I recently had a home for sale that went under contract at the full list price. This home was very nice with lots of upgrades and nicely maintained. It was a house that you didn't have to make any excuses for when I showed it. It's the kind of house that many buyers want, in fact, the first buyer that looked at it put in the offer. The buyer was using FHA financing with 3.5 percent down and needed some cash back to help with closing costs which is a fairly common scenario. Unfortunately, the house did not appraise for the purchase price. We still got the deal together, but at a lower price. And that got me thinking.
I have always gone under the assumption that in a free market place, supply and demand for any commodity is the key factor in causing prices to go up or down. One only needs to look at gas prices and oil production to see that. When home inventory levels drop and there are a lot of buyers you begin to see multiple offers with some exceeding the asking price. To me, that's how home values increase or at least they should. Buyers and sellers must agree on what a home is worth. But, there is a hitch. If the buyer of a home is getting a loan, that home's value has to appraised based on recent sales of similar homes in the same area. But if you are always looking in the rear view mirror, those sales prices are always lower, except perhaps for the occasional cash deal.
Say a buyer and seller agree that the value of a house is $300,000. The buyer is putting 20 percent or $60,000 down and financing 80 percent of the purchase price. If the bank appraisal comes in at $285,000, that is all the bank will lend on. Then, there are at least three paths to take. The seller and buyer have to come to new terms at a lower number, the buyer has to make up the difference for the lender, or the deal doesn't happen at all. When a buyer is willing to put $60,000 of his own money into a home purchase I'd say he has a fair amount of "skin in the game" and is probably a pretty good risk for any lender. A good plausible fourth option to me would be that the lender should be able to take a little more risk, particularly if the buyer has stellar credit and wherewithal, but apparently they can't do that.
Obviously, the appraisal process is there to protect both the lender and the buyer, but like everything else today that the government gets involved in, the appraisal process has become a lot more difficult not only because of new guidelines and requirements but also the lack of good comparable sales in many areas. Then you add in the lender's underwriting department review, scrutiny, and oversight and things seem to be getting to the point of being overly restrictive. Appraisers today have a hard job and they definitely don't get paid enough.
So then, how are property values supposed to increase based on the rear view window appraisal process? One article I read sites findings by Robert Shiller, a Yale economist and expert on home values. He says real home values over the long term have remained relatively the same when adjusted for inflation. He found that between the years 1900 and 2000 that the national average of the real rate of appreciation was just 0.2 percent. He estimates that a house that costs $200,000 today would likely cost about $250,000 ten years from now, not due to increasing property values but rather because inflation will cause the dollar will be worth less. It should be noted that Shiller bases his findings on national averages, but real estate is very local and it is all about location, location, location. Of course, there are always exceptions to every rule. There are parts of the country or areas in various communities where home values outpace appreciation by a lot and then there are some areas that under perform. He feels that a home is not really an "investment," but a place to live and obviously gain some tax write offs. I disagree with him there, as I still believe a home is truly an "investment," it is just a long term one.
So while home prices seemed to have dropped off the cliff back when the housing bubble burst, it is pretty clear that there will be a slow climb back.
Pease feel free to visit www.lakesregionhome.com to learn more about the Lakes Region real estate market and comment on this article and others.
Roy Sanborn is a sales associate at Four Seasons Sotheby's International Realty and can be reached at 603-677-7012.
Last Updated on Friday, 24 April 2015 07:39
Presidents are inevitably shaped by the circumstances in which they campaign for — and come into — office. In 1932, Franklin Roosevelt called for "bold, persistent experimentation" and followed through once in office. Had Roosevelt run in another year, or had there been no Great Depression, he would have campaigned and governed differently.
The same can be said, to varying degrees, of the presidents who won open-seat contests since, John Kennedy, Richard Nixon, the two George Bushes and Barack Obama, and of those who unseated incumbents, Jimmy Carter, Ronald Reagan and Bill Clinton.
The Republicans who have announced their candidacies so far — Ted Cruz, Rand Paul and Marco Rubio — have similarly framed their appeals in contemporary context. That's made easier by the fact that none was in Congress when Barack Obama was first elected in 2008. We can expect something similar from other Republicans.
The lesson from history is that winning candidates and successful presidents show they are in step with the times. The rationale for their candidacies, while sometimes drawing on historical precedent, is rooted in what is contemporary.
This is obviously a problem for Hillary Clinton, just as it would have been for Eleanor Roosevelt if, somehow, she had run for president in 1952 (when she was younger than Clinton will be in 2016). She would have been defined in large part by her husband's record, which was specific to its time.
Bill Clinton was elected president in 1992 as a different kind of Democrat, more moderate on some issues than previous nominees, vastly interested in alternative public policies that he had advanced as head of the moderate Democratic Leadership Council.
His party was prepared to accept him because Democrats were uncomfortably aware that their candidates had lost five of the six previous elections and had won the other one only by a narrow margin. Political scientists proclaimed that Republicans had a lock on the White House. Liberal Democrats were willing to settle for half a loaf to break that lock — which they did.
Democrats have won four of the last six presidential elections and won a popular-vote plurality in another. Liberals no longer feel they need to compromise to win.
Moreover, in the second term of a party's presidency, its wingers tend to get restless. They take their president's achievements for granted and are full of regret at what he didn't accomplish. Thus, conservatives with complaints against George W. Bush fueled the tea party movement. The energy and enthusiasm in the Democratic Party today is clearly on the left.
In their view Hillary Clinton's appeal is, as Robert Merry characterized it in The National Interest, "Vote for me because I will tinker with the problems facing our nation far better than anyone else possibly could." Dovish Democrats remember she voted for the Iraq war resolution and favored military action in Syria at a time when Obama did not.
The Democrats of 1992 accepted a somewhat hawkish Clinton in order to win. The Democrats of 2015 feel no need to do so. No wonder the two-minute video announcing Clinton's candidacy didn't mention foreign policy, even though she served as secretary of state for four years.
The Clinton video was obviously designed to depict her as a candidate of the moment. Most of it consisted of showing cheerful Clinton supporters living their lives, apparently without the support of government programs that were the highlight of the 2012 Obama cartoon The Life of Julia. The video included gay couples, an attempt by Clinton to get credit with young voters for her recent (2013) endorsement of same-sex marriage.
Clinton tried to identify with liberal Democrats' concern with economic inequality. "Americans have fought their way back from tough economic times," she said, "but the deck is still stacked in favor of those at the top." But the solutions she has mentioned — equal pay for women, mandatory pre-kindergarten, increased minimum wages — are either already law or would have only a de minimis redistributive effect.
Following the video announcement, Clinton headed to Iowa in a Secret Service van dubbed Scooby-Doo — after a cartoon program that debuted in 1969, before Cruz or Rubio were born. Behind closed doors, she mingled with a small group at an Iowa junior college while other students and reporters were barred from the hallway.
Hillary Clinton may still be elected president. But she seems out of sync with her party and out of sync with the times.
(Syndicated columnist Michael Barone is senior political analyst for The Washington Examiner, is a resident fellow at the American Enterprise Institute, a Fox News Channel contributor and co-author of The Almanac of American Politics.)
Last Updated on Thursday, 23 April 2015 08:51
The GOP swept to victory in November by declaring that this imperial presidency must be brought to heel, and President Obama's illicit seizures of Congressional power must end.
That was then. Now is now.
This week, Congress takes up legislation to cede His Majesty full authority to negotiate the largest trade deal in history, the 12-nation Trans-Pacific Partnership, and to surrender Congress' right to amend any TPP that Obama might bring home.
Why the capitulation? Why would Republicans line up to kiss the royal ring? Is Middle America clamoring for "fast track"? Are blue-collar workers marching in the streets to have Congress grant "Trade Promotion Authority Now!" to Barack Obama?
No. Pressure for fast track is coming from two sources. First, the editorial pages of papers like The Wall Street Journal and The Washington Post that truckle to the transnational corporations that provide the advertising revenue stream keeping them alive. Second, Obama is relying on Congressional Republicans who, for all their bravado about defying his usurpations, know on which side their bread is buttered. It's the Wall Street-K Street side.
Fast track is the GOP payoff to its bundlers and big donors. And so, we must hear again all the tired talking points about free trade, soaring exports, jobs created, etc.
But what is reality of the last quarter century of "free trade"? The economic independence that enabled us to stay out of two world wars — until we chose to go in and help win them swiftly — is history. We are a dependent nation now. We rely on imports for the necessities of our national life and the vital components of our weapons systems. Hamilton must be turning over in his grave.
Where once wages rose inexorably in America and the middle class seemed ever to expand, we read today about income inequality, the growing gap between rich and poor, and wage stagnation. Did $11 trillion in trade deficits since Bush I have anything to do with this? Or do we think that the 55,000 factories and 5-6 million manufacturing jobs that went missing in the first decade of this new century had no connection to those huge trade deficits?
Is there a link perhaps between all those factories closing in the USA and all those factories opening in China, or between a U.S. average annual growth rate of 1.8 percent since the turn of the century, and a Chinese average annual growth rate of around 10 percent?
We read of China's hoard of $4 trillion in cash reserves, of Beijing creating a replica of the World Bank, of European and Asian nations rushing to sign up to get a piece of the action in building China's new "Silk Road" to Europe.
Monday's New York Times tells of Premier Xi Jinping coming to Islamabad bearing gifts. Pakistani officials say Xi will be signing agreements for $46 billion for the construction of railroads, highways and power plants over the next 15 years.
Where did Xi get all that money to displace America in Asia?
Last week came news that Japan has narrowly passed China as a holder of U.S. federal debt. Between them, they hold $2.5 trillion. Did the tidal wave of imports from Japan and China, and the historic trade deficits we have run with both nations for decades, have anything to do with our Athens-like indebtedness to our Asian creditors?
When we look back to NAFTA, GATT, the WTO, MFN and PNTR for China, the Korean-U.S. free trade deal, CAFTA with Central America — almost all have led to soaring trade deficits and jobs lost to the nations with whom we signed the agreements.
As for the bureaucrats and politicians who promised us big new markets for exports, rising trade surpluses, better jobs — were they simply ignorant, or were they knowingly lying to us? No one can be that wrong for that long. The law of averages is against it.
Writing yesterday, Peter Morici, chief economist in the early Clinton years at the U.S. International Trade Commission, says the Korean deal alone, and the import surge that followed, cost America 100,000 jobs. "Asian nations target specific industries — such as autos and information technology — and compel U.S. firms to establish factories and research facilities in their economies," as China, Germany and Japan manipulate their currencies to keep exports to us high and imports from us low. Morici estimates that our annual $500 billion trade deficit costs America 4-million jobs and is a contributing cause of the fall of U.S. family income by $4,600 since 2000.
Unless changes are made in TPP, he writes, "Congress should deny President Obama authority to negotiate yet another jobs killing trade pact in the Pacific."
What the nation needs is not only a rejection of fast track, but also a trade policy that puts country before corporate profit, workers before Wall Street, and America first.
Such a policy once made the Republican Party America's Party.
(Syndicated columnist Pat Buchanan has been a senior advisor to three presidents, twice a candidate for the Republican presidential nomination and the presidential nominee of the Reform Party in 2000. He won the New Hampshire Republican Primary in 1996.)
Last Updated on Tuesday, 21 April 2015 10:19
The profit motive is what incentivizes businesses. In order to survive, a business must provide goods or services the market wants, producing and delivering those goods or services at a cost to the business that's lower than the price the customer is willing to pay. That difference between cost and price is the profit. Without a profit, the business goes out of business.
A federal bureaucracy does not have a profit motive. It normally gets established to achieve an objective, not a profit. Without a profit motive, we have seen our federal bureaucracies grow, at substantial costs to the taxpayers, without achieving the objectives for which they were started.
The Heritage foundation did a study comparing pay in the federal government and in the private sector. The study showed that the federal government paid employees basic wages that are 57 percent higher than wages paid in the private sector for the same types of functions. Even more outrageous is the fact that when the costs of the benefit packages are included, Federal workers receive wages and benefits that are 85 percent higher than comparable job skills in the private sector. Private sector wages and benefits amount to $60,078 while federal employee wages and benefits total $111,015. Staggering! Is it any wonder that federal workers are eight times less likely to quit their jobs than are private sector workers?
The Heritage report estimates that the federal government would save $47 billion annually if federal wages were reduced to private sector rates. However, that savings does not include the savings from increases in productivity and the reduction in staff that would ensue if the bureaucratic functions were privatized.
Over the last few years, we have also witnessed the spending excesses of the various federal agencies, and have read of federal employees who spend six or seven hours a day on their computers looking at pornographic web sites. In a normal business environment, the employer would not put day to day work on hold to take employees to a five star hotel to learn "line dancing" or to sip champagne in a hot tub with other workers. The cost to do so would directly affect the cost of the goods or services being marketed, and diminish or eliminate any profits. Nor would the employer tolerate the employee spending the better part of a work day looking at pornographic materials . . . once discovered, the employee would be fired on the spot. However, the boss in the federal bureaucracy cannot fire the employee as it isn't permitted under the contract the government has with the union. The "worst" that can happen is that the offending federal worker can be suspended for a few weeks or months, and be given full wages and benefits during that time. In other words, the worse the employee is, the more likely he or she is to be given an extended paid vacation, at your expense. Does Lois Lerner ring a bell?
We now spend $77 billion a year for our Federal Department of Education, which was started in 1977. Even though our per pupil cost is the highest in the world, our results, in comparison to other countries, continue to drop and our national high school graduation rates hover at around 70 percent, and in the 50 percent range in many urban areas. How much of that $77 billion would be saved if the objectives of this department were specified and set out for bid in the private sector, with a time line for achieving a successful completion? Where the company contracted to achieve results would either achieve those results or lose their contract?
The Department of Energy was also started in 1977, with the objective being to bring this country to energy independence. While countries like France receive about 75 percent of their electricity through nuclear energy, in this country we only receive 17 percent . . . and, we have basically blocked any new nuclear plants from being built in the last 30 years. We have the largest "clean coal" supply in the world. President Clinton unilaterally turned that reserve into a "National Monument" which forever prohibits that coal from being mined. Indonesia, which has the next largest clean coal reserve, became the beneficiary of that decision.
President Obama put a target on the back of the coal industry, killing many coal mining jobs, driving workers into poverty and companies out of business. He has also stifled oil exploration on federal lands. Private enterprise developed "fracking" technologies and oil exploration using that technology has been done on privately owned lands. That private sector success has been largely responsible for bringing us to near energy independence, as it has been estimated that we now have the largest oil reserves in the world. Fracking has also resulted in the oil producing nations dramatically dropping their per barrel price of oil . . . as they try to destroy our fracking industries by pricing their oil below what it currently costs to produce oil through fracking.
We need to transition from bloated, costly, unregulated, unaccountable, and never ending bureaucracies at the Federal level, by contracting necessary functions/objectives to the private sector. A huge improvement in achieving results in a timely manner while dramatically lowering costs to the taxpayers awaits.
(Bob Meade is a Laconia resident.)
Last Updated on Monday, 20 April 2015 09:34
Our state enjoys a rich environmental heritage with the tourism industry serving as a cornerstone of our economy — contributing $318 million in federal, state and local revenue while supporting over 24,385 seasonal and full-time jobs. From our state's pristine ski resorts to White Mountain National Forest to our beautiful coastline, we are known for our natural beauty and the industries which support and strengthen it.
Like you, I understand the importance of preserving our lands and water resources to provide our state with a steady source of good-paying jobs and local revenue. In fact, last month I joined my House colleagues in sending a bipartisan letter to the Appropriations Committee urging them to secure funding for the Land Water Conservation Fund (LWCF). The LWCF supports public land conservation and ensures access to outdoor recreation opportunities for Granite Staters and tourists.
Similarly, I signed onto a letter urging the Appropriations Committee to invest directly in the New England region's coastal communities by supporting funding for the National Estuary Program, which is instrumental in protecting our coastal environments, sustaining coastal economics and jobs.
Unfortunately, our state is experiencing manufacturing job losses and skyrocketing energy costs due to the heavy hand of government intervention. A safe environment and a healthy economy are not mutually exclusive ends; however, increasing and ever-changing government regulations lead to the suffocation of our manufacturing sector and heavy financial burdens on the middle-class and energy producing plants.
As regulations increase, the cost of doing business also increases. In an effort to remain or become profitable, manufactures have a choice of passing this cost along to its consumers, increasing energy rates, firing workers to reduce payroll costs or shutting down their plans entirely.
All four situations occurred in New Hampshire.
Just this past year, Granite State businesses and families experienced sky-rocketing energy costs which resulted in a loss of business and jobs growth. For example, last November, Liberty Utilities doubled its rates from 7.7 cents per kilowatt hour to 15.4 cents resulting in a monthly average increase from $110 to $162 for the average household's monthly energy bill.
Who can afford this 47 percent cost increase?
Likewise, approximately 500,000 Granite State homes and businesses experienced a 6 percent rate increase for Public Service of New Hampshire in the beginning of January due to a ruling by the New Hampshire Public Utilities Commission.
And, just last year, five power plants announced their anticipated closures in the coming years resulting in the loss of more than 3,000 megawatts of energy. These closures come at a heavy price. Not only do we lose a massive amount of energy; but, we also lose the hundreds of jobs that come with it.
These dramatic increases hurts those living on fixed incomes the most, as they are ill equipped to deal with fluctuating prices. With a population that is older than the national average, and with many living paycheck to paycheck — or reliant on Social Security alone — this is deeply troubling to New Hampshire.
In addition to affecting our state's existing businesses, the shock rate associated with increasing electricity rates also deters out-of-state companies from relocating to New Hampshire. This results in missed opportunities for thousands of new jobs, increased competition; and, therefore, reduced energy costs.
Our state needs real results, and we need them now.
New Hampshire is estimated to lose 3,452 manufacturing jobs by 2023. That means almost 3,500 Granite State individuals will be without a stable paycheck to support themselves and their families. We simply cannot afford to continue down this path. You and your family deserve better.
You deserve an all-of-the-above energy approach that responsibly explores and utilizes our own natural resources and supports renewable energy sources. You deserve a more robust infrastructure to strengthen and support new energy projects and jobs. And, you deserve a market free from cap-and-trade policies which picks winners and losers, decreases market competition and therefore, gouges energy costs for Granite State households.
Higher costs for consumers, fewer manufacturing jobs, and more regulations are a death knell for an economy like ours accustomed to leading the New England region out of recessions.
Until we are able to find the happy medium between our regulatory environment and our ability to attract businesses and individuals, we will continue to experience a sluggish economy with less take home pay and little hope for economic expansion.
(Manchester Republican Frank Guinta represents New Hampshire's First Congressional District in Washington, D.C.)
Last Updated on Friday, 17 April 2015 09:51