News, Commentary, & Analysis. Mar. 13, 2014. #RealEstate #Insurance #Economics

Linking ≠ endorsement. Enjoy and share:

Table of Contents
(Click to sections below.)

1) Study Says Cahokia, America's First City, Was a Melting Pot

2) Tax reform proposal would cut many real estate deductions – latimes.com

3) EconoMonitor : Great Leap Forward – When Will They Ever Learn: Uncle Sam is not Robin Hood

4) Gazprom Threatens to Disrupt Gas Supplies to Europe

5) Ukrainian Chess | The Baseline Scenario

6) Macro and Markets – Ukraine: Economy Matters

7) Why Russia No Longer Fears the West – Ben Judah – POLITICO Magazine

8) About the Ukraine-Russia conflict. First, know what we don't know. | Fabius Maximus

9) Low insurance premiums encourage development of state's most vulnerable areas – Other Views – MiamiHerald.com

10) Court hits bank with $2.7 million judgment | ABQJournal Online

11) Dryer fire at Jackson condo leaves 5 residents displaced | NJ.com

12) Property Managers Owe Fiduciary Duties to Their Clients at Minimum

13) Anniston Star – Number of fire deaths linked to colder weather

14) Attitudes And Laws Against Pit Bulls Soften : NPR

15) NTSB: Pipeline explosion could have been prevented – Latest News – The Register-Herald, Beckley, West Virginia

16) USGBC LEED bombshell – FierceEnergy

17) Two Dead, at Least 64 Injured, Several Missing in NYC Building Explosion – ABC News

18) San Francisco fire: Blaze still smoldering at Mission Bay building – San Jose Mercury News

19) 'Ballpark Guesstimate' Insufficient To Support 'Real Estate Pro' Status – Penalties Applied – Forbes

20) Home Prices Actually Undervalued Based on Incomes -CoreLogic

21) Fannie and Freddie Phase Out "Shocking," Real Estate Experts Say | Commercial Observer

22) Asia Day Ahead: Is China choosing growth over reform? – YouTube

23) DS News Webcast: Thursday 3/13/2014 – YouTube

24) With inventory down, real estate market 'could not be hotter' | Boston Herald

25) February Twin Cities housing market hampered by weather – TwinCities.com

26) Home buyers are losing confidence in the housing market

27) IMF Economists Recommend Using Fiscal Tools Against Inequality – Businessweek

28) Chinese economy remains primary worry in markets – US News

  1.    Study Says Cahokia, America's First City, Was a Melting Pot

    Cahokia was the largest and most influential city of the mound-building Mississippian culture. Analysis of teeth from 87 ancient Cahokians indicates that massive immigration may have driven the city's explosive growth.

    Add your comment.


  2.    Tax reform proposal would cut many real estate deductions – latimes.com

    Even the most die-hard proponents of real estate tax benefits concede that with the right combination of lower federal income tax brackets and higher standard-deduction levels, housing's special carve-outs in the tax code would be less compelling to many homeowners. Why itemize when you can just take the standard deduction and save more? Once this sinks in, the political support for retention of owners' unique tax privileges in the code will begin to crumble.

    So what did Camp propose? For the vast majority of individuals and corporations, enticingly lower marginal rates of 10% and 25%, plus a substantially increased personal standard deduction — $22,000 for married joint filers, $11,000 for singles.

    Increasing the standard deduction would certainly help the poor more than the current situation. Right? We wonder how the whole plan would pencil out.

    Add your comment.


  3.    EconoMonitor : Great Leap Forward – When Will They Ever Learn: Uncle Sam is not Robin Hood

    L. Randall Wray on President Obama's new stimulus plan:

    First, if you are trying to stimulate the economy, you don't enact a "trillion dollar" tax increase. I do believe there is something to the "balanced budget multiplier": if you reduce the income of those who don't want to spend but increase the income of those who do, you will get some stimulus. But we are literally trillions of dollars of spending away from full capacity. And Obama's plan is, apparently, to tax $1trillion and spend $600billion. Uhmmm. Can he subtract? I calculate a $400 billion shortfall. I doubt the differing spending propensities involved would make that much of a stimulus.

    Second, Uncle Sam is the currency issuer. He cannot run out. He cannot become insolvent. He always spends by crediting bank accounts with High Powered Money. He never spends "taxpayer's money". Unless we've got a nation of counterfeiters, every single dollar that a taxpayer pays to Uncle Sam came from Uncle Sam.

    Uncle Sam can never wear out his welcome.

    Add your comment.


  4.    Gazprom Threatens to Disrupt Gas Supplies to Europe

    John Daly:

    … Ukraine took advantage of its perception that transit access was critical to Gazprom even as it enjoyed hefty gas discounts as evidenced by the fact that in 2010 Ukraine raised Gazprom's transit fees by almost 60% from $1.70 per 1,000 cubic meters per 100 kilometers of transit to $2.70. So, as obnoxious as many Europeans find Gazprom's hardball tactics, nevertheless the company has a number of legitimate issues with Ukraine, which seem increasingly unlikely to be resolved anytime soon.

    Add your comment.


  5.    Ukrainian Chess | The Baseline Scenario

    Peter Boone and Simon Johnson:

    … Ukraine's established politicians have spent the last two decades playing off the US and Russia, and extracting resources from both sides. Corruption among this group is pervasive; in no sense have they managed Ukraine for its people.

    Add your comment.


  6.    Macro and Markets – Ukraine: Economy Matters

    Robert Kahn:

    Experience with crisis situations and failed states suggest that economic fundamentals deteriorate quickly if unaddressed. Capital flees, growth and trade slows dramatically, and tax receipts plunge as the authority of the state activity weakens. Exchange rate depreciation (see chart) and continued reserve loss exacerbates the risks. Ugly surprises appear on bank balance sheets.

    Add your comment.


  7.    Why Russia No Longer Fears the West – Ben Judah – POLITICO Magazine

    Powerful accusations by Ben Judah:

    … Europe is really run by an elite with the morality of the hedge fund: Make money at all costs and move it offshore.

    … the grand propaganda campaign called the Eurasian Union has come into its own. This is the name of the vague new entity that Putin wants to create out of former Soviet states — the first steps toward which Putin has taken by building a Customs Union with Belarus and Kazakhstan, and he had hoped with a Ukraine run by Viktor Yanuvokych. This is not just about empire; it is about using empire to cover up the grotesque scale of Russian corruption and justify the regime.

    Russia would rather have swallowed Ukraine whole, but the show must go on. Russian TV needs glories for Putin every night on the evening news. Russian politics is about spin, not substance. The real substance of Russian politics is the extraction of billions of dollars from the nation and shuttling them into tropical Western tax havens, which is why Russian politics needs perpetual PR and perpetual Putinist drama to keep all this hidden from the Russian people. Outraged Putin has built up a Kremlin fleet of luxury aircraft worth $1 billion? Angry that a third of the $51 billion budget of the Sochi games vanished into kickbacks? Forget about it. Russia is on the march again.

    It's certainly true that extremely rich Russians have money stashed outside Russia and have purchased lots of real estate, etc.

    We've also read that Putin is trying to crack down on it, but whether he's sincere remains to be seen. We hope he is.

    Add your comment.


  8.    About the Ukraine-Russia conflict. First, know what we don't know. | Fabius Maximus

    This article seems to be the source for much if not most of the information supplied in The Future of Freedom Foundation video we posted Tuesday entitled "The Libertarian Angle: Ukraine and Venezuela." http://propertypak.com/2014/03/11/all-uk raine-news-commentary-analysis-mar-11-20 14-realestate-insurance-economics/#03111 416

    Add your comment.


  9.    Low insurance premiums encourage development of state's most vulnerable areas – Other Views – MiamiHerald.com

    What do you think?

    A 2010 planning scenario for a Category 5 storm hitting the Tampa Bay area projected about $250 billion in economic losses of all kinds, including property damage, business losses and flood damage.

    This is why 1000 Friends of Florida has joined a diverse group of business, conservation and nonprofit organizations known as Stronger Safer Florida to promote appropriate changes to current insurance programs, curtail unreasonable subsidies, and offer market-based insurance alternatives.

    Included in this mix should be increased emphasis on community resiliency, mitigation options, affordability considerations, private insurance incentives and a phase-in of necessary rate increases to eliminate subsidies.

    Add your comment.


  10.    Court hits bank with $2.7 million judgment | ABQJournal Online

    Christopher Dollens was still grieving his father's death from a workplace accident in 2010 when he found himself also having to fend off notices from Wells Fargo, the company servicing the home loan his father had taken out seven years earlier.

    Wells Fargo foreclosed on the family home despite the accidental death insurance policy the bank sold his father along with the mortgage — conduct an Albuquerque judge said was so "highly reprehensible" she slapped the company with a judgment awarding the Dollens estate $2.7 million in punitive damages.

    This is a very strange case because the bank sold the policy. We wonder whether it's a one-off.

    Add your comment.


  11.    Dryer fire at Jackson condo leaves 5 residents displaced | NJ.com

    Five people were displaced when a dryer fire damaged a condominium in southern New Jersey.

    Add your comment.


  12.    Property Managers Owe Fiduciary Duties to Their Clients at Minimum

    David S. Roberson:

    Managers owe fiduciary duties to their clients – this is the minimum standard owed. There are many ways to breach these duties which form the basis for the relationship between the manager and the client. It is important to hire a property manager who understands and abides by the statutory framework, understands fully what a fiduciary duty entails, and can both clearly communicate those duties and at the same time live up to them. It is important for owners to make sure they hire property managers who abide by these minimum standards.

    Add your comment.


  13.    Anniston Star – Number of fire deaths linked to colder weather

    The number of fatal fires has increased in Alabama this winter as some residents used heating appliances improperly to combat colder-than-usual weather, according to the Alabama Fire Marshal's Office.

    "We're attributing it primarily to colder weather," Holmes said. "A lot of people have taken extreme measures to stay warm."

    The poor are disproportionately affected by heating fires, said Brandon Avila, a spokesman for a federal program that helps low-income families pay for energy.

    Add your comment.


  14.    Attitudes And Laws Against Pit Bulls Soften : NPR

    Acceptable risk?

    "Everything is telling us these animals are safe if you raise them right," said Jeff Borchardt, an East Troy, Wis., man whose 14-month-old son was mauled to death a year ago by two pit bulls that tore the child from the arms of their owner, who was baby-sitting. "My son's dead because of a lie, because of a myth. My life will never be the same."

    The two dogs that killed Borchardt's son had lived with their owner since soon after they were born, were well-cared for and had no history of aggressive behavior, he said. Both had been spayed or neutered.

    That contradicts the contention that only mistreated, neglected or abused pit bulls attack people.

    As a landlord or property manager, you don't have to allow pets.

    "Dangerous" dog breeds. Some landlords ban certain dog breeds that many people believe have a propensity toward violence, such as pit bulls and Rottweilers. Although the question of whether certain breeds are truly dangerous is a topic of controversy, landlords are legally entitled to ban these breeds from rental property. (Fair housing laws apply to human beings, not to dogs.) Before you allow such breeds, check with your insurer. Some companies won't issue liability policies if certain so-called "dangerous breeds" are kept on the property.

    Weight limits. Instead of, or in addition to, banning certain breeds, some landlords limit the weight of dogs. For example, a landlord might only allow dogs under 20 pounds.

    Source: Smart Landlord Policies for Pet-Friendly Rentals

    Add your comment.


  15.    NTSB: Pipeline explosion could have been prevented – Latest News – The Register-Herald, Beckley, West Virginia

    Severe corrosion caused a 2012 natural gas pipeline rupture and explosion in West Virginia that destroyed three houses and cooked a stretch of Interstate 77, and the incident likely could have been prevented if the pipeline had been inspected or tested, the National Transportation Safety Board said in a report released Monday.

    Investigators found severe external corrosion that reduced the thickness of the pipeline wall to about 30 percent of its original thickness. The 20-inch buried pipeline, which was installed in 1967, had not been inspected or tested since 1988, the report said.

    Add your comment.


  16.    USGBC LEED bombshell – FierceEnergy

    This is a very interesting bit of news. See the comment section on the FierceEnergy post too. Barbara Vergetis Lundin:

    It has been speculated about for years: Is LEED certification — based on the U.S. Green Building Council's (USGBC) Leadership in Energy and Environmental Design standards — anything more than a PR stamp of approval, even though USGBC contends that buildings with this "stamp" actually use less energy than their uncertified counterparts? Hard evidence now answers this question.

    Add your comment.


  17.    Two Dead, at Least 64 Injured, Several Missing in NYC Building Explosion – ABC News

    Copied on Wednesday, March 12, 2014, so Thursday's news may be updated with additional casualties, etc.:

    Two people were killed and at least 64 were injured today when a suspected gas explosion tore through a building in Manhattan's East Harlem neighborhood, collapsing at least part of the structure, authorities said.

    "This is a tragedy of the worse kind because there was no indication in time to save people," New York City Mayor Bill de Blasio said. "There will be a search through the rubble of the building once the fire has been put out."

    Add your comment.


  18.    San Francisco fire: Blaze still smoldering at Mission Bay building – San Jose Mercury News

    Firefighters struggled to reach an area still smoldering and hosed down hot spots on Wednesday [March 12, 2014] after a massive five-alarm blaze caused $227 million in damage to a building under construction near AT&T Park in the Mission Bay neighborhood, authorities said.

    "We are currently assessing the situation, including the cause of the fire, and we will be consulting with the appropriate authorities," the company said in a statement.

    BRE Properties said the company has comprehensive insurance coverage for events such as the fire, and believe any losses to the company caused by the fire will be covered by insurance.

    Add your comment.


  19.    'Ballpark Guesstimate' Insufficient To Support 'Real Estate Pro' Status – Penalties Applied – Forbes

    Tax expert Chuck Rettig:

    A taxpayer qualifies as a real estate professional under Code Sec. 469(c)(7)(B)(i) and (ii) if:

    (i) more than one-half of the personal services performed in trades or businesses by the taxpayer during such taxable year are performed in real property trades or businesses in which the taxpayer materially participates, and

    (ii) such taxpayer performs more than 750 hours of services during the taxable year in real property trades or businesses in which the taxpayer materially participates.[4]

    Read the whole article for information on how to document your hours spent so the IRS won't disallow your declaration and apply a penalty.

    Add your comment.


  20.    Home Prices Actually Undervalued Based on Incomes -CoreLogic

    In each market there is a gap between the home price implied by the income level, i.e. the fundamental home price, and the actual or forecasted house price. This gap is measured as a percentage of the fundamental price. By constructing a composite measure of house prices relative to fundamental prices it is possible to construct a population-weighted average of the largest 50 market gaps over time. This allows us to see that house prices clearly got well ahead of what was fundamentally supported by income levels in the early 2000s and then there was a significant over correction. The figure below has been updated and provides a home price forecast through the end of 2015.

    That's right. They said "over correction." Well, they don't think we've come back to bubble territory (nationally we assume). We agree.

    We we're concerned it could get there, but the taper talk really slammed on the brakes. The cold winter also froze the peddle too.

    Add your comment.


  21.    Fannie and Freddie Phase Out "Shocking," Real Estate Experts Say | Commercial Observer

    Recently published calculations from the Office of Management and Budget said the GSEs were on course to return $179 billion in profits to taxpayers in the next decade, if allowed to continue operating in conservatorship, making the attack on the agencies today even more surprising.

    Rick Lazio, former U. S. representative and real estate attorney with Jones Walker, agreed that the bill was a good starting point but would likely not make it into law intact. But he disagreed that the bill was a boon to the multifamily lending climate.

    "Multifamily lenders overwhelmingly like the programs as they exist now," he said. "They never lost a dime even through the worst of the downturn."

    Now, they will lose their federal guarantees, for the most part, even though their business was not what caused Fannie and Freddie to fall back on the government's coffers.

    Add your comment.


  22.    Asia Day Ahead: Is China choosing growth over reform? – YouTube

    Investors will be watching for clues on progress with long-awaited economic reforms when China's annual congress closes Thursday. Plus Ping An reports earnings, and a rate decision in Indonesia.

    )

    Add your comment.


  23.    DS News Webcast: Thursday 3/13/2014 – YouTube

    RealtyTrac released its U.S. Foreclosure Market Report for February …

    As of the first quarter of 2014, a total of 152,033 properties in the foreclosure process had been vacated by the homeowner, representing 21 percent of all properties in the foreclosure process. …

    The National Fair Housing Alliance added to a complaint with the Department of Housing and Urban Development of housing discrimination by U.S. Bank, N.A. The group alleges that U.S. Bank maintains and markets foreclosed homes in white neighborhoods in a much better manner than in African-American and Latino neighborhoods. …

    Add your comment.


  24.    With inventory down, real estate market 'could not be hotter' | Boston Herald

    This is why we refer to local bubbles.

    "In real estate, Boston is considered one of the 'sexy six,'" with the others being New York City, Los Angeles, Seattle, the San Francisco Bay Area and Washington, D.C., said John Ranco of Hammond Real Estate. "Because there's such little inventory, very often the price is getting bid up."

    "The market could not be hotter," said David McCarthy of Keller Williams Realty. "It's extremely strong and extremely competitive."

    Add your comment.


  25.    February Twin Cities housing market hampered by weather – TwinCities.com

    "It was an interesting month," said Emily Green, president of the Minneapolis association, in the release. "While the market shifts back toward where it was before the bubble, we expect to see foreclosures and short sales become less prevalent, which can dilute overall numbers. Then you have the weather."

    The real estate associations say spring will offer better clues as to the health of the Twin Cities housing market.

    "Above-average snowfall and below-average temperatures have almost certainly affected new listing activity, especially compared to last year," said Michael Hunstad, president of the St. Paul association said in a news release.

    Add your comment.


  26.    Home buyers are losing confidence in the housing market

    Here is a chart Shiller, an economics professor at Yale University, provided that chronicles the results of the expectation surveys. His grim conclusion: "We're losing our general sense of optimism about housing. It's percolating throughout the nation."

    Add your comment.


  27.    IMF Economists Recommend Using Fiscal Tools Against Inequality – Businessweek

    Governments should use fiscal tools such as higher property taxes to help reduce an income gap that's widened from China to the U.S., International Monetary Fund economists said.

    With growing public support for policies of income redistribution, at a time when many countries are trying to narrow budget deficits, governments need to better target social spending, IMF staff wrote in a report released today. Policy makers can also rely on income and property taxes rather than making large cuts in welfare transfers, they said.

    The study is the second in two weeks by an institution better known for prescribing austerity to cash-strapped countries.

    The IMF has been mugged by reality.

    Add your comment.


  28.    Chinese economy remains primary worry in markets – US News

    … investors remain preoccupied by what's going on in China. Fears that the world's number 2 economy is struggling have dominated trading all week and were accentuated Thursday by government figures showing industrial production rose by a lower than anticipated 8.6 percent in the first two months of this year. Retail sales growth also fell short of estimates.

    "All the focus is on China as concerns intensify about the health of the world's second largest economy," said Fawad Razaqzada ….

    Add your comment.


If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.

Subscribe