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Existing-Home Sales Show Strong Gain In December

by Alexandra Zega

RISMEDIA, January 27, 2009-Existing-home sales rose unexpectedly while inventory declined, led by a surge of sales in the West, according to the National Association of Realtors®.

Existing-home sales-including single-family, townhomes, condominiums and co-ops-jumped 6.5% to a seasonally adjusted annual rate of 4.74 million units in December from a downwardly revised pace of 4.45 million units in November, but are 3.5% below the 4.91 million-unit pace in December 2007.

For all of 2008 there were 4,912,000 existing-home sales, which was 13.1% below the 5,652,000 transactions recorded in 2007. This is the lowest volume since 1997 when there were 4,371,000 sales.

Lawrence Yun, NAR chief economist, said home prices continue to fall significantly. “It appears some buyers are taking advantage of much lower home prices,” he said. “The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal balanced conditions. Buyers will continue to have an edge over sellers for the foreseeable future.”

Total housing inventory at the end of December fell 11.7% to 3.68 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, down from a 11.2-month supply in November.

Yun said the market is underperforming and hurting the broader economy. “We’ve added 25 million people to our population over the past decade and housing affordability conditions are the best we’ve seen since 1973, but household formation is much lower than expected,” he said. “Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable home buyer tax credit. The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery.”

The national median existing-home price for all housing types was $175,400 in December, which is 15.3% below December 2007 when the median was $207,000. There remains a significant downward distortion in the current median from a large number of distress sales at discounted prices, currently 45% of transactions; the median is where half of the homes sold for more and half sold for less. For all of 2008, the median price was $198,600, down 9.3% from $219,000 in 2007.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said it’s an excellent time for first-time home buyers with good jobs. “The typical buyer plans to stay in their home for 10 years, which is the correct approach in today’s market,” he said. “With historically low mortgage interest rates, flexible sellers, a large inventory, and homes that are selling for less than replacement construction costs in much of the country, buyers who’ve been on the fence should take a closer look at today’s market.”

McMillan added that first-time buyers may want to consider an FHA loan, which offers downpayments of 3.5% on a safe 30-year fixed-rate mortgage.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.29% in December from 6.09% in November; the rate was 6.10% in December 2007. Last week, Freddie Mac reported the 30-year rate was 5.12%.

Single-family home sales rose 7.0% to a seasonally adjusted annual rate of 4.26 million in December from a level of 3.98 million in November, but are 1.4% below a 4.32 million-unit pace in December 2007. For all of 2008, single-family sales fell 11.9% to 4,349,000.

The median existing single-family home price was $174,700 in December, down 14.8% from a year ago. For all of 2008, the single-family median was $197,100, which is 9.5% below 2007.

Existing condominium and co-op sales increased 2.1% to a seasonally adjusted annual rate of 480,000 units in December from 470,000 in November, but are 18.4% below the 588,000-unit level a year ago. For all of 2008, condo sales dropped 21.0% to 563,000 units.

The median existing condo price4 was $181,400 in December, down 18.3% from December 2007. For all of 2008, the median condo price was $210,000, which is 7.2% below 2007.

Regionally, existing-home sales in the Northeast slipped 1.4% to an annual pace of 720,000 in December, and are 14.3% below December 2007. The median price in the Northeast was $235,000, which is 7.8% lower than a year ago.

Existing-home sales in the Midwest increased 4.0% in December to a level of 1.04 million but are 10.3% below a year ago. The median price in the Midwest was $140,800, down 11.4% from December 2007.

In the South, existing-home sales rose 7.4% to an annual pace of 1.74 million in December, but are 11.2% lower than December 2007. The median price in the South was $158,600, which is down 8.0% from a year ago.

Existing-home sales in the West jumped 13.6% to an annual rate of 1.25 million in December and are 31.6% higher than a year ago. The median price in the West was $213,100, down 31.5% from December 2007.

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How to Save for College during a Recession

by Alexandra Zega


RISMEDIA, January 21, 2009-(MCT)-Saving for educational expenses in an economic downturn is a daunting task. It’s scary enough to face a price tag of $80,000 to $200,000 for four years of college under any circumstances, but with the economy growing weaker and people losing jobs, it’s terrifying for many families.

But there are strategies, experts said, that can help parents sock away money for education and obtain aid to help defray the costs.

For families still a few years away from the college years, for example, Somnath Basu, a financial planner and finance professor at California Lutheran University, encourages families to plan ahead in case they suffer a financial setback as college looms.

All families thinking about college should be saving more and spending less, Basu said. He suggests that parents tell high school students that education is a priority, and spending cuts must be made immediately to ensure that college is possible.

“This is not a time to run up clothing and cell phone bills,” he said. “Families can eat meals together at home. College students can be told to eat the meals at the college cafeteria. There is no need for limos at the high school prom.”

Whether for college or private elementary or high schools, experts recommend automatically putting aside a designated amount from each paycheck into savings, if possible.

But some families cannot afford to build up emergency savings and adequate retirement savings, plus stash money for education. So if there are compromises to be made in saving, they should focus on less college saving rather than less emergency or retirement savings.

Young families often set their priorities backward, wanting to make sure they do as much as possible to help children through college. But financial planner Sheryl Garrett of the Garrett Planning Network said that too many families crimp their retirement needs by overspending on college.

Parents should realize that college students can borrow money at low interest rates for college and pay it back during the 10 to 30 years after they complete their education. But parents cannot borrow money for food, medicine and a roof over their heads if they are 75 and without adequate retirement savings.

Given the uncertainties in the current economic climate, Garrett advocates that even college saving be done in a way that won’t interfere with a family’s options.

She suggests that parents save as much as $5,000 a year each in a Roth individual retirement account. With that type of IRA, parents could tap their original contributions in an emergency without penalty, or use it for college or retirement if no financial problems arise.

Putting money into a 529 college saving plan or Coverdell education account locks the family into spending the money only for education. If they withdraw the money for other purposes, they will be taxed.

Families already saving for college with 529 plans or other college savings do not have to close the accounts. They can route new savings into a Roth IRA, provided their income levels allow them to do so. Meanwhile, they should be reviewing any college investments now to make sure they are not invested too aggressively in stocks at a time when the market is shaky.

A rule of thumb is to invest no money in the stock market that will be needed within five years. So by time the student turns 17, it’s considered risky to subject college money to the stock market.

A person wanting to make sure college money would be completely safe could open a Roth IRA at a bank and invest it all in certificates of deposit.

Many parents look at meager savings and worry how they will pay for school. But some middle- and low-income families should be less concerned than they are: Many will be eligible for financial aid.

Aid could include low-interest loans, campus jobs and scholarships that come in many shapes and sizes. Also available are grants-free money that does not have to be repaid. Qualifying is not contingent on grades or SAT or ACT scores. The grants are given to families by colleges based on the parents’ and students’ income, savings and other assets. At an Ivy League school, a family with an income of $180,000 might qualify, while at a public university incomes over $70,000 might not.

Many private high school or elementary schools also will grant scholarships to families in need or will allow people to defer payments.

Still, at both the college and private-school level, the economic downturn is eroding some opportunities for aid.

The plunging stock market has hurt college endowments and donations, making it more difficult for schools to deliver the aid they would have during better times. Consequently, families with students headed to college this fall need to apply quickly for aid so they are in front of the line.

“There is aid available, and people should go after it,” said Kalman Chany, a New York financial aid consultant and author of “Paying for College Without Going Broke.”

To apply for aid, families must complete a form known as the FAFSA and submit it to colleges along with their tax return. Private colleges might want another form, the Profile. College financial aid offices will tell you what they require.

Even people who qualify for grants usually must come up with additional money of their own for college. But combined with college savings, low-interest federal and state student loans, as well as work-study jobs on campus, frugal families can often make the situation work.



© 2009, Chicago Tribune.By Gail Marks-Jarvis
Distributed by McClatchy-Tribune Information Services.

Now’s the Time to Rebuild Your Personal Finances

by Alexandra Zega


RISMEDIA, January 17, 2009-(MCT)-After watching the worst financial fiasco since the 1930s unravel throughout last year, we must treat 2009 as a year of rebuilding.

If only, really, we could rebuild all this mess in a year, right? We’ve all got a long, uncertain road ahead of us when it comes to working our way through the recession, rebuilding our retirement plans, recreating lost wealth, and, frankly, redefining the way we handle money.

Still, you’ve got to start the cleanup sometime-and 2009 is as good a time as any. Here are some suggestions:

- Get your resume–and yourself–in shape in case of a job loss. Work the network. Go back to friends and former coworkers to help them open doors for you. Some send e-mails endorsing you to potential employers.

- Do what you can to control spending. Even an extra $25 a week saved now could offer some relief in the future if you lose your job. Go to the library. Make do with what you’ve got at home in the freezer. Shop your closet.

- Create a lifestyle built around saving, not spending. Even as things start looking better–or OK, maybe just stop looking worse–many families won’t be able to effortlessly make quick money in their 401(k) plans or their homes anymore. Saving for retirement or college will require saving money– not spending it.

“Painful as it is, you’re not going to get bailed out by your home appreciating,” said Mitch Stapley, chief fixed income officer for Fifth Third Asset Management in Grand Rapids, Mich.

- Stop charging on your credit card. Pay the bill in full each month or pay cash only.

- Know how much money you have in that 401(k) after it was sliced and diced by the ‘08 Vegematic sold on Wall Street.

- If buried in debt, work with a nonprofit counselor, such as Green Path Debt Solutions, at

- Homeowners who are running into trouble should contact their lenders, as well as seek free mortgage counseling through the Hope Now Alliance at 888-995-4673.

- Don’t do anything stupid. Don’t spend like there’s no tomorrow because you’ve got some money now. Don’t dump all your 401(k) money into GM stock or Ford stock. Don’t engage in risky personal–and later way-too-costly–behaviors. No one needs another speeding ticket.

- Focus on your financial footprint–not overall gloom and doom. Remind yourself of what you may have done right–say if you have little or no debt, you have savings and continue to have equity in your home.

- Talk to your loved ones and friends about where you need to spend money and where you don’t. Get out of any spending ruts–you don’t have to buy the same things that you did last year.

- Leave room for the possibility that ‘09 could look better than ‘08. While many people, rightfully so, feel grim, some market experts say that the stock market could post a double-digit rebound in ‘09.


© 2009, Detroit Free Press.Susan Tompor is the personal finance columnist for the Detroit Free Press.
Distributed by McClatchy-Tribune Information Services

5 Ways to Have Fun on a Budget

by Alexandra Zega


RISMEDIA, January 13, 2009-(MCT)-This year I’m stealing my grandparents’ favorite ritual: happy hour at home. At 4 p.m. on various weekdays, they’d whip up some whiskey sours and crack open a can of cocktail nuts. Sometimes the menu consisted of beers and pretzels. No frills, nothing fancy, it was just time to stop working, sit back and enjoy a little conversation.

Any way I can save a little money in this bad economy is a good thing. But I don’t intend to give up happy hour, because it’s one of life’s little pleasures, a time when friends and co-workers can come together for a few much-needed laughs.

I just need to ditch the happy hours of the old days. Typical outings were little more than an hour at a restaurant, but each of us spent at least $30. That was after only two glasses of wine each and a few shared appetizers. A few of those outings, and I was out of a considerable amount of mad money. I didn’t regret that then, but I’d regret it now.

Hosting happy hours at home can save a lot of cash without skimping on the fun. The five-part plan:

1. Start a rotation with friends of hosting happy hours at least once a month. The host is responsible for providing food and drinks.

2. Cap spending at $20 or less. That might not seem like much, but it’s enough for snacks and a limited number of drinks. Happy hours at home shouldn’t be considered meals.

3. Set time limits. Two hours is enough time for a getaway. Longer than that starts feeling like an obligation, and that’s no fun.

4. Don’t stress about cleaning. As long as the kitchen counters and table are decluttered and a bathroom is straightened, who cares about the rest of the house?

5. Create a fun but carefree ambience. Light a few candles, dim the lights and turn on some music. But the host shouldn’t go through the trouble of arranging fresh flowers throughout the house. Remember, it’s not about impressing guests. It’s just happy hour.



© 2009, The Kansas City Star-By Stacy Downs
Distributed by McClatchy-Tribune Information Services.

Strike a Yoga Pose to Strike Down Stress

by Alexandra Zega


RISMEDIA, January 8, 2009-(MCT)-When hyperventilating sometimes seems the only option to stress, Petri Brill has a healthier suggestion: yoga. 

“Yoga is not just a practice of poses, but of your breath work,” says Brill, a Dallas certified yoga instructor. “The practice of slow, controlled, rhythmic breathing helps bring down blood pressure, rest the heart, clear the mind, energize the body and relax the muscles. Combine this with some relaxing yoga poses, and peace and serenity are just around the corner.

We asked her for poses to help ease stress. Yes, poses even those of us with the flexibility of a pencil can do. Here are five: Do one or two or all five poses for a deep inhale and exhale of a minute or two. Or longer.

Or, as she puts it, “You never want to stay and struggle in a pose. Feel the benefits; you don’t want to feel like you’re going to pass out or rip in half.”

1) Bridge Pose. This is designed to calm the brain, rejuvenate tired legs and relieve spinal tension.

To do it: Lie on your back with your feet hip-width and flat on the ground. Press down with your feet; lift your glutes, hips, pelvis and back off the ground. Keeping your arms flat, with your shoulders on the floor, lock your fingers under your glutes. Inhale and exhale.

2) Standing Forward Bend. This stretches tight hamstrings and relieves tension in the hips and lower back.

To do it: Stand straight, feet hip-distance apart. Exhale and bend, bringing the crown of your head toward the ground. You’re far enough when your hamstrings are stretched, but not tight. Put your right hand on your left elbow; release and switch.

3) Seated Spinal Twist. This helps aid digestion and opens up the spine to release tightness and tension.

To do it: Sit comfortably cross-legged. Inhale, bringing arms overhead and pressing palms together. As you exhale, twist to your left. Reach your left hand behind your back to the ground. Put your right hand on the outside of your left knee. Use it to leverage the twist to your left, taking your gaze over your left shoulder. Repeat on the right side.

4) Salutation seal. This helps reduce anxiety and stress, calms the brain and clears the mind.

To do it: Sit cross-legged. Relax shoulders back and down. Draw chin slightly toward chest. Bring palms together. Take 10 deep, rhythmic inhales and exhales.

5) Seated forward bend. This brings energy to the body, improves digestion and helps insomnia.

To do it: Sit on the floor, legs extended. As you inhale, bring your arms overhead. As you exhale, reach up and out, slowly folding over your legs. Hold the position, making sure your shoulders and neck are relaxed. Deeply inhale and exhale a few times. Inhale, slowly rising up to sitting position.



© 2008, By Leslie Garcia The Dallas Morning News.

Economists Predict Recession Will Persist until Midyear

by Alexandra Zega

RISMEDIA, January 6, 2009-(MCT)-Harry Truman joked that he needed a one-armed economist so he wasn’t faced with someone who always said “on the other hand …” Well, BNA Inc. found quite a few one-armed economists.

The business research and information company surveyed 25 economists from financial institutions, consulting firms and academia and found near unanimous agreement that the recession will persist for another six months.

All but one of the economists said economic growth will resume gradually in the third quarter-largely depending on the success of the as-yet-unspecified federal economic stimulus package.

“We are going through some of the scariest parts right now,” said John Silvia, chief economist at Wachovia Corp. and one of the participating economists. “By the end of 2009, economic growth should return.”

Meanwhile, the economists agreed the job market would remain sour for several months after the real gross national product begins to tick upward.

“Jobs always lag the economy,” Stuart Hoffman, chief economist at PNC Financial Services Group, told BNA.

Hoffman said he expected job losses to be “widespread,” with the steepest cuts in the automotive sector.

As a group, the economists calculated that U.S. employers will continue to jettison an average of 218,200 jobs a month in the first half of the year and that the national unemployment rate will continue rising into the second half of the year.

An average jobless rate of 8.2% was forecast for the last six months of 2009, with individual forecasts ranging from 7% to 8.9%.

Only one economist, Susan Sterne of Economic Analysis Associates, predicted job growth in 2009.

On the brighter side, the outlook calls for inflation to be relatively low-averaging 1.3%-over the year (although two of the economists predicted a slight deflation of -0.2% or -0.4% for the year).

In terms of monetary policy, the consensus prediction was for the Federal Reserve to “keep the fed funds rate at very low levels early in the year and generally maintain that before beginning to tighten slightly late in the year.”

Most of the respondents said they expected the central bank to continue pursuing monetary stimulus initiatives.

“Wherever there is a market failure, the Fed will make a market,” predicted Joel Naroff, chief economist at Naroff Economic Advisors Inc.

The average forecast change, fourth quarter 2008 to fourth quarter 2009, was for:

- Real gross domestic product: 0.1%.
- Real personal consumption expenditures: 0.8%.
- Real business fixed investment: -6.8%.
- Hourly compensation: 2.6%.
- Unit labor costs: 1.2%.
- Consumer price index, overall (Dec. 2008-Dec. 2009): 1.3%.
- Federal funds rate (end of 2009), 0.7%.

The economists also focused on the worldwide nature of the economic downturn which, they said, requires fiscal stimuli in both industrial and developing countries to avert a more severe financial crisis.



© 2009, The Kansas City Star.

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