Bitter winter froze demand causing new home sales to drop

The bitter winter chilled demand for newly built homes, causing new home sales to sink like a stone. The already struggling housing market received another blow, as new home sales dropped by almost 17 %. Skittish lending conditions are given partial credit. Overall conditions have not been very conducive to recovery in the housing market.

Less individuals considering new houses

A decrease in the sale and construction of new homes in the last few months has appeared. Reuters attributes this to the cold weather, less of a demand and the issues with foreclosures.

In February, there was a 27 percent decrease in new housing starts. There was a decrease in the annual rate of sales of new homes from 300,000 to 250,000. From January to February, there was a 16.9 percent decrease in new home sales. There was a 28 percent decrease in new home sales since February 2010. That year's data shows those figures.

The delay in construction most likely did have to do with winder conditions. Nevertheless, the decrease in existing home sales was likely as a result of weak demand. Nobody wants homes while banks have to lend to make it take place. Banks may be unwilling to write installment loans for these homes.

Head real estate economist blasts sluggish lending

The NAR site showed that chief economist for the National Association of Realtors, Lawrence Yun, said that if "mortgage credit conditions would return to normal," the sales would go up which is the issue with "unnecessarily tight credit" and loan companies.

Ron Phipps, president of the NAR, echoed Yun by saying that though rates of interest for mortgages were certainly lower than several short term loans, lamenting that "credit remains a challenge.". Purchasing a new home is something hard to justify. This is especially true when the home costs are low nevertheless and not going up. There was a median price for existing homes of $156,100 at the end of February. This compares to the new home median price of $202,100.

Glut of foreclosures

The housing market is currently riddled with foreclosed properties, and the rich are having a field day gobbling them up. Cash sales made up 33 percent of all home sales in February, and 39 percent of all homes sold were distressed properties, in accordance with Bloomberg.

The future of housing does not look good, in accordance with Federal Reserve Chairman Ben Bernanke. He said that mortgages were "difficult to obtain" and "there's no demand for construction" right now.

Purchasing a house is only something few will be able to do. This is for everyone with credit or money to do so. However, those that try to become homeowners will likely have a difficult time. Until credit gets better, more than likely the housing industry will struggle.

Information from

Reuters

reuters.com/article/2011/03/23/us-usa-economy-housing-idUSTRE72F3XG20110323?pageNumber=1

Bloomberg

bloomberg.com/news/2011-03-21/u-s-february-existing-home-sales-fall-to-4-88-million-rate.html

National Association of Realtors

realtor.org/press_room/news_releases/2011/03/feb_decline

Maryland challenges sovereign immunity in tribal lending case

Numerous state laws apply to United States short term lenders. When a legitimate company operates outside the bounds of state law – such as with Native American tribal lending – state laws traditionally have not applied. In accordance with the Center for Public Integrity, such a legal divide has resulted in a legal clash between Maryland regulators and Western Sky Financial, a personal loans provider that claims affiliation with the Cheyenne River Sioux Tribe.

Western Sky claims sovereign immunity is there

Owner of Western Sky Financial, Martin Webb, has the exact same opinion. He says the company is saved by its short term loans activity amongst Native American tribes from laws in the state. When trying to make a stricter personal unsecured loan rule in Maryland, the state is arguing this statement in court. The argument Maryland has is that tribal immunity is being used by Native American lenders. Customers throughout the nation are able to get the short term loans though. All native personal loan companies can be affected by the ruling. The CFPB has to make this decision.

Western Sky in Maryland supposedly breaks laws

The Western Sky Financial loans issue has a right and a wrong according to Anne Norton as financial regulation deputy commissioner in Maryland:

"I don't think there's a lot of gray area in terms of what is or is not permitted," Norton said. "Under our reading of both how tribal immunity is interpreted and how it's been applied by the Supreme Court, we feel that these are loans that violate Maryland law."

There can be a 33 percent Annual Percentage Rate cap on an unpaid balance with Maryland law. Right now, Maryland short term loan regulation doesn’t apply to Western Sky Financial as it has, instead of a Maryland license, sovereign immunity as it is part of the Cheyenne River Sioux Tribe operating out of South Dakota and online. APRs charged for short term unsecured loans vary by state, but are generally at least three times higher than the Maryland cap.

The Indian Commerce Clause is there

Webb’s attorney argues that under the Indian Commerce Clause of the U.S. Constitution, tribes are the ones responsible for regulating consensual relationships undertaken between non-members and members of a tribe. Webb claims that he doesn't have to recognize any lending laws outside of the tribe as he claims to be a Cheyenne River Sioux Tribe member.

Norton claims that Western Sky Financial should not be protected because it is not an arm of the tribe even though Maryland does follow Cheyenne River Sioux Tribe sovereign immunity rules.

It remains to be seen on which side of the argument a court will rule. There are a lot of times in which the court tends to side with tribes though which makes several suspect Western Sky Financial will win. For example, there is the Wall Street Journal case of casino lending with the Lac du Flambeau Band of Lake Superior Chippewa.

Citations

Public Integrity

publicintegrity.org/blog/entry/3052/

Wall Street Journal

online.wsj.com/article/SB10001424052748703565804575238621598513454.html

Western Sky Financial

westernsky.com/

Western Sky Financial: No collateral required

youtube.com/watch?v=183C9NM4XMg

Trend of increasing food costs anticipated to proceed

Americans are noticing a significant rise in food prices recently. Greater competition globally for agricultural commodities is trickling down to U.S. customers in the form of more expensive groceries.

Problem with food costs

Food inflation in January rose 1.8 percent year-over-year, according to the U.S. Consumer Cost Index. With the increasing fuel costs and bad weather, the price for many goods is going up. The need is going up right along with it. There was a huge impact on meat costs. This was where these factors changed cost the most. In January, corn prices went to a 30 month high since supplies are going down. Because corn is used more for livestock feed rather than consumed directly, the price of livestock is rising. Meat is wanted in more developing countries. In fact, China and India are both requesting more meat in their meals. U.S. beef exports have risen nearly 1.5 billion pounds in the past five years.

Average U.S. food costs

Other countries are beginning to bid against U.S. consumers. The supply of meat is limited. There has been an increase in pork prices of 12 percent, beef 6 percent and poultry 2 percent from a year ago. The grocery store costs are increasing in other products too since commodity costs are increasing. There has been a huge increase in bread, milk and egg costs according to January CPI data. Since the coffee bean prices went up 77 percent last year, coffee has started becoming more expensive while cereal isn't as cheap with increasing wheat costs. At the food store in 2011, pork costs are expected to raise the most, more than 10 percent. Beef is expected to go up as well. It is supposed to have a 7 percent increase. U.S. consumers will be eating more chicken, which is expected to rise in price a little more than 5 percent.

Perspective for cost of food this year

Overall, U.S. food prices are expected to rise 3 percent to 4 percent this year, according to the U.S. Department of Agriculture. U.S. lawmakers are trying to act like the food inflation doesn't affect Americans. Last week Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that effect of food inflation on consumers will be “temporary and relatively modest.”. The Fed doesn’t factor in food and energy costs when it calculates inflation, but more than 12 percent of after-tax income in U.S. households is now spent on fuel and food. Consumers aren't happy with the increases in costs. This is because unemployment is still extremely high while those who are employed are not having an increase in salary anytime soon. About $33,000 a year was the 2008 average made by a taxpayer. Two decades ago, it was not that bad.

Information from

CNN Money

money.cnn.com/2011/03/08/news/economy/food_prices/index.htm” target=”_blank

Seeking Alpha

seekingalpha.com/article/256992-rising-prices-are-hitting-consumers-harder-than-the-fed-will-admit” target=”_blank

Agrimoney.com

agrimoney.com/news/meat—and-oil—to-lead-climb-in-us-food-prices–2903.html” target=”_blank

Brand new jobs statement indicates unemployment dropped in Feb.

Unemployment has declined by an unimpressive percentage in the recently issued Feb. jobs report. Joblessness dropped 0.1 % through February to 8.9 %. Joblessness has dropped for the past three months in a row. Post resource – February jobs report shows decline in unemployment by MoneyBlogNewz.

Companies incorporating jobs

There was a small increase in Feb. in the number of jobs according to the Department of Labor's Feb. jobs statement. CNN reports that from Jan to Feb., the unemployment went down to 8.9 % from 9 percent, a 0.1 percent decrease. There were a lot more jobs included to the sector improving quite a bit from January. About 192,000 jobs were added. In Jan, employers included 63,000 jobs to the overall economy, however January was slower than Feb. as winter weather brought several areas to a near standstill, according to the LA Times. About 50,000 new jobs weren't reported in the Dec. and Jan jobs states. This was what the Labor Department said with a revised report.

Decreasing joblessness shown for a 3rd sequential month

The unemployment rate has declined for the 3rd month in a row. Throughout the recession, there have been drops and gains in the unemployment pace over and over. This seems different though considering there was almost an entire percentage pace drop in unemployment from December to Feb.. There were only 368,000 unemployment claims. That is a three year low. Much more than 9 million people are claiming joblessness benefits, in accordance with Forbes. The economy is projected by the Federal Reserve to grow between 3.5 and 4 percent during 2011, though increasing gas prices are sure to trigger some hiccups over the next few months.

Restoration can be hard with government spending reductions

CBS states that reducing the federal budget is a goal that many Republicans have in mind although economists are worried that might hurt the joblessness rate some more. Moody's Analytics' Mark Zandi thinks that a $61 billion cut from the federal spending budget, as planned, could end up a job loss for 700,000 people. This projection was mirrored fairly closely by Goldman Sachs. You should remember that Zandi claimed that the stimulus spending would allow joblessness to stay under 8 percent while being one of probably the most supportive people of the stimulus packages.

Articles cited

CNN

cnn.com/2011/03/04/news/economy/february_jobs_report/

Los Angeles Times

latimesblogs.latimes.com/money_co/2011/03/february-unemployment-jobs-economy-recovery-obama.html

Forbes

blogs.forbes.com/heatherstruck/2011/03/04/jobs-report-at-high-end-of-expectations-unemployment-drops-to-8-9/

CBS News

cbsnews.com/8301-503544_162-20037435-503544.html

Property sales rise though housing costs drop

Nationwide property prices are declining, however home sales are beginning to rise. The past few years have been volatile for real estate. That said, it would appear more individuals are going to loan lender to finance the purchase of a home. However, there is a slight caveat. It’s possible that sales are only increasing due to the low costs.

Homes being bought by buyers

CNN reports the National Association of Realtors explained that more people are buying home with home sales nationwide. Home sales rose 2.7 percent over Jan 2011, to a seasonally adjusted rate of 5.36 million per year. For the first time in seven months, home sales are over the figures from a year ago. There was a 5.3 percent increase from January 2010. People who haven't had to make their way to a lender to buy the houses have been the ones making this increase happen though. The number of cash purchases was 32 percent of all sales, up from 26 percent in Jan 2010. About 23 percent of sales were to buyers which, in Jan 2010, were only 17 percent.

Too several foreclosures

The discounts on foreclosed properties are what have gotten several cash buyers and investors interested. Bloomberg explains how many properties were distressed. In Jan 2011 home sales, 37 percent had this issue. More houses are accessible at rock bottom costs, and many loan businesses are anxious to get a property off its balance sheet. There aren’t several people who have enough instant money to pay for a property out of pocket, even one sold at half its worth. Since Jan 2010, the median property price went down to $158,800 which is a 3 percent drop.

Continuing to decrease home value

USA Today states that the metropolitan areas are having home values drop drastically. In all however one of the 20 major cities the Standard & Poor's Case Shiller Index tracks, there were drops. Washington D.C. was immune to the drop. It was the only one city without dropping prices. Arizona, California and Florida are all areas where real estate is inflated where drop has been very clear although states in the south like Mississippi and Alabama are having declines also. There might be more of a demand for homes considering the rise in sales.

Information from

CNN

money.cnn.com/2011/02/23/real_estate/january_home_sales/index.htm

Bloomberg

bloomberg.com/news/2011-02-23/sales-of-u-s-existing-homes-climb-to-eight-month-high.html

USA Today

usatoday.com/money/economy/housing/2011-02-22-home-prices_N.htm

U.S. embassy closes in Tripoli as sanctions loom against Libya

The United States Embassy in Libya has shut down, due to growing violence and instability in the North African nation. The regime of Gadhafi is fast losing its grip of the country. Deadly reprisals against Libyans have done little to quell demonstrations in opposition to his rule in excess of four decades. Sanctions in opposition to Libya are likely to be enacted soon.

Gadhafi regime getting firmer indicating issues in Tripoli

In order to gain control of Libya, Tripoli has become a battle ground while dictator Moammar Gadhafi is entirely losing handle. Gadhafi loyal army members are firing upon demonstrators and keeping the place dangerous. Still, protesters refuse to leave when their lives are in danger. Reuters states that the U.S. State Department has stopped any American Embassy operations because of the Libyan instability and has used a chartered ferry to move embassy members out of Tripoli. Currently, the embassy is open nevertheless. Staff will be evacuated soon though.

Sanctions in opposition to Libya something considered

The White House has affirmed that economic sanctions could be levied against Libya, in response to the brutal tactics used by Gadhafi in addressing the unrest in the country he has ruled for more than four decades. CNN states the U.S. already cut off all military cooperation with Libya while President Obama and the United Nations Secretary-General Ban Ki-moon may have a meeting soon to discuss the sanctions. Obama has been dealing with criticism recently. This is due to the stance on Libya he has shown has been too soft.

Leaders across the world hope Gadhafi will quit soon

The resignation of Colonel Gadhafi is not something just Libyans want, the NY Times states. In fact, international leaders and figureheads have been asking for this. President of France Nicolas Sarkozy said that Gadhafi needs to quit while "the world will hold you to account" was what British PM David Cameron had to say. Gadhafi is going to "die a martyr" before leaving. This is what he has said, that he won't be alive when he leaves if it occurs.

Articles cited

Reuters

reuters.com/article/2011/02/25/us-libya-usa-idUSTRE71K6D520110225?pageNumber=1

CNN

cnn.com/2011/WORLD/africa/02/25/libya.us.reaction/

NY Times

nytimes.com/2011/02/26/world/middleeast/26diplomacy.html

Charge card delinquency and debt dropped in 2010

Fewer charge card delinquencies are being documented, and the level of credit card debt is declining also. Recent data from credit bureau TransUnion indicates more individuals are paying their cards off. More people are applying for cards, as more are also being issued. Dropping delinquencies indicate several individuals are paying down holiday purchasing sprees.

Consumers get out of debt in 2010

During the last three months of 2010, the number of delinquencies for charge cards declined considerably, according to ABC. Credit rating bureau TransUnion released a report that indicated charge card delinquencies fell to just 0.82 percent in the last three months of 2010, in contrast to 1.21 percent in the last three months of 2009. The 3rd quarter of 2010 had a delinquency rate of 0.83 percent. Usually during the holidays the number of delinquencies goes up drastically; however, it seems that this year more people preferred to stay out of debt than to buy lots of presents.

Balances are ever changing

The credit card national average balance has changed also. It went down a bit. For the last three months of 2010, there was a decrease to $4,965 for the average balance on major cardholders including Visa, MasterCard, Discover and American Express which is a drop from the period in 2009 of 8.6 percent. In 33 states, the balance went up really. There were highest balances in three places. These were Washington D.C., Iowa and Mississippi.

Lots of new cards

There have been a lot more cards issued recently even though credit card businesses have complained the CARD Act makes business terrible. In 2010's last quarter, there was a huge increase in the number of credit cards issued. The 19.1 percent increase goes against what credit card corporations say. That was the first time since 2007 the number of newly issued charge cards rose for two consecutive quarters.

Articles cited

ABC News

abcnews.go.com/Business/wireStory?id=12968324&page=1

Washington Post

washingtonpost.com/wp-dyn/content/article/2011/02/23/AR2011022306978.html