Los Angeles County Continues Reign as Most Populous

Of the 100 fastest-growing counties between July 1, 2003, and July 1, 2004, 60 were located in the South, 23 in the West and 17 in the Midwest, according to a recent report by the U.S. Census Bureau. While Flager, Fla., located along the Atlantic coast, was the nation's fastest-growing county with a 10.1 percent population increase between 2003 and 2004, Riverside (5.0 percent), Placer (4.6 percent) and Madera (3.9 percent) counties, all located in California, were also among the top 100 fastest-growing counties. With 9.94 million residents, Los Angeles County continues to be the most populous county in the nation, according to the report. Orange and San Diego counties are also among the country's top 10 largest counties, with 2.99 million residents and 2.93 million residents, respectively.
Full Article: from U.S. Census Bureau

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U.S. Housing Starts Dip in March

The seasonally adjusted annual rate for privately owned housing starts dropped sharply in March, falling 17.6 percent from February to 1.84 million units, according to a report released by the U.S. Dept. of Housing and Urban Development. Single-family housing starts declined 14.4 percent to a rate of 1.54 million units, while starts for buildings with five or more units reached 258,000. The number of building permits issued, which can be an indicator of future building activity, decreased 4.0 percent to a seasonally adjusted annual rate of 2.02 million permits.
All four U.S. regions posted decreases in the number of new privately owned housing units started in March when compared with the previous month. In the Midwest, housing starts fell 29.3 percent, followed by an 18 percent decrease in the South. In the West and Northeast, housing starts dropped 12.7 percent and 3.6 percent, respectively.
Full Article: New Residential Construction in March 2005

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Five California Cities Improve Air Quality

Five of the top 10 metropolitan areas with the largest improvements in air quality over a 12-year period are located in California, according to the 10th Annual Index of Leading Environmental Indicators, reported by the Pacific Research Institute. The list is based on the Environmental Protection Agency's Air Quality Index (AQI), which rates air quality on a scale of one to 500. AQI readings above 100 identify unhealthy air quality in a specific region. The following California cities are among the top 10 U.S. cities with the largest reduction in the number of days with AQI readings above 100: Los Angeles-Long Beach, San Diego, Riverside-San Bernardino, Orange County and Sacramento. Air quality in these areas improved an average of 59 percent during 1992-2003 when compared with the previous decade.
Full Article: Index of Leading Environmental Indicators 2005
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California: Many Homeowners Head to Retirement

The largest share of Californians who sold their homes in 2004—fortunately for them during one of the hottest real estate markets in the country—cashed out and headed off to retirement. The CALIFORNIA ASSOCIATION OF REALTORS® annual “Profile of Homebuyers and Sellers” reports that 18.4 percent of all sellers said they were retiring or moving to a retirement facility. In addition to retirees, the association says 15 percent of sellers sold because they wanted a larger home, while 13 percent desired a better location. Three out of every four sellers was a baby boomer—the huge generation of graying Americans who are approximately 40 to 60 years old—and the typical seller was 50 years old. Last year’s sellers fared well. The association profile says that sellers received record net gains of $204,386 last year, a 36.3 percent jump from $150,000 in 2003. Seventy-five percent of the state’s sellers planned to purchase another property, the profile indicates. Six out of 10 said they intend to buy a new home outside the county in which they previously lived, and an increasing number of baby boomers said they want to move to Arizona.
The association says the typical seller earned $100,000 annually. More than half were married—54.7 percent—and 31.3 percent were singles. Another 8.9 percent of sellers included two or more related or unrelated individuals while “others” constituted the remainder of sellers.
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Reverse mortgage ignorance a growing trend

Many seniors unaware of home's long-term-care-financing potential
The National Council on the Aging (NCOA) has published a report showing that reverse mortgages can help an estimated 13.2 million elderly homeowners pay for long-term care, allowing many to remain independent in their homes longer..

Of the 13.2 million eligible households, an estimated 9.8 million currently have an impairment that can make it hard to live at home, according to the study, "Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages to Pay for Long-Term Care."

A reverse mortgage is a loan that enables homeowners 62 years or older to borrow against the equity in their home, without having to sell their home, give up title, or take on a new monthly mortgage payment. The loan proceeds, which can be used for any purpose, may be taken out as a lump sum payment, fixed monthly payment, line of credit, or a combination. The loan amount depends on the borrower's age, current interest rates, and the value and location of the home.

State legislators, Medicare directors, regional associations on aging, faith-based groups, and officials from health and human service organizations recently met to discuss the findings.

"Most policymakers had no idea of the potential for reverse mortgages," said Dr. Barbara Stucki, a Bend, Ore., researcher and the project manager. "The results surprised them mainly because there was a general sense of ignorance about the product."

In total, these households could access as much as $695 billion through reverse mortgages. For individuals, the extra cash could go a long way to help with family caregiving and other long-term care expenses.

For example, a borrower aged 75 years old with a home worth $100,000 could receive a reverse mortgage that could pay a family caregiver $500 a month for almost 12 years, $1,120 a month in adult day care services for almost five years, or $2,160 a month in home care (daily care for at least four hours) for 2.5 years.

"The study shows that reverse mortgages have significant potential to help seniors pay for home healthcare services or to make home modifications that make independent living possible," said Peter Bell, president of the National Reverse Mortgage Lenders Association.

The report is the first in a multi-phased project focused on educating policymakers, the healthcare industry, the aging community and others about the potential use of reverse mortgages to help reform America's long-term-care financing policies. It was funded by the Centers for Medicare and Medicaid Services and the Robert Wood Johnson Foundation. Medicare and Medicaid have been seeking potential relief to mounting financial pressures.

"This is an important study that, for the first time, shows that elderly homeowners, many with chronic conditions, can use reverse mortgages to pay for care at home," said Jim Knickman, vice president for research at the Robert Wood Johnson Foundation. "We hope that these findings will prompt new thinking into how the nation addresses the challenge of financing long-term care."

NCOA projected annual Medicaid cost savings of $3.34 billion nationwide by 2010 assuming four percent of America's eligible seniors used a reverse mortgage to pay for healthcare services, or, if one in four used a reverse mortgage, $4.86 billion would be saved.

A reverse mortgage isn't repaid until the borrower moves out of the home permanently, and the repayment amount can't exceed the value of the home. After the loan is repaid, any remaining equity is distributed to the borrower or borrower's estate. A senior's home doesn't have to be owned free and clear to qualify for a reverse mortgage.

The NCOA study shows that while two-thirds (67 percent) of older homeowners today have heard of a reverse mortgage, only 9 percent indicate that they are likely to use this financing option to pay for assistance at home. Many don't understand the program,feel that they risk impoverishment, or that they won't be able to leave a legacy to their children if they tap home equity. The cost of these loans and current Medicaid policies on how reverse mortgages affect eligibility for long-term care benefits are other perceived barriers.

"We need expanded public education and additional work to explore how to reduce the cost of tapping home equity, to strengthen consumer protections, and promote innovation," Stucki said. "Overcoming these obstacles will mean that reverse mortgages can play an important role in helping many older Americans pay for the supportive services they need to continue to live at home safely and comfortably."

Tom Kelly's new book "The New Reverse Mortgage Formula" (John Wiley & Sons, New York) is available in local bookstores and on amazon.com. He can be reached at news@tomkelly.com.
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Overnight real estate rates fall further

30-year fixed rate at 5.37 percent; 10-year Treasury up at 4.28 percent
Long-term mortgage interest rates continued lower on Monday, and the benchmark 10-year Treasury bond yield rose to 4.28 percent.

The 30-year fixed-rate average dropped to 5.37 percent, and the 15-year fixed-rate sank to 4.96 percent. The 1-year adjustable was down at 3.68 percent.

The 30-year Treasury bond yield edged up to 4.61 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average dropped 16.26 points, or 0.16 percent, finishing at 10,071.25. The Nasdaq gained 4.77 points, or 0.25 percent, closing at 1,912.92.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.
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California: Home Price Gain of 18.6% Ends Streak

DataQuick Information Systems reports an 18.6 percent gain in Southern California's median home price to $439,000 during the 12 months ended in March. This marks the first time in 14 months that the median price has not posted year-over-year gains of at least 20 percent. However, experts contend that the market remains healthy and that a busted bubble is not likely in the immediate future. Sales in the region hit a near-record high of 32,674 over the same time span, attributable to robust demand, still-low mortgage rates, and a lean supply of properties on the market. The median price shot up 34.8 percent in San Bernardino County, 26.3 percent in Riverside County, 17.3 percent in Los Angeles County, and 16.1 percent in Ventura County. Meanwhile, San Diego County's March tallies are thought to be indicative of the region's future. The county recorded a 12.5 percent gain in the median home price and a 5.5 percent decline in sales. This leads many local housing experts to believe that the Southern California market will not crash, making a soft landing instead.
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Income Tax Time: Value of Homeownership

In the midst of tax season, the California Association of REALTORS® (C.A.R.) has decided to take a closer look at the benefits that go along with homeownership, particularly the consumption and tax benefits. There are generally two primary reasons for owning a home: for consumption purposes and for investment purposes. At this time of year, everyone is doing their tax returns or will have to do so before April 15th. It is crucial to reap all of the tax advantages available to you as homeowners. We will take a quick look at how valuable your homeownership is and how it can add to your bottom line during this tax season.

Our first look at the value of homeownership is the return on investment alone.
Let’s take a look back. Just imagine you bought your home at the median price five years ago. That home would have cost you $227,160 (February 2000 single-family median home price). In just five years, the value of your investment has skyrocketed to $471,620 (February 2005 single-family median home price), thus reaping a 107 percent gain in the value of your home. On average that is a 20 percent per year return, which is in and of itself an amazing return on your investment in any circumstances. In fact, that is nearly 3 times the nation’s return 7 percent per year over the same time period.

That return on your investment does not even take into account that the investment also provides a place to live for you and your family. Because this real estate investment is also your primary residence, you have a vested interest to take the proper care i.e. renovations, maintenance, and repairs, all of which are necessary in any real estate investment. Therefore, the benefits reaped are two-fold: the improvements made to the actual structure and property, and also the improved quality of living for you, your neighborhood, and community overall.

From a pure investment standpoint, if you decided to sell your home in 2004, $250,000 of that profit or equity is tax free if you are single and doubles to $500,000 if you are married and file a joint tax return, as long as you have lived in the home for at least 2 years and it is your primary residence (IRS Publication 523). Let’s take a look at the February 2000 example again. If you purchased your home in February 2000 for the then median price of $227,160 and decided to sell five years later in February 2005 for the going median price of $471,620. The equity gain on the sale of your home would be $244,460 and thus that amount earned would be tax-free.

Along with home equity gains and overall appreciation, there are other huge tax advantages to owning your own home—interest & property tax deductions. Let’s fast forward to those who have purchased a home recently. If you buy a home today at the February median of $471,620, and if property taxes are about 1 percent of the property value, the property tax deduction for that home would be approximately $4,716 in your first. In the first 12 months the interest paid on that home loan would total $26,750 (Interest calculated assuming a 20% downpayment with 5.71 percent FHFB February 2005 composite mortgage rate). Therefore, if you are in the 25 percent tax bracket the total tax savings in the first year of owning the home would be around $8,000 ($31,460 interest paid & property taxes x 25 percent marginal tax bracket). The IRS allows you to deduct the entire amount of interest paid on your home loan as long as you complete a Schedule A on your 1040, the loan is in your name, and the mortgage must be secured by collateral (usually the home itself—IRS Publication 936).

Many homeowners are also taking advantage of the ability to consolidate credit card debt and roll it into a home equity loan. The main advantage to this approach is being able to deduct the interest on the home equity loan as the first mortgage deduction rules apply. Interest on credit card debt is non-deductible and the rates charged are typically higher than that of the current rates charged on home equity loans. By taking advantage of these types of perks, homeowners are able to better handle their debt and improve their financial situations.

Homeowners reap many advantages when tax season comes around. Make sure you squeeze the most out of your homeownership as you can.
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California: Two New Loans for Buyers

The California Housing Finance Agency is unveiling a 35-year, fixed-rate interest-only loan that it believes will allow borrowers to afford a first home in the state's pricey shelter market by lowering monthly mortgage payments by hundreds of dollars.
In addition to its so-called PLUS loan, CalHFA is offering free mortgage protection through its HomeOpeners program, which automatically covers borrowers for six months after a job loss; the policy covers up to $2,500 a month for the first five years of a loan. CalHFA offers mortgage interest that is below market rate to first-time buyers who meet its income, home sale price, and other restrictions; and its loans typically range from $250,000 to $325,000."There are a lot of loan products out there and this is one more avenue to take," says Jim Hamilton, president of the CALIFORNIA ASSOCIATION OF REALTORS®, who adds that condominiums might make good buys in expensive areas.
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California school report card: Just released

State education leaders released new rankings for California's public schools that offered a glimpse of how campuses performed on standardized tests of English, math and other subjects. More than 8,300 schools were ranked on a scale of 1 to 10, with 10 being highest.
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Website access to California's sex offender registry is now available to the public

Megan's Law - Information on Registered Sex OffendersIn response to a legislative mandate, the California Department of Justice recently started providing online information about registered sex offenders. Specific home addresses are displayed.
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