Discussing real estate being the top choice for a long term investment, another reason why new home prices are rising, tough choices for today’s buyers and more!
What is the Best Way to Invest?
In case you missed my post several weeks ago, Gallup does a poll every year asking what their choice for the best long-term investment. Respondents are given a choice between real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.
For the 5th year in a row, real estate was the number one choice! Check out the chart showing the results:
There is no doubt that investing in real estate is a great wealth builder. This includes owning the home you live in as well as owning investment properties or flipping homes.
My suggestion is that you speak with your financial advisor and tax person to determine what is best for you.
Bank of America and Wells Fargo Accused of Housing Discrimination
On May 4, the Lawyers’ Committee for Civil Rights Under Law, the ACLU Foundation, the National Fair Housing Alliance, the NAACP Legal Defense & Educational Fund, Inc., the Poverty and Race Research Action Council (PRRAC), AARP and eight fair housing organizations filed a motion seeking leave to file a “friend of the court,” amicus curiae brief in City of Miami v. Bank of America and Wells Fargo & Co., a case pending in the Eleventh Circuit Court of Appeals. In 2016, the Supreme Court issued a decision in the case holding that the City of Miami had standing to bring a case against the defendant banks in which the City alleges it was harmed by the targeting of predatory high-cost loans at communities of color in Miami. At the same time, the Supreme Court remanded the case to the Court of Appeals to determine whether the alleged discriminatory actions by the banks were the proximate cause of the harm they allege to have experienced.
The brief supports the City, which alleges that the banks’ lending practices discriminated against persons of color and resulted in concentrated foreclosures in predominantly African American and Latino neighborhoods in Miami. In turn, these foreclosures are alleged to have directly harmed the City’s fair housing efforts, deprived it of the benefits of an integrated community, robbed properties and neighborhoods of their value, diminished tax revenues, and otherwise drained the City’s resources. The types of practices that the City is challenging significantly contributed to the 2008 financial crisis and ensuing recession, which exacerbated the racial wealth gap.
While this is an accusation and does not prove anything, we have to consider the history of both of these banks. Neither of these banks has a stellar record…
It will be very hard to win against banks with very deep pockets. The best they may be able to hope for is a settlement.
Cost of Residential Construction Goods Up 4% in 2018
The prices of most building materials increased in April, according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. The 0.9% increase in prices paid for residential construction inputs (goods) was the fourth consecutive monthly increase. The index has risen 3.9% over the first four months of 2018 and sits 6.2% higher than it did in April 2017.
We have all heard that the high demand and low inventory of homes for sale is causing home prices to increase. It appears that this could also cause new home prices to increase as the rising costs will be passed on to buyers.
NAHB also said that since the beginning of last year, rising lumber prices – primarily as a result of tariffs on imported Canadian softwood lumber – have increased the price of an average single-family home by more than $7,000.
RBS Settles MBS Investigation for $4.9 Billion
Royal Bank of Scotland (RBS.L) has agreed to pay a smaller-than-expected $4.9 billion to resolve a U.S. investigation into its sale of mortgage-backed securities, paving the way for a long-awaited return of cash to UK taxpayers who bankrolled its post-crisis survival.
The implosion of markets for residential mortgage-backed securities and related derivatives contributed to the global financial crisis and prompted a series of investigations by authorities including the U.S. Department of Justice.
Another week, another settlement. While the cost to prevent RBS from going under was paid by UK taxpayers, the stuff they did was in the US.
Beware of the Coming Economic Debt Bomb
From The Street:
We know that the Fed has kept interest rates low for many years until recently. Why did it do so? Here are some of the reasons we have been told:
- The Fed wanted to stimulate the economy.
- The Fed wanted to make it easier for Americans to borrow.
- The Fed wanted to create a “wealth effect” to encourage spending.
Which of these statements do you think explains the primary reason for the Fed’s decision to keep interest rates low? Don’t bother. It is none of the above.
The primary reason the Fed kept interest rates low was to avert an economic catastrophe. Today, that catastrophe can no longer be avoided. The trigger for the economic explosion is the rising interest payments on the federal debt.
The staggering amount of federal debt is one of the biggest concerns I have about the future. Too much debt is not good for us and it certainly isn’t good for America.
Tough Decisions for Home Buyers in Today’s Market
From Trulia’s Consumer Home Buying Survey:
- 84% of millennials (ages 20-36) are willing to give up one or more home features to live in their ideal neighborhood
- 89% would be willing to give up one or more neighborhood features to live in their ideal home
- Of the 86% of millennials planning to purchase a home, 35% plan to purchase in the next year
- 98% of millennials planning to buy in the next year have encountered obstacles that are keeping them from buying at this time
In some ways, these are the same problems faced by many first time home buyers since the dawn of time. Home buyers need to focus on buying a home that fits their budgets and needs.
Well that is it for today! If you enjoy this article, please share it on Facebook, Twitter and Google!