Production is on the rise

If you need easy loans just to make it from paycheck to paycheck, and even then you could still use some extra cash, take heart. Recently there have been hopeful signs that the current recession is coming to an end.

At the end of July, the government reported that the real gross domestic product (GDP) fell at an annual rate of only 1% in the second quarter. Manufacturing activity rose to its highest level in the last year. Car sales jumped 15% and manufacturers are ramping up production. Based on the data now available for July, experts are predicting that the GDP will increase by as much as 3% in the second quarter.

Home sales are on the rise

Another encouraging trend is that existing home sales are on the rise. Between April and May, the S&P/Case-Shiller 20-city index of house prices fell just 0.2%, the smallest decline in the past two years. Stabilizing house prices are expected to reduce mortgage-loan defaults, shore up bank balance-sheets and improve the flow of credit.

Oddly, unemployment is also on the rise

Employment, however, is the single most important economic benchmark, and the outlook on that front remains grim. Unemployment rates are still on the rise, which is surprising given that economists generally predict that an increase in the GDP will be accompanied by a decrease in the unemployment rate.

The accuracy of this rule of economics, called Okun’s law, has been disputed, however; and according to Michael Feroli, an economist at JPMorgan Chase, Okun’s law would have predicted a national unemployment rate of only 8.6% during the second quarter of this year, whereas the actual rate averaged 9.3%.

Many factors influence the rising unemployment rate

Several factors may be at work in the discrepancy between the improving GDP and the worsening unemployment rate. Last week, the government revised earlier data to show that the GDP has declined a cumulative 3.7% (rather than 2.5%) since the end of 2007, tying with 1957-58 as the deepest recession since the Great Depression.

Also, expanded unemployment-insurance benefits are encouraging some workers to keep looking for jobs rather than drop out of the workforce altogether, which according to the government, could add as much as a half percentage point to the unemployment rate. Similarly, dissipation of wealth is driving people to look for employment rather than retire or stay at home with the children.

Another factor may be that employers have been quick to slash payrolls. Businesses are budgeting more conservatively because of the credit crunch, and many are pessimistic about an eventual economic recovery.

Whatever the explanation, productivity is rising and so is unemployment. According to a recent article in The Economist, Robert Hall of Stanford University, head of the academic committee that identifies and assigns time frames to recessions, says Okun devised his law in an era when productivity usually fell during recessions: “When productivity rises, the law fails.” Okun’s law, he says, is “obsolete.”

The rise in production may be a false reading

Employers are not likely to do much hiring until it seems reasonably certain that the new growth in production will continue. And some economists are doubtful that what we are seeing is real growth. These experts attribute the recent increase in production to the replenishment of inventory after an extended period of filling new orders from existing inventory in idle factories. They point out that inventory replenishment gives production a temporary boost without a corresponding increase in consumer demand.

The federal cash-for-clunkers program may also have given production an artificial boost. Recent car sales have been strong, in large part because of the program, which offers subsidies of as much as $4,500 to people trading in older, higher-emissions vehicles for newer, more fuel-efficient cars. But the $1 billion set aside for the program, which was supposed to run for several months, was depleted within the first week. The House of Representatives has now voted to spend an additional $2 billion and the Senate is expected to do likewise. But cars bought now will mean fewer cars bought later.

Numbers have a way of changing

And one more qualification: Government figures are notoriously subject to revision. Even the Great Depression is getting worse. According to the latest revisions, the GDP fell 26.7% (rather than 26.6%) between 1929 and 1933. In another 50 or 60 years, or as soon as next week – who can say? — today’s fresh new growth in production may never have happened.

As home values continue to fall, people are looking to short term loans as payment options. Things are difficult in the recession and a continuous drop in home values are proof. According to the AP, home prices fell in nine out of every ten US cities throughout the first quarter of 2009. The National Association of Realtors said that median sales prices of homes declined in 134 out of the 152 cities studied. The floundering economy is taking its toll on home owners’ whose equity is quickly dwindling.

Almost half of home sales are made up of foreclosures or other distressed properties. David Resler, chief economist of Normura Securities, stated “I think we’re near a bottom, but we’re not there yet.” He believes, along with other analysts, that the housing industry will hit rock bottom soon, and then slowly begin to rise again by the end of this year. Alan Greenspan, of the Federal Reserve, agreed adding, “We are finally beginning to see the seeds of a bottoming”, but noted the huge inventory of for-same properties as a major concern.

Future hope

A consortium of real estate agents are hoping that Obama’s tax credit for first-time buyers will spur more people to venture into homeownership. The $8,000 tax credit is making it popular for potential buyers to move into homeownership. However, in higher priced neighborhoods that tax credit still doesn’t make things affordable. Leon Grammer of New York City stated, “I would love to take advantage of the tax credit and move out of my apartment. It would be great to take advantage of the market right now, but the homes in my area are still way out of my price range. Even with all of Obama’s perks.” Grammer is not alone. Many in the real estate field agree that the government should be doing more to stimulate housing sales and without some intervention, the recession is sure to linger on longer.

Shaun Donovan, of the Housing and Urban Development Commission, said that the Federal Housing Administration will begin to allow borrowers to apply for short term loans and turn Obama’s $8,000 tax credit directly into their down payment. He said the credit “is not only a tremendous opportunity for first-time buyers, but also an enormous benefit for communities struggling to deal with an oversupply of housing.”

More research

Research is showing that the mid-price of homes throughout the US is $169,900, which is down almost 14% from last year. The biggest drops were seen in Fort Myers, Florida, where homes have dipped beyond the 50% range in value. Saginaw Michigan, Akron Ohio, San Francisco, San Jose, Phoenix and Sarasota Florida have all seen housing values decline 40%. With this type of blow to the industry, it’s no wonder homeowners are worried. Homeowner Calvin Brunte said, “We had planned on taking out a home equity loan to do some major fix-ups in our home. With the recession and the economy, we can forget that for at least the next couple of years.”

Still waiting for rock bottom

Home values have still not hit rock bottom. Homeowners, realtors and investors are all waiting for the market to reach the turning point. Unfortunately, that turning point is slow in coming, even though some communities are allowing the first-time home buyer an $8,000 tax credit to be converted into a short term loan as a down payment. Hopefully, the market will even itself out soon and once again, people will be able to invest in their homes.

Installment loans are aiding first-time home buyers make the purchase of their dreams. When moving to Phoenix, Arizona, Kostas Kalaitzidis longed for a home. Due to his low-income and the high-cost market, he was unable to buy. Just one year later, he was able to buy a formerly-priced $220,000 house for just $82,000. “I’m very glad I waited,” he says, “people like me are the ones buying now.”

Declining home values

It is estimated that 53% of all home sales are being made by people like Kalaitzidis, according to the National Association of Realtors. The group also says, “While America’s declining home values have wrought havoc on home sellers, owners and lenders, first-time buyers can celebrate the housing market bust, and may even help fix it.” They expect first-time buyers to comprise the bulk of buyers throughout the rest of 2009.

Although salary is a factor, most first-time buyers are making the move as a result of the huge decrease in home prices. For example, Kalaitzidis’ home boasts 2,200 square feet, four bedrooms and 2 ½ baths. At $82,000, it’s a relative steal in the real estate market. In addition, tax credits are plentiful for first-time buyers.

According to James Saccaccio, CEO of RealtyTrac, “The metro areas with the highest level of foreclosure activity paint a picture of concentrated problems in a relatively small number of hard-hit areas. Sales activity appears to be increasing in some of these markets as home prices have fallen to levels that are attractive to first-time homebuyers.”

New buyers are plentiful

Kalaitzidis is not alone. Many first time buyers are seeing homeownership as a potential accomplishment they could not have attained without the struggling market. Albert Ko of Orange County, California first moved to the area in 2007 when the average price of a moderate home was $800,000. He just was approved for $400,000 and most homes in the area have dropped to just about that level. “Two years ago, this would have been out of the question,” Ko confirms.

Though current homeowners are suffering the lost equity, new potential buyers are seeing affordable housing as a huge benefit. With the dream of owning a home as a viable option, they are looking to installment loans, family borrowing and extreme budgeting as methods of reaching their goals. For the first time, many potential borrowers are taking advantage of the recession and downfall of the housing market.

Burns Consulting Group study

According to Burns’ Consulting Group the average home costs 25% of the owner’s pretax income to sustain, down from 44% just three years ago. That means that a household with a $60,000 income is now spending about $15,000 a year for the fixed-rate mortgage, down from $26,400. That’s a substantial savings for a family.

Finally a homeowner

There is a light at the end of the recession. Many people who were formerly unable to even consider purchasing their own home are now enjoying the affordability brought about by the recession. Home values are down and down payments needed to purchase are much smaller. Some potential homeowners are working with lenders for installment loans to help fund their purchases as they move into the most-coveted title of “homeowner.”

Per the Greater Las Vegas Association of Realtors, home sales in the sin city area increased by 30% in March. Sources indicate a large number of sales were to investors who are buying two to three homes at a time. One investor, Arthur Wong, indicated that the current buyers are looking to hold long-term, unlike the speculators who inflated the market in the first place. February, 2009 home sales in Las Vegas were 80% higher than in 2008. Some landlords are even researching foreclosure rolls to find potential renters to ensure their new investments will produce cash flow, per Camden Property Trust.

Ominous Signs Despite Increased Investor Interest

Despite the increase in sales, prices are declining. The Association of Realtors announced that the median price in March, 2008 was $149,000, down 39% from the year before. The Nevada state legislature recently introduced a measure known as AB I39 which would improve accessibility to low income housing. A similar measure was defeated in 2007 as too costly, but the current measure would be funded from an affordable housing trust fund and not general revenues. In addition to the perceived need for government stimulus or cash advance loans to the housing market, personal bankruptcy filings in Nevada went from 10,632 in 2007 to 18,211 in 2008. This indicates fewer individuals will be able to qualify for home loans. The mixed use CityCenter Las Vegas complex, a $9.1 billion project including both condominium and retail space, is now in jeopardy as Dubai World filed suit against its principal partner in the development, MGM Mirage, last month. MGM recently obtained a $70 million reprieve from creditors which may ease financial strains on the project. However, if completed, the condominium units would add supply to the strained residential market. The potential for further cheap condominium supply weighing on the market is indicated by the sale offering for the mortgage on Vantage Lofts. George Smith Partners recently indicated it is willing to sell the Note at a discount as the developer is in bankruptcy.

Merger Increases Cost Effectiveness

The recently announced acquisition of Centex Homes by Pulte Homes in a stock swap merger may improve the economics of this market somewhat. The cost savings from eliminating redundant back office staff would allow the combined company to be more price competitive in a market where new home sales have declined steadily for four years. It is not clear however, whether resulting lower new home prices and increased investor interest in single family homes will create sufficient demand to stem this decline.

Foreclosures Continue to Loom

One negative factor for the Las Vegas housing market is the potential for large numbers of foreclosed homes to be placed on the market. Distressed residential loans increased to $455 million at December 31, 2008 from $83 million at December 31, 2007. In addition to creating additional supply, the high level of delinquent loans could make banks less willing to lend in the Vegas market, making credit less accessible to potential buyers.

Caution Remains Prudent

Despite the increase in the number of units being sold, the likelihood of significant additional supply of residential housing units and the continuing price declines for these units suggest that the Las Vegas market has not hit bottom. A cautious approach would appear justified for anyone considering purchasing a home in the area at this time.

Once again, the United States has broken its own record, this time in the unemployment category.

Personal Money Store provides you with faxless payday loans and details on the deepening recession.

The United States continues to reach for greatness, setting new records and leaving the old ones in the dust. Unfortunately, these “triumphs” are in the “highest number of unemployed workers” and “lowest number of homes sold” categories.

Now more unemployed than ever!

Unemployment claims in the U.S. hit a record peak in mid-January. Last week 588,000 new claims were filed for unemployment insurance, the highest number ever recorded. Records date back to 1967. The number of people who continued collecting unemployment during the week of Jan. 17 after filing the previous week was 4.78 million.

I guess Americans don’t have to make a choice anymore when faced with the old saying “Go big or go home.” When it comes to unemployment, they’re doing both. Check out your faxless payday loans store’s daily update on big layoffs.

Home purchases take big nosedive

Despite all the efforts to rescue the housing market, new home sales plunged 14.7 percent in December, another record. December marked the slowest home sales in the United States since 1963, when the data started being recorded.

Overall sales in 2008 fell just short of record-breaking lows. Builders sold 482,000 homes for the entire year. That’s the lowest number of new homes sold since 1982, when the economy scored well in the “dismal home sales” category with 412,000 sales.

Sticking to it

It looks like the U.S. economy will continue its record-breaking performance  for some time. In fact, according to Forbes.com “There is no end in sight.” Michael Darda, chief economist at MKM Partners in Greenwich Connecticut, is slightly more optimistic.

“I don’t think we are going to see a recovery until 2010. It’s possible the economy can bottom sometime in the fall or the winter, but it will be pretty rough sailing ahead, especially for the next quarter or two,” Darda said.

Michael Darda

Not very cheerful news, but it’s better than “no end in sight.”

Your faxless payday loans site does not encourage gambling, but if you are going to do it anyway, now would be a good time to bet on more record-breaking performance in the U.S. economy.

Existing-home sales have increased nearly 18 percent over November 2007 in the western U.S., a region that includes Colorado. This statistic and the ones that follow include single-family homes, condominiums, townhouses and co-ops.

Counter intuitive?

It may be surprising that home sales are rising during an  economic crisis, when payday loans are more popular than ever. Furthermore, home sales usually drop in the fall and winter and pick back up in the spring and summer.

However, home prices in the West have dropped nearly 26 percent. It’s a simple matter of supply and demand. No one was buying, and prices dropped to a level where houses are selling again.

How big is this trend?

Nationally, home sales are still down. Compared to November 2007, home sales are down 10.6 percent nationally. Prices decreased more than 13 percent nationwide, but so far that’s not enough to make homes an affordable commodity.

Sales were down 8.6 percent in October. So nationally, home sales are still in decline.

Sitting pretty in the West

Even in the West, home sales for October decreased, year-after-year. They were down 4.3 percent that month, making the jump in November even more significant.

Another surprise is that the median price for a home in the West is actually higher than the national average. Nationally the average price of a home is $181,300. In the West, it’s $242,500.

What about December?

While it’s unlikely that national home sales will increase in December, one statistic provides a glimmer of hope for the housing market. During the week that ended Dec. 12, the number of mortgage applications rose 2.9 percent. This figure is a bit tricky because it includes applications to refinance, which are climbing as interest rates drop.

Should I buy a home?

Just remember if you’re applying for payday loans or looking to repair credit, make sure you don’t sign up for something you can’t easily afford.