housing market 2013
Money Morning Capital Wave Strategist Shah Gilani talked with FOX Business' "Varney & Co." today (Tuesday) about a huge red flag in the housing recovery.
Shah has found that we may be on the cusp of a double-dip in home prices.
Will the Home Mortgage Interest Deduction Vanish in 2013?
In 2013, Congress is expected to explore a number of tax reforms in order to address staggering deficits and a crippling $17 trillion in debt owed by the Federal government.
No proposed tax reform will be more controversial this year than attempts to alter the Home Mortgage Interest Deduction (HMID).
Considered the holy grail of tax deductions, the annual tax break to homeowners, which provides more than $100 billion a year in tax relief, could see significant changes, thus affecting the finances of millions of Americans.
But in order to understand how these changes could affect you, one needs to understand how this tax break became so monstrous in the first place, and what the impact of such proposals could have on the housing markets.
In fact, this very issue proves why even grander tax reform is necessary right now in the United States.
The 10 Best U.S. Housing Markets 2013
The percentage of Americans optimistic about the U.S. housing market has reached levels not seen since rumblings of the financial crisis began.
A new Rasmussen Reports national survey found 37% of homeowners believe the value of their home will increase in the next year - thehighest since September 2008.
And 58% of Americans believe their homes are worth more now than when they bought them. That's the highest percentage believing this since fall 2011.
Is the Housing Market 2013 Being Propped Up by Wall Street?
The housing market 2013 is showing signs of improvement from last year - but there's reason to believe this recovery isn't sustainable.
Home prices and sales have been climbing, fueling optimistic outlooks for the rest of the year - but mortgage lending hasn't risen by a similar amount.
That's because it's not families or new home buyers driving the housing market rebound in 2013. There's another major buyer moving markets. And if that buyer stops purchasing homes, this "recovery" could lose its steam.
We caught up with Money Morning market expert Shah Gilani, who in the following interview explained this development in the 2013 housing market.Click here to watch Shah's interview.
Here's Another Troubling Sign America is Circling the Drain
Don't blame yourself if you missed this tidbit last week...
On Thursday, the Consumer Financial Protection Bureau hit the nation's four largest mortgage insurers with a total of $15.4 million in fines for "allegedly" paying kickbacks to lenders to steer business their way.
Of course, they didn't have to admit they did it, and therefore, they didn't do what they were fined for.
Back in the summer of 2009, the Inspector General of the Department of Housing and Urban Development handed the Justice Department evidence that laid bare a scheme by lenders (the usual suspects: Citigroup, Wells Fargo, Countrywide, and so on) to get kickbacks from mortgage insurers for making borrowers - who had to buy mortgage insurance - purchase coverage from those companies kicking back profits to lenders. In the industry, it's called "forced placement"
Who did what here?
The Secret Behind the Housing Market "Recovery"
U.S. home prices climbed 10.2% in February, the biggest year-over-year gain since March 2006.
The data seemed to support that a housing market recovery is alive and well - or, is it?
Even though buying is up, banks aren't handing out mortgages at a high enough rate to support this climb.
We asked Money Morning Capital Wave Strategist Shah Gilani to explain what was behind this major housing market change. You might be surprised to learn who's driving the home buying - and what it means for the housing market recovery.
Watch his interview below for the answer.
Why You Can't Trust Bob Toll's Prediction of 20% Home Price Increases in 2013
Bob Toll, Executive Chairman of Toll Brothers, recently told Reuters that home prices are going to jump 20% in 2013 and another 25-30% in 2014.
But before you decide to pile into real estate, you might want to think about it for a moment.
It's not that there's anything wrong with Mr. Toll, nor even his prediction. He is a seasoned executive in one of the most respected homebuilders in the country; it's why he made this prognostication and what he stands to gain from it that bothers me:
- Toll Brothers (NYSE: TOL) is one of the most prominent and capable homebuilders in the country. If people believe that real estate will appreciate, they are more likely to buy more of Bob Toll's product.
- Toll Brothers needs more of the same - big bailouts, big stimulus and low interest rates because that greases the skids in the banking system for big real estate companies like his. Without the extra money floating around, Toll Brothers' financing options are limited and he can't build or at least build as much. Worse, if interest rates rise, his cost of capital will increase significantly and negatively impact his margins. Rising property values give companies like Toll Brothers greater collateral and borrowing power, so of course he wants properties to appreciate...a lot.
- Toll is also an outside advisor to President Obama. That means he's plugged into the White House like other big business leaders and has a vested interest in preserving the status quo rather than shaking up the establishment and really fixing things.
Why Bob Toll is Wrong About Home PricesWhen viewed against the longer term lens of history, housing values are still as much as 6-12% overvalued.
You can see that quite clearly in the Case-Shiller Index created by Yale's Robert Shiller. Take a look:
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