Home Sales Hit a 5 Year High

Sales of existing homes ticked down in December from the month before, while the total for 2012 hit the highest level in five years, according to data released Tuesday by the National Association of REALTORS®. The pace of sales fell 1 percent in December to a seasonally adjusted annual rate of 4.94 million, according to NAR. For all of 2012, existing-home sales hit 4.65 million, the highest level since 2007 and up 9.2 percent from 2011.

“Record-low mortgage interest rates clearly are helping many home buyers, but tight inventory

Potential Aersospace Project to Come to San Antonio

San Antonio is a finalist for a mega aerospace project that has the potential to generate thousands of high-paying jobs, local officials have confirmed.According to several sources involved in the recruitment push, the city is competing against sites in Washington and Florida for the economic development prize.
The officials, who asked to remain anonymous because they're not authorized to discuss the project, said the aerospace firm would need 250 to 500 workers early on, many of them engineers.

The operation — which would include research and development and manufacturing — eventually would employ a workforce of at least 3,000, though the timeframe is unknown. Average pay would be at least $80,000 a year.Port San Antonio, the former Kelly AFB and home to several sizable aerospace operations, is the local site under consideration.

Yet key details of the project — including the company's identity, the amount of potential investment and what will be developed and built — remain closely guarded secrets. Indeed, several local officials who've worked on the project for months say they still don't know which aerospace firm they're dealing with. They call it by its code name: Bullet.

Neither is it clear when the company will make its selection. One San Antonio official said the decision could come within a month, and another said within six months. Still, two sources independently said they believe the operation would develop and manufacture drone aircraft.

The site-selection process is said to have first heated up around mid-2012. San Antonio and Dallas were among the early contenders, sources said, but Dallas has dropped out of the running. The San Antonio Economic Development Foundation has taken the lead role in the recruitment effort, though its president, Mario Hernandez, and chairman, former Mayor Henry Cisneros, declined to comment. San Antonio City Hall, Bexar County and the state also are involved.

“It's a significant project,” Bexar County Judge Nelson Wolff said. “I think we have a real good plan. We have good facilities. We'll see where it goes.” Wolff said the project could involve both military and commercial aircraft, but declined further comment.

Sources said the local incentive package is the “most substantial one” the community has ever put together. San Antonio's two rivals also are said to be pursuing the project with big inducements. In a written statement, Mayor Julián Castro declined to discuss the specifics of “any prospective economic development deals involving the city.” But he said the city aggressively pursues high-paying “21st century” jobs in general.
“San Antonio is ideally positioned for growth in the aerospace industry with an asset like Port San Antonio and the community's commitment to building a workforce that is second to none,” Castro said. “If the potential exists for San Antonio to increase its aerospace investment, you can bet that we will put our best foot forward.”

Port San Antonio spokesman Paco Felici declined comment, as did a spokeswoman for Gov. Rick Perry.
“If such a project lands on the South Side, it would be uplifting for my district, huge for the city of San Antonio and enormous for the state of Texas,” said City Councilman Rey Saldaña, whose district includes Port San Antonio. Saldaña added that talk of the aerospace project “is still speculative and the details are ever-changing.”

San Antonio's main weaknesses in the competition are its relatively small pool of aerospace, mechanical and electrical engineers, and the less-than-stellar educational attainment of its workforce. Florida, on the other hand, has a lot of technical expertise idled by downsizing at NASA. Contractors at the Kennedy Space Center have laid off more than 4,000 employees over the past four years, the Orlando Business Journal reported last week. And the state of Washington is known worldwide as the base of operations for the commercial aircraft division of Chicago-based Boeing Co.

However, San Antonio also is widely known as an aviation center, primarily for aircraft maintenance, repair and overhaul (MRO) operations.Among the large San Antonio aerospace employers is the Boeing Global Services & Support Center at Port San Antonio. Since 2011, Boeing's San Antonio plant has helped customize the company's 787 Dreamliners in post-production before delivery to airlines.
Boeing also announced a year ago that the San Antonio center would perform MRO work on government aircraft fleets, including Air Force One, by 2014 as the company closes its Wichita, Kan., facility.
Another large employer at Port San Antonio is the Kelly Aviation Center, an MRO facility operated by Bethesda, Md.-based Lockheed Martin Corp., along with other partners.

San Antonio is a logical site for a large aerospace operation, said Jim Perschbach, a San Antonio lawyer and an aerospace industry expert. Perschbach, of Bracewell & Giuliani LLP's San Antonio office, said he had no knowledge of the so-called Bullet project. Aerospace projects in general, Perschbach said, need a big airfield with sizeable hangar and land space, which Port San Antonio offers. “Projects also need a workforce in sufficient numbers who can do the work or be trained to do the work,” he said.“The cost of the infrastructure (workforce and facilities) must be competitive,” added Perschbach, a former chairman of the Greater San Antonio Chamber of Commerce's aerospace committee.

Source: San Antonio Express News

Taxes Are Going Up!

While the tax package that Congress passed New Year's Day will protect 99% of Americans from an income tax increase, most of them will still end up paying more federal taxes in 2013. That's because the legislation did nothing to prevent a temporary reduction in the Social Security payroll tax from expiring. In 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year.

The Tax Policy Center, a nonpartisan Washington research group, estimates that 77 percent of American households will face higher federal taxes in 2013 under the agreement negotiated between President Barack Obama and Senate Republicans. High-income families will feel the biggest tax increases, but many middle- and low-income families will pay higher taxes, too.

Households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013, according to the Tax Policy Center's analysis. Households making between $50,000 and $75,000 will face an average tax increase of $822.

"For most people, it's just the payroll tax," said Roberton Williams, a senior fellow at the Tax Policy Center.

The tax increases could be a lot higher. A huge package of tax cuts first enacted under President George W. Bush was scheduled to expire as part of the "fiscal cliff." The Bush-era tax cuts lowered taxes for families at every income level, reduced investment taxes and the estate tax, and enhanced a number of tax credits, including a $1,000-per-child credit.

The package passed by the Senate and House extends most the Bush-era tax cuts for individuals making less than $400,000 and married couples making less than $450,000.

Obama said the deal "protects 98% of Americans and 97% of small business owners from a middle-class tax hike. While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country."

The income threshold covers more than 99% of all household)s, exceeding Obama's claim, according to the Tax Policy Center. However, the increase in payroll taxes will hit nearly every wage earner. Social Security is financed by a 12.4% on wages up to $113,700, with employers paying half and workers paying the other half. Obama and Congress reduced the share paid by workers from 6.2% to 4.2% for 2011 and 2012, saving a typical family about $1,000 a year.

Obama pushed hard to enact the payroll tax cut for 2011 and to extend it through 2012. But it was never fully embraced by either party, and this time around, there was general agreement to let it expire.
The new tax package would increase the income tax rate from 35% to 39.6% on income above $400,000 for individuals and $450,000 for married couples. Investment taxes would increase for people who fall in the new top tax bracket.

High-income families will also pay higher taxes this year as part of Obama's 2010 health care law. As part of that law, a new 3.8% tax is being imposed on investment income for individuals making more than $200,000 a year and couples making more than $250,000. Together, the new tax package and Obama's health care law will produce significant tax increases for many high-income families.

For 2013, households making between $500,000 and $1 million would get an average tax increase of $14,812, according to the Tax Policy Center analysis. Households making more than $1 million would get an average tax increase of $170,341. "If you're "rich", you're almost certain to get a big tax increase," Williams said. Here's how the tax increases will affect households at different income levels:

Annual income: $20,000 to $30,000 = Average tax increase: $297
Annual income: $30,000 to $40,000 = Average tax increase: $445
Annual income: $40,000 to $50,000 = Average tax increase: $579
Annual income: $50,000 to $75,000 = Average tax increase: $822
Annual income: $75,000 to $100,000 = Average tax increase: $1,206
Annual income: $100,000 to $200,000 = Average tax increase: $1,784
Annual income: $200,000 to $500,000 = Average tax increase: $2,711
Annual income: $500,000 to $1 million = Average tax increase: $14,812
Annual income: More than $1 million = Average tax increase: $170,341

Source:CNBC news

Housing Affordability Index for 2012

According to current statistics, 2012 will clearly go down as a record year for favorable housing affordability conditions, and a great year for buyers who could get a mortgage, according to the National Association of REALTORS®.

NAR’s national Housing Affordability Index stood at 198.2 in November, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power; record keeping began in 1970.

An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent down payment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making small down payments, the affordability levels are relatively lower.

For all of 2012, NAR projects the housing affordability index to be a record high 194, up from 186 in 2011, which was the previous record. November’s reading was 2.5 index points below October, but up 1.5 index points from a year earlier.

Lawrence Yun, NAR chief economist, said home buyers are able to stay well within their means. “Although 2012 was highest on record, the excessively tight underwriting precluded many would-be homebuyers from locking-in generational low interest rates,” he says. “Rising home prices and a gradual uptrend in mortgage interest rates will offset improvements in family income, but 2013 likely will be the third best on record in terms of household buying power. A window of opportunity remains open for buyers who can qualify for a mortgage.”

NAR projects the housing affordability index to average 160 during 2013, which means on a national basis that a median-income family would have 160 percent of the income needed to purchase a median-priced existing single-family home. Conditions vary widely, with the highest buying power in the Midwest. Even in the West, where the regional index is lower, they typical family is well positioned in most markets.

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., says the minor erosion in affordability conditions moving forward could be mitigated by bank and regulatory policies. “Clearer rules from the government regarding future lawsuits and buybacks of Fannie and Freddie loans could encourage banks to use their massive cash holdings to originate more loans,” he says. “A more sensible lending environment that makes it easier for other financially qualified buyers to get a mortgage would allow many more households to enter the market, boosting home sales as much as 10 to 15 percent,” Thomas says.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

For more information, visit www.realtor.org [2].

5 Things You Might Not Know About the State Water Plan

The Texas legislature got underway this month, and one bit of spending that many seem to agree on, regardless of their political stripes, is water. Several proposals call for funding the 2012 State Water Plan, a bottom-up approach to Texas’ water needs. It relies on regional districts to come up with a wish list of projects that will provide the growing state with enough water for the next 50 years.

The water plan calls for a variety of techniques to harness more water in the coming decades, from new reservoirs to conservation, and some of the ideas are more offbeat than others. We’ve culled a handful of the more novel and obscure methods outlined in the plan.
  1. Weather ModificationCloud seeding involves blasting silver iodide, a chemical with similar composition to ice, into a thunderstorm, thereby increasing the cloud’s ability to produce rain. It may sound like science fiction, but it’s already being done around the world, particularly in China (and even here in Texas). Starting in 2020, the water plan earmarks about 15,000 acre-feet (or 4,8 billion gallons) of water to be procured each year through weather modification or cloud seeding. Most cloud seeding taking place in Texas today is done East of the Interstate-35 corridor. There’s just one (fairly significant) drawback: if there aren’t any rain clouds to seed, like much of the summer of 2011, there’s not much seeding can accomplish. 
  2. Brush ControlThe water plan calls for the targeted removal of water-hoarding brush and trees, namely the widely-ridiculed and famously-allergenic Ashe Juniper, or cedar. By culling cedars and other water-gulping plants, the water plan says Texas could gain another 19,000 acre-feet of water per year. Problem is, not everyone agrees native cedar trees are such a water-sucking problem. Also, while it might help increase runoff into creeks and hasten the recharge of aquifers, brush control only works when it rains. The water plan recommends brush control mainly in the western half of Texas where cedars are more prevalent.
  3. Aquifer Storage and Recovery: Aquifer storage and recovery (also known as ASR) turns the notion of how to use an aquifer on its ears. Instead of pumping water out of aquifers, we’re going to start pumping it in. By injecting potable water into viable underground formations, the water remains safe from the ravages of evaporation and contamination that can occur on the earth’s surface. The water plan says storage and recovery could account for about 81,000 acre-feet of water per year by 2060. That’s about half the water that the entire City of Austin used in a year from the Highland Lakes during the record drought year of 2011. That same year, more water evaporated from the Lakes than the City used. Not just any aquifer will work for ASR. The aquifer being used cannot be used or accessed by anyone other than the utility doing ASR. 
  4. Rainwater Harvesting:  It’s a technique as old as mankind. Rainwater collection systems run the gamut, from a barrel beneath a gutter to Texas A&M University’s multimillion-dollar Agriculture and Life Sciences Facility, equipped with rain canopies and a 40,000 gallon underground tank. And the Texas Water Development Board has researched implementation of neighborhood-wide harvesting schemes. The City of Austin, and several other Texas towns, offer rebates on rainwater collection equipment. Unfortunately, you can only harvest as much rain as the weather affords. Roofs are prime harvesting locations, so the highest concentration of rainwater harvesting will likely occur in municipalities and urban areas, though it has seen use in less-developed parts of Texas where drilling a well can be costly, like the Hill Country.
  5. Conservation: A drop of water saved is a drop of water earned. Water conservation occurs on all levels, from low-flow toilets to government programs promoting water-friendly power generation. Urban conservation could account for up to 650,000 acre-feet of water saved by 2060. Total conservation could account for up to 1.5 million acre-feet, according to the water plan. In all, conservation makes up 34 percent of the state’s new water supplies by 2060. A significant portion of conservation will be irrigation conservation (17 percent), which means agriculture and farmers will be able to grow more while using less water.(Source: StateImpact Texas)

Tips to Prevent Fraud

“During and just after the holidays is when many fraud schemes pick up, as more people feel stretched with greater year-end expenses,” he says. “And as we look ahead into 2013, companies may have blind spots they may not be considering when trying to protect themselves, particularly when it comes to employee fraud.”
RBS Citizens Treasury Solutions experts are currently conducting a fraud education campaign for commercial customers to make sure clients are aware of the areas of vulnerability at their firms, including new online threats that will pose the greatest risk in 2013. Gifas and his team have identified ten common security gaps that companies need to address to protect themselves when planning for 2013:

10 Fraud Blind Spots
1. Are you using weak passwords? “Hackers have more processing power to crack passwords than ever before, and can relatively quickly test all words in the dictionary to see if the right one comes up. Use instead a more complicated combination of letters, numbers, and symbols that aren’t easily searchable.” 

2. Do employees keep passwords “hidden” in their top desk drawer? “The strongest password in the world won’t protect your account if a perpetrator can read it from a slip of paper in your office. Keep passwords behind lock and key, just as you would cash.”

3. Are you training your employees against social engineering? “Many fraudsters find it easier to trick a person into revealing account credentials than to hack into a computer. Training your employees to not provide any user name or password information over the phone or email – even if the source seems legitimate and unless and until the source is independently verified – is a vital measure of protection.

4. Do you lock your computer when you step away from your desk? “As we all know, a minute away from our desk can sometimes turn into much longer, as meetings pop up and we get stuck taking care of a crisis. Again, just as you wouldn’t leave cash lying around on your desk, always lock your computer as well. Also, software such as Trusteer Rapport provides additional high-tech protection against infiltrators who try to break into your computer electronically.”

5. How well do you know your vendors and business partners? “While you may somewhat confidently share wire instructions with long-time vendors or business partners, it is wise to conduct some due diligence around new vendors or other payees. Using the Positive Pay services for checks and ACH and Payee Positive Pay for check disbursement accounts adds in an extra layer of protection.”

6. Do you conduct surprise audits? “The American Bankers Association reports that 60 percent of all fraud incidents within a business involve employees. Surprise audits are a good way to detect and deter occupational fraud schemes so that funds can’t be manipulated ahead of the audit.”

7. Does your company enforce vacation policies? “Similarly, making sure that there are periods of time in which employees are away from their desks and have their records available for oversight has been supported by financial regulators like the SEC for years, but all companies can benefit from this policy. A one- or two-week window can provide the additional transparency needed to expose internal fraud.”

8. Are dual approvals required for your payments? “Implementing banking processes that require dual approvals for activities such as payments and wire transfers is an easy way to minimize certain fraud risks. Companies can also require additional approvals before a new vendor is added to a payment system, as well as use debit blocks and alerts to reduce the risk of unauthorized payments.”

9. Is there open access to company checkbooks? “In 2012, 85 percent of organizations experienced actual or attempted check fraud, according to the Association for Financial Professionals’ latest fraud survey. Having company checkbooks out in the open leaves your bank account information visible and increases the risk of check theft. Always lock up any checkbooks.”

10. Does your company have on-site collections? “Outsourcing collections mitigates the risks that emerge when receivables checks are lying around the office.”
“Whether it’s our personal banking information or the company accounts we are responsible for, the most basic advice we can give is to use common sense – and make sure your employees do, too,” says Gifas. “Walking employees through scenarios and conducting training around fraud threats can help to minimize the headaches and real financial losses that happen when fraud occurs.”

Source: RBS Citizens Financial Group, Inc.

Buyers Expect Price Increases

Despite forecasts that prices will increase less in 2013 than this year, buyers are more concerned by rising prices than the overall economy. Thirty-three percent of buyers listed rising prices as a major concern in the fourth quarter, up from just 23 percent in the third quarter. Meanwhile, 22 percent said they were concerned with a weak economy, down from 27 percent in the third quarter, according to the Redfin Real-Time Homebuyer Survey. From November 30 to December 2, 2012, Redfin surveyed 1,084 active homebuyers who had toured a home with a Redfin agent since August 14.

More Than 70 percent of buyers believe prices will rise next year in their markets. The number of buyers who believe prices are rising shot up even higher in the fourth quarter, although most still expect gains to be modest. Ten percent of respondents expect home prices in their area to “rise a lot” over the next twelve months, the same as last quarter; 61 percent expect prices to “rise a little” an increase of ten percentage points over last quarter. Twenty-one percent expect prices to “stay the same,” 6 percent expect prices to “drop a little,” and less than 1 percent expect prices to “drop a lot.”

A growing number of buyers are planning to buy in order to get out in front of rising prices. Thirty-three percent of respondents indicated rising prices as a motivation for buying now, up from 29 percent in the third quarter and just 19 percent in the first quarter. Not surprisingly, a decreasing number of buyers cited “low home prices” as their reason for buying-just 28 percent in this quarter’s survey, down from 33 percent in the third quarter and 40 percent in the first quarter.

More than half (59 percent) of buyers listed low inventory as their top concern with buying now, consistent with last quarter’s rate. When we asked buyers how low inventory was affecting their home search, nearly half (46 percent) indicated that they have expanded their search to include new areas that they hadn’t previously been considering, while 38% indicated that they would be taking a break until more listings come on the market.

In the nine months between Redfin’s first quarter survey and the fourth quarter survey, the percentage of buyers who were also potential home sellers roughly doubled, from 8 percent to 16 percent; after years of rising, the percentage of first-time home-buyers actually decreased from 48 percent to 37 percent. Over that same time, buyers who believe prices will rise over the next 12 months has gone from one in three (34 percent), a minority, to an overwhelming majority, nearly 3 in 4 (71 percent); the number that considered delaying a purchase to see if prices dropped further declined from nearly 1 in 3 (29 percent) to one in 20.
For homebuyers who are not first-timers, we asked if they’re planning to buy a home that is bigger, smaller, or the same size as their current home. The most common response was “much bigger,” at 49 percent. Only 9.6 percent intend to buy a home that is much smaller, while the remaining 41 percent are planning to buy a home that’s the same size but is nicer, more affordable, or in a different location.

Most homebuyers are not very concerned about the Fiscal Cliff and possible changes to the Mortgage Interest Deduction. Although the possible consequences of some of the proposed changes may be large for certain people, only about 5 percent of buyers are seriously concerned and only 23 percent are being more cautious in their home search while they wait to see how things pan out.

For more information, visit www.realestateeconomywatch.com

Ten Steps to Making a Budget

It's time for new Year resolutions. Why not start with planning a budget? Here's some tips to help you get started.

1. Budgets are necessary - They're the only practical way to get a grip on your spending - and to make sure your money is being used the way you want it to be used.

2. Creating a budget generally requires three steps: Identify how you're spending money now, Evaluate your current spending and set goals that take into account your long-term financial   objectives,Track your spending to make sure it stays within those guidelines.

3. Use a software program - If you use a personal-finance program such as Quicken or Microsoft Money, the built-in budget-making tools can create your budget for you.

4. Be reasonable - One drawback of monitoring your spending by computer is that it encourages overzealous attention to detail. Once you determine which categories of spending can and should be cut (or expanded), concentrate on those categories and worry less about other aspects of your spending.
5. Watch your cash - If withdrawals from the ATM machine evaporate from your pocket without apparent explanation, it's time to keep better records. In general, if you find yourself returning to the ATM more than once a week or so, you need to examine where that cash is going.

6. Stop overspending - Government figures show that many households with total income of $50,000 or less are spending more than they bring in. This doesn't make you an automatic candidate for bankruptcy - but it's definitely a sign you need to make some serious spending cuts.

7. Luxuries are not necessities - If your income doesn't cover your costs, then some of your spending is probably for luxuries - even if you've been considering them to be filling a real need.

8. Pay yourself - Plan to spend no more than 90% of your income. That way, you'll have the other 10% left to save for emergencies.

9. Don't count on windfalls - When projecting the amount of money you can live on, don't include dollars that you can't be sure you'll receive, such as year-end bonuses, tax refunds or investment gains.

10. Don't spend up - As your annual income climbs from raises, promotions and smart investing, don't start spending for luxuries until you're sure that you're staying ahead of inflation. It's better to use those income increases as an excuse to save more.

Source: CNN Money

Housing Markets Improving

The number of housing markets considered “improving” according to parameters established by the National Association of Home Builders/First American Improving Markets Index (IMI) surged by 76 to a total of 201 metros in December, according to recently release IMI data. The index also shows that the number of states represented on the list by at least one metro increased from 38 in November to 44 (plus the District of Columbia) in December.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. A total of 84 new metros were added to the list and eight were dropped from it this month. Newly added metros include such geographically diverse locations as Atlanta, Ga.; Bloomington, Ill.; Ann Arbor, Mich.; Seattle, Wash.; and Green Bay, Wis.

“The big gain in improving markets this December indicates that key measures of housing and economic strength have now been holding steady or improving in metros across the country for six months or more, which is an important signal of stability amidst the slowly emerging recovery,” says NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “The main thing that’s limiting the progress we’re seeing right now is the difficulty that potential buyers continue to experience with regard to overly tight mortgage qualifying standards.”

“This fourth consecutive month of expansion in the IMI, coupled with the fact that well over half of all metro areas are now represented on the list, is in keeping with the upward trends that we’ve been seeing all year in terms of housing starts and sales, builder confidence and other measures,” notes NAHB Chief Economist David Crowe. “In general, we expect the overall housing recovery to continue expanding in 2013. However, that is absent a major policy change of the kind that some policymakers have been discussing with regard to the mortgage interest deduction.”

“The dramatic expansion of improving markets at the end of this year should help encourage consumers who may have been on the fence about a home purchase that a housing recovery is now firmly underway,” adds Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, housing price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three measures for at least six consecutive months following those measures’ respective troughs before being included on the improving markets list.

Source: NAHB