Poll: Americans still believe deeply in homeownership

WASHINGTON – March 18, 2011 – Despite a historic real estate market upheaval that sent foreclosure rates skyrocketing and home values plummeting, Americans still have a deep attachment to homeownership. Furthermore, they consider homeownership an integral part of an American Dream in which they still believe, according to poll results announced today by The Allstate Corporation and National Journal.

The eighth quarterly Allstate-National Journal Heartland Monitor Poll revealed that nearly nine out of 10 homeowners say they would buy their homes again. That percentage held true even among homeowners who said their home values had declined. Seven of 10 Americans say they would advise a friend or family member to buy a home as a long-term asset. However, while homeownership is perceived as a good personal decision, there is much greater uncertainty about whether expanding homeownership should be a government priority.

Although only 35% of respondents expect their personal financial situations to improve over the next year, three-fourths of those surveyed said it is still possible for people like them to achieve the American Dream, which the poll defined as the ability to advance as far as their talents will take them and live better than their parents did. A total of 59% said they currently are living the American Dream. Respondents identified owning your own home as one of the most critical parts of the American Dream, second only to raising a family.

“Owning a home continues to be the bedrock of the American Dream – even as incomes are down, jobs are scarce and families struggle to make ends meet,” said Thomas J. Wilson, Allstate chairman, president and chief executive officer. “Homeownership is viewed positively by the vast majority of Americans as both a place to raise a family and a sound investment. As a result, financial institutions and the government must work together to ensure that those who can afford their homes stay in them and this opportunity remains a viable alternative for all Americans.”

Despite their positive statements about owning a home, only 42% of those polled said that government’s push to expand homeownership created more stable communities, while 51% said these policies made communities less stable because it “encouraged people to take on too much debt” and led to foreclosures. Those surveyed split exactly in half – 46% on each side – on the broad question of whether Washington should continue or scale back its efforts to promote homeownership through policies such as tax incentives for first-time buyers and the mortgage interest deduction.

“Homeownership retains a powerful, almost tidal, grip on the American imagination,” said Ronald Brownstein, editorial director of National Journal Group. “Even the economic experiences of the last several years don’t seem to have dimmed the yearning for ownership. But we do see that the public is much more ambivalent about whether the nation’s focus on expanding homeownership is a good thing for the country overall.”

Key findings from the eighth Allstate-National Journal Heartland Monitor Poll include:

1) Americans still believe in homeownership as a sound investment. A solid majority (70%) of Americans would advise a family member or close friends to buy a home to build long-term assets.

* Just 27% disagree with this statement and say homeownership is too risky. This measure is essentially unchanged since the first Heartland survey in April 2009.

* Young Americans (aged 18-29) are less convinced, with 49% who agree that homeownership is a sound investment and 49% who say it is too risky.

* Asked to name the best investment, 24% of Americans say “buying a home,” which ranks behind “investing in retirement savings” (38%), but ahead of “saving money in the bank” (20%), and “investing in the stock market” (6%).

* Most Americans (63%) believe that the current housing crisis is temporary and will improve over the next several years.

* Surprisingly, 58% of those who believe the housing crisis will remain a serious problem would still recommend buying a home.

2) Most Americans (59%) say they are living the American Dream.

* Those most likely to disagree include groups that typically have less of a safety net in a struggling economy: low-income households (51% disagree), those with a high-school education or less (43%), African-Americans (46%), and single mothers (68%).

* Three-quarters of Americans believe the American Dream is still achievable for people like them.

* 58% of Americans believe that the ability to achieve the American Dream is affected more by their own skills and hard work than by the state of the economy. This belief in hard work cuts across every demographic and socioeconomic subgroup.

For more results or to download the poll, go here.

The poll was conducted March 4-8, 2011, among 800 adults via landline and 200 adults via cell phone.

Copyright © 2011 Allstate-National Journal Heartland Monitor Poll.

To Buy or To Rent… You Decide

For the past decade or so, renting a home has typically been a better financial move than buying one. It’s been true in Southern California, San Francisco, Phoenix, Las Vegas and large parts of Florida, the Pacific Northwest and the Northeast.

By renting you most likely had to put up with friends and relatives who believed that owning a home was almost always superior. But renting also would have typically saved you thousands of dollars a year.

Now, as David Leonhardt of the New York Times continues to point out, the situation is getting more complicated because the housing bust has been playing out unevenly across the country.

“In some once bubbly markets, prices have fallen so far that buying a home appears to be a bargain, based on a New York Times analysis of prices and rents in 54 metropolitan areas. In South Florida, Phoenix and Las Vegas, house prices — relative to rents — are as low as in places that never experienced a bubble, like Indianapolis and St. Louis.

But in a handful of other areas, including San Francisco, Seattle and Portland, Ore., house prices remain significantly higher than they were before the bubble began. People who buy a home in these areas will face higher monthly costs than if they rented, even after taking tax deductions into account. As a result, buyers are effectively betting that prices will rise enough in future years to cover the difference.”

Below is an list of rent ratios — the price of a typical home divided by the annual cost of renting that home — for 55 metropolitan areas across the country.

According to Leonhardt, a good rule of thumb is that you should often buy when the ratio is below 15 and rent when the ratio is above 20. If it’s between 15 and 20, lean toward renting — unless you find a home you really like and expect to stay there for many years.

Metro area Ratio
East Bay, Calif. 35.9
Honolulu 34.4
San Jose, Calif. 32.7
San Francisco 27.9
Seattle 27.3
Charlotte, N.C. 27
Orange County, Calif. 27
New York (Manhattan) 26.7
Raleigh, N.C. 26.2
Portland, Ore. 25.9
North – Central New Jersey 25.2
Nashville 24
Denver 22.6
San Diego 22.1
Long Island, N.Y. 21.4
Milwaukee 21.4
Austin, Tex. 20.5
Norfolk, Va. 19.9
Richmond 19.7
Memphis 19.3
Bridgeport, Conn. 18.5
Hartford 18.4
Boston 18.4
Washington–N. Virginia-MD   18.3
Oklahoma City 18.2
Baltimore 17.6
Columbus, Ohio 17.6
Palm Beach County, Fla. 17.6
Salt Lake City 17.6
Sacramento 16.7
San Antonio 16.7
Chicago 16.6
New Orleans 16.2
Philadelphia 16.1
Houston 15.9
Fort Lauderdale, Fla. 15.7
Miami 15.6
New York 15.4
Los Angeles 15.4
Kansas City, Kan. 15.3
Inland Empire, Calif. 15.1
**National Average for    metro areas 15.1
Indianapolis 15.1
Jacksonville, Fla. 15
Minneapolis 14.9
St. Louis 14.6
Las Vegas 14.3
Atlanta 14.3
Orlando, Fla. 14.1
Tampa, Fla. 14
Cincinnati 13.9
Dallas – Fort Worth 13.8
Phoenix 13.3
Detroit 12.4
Cleveland 11.7
Pittsburgh 11.4

 –Towers of Channelside Ratios ranged from 10 to 13, indicating that buying is better than renting if planning to stay in the home longer than 2 years.

It’s pretty amazing when you think about it. The country has suffered through a terrible crash in home prices, yet buying a house remains an iffy proposition in many markets.

The data comes from Mark Zandi of Moody’s Analytics and covers the second quarter of this year.

Tax Credit Still Available For Veterans

As we move between Veterans Day and Thanksgiving, let us extend our gratitude to our armed forces and their loved ones.

Eligible Veterans are still able to take advantage of the Federal Tax Credits that expired for everyone else last spring. First Time Veteran Home Buyers that contract by April 30, 2011 and close by June 30, 2011 qualify to receive up to $8000 tax credit on their income tax return, and eligible Repeat Home Buying Veterans can receive as much as a $6500 credit.

Below is the wording from the www.irs.gov website.

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.

Homestead Exemption… Now’s the Time to cash in.

 Now is the time to purchase a new home if you plan on taking advantage of Florida’s homestead exemption next year!!  You will want to make the most of this Buyers Market in the next couple of weeks to benefit up to $50,000 in tax exemptions in 2011.

Realtor friend Maria Norton reminds us that technically part of the Florida Homestead Exemption, the Save Our Homes Amendment goes one step further in protecting homeowners by limiting the annual increase in tax assessment to 3 percent per year for properties that qualify. That means that even if the value of your home suddenly spikes (and hopefully it will) you won’t get hit with an unexpectedly large spike in property taxes, as well. (Home construction and other improvements may disqualify you from receiving the 3 percent limit, so discuss the benefits or drawbacks of such projects before you take them on)

Starting in January 2009, Florida property owners also began receiving this type of protection on their second homes when a law went into effect stating that the rate increase on second properties would be capped at an annual rate of 10 percent per year.
   
When it comes to the Save Our Homes Benefit, another term you’ll hear a lot is “Portability.” Portability is the ability of a homeowner to retain the benefits they’ve accrued through SOH, even when they move to another home of greater or lesser value.
 
For instance, logic says that Florida homeowners benefiting from the Save Our Homes benefit are paying less-than-market value for the property taxes on their homes, as the amount they pay each year is capped (unlike taxes in the open market). As such, it’s natural to assume that some residents would be reluctant to move and take on higher property rates, along with a potentially higher mortgage.
 
To prevent that, Portability allows you receive a similar benefit on your new home, even though it’s assessed at current market value. Pretty cool, right? The amount will vary depending on the value of your new home, and whether you are upsizing or downsizing on your move. (If you’re upsizing, you’ll be able to keep the entire benefit. If you’re down-sizing, you’ll receive the same percentage of the benefit applied to the new home’s value.)

Time to make your move…

Believe it or not, a housing shortage

Yes, even with months of inventory languishing on the market, some real-estate experts see a day coming when demand for new homes will exceed supply.

By SmartMoney

With all the talk of excess inventory and a flood of foreclosures, the idea of a looming housing shortage sounds unrealistic, if not downright fanciful.

After all, data from the National Association of Realtors showed a 5.1% decline in existing-home sales in June. Meanwhile, total housing inventory increased 2.5%, to 4 million homes available for sale — an 8.9-month supply, up from an 8.3-month supply in May.

Foreclosures, too, are an issue, with a vast backlog of distressed properties and “underwater” loans sitting just below the surface, according to RealtyTrac, an online foreclosure marketplace. The company forecasts that more than 3 million properties will get hit with foreclosure filings by the end of the year.

But if you step back from the doom and gloom of foreclosures and declining sales and focus on the low construction levels of the past few years, some economists say a housing shortage might be in the offing. A 2009 report by Massachusetts Institute of Technology economics professor William Wheaton says that despite the glut of existing homes, with current depressed levels of construction, there might be “excess demand” for new homes.

How could there be too few?

In the past seven years, housing starts first exceeded — but then fell short of — the historical norm of 1.6 million, according to the National Association of Realtors, with a deficit expected to grow into 2011. The chief economist of the Realtors group said last month that the big drop in home construction suggests a shortage could become an issue later.

Longer-term demographics support this theory, says Ross DeVol, the executive director of economic research at the Milken Institute, an independent think tank in Santa Monica, Calif. The U.S. is adding only about 600,000 housing units a year now, and the long-term growth in new households is 1.3 million to 1.4 million per year, DeVol says.

Rumors of a recovery

That household formation rate has fallen off somewhat because of the recession. But that decline is misleading because many college graduates have chosen to live with their parents while they find their financial footing, and some couples have deferred getting married.

But long term, that household growth says that “if we build substantially less than that amount, which we’re doing now, in four, five or six years, if we don’t ramp up housing starts, we could see a shortage,” DeVol says.

We’re still growing

There’s a tendency in any market that when you overshoot on the upside — which the U.S. did through 2007 in real estate — you undershoot on the downside, DeVol says. But underlying growth in population demographics — namely, how many people will enter the work force — is somewhere in that range of 1.3 million to 1.4 million, he says. One risk is that so many homebuilders will leave the field during the current downturn that there could be “capacity constraints” in the long term as the U.S. population continues to grow, says John Vogel, a professor of real estate at the Tuck School of Business at Dartmouth.

Consider that at the peak of housing bubble, in 2005, nearly 2.1 million new housing units were built. In 2006, that number dropped to 1.81 million; in 2007, as the bubble deflated, new units fell to 1.34 million. By 2009, only 550,000 new units were built, DeVol says.

There won’t likely be constraints in overbuilt places such as Las Vegas, Phoenix, Miami or Riverside, Calif. But if the pace of home construction doesn’t pick up, “we are going to begin to see some tightness in some areas of the country that didn’t have the boom and bust occur,” DeVol says.

The regions most likely to be undersupplied by mid-2012 are those where supply and demand are now in balance, says Celia Chen, a senior director of housing economics at Moody’s. Chen includes Washington state, Oregon, New Mexico and Utah in this group. This is where strengthening demand, combined with construction that will remain below trend, is likely to result in undersupply, she says.

This article was reported by Lisa Scherzer for SmartMoney.

Expiration of Homebuyer’s Tax credit

On April 30th, the tax credit expired in a relatively quiet manner… leading us to assume that the housing market is on more solid footing. When the original homebuyer tax credit was set to expire at the end of last November, there was much lobbying from Realtor groups and industry participants to extend the tax credit because housing needed more support at the time. While there was some word of a possible extension, those rumors were laid to rest as the tax credit expired. The housing market will now carry forward without government propping up demand, and only now will we be able to truly move in a positive direction and gauge the true health of the market.

Judges Say, ‘WOW. Don’t Miss These Balconies!’

A steady stream of Parade of Homes visitors kept The Towers of Channelside team hopping during the opening weekend. Potential buyers were full of compliments and challenging questions, while a panel of Parade judges raved about the “incredible balconies” in both Tower models, encouraging visitors to take note of them on the red ribbon special feature awards.  

Of course, we’re delighted and very grateful for both buyers’ and judges’ attention, and we hasten to express our thanks for their confidence and support.

St Croix's Balcony Travels the Full Length of the Home

However, with a full roster of changes over the past few months — from (drastically) reduced pricing and accessible financing packages to aesthetic modifications, an energetic new real estate sales team and nearly two dozen sales — we’re not entirely surprised by the interest.

Come by and see why:  Residence No. 1401 (the St Croix) — with three bedrooms and three baths, an incredible 662 square feet of terrace and space-expanding natural light through floor-to-ceiling sliders — never fails to wow visitors. And the two-bedroom, two-bath Residence No. 1405 (the St Thomas) packs an equal winning punch with brilliant space planning and an expansive terrace that’s accessible through sliding doors in three rooms.

They sure wowed the judges, but please come by and be your own judge — even (especially!) if you’ve visited in the past. Parade hostesses will be on hand to answer questions. And if these homes pique your interest and you’d like to tour some of the other seven floor plans, please stop in to meet the new sales team, and make an appointment for a personal tour. 

Or call at convenience and schedule an appointment, or register for updates on best pricing, selection of floor plan and location: 813-574-7252.