economic update and forecasting for real estate professionals, mortgage professionals, and those...
DESCRIPTION
Not sure what is happening in the world of housing? What are low income housing advocates facing? How do we solve housing issues? Can economic data help? Mary Kelly, Economist, provides data and recommenationsTRANSCRIPT
1
Hou
sing
Sup
ply
and D
em
and in
Aw
eso
meto
wn,
Iow
a
An Economic Update for
Awesometown, Iowa
By Mary Kelly, PhD,
CSP, CDR, US Navy (ret)
Governance
Business
Schools
Communities
Economic challenges
affect:
Everything is resource
allocation
Economics is largely
anecdotal
Do I have investments?
Are they still down?
Will my taxes increase?
Dow up! S&P up 22.11% over last 365 days
What stocks are doing well?
What goes down does not
come up
$1,000
- 40%
$600 +40%= $840
Investments still down?
Inflation
Do you have a job?
Do your friends have jobs?
Are you upside down on
your house?
Hou
sing
Sup
ply
and D
em
and in
Aw
eso
meto
wn,
Iow
aIs US housing affordable?
Well, yes, but it might not feel like it
US National Debt
Taxes are increasing
Over $6 trillion new debt last 3 years
• $17,702,226,121,312 per www.usdebtclock.org
• $141,119 per taxpayer last Dec 2013
• $151,897 Sept 2, 2014
• Top 5% of Americans pay 58.66% of Federal
income taxes collected
• Bottom 46.3% of Americans pay no federal
income taxes
Debt and Taxes
Taxes up more than $500 billion in 2013
• Average tax increase of $3,500 per household
• Married couple pays 28% vice 25% above
$72,300
• On income up to $8,900, goes from 10% to 15%
• Summary: Typical middle-class family making
$40,000-$64,000 sees $2,000 more in taxes
• Family making $110,000-$140,000 sees $6,000
more in taxes (Tax Policy Center)
TAXES!
Remember, for Americans,
economics is local
*Do we have more disposable income?
*Consumer confidence, housing, auto sales
higher
*Fiscal cliff? Sequester?
• $1 trillion over 9 years
• 50% DoD
• 50% other federal programs
• No on is talking about it unless
you are impacted
• Less federal funding for low-income housing
Sequestering
• The average duration of unemployment
• The value of outstanding commercial and industrial
loans
• The change in the Consumer Price Index for
services
• The change in labor cost per unit of output
• The ratio of manufacturing and trade inventories to
sales
• The ratio of consumer credit outstanding to personal
Lagging Economics
Indicators
$16,482,511,352,009 Sept 2, 2014
$51,704 per citizen (includes babies)
Comes from:
$13,236.544,560,010 Mortgage debt
$ 1,291,808,571,121 Student loans
$ 875,182,401,179 Credit card debt
Total Personal Debt
-$875,182,401,179 Sept 2, 2014
-$672 billion July 2012
-$805.7 billion March 2010
-Falling indebtedness due to defaults vice
repayments (Fed Reserve) 2010-2012
-72% of Americans carry CC debt
Individual US Credit Card
Debt
P R O D U C T I V I T Y
p h o n e # o r P e r s o n : R e g a r d i n g :
T i m e : P e r s o n / P l a c e :
Productive Leaders 2011©
D a t e : __________________________
F o l l o w U p
T o d a y ’s A c c o m p l i s h m e n t s
T o D o
S h o r t - T e r m G o a l s
A p p o i n t m e n t s / M e e t i n g s
C a l l s t o M a k e
-3,100,761 population 2,899,715
-72,358 unemployed 68,187
-402,863 Food Stamp 276,871
-$6,663 debt/citizen $10,297
-
Iowa/KS Numbers Sept 2,
2014
Iowa State Debt
68 Housing Authorities
42 operate Housing Choice Voucher
Make it easy for people who should have help get it,
and harder for people who should not.
26
Low-income borrowers tend to stay
in debt, miss mortgage payments, be
delinquent on 2nd or 3rd mortgage
liens, and have unpaid property
taxes.
Average credit score in an area
Property values
Competition
Risk
What affects mortgage
rates?
Why are rates lower in
areas where the prices are
higher?
Lenders incur fixed
transaction costs so they
pass them along
$100K versus $300K
house
“It is only the first $1M
that is hard”
Supply and Demand for
lending and building
dollars
Lending Paradox
“In an area where the economy is struggling and fewer people have jobs, lenders need to lower rates in order to attract borrowers” and prevent defaults.
Governance Paradox
States that make it easier to foreclose on delinquent buyers tend to have cheaper properties
TranslationIf the economy is growing then the rates can go up.
Translation: Lenders have an interest in good economic growth and good jobs.
Groceries 2%
Housing 14%
Utilities 4%
Health Care ==
From Lincoln, Nebraska to
Des Moines, Iowa
Groceries 4%
Housing 10%
Utilities 10%
Health Care 8%
Colorado Springs,
Colorado to
Des Moines, Iowa
How are Americans
spending their income?
For the bottom
20% of
Americans, food
and shelter are
big expenses
Hou
sing
Sup
ply
and D
em
and in
Aw
eso
meto
wn,
Iow
a
33.1 % of all consumers’
spending went to housing
costs while 12.8% went to
food.
Americans paying more than
30% of income on housing are
considered cost burdened and
may have difficulty affording
food, clothing, transportation
and medical care
45
46
47
www.Kiwilive.com
Mary C. Kelly copyright 2012
www.ProductiveLeaders.com
• Keyword: DOG
• 5-Minute Business Plan
• 5-Minute Money Plan
• 5-Minute Career Plan
• Productivity System
Americans paying more than
30% of income on housing are
considered cost burdened and
may have difficulty affording
food, clothing, transportation
and medical care
Minimum and average wages in the area
Wages in the future
Resident support NIMBY problem
Crime rates
Zoning
Cost of land and construction labor
Taxes on new properties
Availability of jobs, nearby schools, hospitals, infrastructure, fire, police
Initial cost estimates (taxes, land, advertising, govtpermits, policies over life of development, repairs, maint)
What do you need to
consider for a new
development?
Iowa needs to continue economic growth, business development, and
community leadership
Welcome to Awesometown!
Will the area
become more
profitable over time?
Is the housing demand
growing in this area?
Will the city waive
building fees?
• Hard to start and sustain a
business
• Taxes, Regulations, Health Care
Note: Small businesses are where
the growth is
Keeps business owners
awake
• US taxes
• US debt www.usdebtclock.org (States info too)
• US spending
• US education
• EU recessing – Portugal, Italy, Greece, Spain
• Egypt instability
• Iran’s nuclear ambition
• Syria
• Terrorists
• Note: List has not changed in 3 years
What keeps me awake at
night
World Peace
• People need you now more than ever
• Consumer confidence is not terrible
• US economy growing
• American consumers account for 70% of
every dollar spent in US economy
• Housing values don’t matter as much as
people think
Toward Prosperity
1. Keep them informed-reduce/manage
uncertainty
2. Put client $ into foundations/tax-free/real
estate
3. Be smart about expenditures/fees
4. Taxes will go up, so take $ now
5. Guard against taxable income
6. Watch for buying opportunities
Businesses:
What to do to help your clients:
7. Run your business well – know profits and
losses
8. Know breakeven points
9. Stay on top of financials & investments
10. Connect with the right people
What to do help your business:
www.KiwiLive.com
How to give tools to
housing people?
• Sign up “DOG”
• Get 5-Minute Plans
Productivity plan
Mary C. Kelly
www.ProductiveLeaders.com
443-995-8663 (Mary’s cell)
Author, speaker, frustrated comedianIn Case of Emergency, Break Glass!
360 Degrees of Leadership
15 Ways to Grow Your Business in Every Economy
Stop the Barking
Master Your World: 10 Dog-Inspired Leadership Lessons for Greater
Productivity, Profits, and Communication
Money Smart: How not to buy cat food when you don’t have a cat