New Home Sales Fall Slightly in May

New home sales unexpectedly fell 0.6 percent in May according to figures released by the Commerce Department, surprising analysts who predicted a 2 percent increase in sales of new homes. Overall, the number was down 32.8 percent compared with the same period last year.

Still, analysts are hopeful for a recovery later this year. 

"Even though sales disappointed expectations for a rebound, demand for new homes is still exhibiting signs of stability, albeit at very low levels," Michael Feroli, an economist for J.P.Morgan Chase, told The Washington Post.

Sales increased in the West and Midwest parts of the country by 1.3 percent and 18.6 percent, respectively, while the Northeast saw an increase of 28.6 percent. However, an 8.5 percent decline in sales in the South brought the nationwide number down. 

Builders have cut production and lowered prices, but potential buyers are still nervous, fearing job loss in an unstable labor market. The recent rise in interest rates has also been a deterrent. 

"If mortgage rates don't keep going up, you could see improvement in home sales" later this year, said Stuart Hoffman, chief economist for PNC Financial Services Group told the Post. "If they rise further, it would be spring of 2010 before we see any improvement in sales and construction."

Builders have more than 10 months of inventory backlogged, according to the Commerce report. This is about twice the amount in an average market. 

"Unfortunate Locations" Don't Deter Some From Their Dream Homes

Here's a charming story that appeared in today's New York Times Home & Garden section. It's called "The Unfortunate Location" and it's about people who were able to purchase their dream homes at reduced prices because the homes are located in what some might consider "undesirable locations."

My favorite "undesirably located" home is that of Kathleen Hulser, whose early 1800s home is positioned between railroad tracks and a former Superfund site that was a dumping ground for chemicals. The Superfund site was cleaned up, but there is a still a train that uses the tracks -- which are all of 20 feet from her home. The train goes past around 7:30 am each day and the conductor greets her with a wave. "It almost counts as a charming defect," Hulser told the Times. 

The accompanying photo of the locomotive travelling literally a stone's throw from Hulser's house is priceless -- not unlike how the featured homeowners feel about their dream homes, even with their location challenges. Check it out.

  

"Hope For Homeowners" (Okay Make That "Homeowner")

Here’s a little update on Hope for Homeowners, the program created last summer by Congress to help an estimated 400,000 homeowners avoid foreclosure. Hope for Homeowners was designed to give people who couldn’t afford their mortgage payments a chance to refinance into a 30-year, fixed-rate loan insured by the Federal Housing Administration, even if they owed more than their home was worth.

So, we thought we’d check in and see how successful the program has been at assisting troubled homeowners. To-date, the total number of homeowners helped is…drumroll please…

1

Wait. Did we read that right? $300 billion set aside for this program and we have…one.

All sarcasm aside, the program has been universally regarded as a flop. But Congress and the Obama Administration believe it can be saved, with fixes, and be a key component of the government’s campaign to curb foreclosures. So recently, President Obama signed a bill that included improvements to the program.

The key problem with Hope for Homeowners in its original form was that lawmakers put in so many eligibility requirements that few borrowers qualified – and if they did qualify, it was very expensive to participate. Additionally, lenders had to follow complicated rules and then had to agree to reduce the loan balances of borrowers in order for FHA to insure the loans. Instead many decided to take their chances with foreclosures. 

As part of the new version of the program, HUD will likely reduce borrower fees to participate and will likely offer lenders and servicers incentive payments, much like the Making Home Affordable program that the Obama Administration created to help up to 9 million struggling homeowners.

AHAA appreciates the efforts being put forth by Congress and the Administration to help struggling homeowners. However, AHAA believes that an additional option should be explored: one of the most cost-effective and successful ways of avoiding foreclosure is to give homeowners the opportunity to sell their homes themselves and enable them to realize the equity gained. The combination of down payment assistance and a 30-year fixed FHA loan enables a homeowner to achieve equity in his or her home. As such, AHAA calls upon Congress again to reauthorize privately funded down payment assistance.

Obama, Biden Set Lofty Goals For Summer

We're 100 days into President Barack Obama's Recovery Act, and today he and Vice President Joe Biden spoke on the accomplishments made to-date, as well as their expectations for the next 100 days. 

Thus far, the act has saved or created more than 150,000 jobs; provided tax additional tax breaks to more than 95 percent of families; expanded food assistance, Medicaid and unemployment benefits;  provided aid to state governments; authorized 4,000 infrastructure improvements nationwide; and made investments in new energy technologies such as wind, solar and biomass.

However, on Friday, the May employment report indicated that 345,000 jobs were lost last month. While this was lower than expected, and was the lowest number of jobs shed in the past eight months, it was still a hard pill for the administration to swallow. 

"I'm not satisfied. We've got more work to do," Obama said today. "The biggest concern that I have moving forward is that the toll that job losses take on individual families and communities can be self-reinforcing. People lose jobs, they pull back on spending, that means businesses don't have customers, and suddenly you start seeing more job lay-offs. Our whole task here with the Recovery Act is to reverse that negative cycle into a positive cycle, and it's going to take some work.

"There are families who are still losing not only their jobs, but maybe losing their homes, finding themselves under extraordinary financial straits," Obama said. "And it's a reminder that we're still in the middle of a very deep recession that was years in the making, and it's going to take a considerable amount of time for us to pull out of."

So today Obama and Biden outlined an ambitious goal for the next 100 days, dubbed the "Roadmap to Recovery," which prompted Biden to say, "by the fall I think we're going to be much further down the road to recovery." In total, Biden said, he expects the plan to grow another 600,000 jobs.

Roadmap to Recovery short-term goals, broken down by cabinet:

• Justice: Add 5,500 law enforcement officers on the street this summer.
• Health and Human Services: Build 1,129 health care centers in eight states and eight territories, providing service to approximately 300,000 additional people.
• Interior: 107 new park projects -- many of which are energy conservation projects.
• Veterans: Improvements to 90 veterans’ medical centers.
• Agriculture: 200 new waste water and related projects in rural areas.
• Transportation: Rehabilitation of nearly 100 airports and 1,500 highways.
• Environmental Protection: Accelerate clean-up of 21 Superfund sites.
• Education: 135,000 education-related jobs.
• Labor: 125,000 meaningful summer jobs for youth.
• Defense: 2,300 construction and rehabilitation projects on 359 military facilities.

"Fairly ambitious," Biden said. "But I asked the Cabinet [to] give me what they think is realistic."

"In the end ... the only measure of progress is whether or not the American people are seeing some progress in their own lives," Obama said. "And so although we've seen some stabilizing in the financial markets and credit spreads have gone down, we're seeing a reduction in the fear that gripped the market just a few months ago, stock market is up a little bit -- all that stuff is not our ultimate goal. Our ultimate goal is making sure that the average family out there -- mom working, dad working -- that they are able to pay their bills, feel some job security, make their mortgage payments; the small business owner there is starting to see customers coming back in, they can make payroll, they can even think about hiring a little bit more and expanding. That's the measure, how ordinary families are helping to rebuild America once more."

To follow the Roadmap to Recovery and to share stories of recovery in your community, visit www.whitehouse.gov/recovery.

When It Rains, It Pours In

The drenching imposed by spring and summer thunderstorms is great for your lawn and garden, but that usually beneficial rain can be devastating if it leaks in under doors, around windows or into your basement.

As a preventative measure, always make sure that gutters and drains outside of basement doors are cleared of debris – and this can build up quickly if there’s a mulched bed or trees nearby. Keep an eye on windows and doors – especially when rain blows sideways. Any leaks may require the help of a professional.

If you do have a leak of clean rainwater, especially in a space where the floor is carpeted, fast work is necessary to save belongings and money. (Leaks of potentially contaminated water, such as sewage in flood water, can contain harmful organisms and should be handled by a professional.)

First, locate the source of the leak and stop the flow of more water into your home. Then, remove belongings from the area and mop up any standing water with towels.

If carpet has been soaked, a wet vacuum will help to pull water from deep in the threads, but it will not likely pull the moisture from the pad. The carpet may be salvageable by pulling it up off the floor and elevating it to dry, then laying it back down after the floor beneath has dried. The wet section of the pad, however, will probably have to be replaced as carpet padding is very difficult to dry successfully. Open windows (if the rain has stopped) and turn on fans to hasten the drying process.

If necessary, the carpet can be professionally cleaned or treated on the surface and underneath with an antimicrobial solution that will inhibit any mold growth. When the carpet and floor beneath are dry, a professional or the use of a carpet stretcher may be necessary to re-lay the carpet.