for the MPF program,” said Matt Feldman, president of the FLHBank of Chicago. “Ginnies are among the most liquid financial instruments in the world, and this new product allows us to enable FHLBank members to offer competitive FHA, VA and Government Guaranteed Native American and Rural Housing mortgages.”  Ginnie Mae President Ted Tozer said.
“Now they can connect directly to the capital markets, improving the home financing options they can offer to their customers without the burden of having to individually obtain and maintain Ginnie Mae approval,” he added. Now local community banks and local lenders can compete with national large banks and pass the savings and improved home loan financing options to their consumers.

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Housing Market Is on its Way Towards a Full Recovery

One of the key indicators that the housing market is on its way towards a full recovery post-Recession is house prices.  House prices reached “bubble status” pre-Recession and was the partial cause of the entire crash of the mortgage industry during the crisis because buyers found themselves living in homes with loans that vastly exceeded the appraised value of the home.  House prices must maintain a delicate balance as the ebb and flow of the housing market dictated by new home and existing home buyer supply and demand raises and lowers pricing year-over-year.

The House Price Index (HPI) reported that house prices have been increasing for the last three months as of May, 2015, which had an annual growth rate of 5.4%.  That percentage was higher than April’s increase of 4.7% and March’s increase of 3.8%.  The HPI is issused by the Federal Housing Finance Agency, and another report by The Standard and Poor’s/Case-Shiller also showed a slower growth based on a moving three-month average.  This growth in home prices shows a strong demand for new and existing homes from home buyers nationwide.

The National Association of Realtors (NAR) also had good news to report about existing homes under contract nationally.  The Pending Home Sales Index (PHSI) reached a record-high in 9 years in May, 2015, and declined only slightly in June.  This statistic is based on homes with signed contracts as reported to the NAR.  Even with the decline, the PHSI was up 8.2% compared to June, 2014, and the number of homes under contract has been increasing for the last 10 months consecutively.  The Southern Region reflected a 5% increase for the entire year of 2015 for contracts on homes for sale.

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Available Construction Jobs on the Rise

Well over half a million builders are getting ramped up with the renewal of the real estate market nationwide and are very much now hiring employees as the number of open construction jobs increased in May.  In fact, the number of available construction jobs in the United States has been on the rise since 2012 along with the constant increase of new home sales and new home inventory.  May’s employment increase logged in as one of the 4 highest months of increases since 2012.

Almost 1.8 million contractors, sub-contractors, and trade companies also made up the number of businesses employed in the home building / remodeling categories of the total U.S. employment in June, 2015, bringing the total number of construction employed jobs to 2.442 million.  Now that new homes are being built on lots developed for sale in more and more numbers, the construction industry has gained almost a half a million jobs since the low point of the Great Recession.

In 2015 alone, approximately 127,000 jobs have been added in the U.S. nationwide.  In fact, since hitting the ceiling during 2010, the unemployment rate for builders and construction has dropped from 22% unemployed to 7% slightly higher than the national unemployment rate.  In fact, many builders are facing a shortage in employees as they try to build new homes for the buyer demand as quickly as possible in new home communities that once stood dormant during the Recession.  This increase in demand for construction employment has only been a boon for the real estate industry’s recovery overall.

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Buy a New Home on the Northshore at Bedico Creek Preserve

When relocating to the Greater New Orleans area, you may want to buy a new home on the Northshore at Bedico Creek Preserve.  If you are considering relocating to the tight knit area of West St. Tammany Parish, you can enjoy the ambiance of downtown Covington, LA, which is located approximately 7 miles from Bedico Creek Preserve.  Living in Madisonville, Louisiana, at Bedico Creek gives you easy access to shopping, entertainment, and dining at the many locations of the two shopping areas Colonial Pinnacle at Nord Du Luc and Stirling Covington Shopping Center off of Highway 21.  In addition to the prolific shopping at mall stores such as JC Penny, Belk, and Lane Bryant, Colonial Pinnacle at Nord Du Luc and Stirling Covington Shopping Center also showcase box stores such as Academy Sports, Kohls, Best Buy, Marshalls, Target, Hobby Lobby, as well as the Hollywood Stadium 14 movie theater.  This Covington, Louisiana shopping area also features restaurants such as Olive Garden, Longhorn Steakhouse, Texas Roadhouse, Cracker Barrel, and Panera Bread Company.  For faster food and service, you can visit Steak & Shake, Firehouse Subs, and Dickeys Barbeque Pit.

Bedico Creek Preserve offers lots and homes for sale in its masterplanned community in St. Tammany Parish.  Lots for sale start in the mid $40’s, and new homes for sale begin in the $230’s.  If you are interested in building your own new, custom home or if you are looking to relocate to one of our existing homes for sale, you can find any lot or home in a selection of different neighborhoods in this St. Tammany Parish subdivision.  Contact Bedico Creek today to schedule your tour.  Call 985-845-4200 or E-mail Info@LiveBedico.com.

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Guidelines to Use When Purchasing a Home in a Seller’s Market

The housing market is hot right now as can be seen in all the statistics gathered from real estate professionals. Multiple offers and shortage of homes on the market along with low interest rates have driven the market to where it is today. This can make for a challenging situation for home buyers. Bidding wars could lead you, as a buyer, to purchase a home priced higher than the appraised value of the home, or you may even spend more than you can afford. One of the downfalls of the Recession is that homeowners ended up owing more than their home was worth – home buyers don’t want to repeat this trend.

In the market for a new single-family home but are a little apprehensive because of the low inventory, increased prices and bidding wars? Don’t be…here are some guidelines to use when purchasing a home in a seller’s market.

Recognize the Supply and Demand. If there are not many real estate listings, it can be difficult to find what you are looking for when your pickings are slim. When you do find what you are looking for, you can bet other buyers want the same thing which will only drive the price up. You do not want to purchase a home at a higher price when the price rise is determined by low inventory versus a strong economy. A strong economy can support a strong market.

Scout Out the Neighborhood. Are there any signs of new construction or have the housing starts increased? If so, this is a good sign that the local housing market is thriving. Remember, if the local economy is strong it can sustain a rising housing market. Research the market by noting the number of developed lots in the community and the amount of building permits that have been issued. The St. Tammany Parish Residential Permits office provides information regarding the amount of building permits that have been issued in the Greater New Orleans area. Speak to a Realtor in the neighborhood market in which you are interested. They can tell you if new home construction is strong in the neighborhood and how many lots are for sale in the area.

Sometimes Losing Can Be in Your Best Interest. Buyers who push to any limit to win the bidding war can overpay and loose in the long run. Go into the bid with your game shoes on…set a budget and think about getting a preapproval from a mortgage lender. When setting a budget, remember to compensate for living expenses and emergency funds. If the bidding war sets the price too high, walk away!

Do Not Let Your Guard Down. Use smart self-defense when purchasing a home. Many buyers who want to win the bid give up rights that are standard in sales contracts. Contingencies are there to protect the buyer. It is pretty risky to give these up to appease a seller into accepting your offer. Buyers can lose their deposit if they do not have a preapproved mortgage and have been denied a mortgage after they have a house under contract or the inspection comes back with costly repairs. Another way a buyer can lose cash is if an appraisal comes in low and the mortgage lender reduces the loan amount making the buyer put up the cash to compensate for the gap between the loan and purchase price. If you feel you have found the house for you, then determine if the risk of waiving any contingency clauses outweigh any hidden financial surprises you might find.

Now is still a good time to buy as mortgage rates are low. In St. Tammany Parish at Bedico Creek Preserve, we have many new homes for sale from which to choose, including new homes priced from the $230’s – $300’s in two exclusive Neighborhoods called Cypress Crossing and Deer Park. To find out more about our homes for sale, Contact our sales office at 985-845-4200 or E-mail Info@LiveBedico.com.

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