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Preview of this Issue and an Update on the Surreal Housing Market
 Please read on if you would like to learn about nonrecourse mortgages, see our expanding list of seminar offerings, get an update on the progress of wind energy, and learn about a great new web resource for builders.
And, try as I might, I cannot help but provide another update on the housing market. New home sales in 2009 sunk 23% from 2008, yielding the worst year since 1963, when economists started keeping track. As for existing homes, the bump in November that resulted from the deadline, since extended, for the tax credit, did not carry through to December. December sales were lower than expected, lower than the previous low in August, but higher than December 2009.
Last month, I joked about the Arizona law professor who provided justification, on moral and financial grounds, for strategic defaults by homeowners who are under water. Why pay the mortgage if doing so is no longer a financially justifiable strategy? It is a measure of the extent of the housing market's trouble that his ideas are catching on. By that, I mean that an article in The New York Times gave them serious consideration. The law professor's idea only works in states like California and Arizona that permit nonrecourse mortgages, i.e. mortgages where the only recourse is a sale of the property, not the borrower's other assets. Enough other states (sorry, not Ohio) allow nonrecourse loans to make this a nation-wide issue. However, until enough under-water borrowers make a move, there is no reason to implement a policy change such as the one suggested by two other academics--reduce loans to reflect new market values in areas where values have dropped by 20%.
Since Ohio is not a non-recourse state, just do yourself a favor and, if you can, ignore the housing market. If you do not have to sell, do not check real estate web sites for the sales prices of comparable homes.
As always, I appreciate the time you have taken to review this e-newsletter. Please feel free to contact me if you have any questions, comments, or suggestions for future articles.
Jim Dixon
216-515-1642
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Builder Launches TheBuilderWarehouse.com Todd Mason, a family friend, client, and successful builder based in Hinkley, Ohio, has launched what is a much-needed service for builders--a free online service similar to newspaper classifieds and Craigslist (the online service that wiped out newspaper classifieds), where builders can buy, sell or trade construction materials or services. Follow this link to see how the site can help you. |
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Is Wind Energy Surge Sustainable? The wind power industry now employs 85,000 people. Half of components are manufactured domestically. Texas, Iowa, and California are the top three production states. And, despite the recession, wind energy increased capacity by 39% in 2009. Though the U.S. now gets 2% of its energy from wind, a slow-down of orders diminished expectations for 2010. And, further expansion faces challenges presented by a lack of long-distance transmission lines. Review article or visit the American Wind Energy Association's web site for more information. |
