New Year, New President

In the News   Presented by Prairie Title  

January 31, 2017

         

Onward We Go

We’ve just inaugurated a new President, and as we move forward as a nation in a different direction, uncertainty seems to be the dominant factor. No one knows how the new administration in Washington will work with the new Congress. Republicans are cheered, of course, about having control of the legislative and executive branches, but it was only eight years ago that Democrats had the same level of power, and they lost the legislature after two years.

One item that concerns me is the possibility that the home mortgage interest deduction might be revisited by the new Congress. It’s hard to tell how accurate reports are, but there seems to be some substance to the discussion. I hope changes to this vital economic tool are quickly taken off the table, as does nearly everyone in the real estate industry. Eliminating the mortgage interest deduction would no doubt do great damage to our industry, and likely the entire economy as middle class families work to cope financially without that valuable deduction.

I urge you to follow developments in Washington and stay in touch with your local and national associations, representatives and senators as events unfold. Let’s make sure our voices are heard as decisions are made.

Meanwhile, signs point to a growing real estate market this year. On the construction front, the builders are predicting another strong year. Last year, the National Association of Home Builders projected 1.16 million total housing starts in 2016, which was up nearly 5 percent from the previous year. Now NAHB is forecasting a 10 percent increase in single-family production for 2017 and a 12 percent rise for 2018.

On the whole, I’m optimistic about our industry in 2017. Refinances are drying up, but existing home sales will be good, more Millennials will be moving into the housing market and the commercial market is stable.  

What’s your point of view? I’d love to start a conversation. Call or email me, or write a comment below.

Other stories we’re following:

Pending home sales predict strong 2017.

Total value of U.S. home sales at all-time high.                    

Blockchain for mortgages, compelling but premature?

Millennials desire home ownership, but…         

Government and The Economy

In the News   Presented by Prairie Title  

October 31, 2016

         

Election Season is Here: Thinking of Government’s Role

By Frank Pellegrini, Prairie Title CEO   

It’s Halloween, so naturally the goblins and ghouls will be out in full force in our neighborhoods. Trick or treating reminds me of an economic concept I’ve been thinking a lot about lately. With the election just days away it’s a good time to ask the questions: How involved in our economy do we want our government to be? How many “treats” do we expect, or need? The federal government, of course, is very involved in our everyday economy, directly through regulation, taxation policy, etc., but also in some ways more indirectly.

Think of Social Security. While the money we all pay into Social Security is more or less the same money we eventually take out (hopefully), the government is still involved as the collector and distributor. And that money, when distributed, for the most part goes directly into the economy in the form of payments for housing, food, entertainment, etc.

Taking things a step further, some economists advocate strategic use of so-called “helicopter money” where the government flies in and “drops” money into a situation to solve a problem and at the same time provide economic benefit. Infrastructure is a good example. Government money spent on roads and bridges not only improves our lives by providing safer roadways, but also provides stimulus in the local area. Workers who provide the labor, in turn, pay taxes back to the government.

In an interesting piece by A. Gary Shilling published in Bloomberg News, Shilling argues that a form of helicopter money is needed to further stimulate our economy.

“Both U.S. political parties seem to agree that funding for infrastructure projects is needed, given the poor state of American highways, ports, bridges and the like. And a boost in defense spending may also be in the works, especially if Republicans retain control of Congress and win the White House. Given the ‘mad as hell’ attitude of many voters in Europe and the U.S., on the left and the right, don't be surprised to see a new round of fiscal stimulus financed by helicopter money, whether Donald Trump or Hillary Clinton is the next president.”

What’s your point of view? I’d love to start a conversation about this. Call or email me, or write a comment.

*****

Election Day is next week. If you haven’t voted already, I urge you to make your voice heard.

Other stories we’re following:

2017 U.S. mortgages to exceed $1 trillion: MBA.

Nine takeaways from the ULI convention.

Case-Shiller: Housing prices just below record highs.

 Why housing remains a bright spot.

Lousy Job; Good Life?

In the News   Presented by Prairie Title  

September 29, 2016

         

Our Social Compact in the New Economic Reality

By Frank Pellegrini, Prairie Title CEO   

Not so long ago, Americans chose careers (or happened into them), worked for a single company or a few companies over the course of a lifetime and felt a sense of security based on loyalty and the employer-based benefits they received. As we all know, that world has substantially gone the way of all flesh. What now?

The New York Times recently published an article by Michael Lind of New America, a non-partisan public policy think tank, that examines the social compact in modern America by posing the intriguing question, Can You Have a Good Life if You Don’t Have a Good Job? Lind’s answer: Yes.

Incomes are rising, and that helps, but less visible government benefits are also growing.

“Americans have been moving away from a system in which a good job with a generous employer was the key to having a good life to a new system in which even people with low-wage jobs can have access to the basic goods and services that define a decent life in a modern society,” Lind writes.

“The unelected policy experts who envision a future of multiple job types and a greater, if hidden, role for government in maintaining minimum incomes and providing health and retirement benefits are essentially right. From the 1970s to the present, then, mostly with bipartisan support (the glaring exception was Obamacare), American policy makers have responded to the decline of high-wage jobs and generous employer-based benefits by gradually expanding the role of the government in ensuring that Americans have adequate income and adequate benefits.”

As you listen to politicians leading up to November’s critical election, keep in mind that what government officials and those who aspire to replace them say about taxes and benefits while campaigning often contradicts what they do in office. It is up to us to try to tell the difference.

What’s your point of view? Keep the conversation going by calling or emailing me, or write a comment below.

Other stories we’re following:

Five trends affecting: commercial real estate.

Ellie Mae: Time to close settles at 46 days. 

Households make long-awaited gains in housing recovery.

Housing market paradox.