It is our goal at The Parks at Plaquemines to keep our buyers informed about the latest information from the local, state-level, and national real estate industry. We post content to our blog that we hope that you as our custom home buyer will find helpful. Look here for information about financing your new home, building restrictions for new homes, and real estate legislation that will impact you as you are looking to buy or build a new home in the Greater New Orleans area.

PATH Act Negotiated With the NAHB in Washington D.C.

If you’ve been paying particular interest to the news lately, then you have probably heard about the overhaul or threatened elimination of Fannie Mae and Freddie Mac, and like many people not employed in the real estate industry, you may not have any idea how those actions will affect you as a future home buyer.  The truth is that mortgages held by Fannie Mae and Freddie Mac were a large cause of the stock market crash and the real estate industry’s demise.  However, even though these two companies had flaws, the greater problem was a combination of factors which included little or no regulation or oversight of approval of loans by banks and mortgage companies, poorly devised mortgage packages with initial low interest rates that doubled or tripled after a certain time period, and the “everyone should own a home” attitude of the Clinton era.

Originally, Fannie Mae was a government created mortgage company launched right after the Great Depression by President Roosevelt and Congress.  The company was conceived to buy mortgages from lenders offering low-income Americans a chance to buy a home using a government-backed loan.  The company was de-regulated in 1968 when it became a public corporation, and the government even opened a new company called Freddie Mac to “compete” with Fannie Mae, so that the company wouldn’t become a monopoly.  Freddie Mac also was separated from the federal government to become a public corporation in 1989.  The names Fannie Mae and Freddie Mac are actually based on the departments of the federal government which were in charge of their structure and development – Federal National Mortgage Association (Fannie) and the Federal Home Loan Mortgage Corporation (Freddie).

A common misconception today is that Fannie Mae and Freddie Mac are still “owned” by the government.  The semantics of the term is that these two corporations are “backed” somewhat by the U.S. Government.  Fannie Mae and Freddie Mac are able to get investments from many different sources on Wall Street, nationally, and internationally because of their reputation – they truly are “too big to fail.”  If Fannie Mae and Freddie Mac were to “go under,” it would cause a greater panic and a global meltdown much worse than the real estate market catastrophe of 2008.

Now, the United States agencies have “learned their lesson” and are trying to figure out how to get the mortgage industry out of the “hands” or actual influence of the government and dole it out to the private sector so that the true capitalism of supply and demand can “take over” dictating interest rates, home pricing, and home buyer qualification.  A legislative proposal called the Protecting American Taxpayers and Homeowners (PATH) Act is now being discussed by Congress and the NAHB (National Association of Home Builders).  As of now, the PATH Act is shying away from ANY government involvement.  However, this is not the direction in which the NAHB wants it to go.

“NAHB believes federal support is particularly important to ensure that 30-year, fixed-rate mortgages, the bedrock of the nation’s housing finance system since the 1930s, remain available at reasonable interest rates and terms,” said NAHB CEO Jerry Howard. “As currently drafted, the PATH Act does not provide the federal support necessary to ensure a strong and liquid housing finance system, and we urge the committee to make the necessary changes. The historical record clearly shows that the private sector is not capable of providing a consistent and adequate supply of housing credit without a federal backstop,” he said.

The PATH Act also wants to eliminate or greatly diminish the FHA program which is a government-backed program for first-time home buyers.  If put in the hands of the private sector mortgage companies, brokers, and banks, there may not ever be a “first-time home buyer” without perfect credit and an above $200,000 portfolio.  The government’s involvement and influence on the housing market has been, in the past, a good thing.  It simply became too much of a good thing and got out of balance.  The purpose of the approval process for the PATH Act to make sure that there is a good balance between government regulation and private sector capitalism – just like every good republic is always trying to achieve.

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Materials Shortages a Positive Sign for New Home Builders

In what could be termed “good news” for the building industry, builders and lumber companies are reporting shortages of materials according to recent surveys by the National Association of Home Builders (NAHB) and the National Lumber and Building Material Dealers Association (NLBMDA).  These materials include but are not limited to the following: oriented strand board (OSB), with 22 percent of builders reporting shortages, followed by wall board (20 percent), framing lumber (18 percent) and plywood (18 percent).

Items that are typically hard to come by, such as, copper wire, vinyl siding, HVAC equipment, insulation and structural insulated panels show the same “unavailability” as they did in 2004 and 2005 when the real estate market was stable and producing approximately 1.8 million homes annually.  The shortfall of the products listed above, though, indicate that companies are still not ready to “stockpile” material inventory that is used regularly by a thriving real estate industry.

With the post-Recession, record-breaking numbers and statistics emerging recently from the National Association of Home Builders, this shortage of materials would bolster the perception to builders that the housing industry is on the rise.  This cautiously optimistic view is tempered slightly by the inflation of the cost of building materials.  Builders have reported a 5.17% rise in materials costs, while distributors, specifically the lumber companies surveyed by the NAHB, report a 10% (or more) increase in cost.

This should come as no surprise for consumers who “live in the United States,” as the cost of, well everything, has been going up during and since the end of the Recession.  As the building industry balances out, and the new normal of supply and demand is established according to the new pace of the home building/buying industry, one would expect to see these prices level off.  They may not ever retract, but the rise of the cost of materials may cap as demand increases.

Altogether, though, the outlook for builders is positive, and builders seem to think so also, showing higher builder confidence numbers than they have since 2008.  Here at The Parks of Plaquemines in Greater New Orleans, we see many new homes being built by our builders.  Also, there seems to be a lot of interest in building on our lots as our Garden Home Phase I lots are Sold Out.  If you are interested in building your new home on one of our lots at The Parks of Plaquemines, Contact Us at 504-364-2350 or E-mail Info@TheParksLifestyle.com.

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Generation Y the “New” New Home Buyer of New Homes

As the real estate market recovers from a financial disaster, a new generation of home buyers has emerged, or we should say matured.  Interestingly, as the housing market turns to more energy-efficient – “everything” – so does this new demographic of interested purchaser.  Not only is the home building industry focusing on Green Building, but it is also financially beneficial both to the builder and the home buyer because of government programs which offer rebates and incentives for using energy efficient, “green” appliances, products, and systems.

For instance, solar energy has been a strongly emerging market, which is undeniably profitable both for solar energy companies as well as people who install these systems in their new or existing homes.  The monthly utility cost is cut by as much as 85% because of the use of a solar system vs. using a traditional electrical utility.

ENERGY STAR-rated appliances, insulated windows, specialty blown or foam wall insulation, insulated doors, and even water proofing features (great for hurricane flooding protection) are all “must haves” of the Generation Y home buyer population, according to the National Association of Home Builders.  Before, builders considered these types of luxuries to be upgrades, not standards.  However, as affordability for these products and government backing for the use of these products have increased, these features, for some builders in the Greater New Orleans area, have become standards.

It’s almost a natural progression of supply meets demand when it comes to builders building new homes which are the exact product that new home buyers, aged 24 – 35, are looking for.  Another factor that these buyers take into consideration is the cost of buying/maintaining a home.  New homes require less money on an annual basis to take care of vs. previously owned or existing homes. In fact, an NAHB study found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241.

The train of thought for Generation Y buyers is that they are not looking to save a lot of money on the front end of the new home purchase, but they would like the monthly costs, once they buy the home, to be as low as possible.  With interest rates remaining historically low, the emergence of the standard use of energy-efficient features by builders, and the benefit of buying a new home vs. a used one, Generation Y home buyers have found their perfect solution by building a new home with top quality builders in the Greater New Orleans area.

Most of the builders at The Parks of Plaquemines design and build homes with tons of energy efficient features.  This new home community is located a little more than 10 miles from the Central Business District (CBD) in New Orleans, so home buyers enjoy an easy commute, city convenience, more security and safety from living outside city limits, and less monthly and annual cost because the cost for taxes and utilities are based on Plaquemines Parish regulations instead of the City of New Orleans.  To find a home just right for you, Contact Us at 504-364-2350 or E-mail Info@TheParksLifestyle.com.

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Bipartisan Efforts Spur Home Builder Lending Legislation

S. 1002, the Home Building Lending Improvement Act of 2013 will give more flexibility for banks with regards to construction loans.  Specifically, the bill would discourage lenders from calling construction loans where payments are current and establish regulatory guidelines to allow the banking industry to restore lending for viable home building projects.  This bill is unique in that it specifically addresses one of the main stressors of builders which is capital to start a building project.  Also, the bill is unique in that it was drafted “bi-partisanly” by Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.). With the “gap” in the housing market of an estimated 2 million “non-started” households because of what some are now calling the Great Recession, there is a low supply of new home inventory and a high number of families looking for a home in which to live.

Because of economic constraints, studies show that instead of children growing up, going to college, and leaving the house to establish their own families and homes, college kids, instead, were unable to find employment and ended up moving back home.  In some instances, there would be 2 to 3 generations of families living under one roof.  The National Association of Home Builders (NAHB) has been working hand in hand with Congress to push through common sense legislation that will free up lending for the housing industry.

Statistics show that the construction of 100 homes will merit approximately 300 new full-time jobs and add $8.9 million in federal, state, and local tax revenue.  Interest rates have been historically low throughout 2013 which has spurred the purchase and refinancing of thousands of loans across the country.  The mortgage industry seems to have stabilized in their regulations, although getting qualified for a home loan can seem like an act of Congress to some new home buyers.  However, the numbers don’t lie.  The faster that builders can get back to work on new home construction, the more the economy will be stimulated by not only job growth and revenue but also by new homeowners spending money on all of the niceties that are purchased with the purchase of a new home.

It is no secret that new home buyers spend additional money on new furniture, accessories, fixtures, paint and hardware supplies, appliances, and much more after the purchase of their new home.  A NAHB analysis shows that during the first two years after closing on the house a typical buyer of a new single-family detached home tends to spend on average $7,400 more than a similar home owner who does not move, including $4,900 in the first year after purchase.

Consumer Spending drives Wall Street because it is measured and evaluated each month.  Wall Street drives interest rates, and the economy comes full circle.  It may not be THIS simple, but loosening up lending requirements for builders is a good start to the cycle. Here at The Parks of Plaquemines, we have seen an increase of interest in new lots and new home building.  Both home buyers and builders have been buying up our lots so much so that Phase I of our Villas Lots is sold out. We are currently finishing out development of Phase II.  For More Information about buying a home in the Greater New Orleans area, Contact Us at 504-364-2350 or E-mail Info@TheParksLifestyle.com.

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House Prices Sustain Affordability

The National Association of Home Builders keeps a running “journal” of home affordability throughout the United States.  They do this in conjunction with Wells Fargo Bank, and the result is a quarterly report called the NAHB/Wells Fargo Housing Opportunity Index (HOI).  This particular index is a measure of the percentage of homes sold in a given area that are affordable to families earning the area’s median income during a specific quarter.  The information is collected from the recorded mortgages – which is public information – by Core Logic, a research and statistical analysis company.  Any information gathered on interest rates is done so through the Federal Housing Finance Agency.

According to the HOI, home affordability in 2013 remains on the upswing as 73.7% of new and existing homes sold in the first quarter were affordable to a family making the national median income of $64,400.  This income is an average of the median incomes of individual cities throughout the United States.

Interestingly, Ogden-Clearfield, UT has had the most affordability in new and existing home prices for 3 quarters running with 93.4% sold to families of a median income of $70,800.  Unfortunately, San Francisco-San Mateo-Redwood City, CA has had the least affordability coming in at just 28.9% affordability based on a median income of $102,000.

Many reasons are given for the current home affordability including stabilizing home prices, super low interest rates, and the “buyer’s market” during and after the Recession as the housing market slowly recovers from the 2008 crash.  One factor that may cause the affordability percentage to stagnate is that the cost of building a new home has gone up with rising gas and oil prices as well as current inflation.  Housing materials cost more than they did even 3 years ago, and the president of the NAHB does not see them coming down any time soon.

However, affordability is always something to celebrate, and the home buyers at The Parks of Plaquemines in New Orleans have prices to be happy about.  They have shown us this by helping us sell out Phase I of all of the lots in our garden home section of our subdivision – The Villas.  Our Traditional Lots are also selling well, and new homes are being contracted to build every quarter.  Come out and see what all the fuss is about!! Call 504-364-2350 or E-mail Info@TheParksLifestyle.com to get more information on taking a tour of our community.

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