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House Republicans called the Obama administration’s foreclosure prevention program “a colossal failure” and have introduced a bill to end it.

Republicans are calling for the immediate end of the Home Affordable Modification Program. The program has been under attack from both Republicans and Democrats in recent weeks for the program’s failure to do enough to prevent foreclosures.

“It’s one more example of why government interference in the private sector doesn’t work and that’s why it should be repealed,” said Rep. Jim Jordan (R-Ohio), who introduced the bill, in a statement.

Administration officials have defended the bill, saying it has helped standardize industry practices and sparked more loan modifications in the private sector.

However, Republicans say that the program has been struck by low participation among home owners and has been far from reaching its goals. By the end of last month, about 522,000 home owners were enrolled in HAMP loan modifications. Yet, the program’s goal is 4 million home owners. The program has faced a high drop-out rate too: About 793,000 home owners who were once enrolled in HAMP have since left.

Source: “U.S. Republicans’ Bill Would End Obama Home-Foreclosure Program,” Dow Jones Business News (Jan. 28, 2011) 

Other articles relating to Placerville, California at: www.sierraproperties.com

California is an environmentally friendly state. Our state’s color has been transformed from gold to green over the last several years. Much of Governor Schwarzenegger legacy focused upon green energy. Remember his promises that California would lead the nation in the developing alternative energy sources. An entire industry would be centered on the production and utilization of environmentally sensitive fuels and products. This “New California” would employ thousands in this new technology industry.

To insure that this “green dream” came true, lawmakers passed increased regulations on traditional manufacturing and provided a matrix of tax credits to industry and consumers who produced and purchased environmentally friendly products. The Obama Administration passed out billions of dollars for research into solar and alternative energy.

So how has the state been doing in creating all this new employment in alternative energy? Where are the jobs?

Folsom based Waste Connections and a Pleasanton company Fulcrum BioEnergy announced last Thursday that they would build by 2012 a new bio-fuel plant that would employee 500 and cost $120 million. The new plant would produce 10.5 million gallons of ethanol annually and produce 16 megawatts of renewal electricity. The production of ethanol and electricity would be predominated sold in Northern California.

So where do you suppose that new $120 million dollar plant and 500 jobs are going? Rancho Cordova? West Sac? Davis?

Nope, all that money and jobs will be going to Storey County in Nevada just east of Reno.

In the past 3 years California has lost 250,000 manufacturing jobs. There is a reason.

Article by: Ken Calhoon of Placerville, California

With the exception of financial companies, corporate profits in 2010 were the highest ever, which should bode well for U.S. job recovery, says NAI Global Chief Economist Peter M. Linneman. “This could be a real stimulus for the economy,” unlike government efforts which just shifted existing funds around, he says.

The problem so far is that this $1.3 trillion of excess cash isn’t translating into new jobs. Linneman, who made his remarks during a Jan. 18 webcast, attributes the inactivity to uncertainty over political policies and regulation. But he adds that once corporations achieve a level of certainty, spending “could pick up much quicker than people realize.” “I’m very optimistic about this happening,” he says.

Yet, even if job growth returns to normal rates of approximately 1.7 million new jobs per year, it will take about five years to replace the 9 million lost jobs and absorb current vacant office space. “About 85 percent of vacancies today are due to job loss, not overbuilding,” Linneman says.

Jobs are also the catalyst for multifamily demand growth, says Linneman. With more than 2 million “pent-up households,” there will be more households than units waiting for them if the economy begins to add jobs at a more normal pace.

Source: “Global Economic Outlook Web Conference,” Peter Linneman, NAI Global

Fortunately, none of the proposed tax increases directly impact real estate!

California currently faces a $25.4 billion budget shortfall (an $8.2 billion deficit for the current fiscal year plus an estimated $17.2 billion gap for 2011-12).  Governor Brown proposes to bridge this shortfall by: (1) reducing state spending by $12.5 billion, (2) raising $14 billion by extending taxes, and (3) borrowing $1.9 billion from special funds and other resources.  (The $3 billion dollar difference is due to a $2 billion increase in education spending due to Proposition 98 as a result of the increased revenues to the state, as well as a proposed $1 billion budget reserve for 2011-12)

With regard to the tax extensions, the Governor proposes submitting to the voters in a June 2011 special election a ballot proposition which – if approved – would extend four temporary tax increases adopted by the Legislature in February 2009 for an additional five years.  These tax increases are: (1) a 0.25% personal income tax surcharge, (2) a reduction in the dependent exemption credit to the same level as the personal exemption credit, (3) a 0.5% vehicle license fee increase, and (4) a 1% sales tax increase. 

It should be noted that the Governor’s budget is just a proposal and may not be the one eventually approved.  C.A.R. will continue to monitor the ongoing budget negotiations and keep you informed.

For more information: http://www.ebudget.ca.gov/

Analysts are blaming the housing sector for the slow economic recovery.

Analysts say the real estate market often leads to economic recoveries. However, “I expect housing will not provide as much support to this recovery has it has in previous ones,” says Eric Rosengren, the president of the Boston Federal Reserve Bank.

Joel Naroff, president of Naroff Economic Advisers, says 2011 would be a “transition year” for housing with the market “not going anywhere.”

Housing construction has leveled off but some are still skeptical whether the real estate market is in true recovery mode yet. Housing starts for December are expected to fall 2.2 percent to a seasonally adjusted annualized rate of 543,000 after rising 3.9 percent to a 555,000 rate in November.

Building permits have reached their lowest levels since April 2009. Most experts blame the low building permits on the upswing in foreclosures.

The National Association of REALTORS® will release its December existing-home sales report on Thursday, which experts say will help shed more of a light on how the real estate market is really doing. Economists are expecting existing-home sales to rise.

Source: “Housing: U.S. Economy’s Achilles’ Heel,” MarketWatch (Jan. 16, 2011)

During an economic update Wednesday at the International Builders’ Show in Orlando David Crowe, chief economist of the National Association of Home Builders, projected single-family housing starts to rise by 21 percent in 2011, reaching 575,000 units.

The estimate is slightly more conservative than the Dec. 30 projection of 716,000 housing starts this year by Lawrence Yun, chief economist of the National Association of REALTORS®. Both estimates assume sustained job growth, increasing U.S. population, as well as continued low interest rates driving construction.

Yun expects about 2 million jobs to be added in 2011. However, as NAHB presenter Frank Nothaft, chief economist for Freddie Mac, pointed out, 2011 got off to a slow start with nonfarm payrolls rising only by 103,000 in December. He called the figure weaker than expected.

Credit is another factor. Lending remains tight, but if it opens up with safe underwriting standards for creditworthy buyers, Yun says there would be a bigger boost to the housing market with spillover benefits for the broader economy. The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent, according to NAR.

In addition, over the past 10 years the U.S. has added 27 million people. Continued population growth will also spur home construction and sales. “All the indicator trends are pointing to a gradual housing recovery,” Yun says.

An even more conservative projection of 492,000 housing starts in 2011 was released by the Portland Cement Association during the International Builders Show Wednesday. Edward Sullivan, PCA chief economist, does not expect significant increases until 2012 due to tight lending standards, a high home inventory count, and unstable housing prices. He also says that new home construction will vary considerably by region.

– Erica Christoffer, REALTOR® Magazine

Federal Reserve Chairman Ben Bernanke expressed more optimism about the economy in his most recent testimony Friday to the Senate Budget Committee, while also defending the Fed’s controversial plan to buy an extra $600 billion in government bonds to keep recovery moving forward.

Bernanke predicted a “moderately stronger” overall pace for the economy in 2011, noting the Fed has seen “increased evidence that a self-sustaining recovery” is occurring.

He cited improvements in consumer spending and a drop in jobless benefit claims as signs of recovery. However, he said it would take four to five years for the labor market to return to normal unemployment levels. The U.S. jobless rate dropped to 9.4 percent from 9.8 percent last month, but he noted the decline was partially due to a number of people leaving the workforce.

In his testimony to the Senate Budget Committee, Bernanke defended the Fed’s controversial plan to purchase $600 billion in government bonds, a move he says will boost the economy by lowering interest rates and encourage spending.

“Doing nothing will not be an option indefinitely,” Bernanke told the Senate Budget Committee. “Diminishing confidence on the part of investors that deficits will be brought under control would likely lead to sharply rising interest rates on government debt, and, potentially, to broader financial turmoil.”

Source: “Bernanke Grows More Confident in U.S. Recovery,” Reuters News

“Super phone” is the new term the tech industry is coining in debuting its new line of ultra-fast smartphones during this week’s International Consumer Electronics Show in Las Vegas.

LG Electronics Inc., Motorola Mobility Inc., and Samsung Electronics Co. are among the companies showcasing phones that mostly can run over a super-fast 4G network.

Here are a few of the “super phones” hitting stores soon:

▪ Droid Bionic: Motorola’s upcoming dual-core processor, 2 gigahertz phone will run on Verizon’s 4G network, which boasts speeds up to 10 times faster than 3G. The phone features a 4.3-inch display, front- and rear- facing cameras, and has video conferencing capabilities over Wi-Fi or 4G.

▪ Optimus 2X: From LG Electronics, this phone will run on Google’s Android software. It will feature an HDMI output for transferring 1080p high-definition video to bigger screens.

▪ Atrix 4G: AT&T Inc. and Motorola unveiled this dual-core smartphone with nearly 2.2 gigahertz of computing power. The phone can plug into an optional keyboard to turn it more into a laptop or dock it to a desktop by connecting a monitor, keyboard, and mouse.

Source: “New Phones are Super — So They Say,” The San Francisco Chronicle (Jan. 6, 2011)

Exterior replacement projects are among the most cost-effective home improvement projects according to REALTORS® surveyed for NAR’s 2010-11 Remodeling Cost vs. Value Report.

According to the report, nine of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects. The steel entry door replacement remained the project that returned the most money, with an estimated 102.1 percent of cost recouped upon resale; it is also the only project in this year’s report that is expected to return more than the cost. The midrange garage door replacement, a new addition to the report this year, is expected to recoup 83.9 percent of costs. Both projects are small investments that cost little more than $1,200 each, on average. REALTORS® identified these two replacements as projects that can significantly improve a home’s curb appeal.

More information at: http://www.realtor.org/press_room/news_releases/2010/12/home_owners_recoup

Many tech companies are talking tablets at this week’s annual International Consumer Electronics Show in Las Vegas. After being mostly blind sided by the popularity of Apple’s iPad last year, several tech companies are looking to debut their own versions of this new form of tablet computing.

Analyst Richard Doherty of the Envisioneering Group says that more than 100 companies will debut versions of a tablet computer. For example, Motorola, Toshiba, Research In Motion, Asus, Acer and Vizio are among the companies expected to unveil tablets during this week’s Consumer Electronics Show.

Apple’s chief competitor, Google’s Android, is expected to be used in many of the new tablets.

Samsung released its 7-inch screen Galaxy Tab in November. Other companies’ debuts may still be awhile. For example, tablets from Toshiba and Motorola aren’t expected until the second half of the year.

The new tablets are expected to fill in gaps with features the current iPad doesn’t have. For example, the Tab and Toshiba’s Tablet will feature two cameras for videos and photos, a USB port as well as a slot for SD memory cards for photos, and work with Adobe Flash software.

Apple’s CEO Steve Jobs isn’t worried about the competition and called the new tablets “dead on arrival.” He said many of the competing tablets will be too small with 7-inch screens. “Seven-inch tablets are tweeners — too big to be a phone and too small to compete with the iPad,” he said.

Analysts expect Apple to announce it’s next version of the iPad soon.

Source: “Is 2011 the Year of the Tablet?; Tech Companies to Play iPad Catch-up at CES,” USA Today (Jan. 4, 2011)