MAY 2015

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In This Issue
This will be a good year for housing: Economist

The real estate market has been constrained by tight supply and tight credit, but one economist is predicting 2015 will be a good year for housing.

According to a new report from Redfin, almost 70 percent of homes on the market are "stale," meaning they have sat on the market for more than a month. At the same time, there is a lack of listings and home prices are rising. Existing home sales increased 6.1 percent in March, their highest level in 18 months, the National Association of Realtors said earlier this week.

Because many people lost equity in their homes, they aren't selling, explained Christopher Thornburg, founding principal of the research and consulting firm Beacon Economics.

However, he thinks the trends are looking up. "It is easier to get credit right now. You're starting to see stabilization in outstanding mortgage debt. Banks are starting to lend again," Thornburg said in an interview with "Closing Bell."

Plus, recent estimates by the Federal Reserve show that Americans have about $13 trillion in equity in their homes, up from about $8 trillion at the bottom of the housing downturn, he added.

"As things start to circulate, people are more confident about their jobs. They're making more money. I think this is going to be a very good year for housing."

Dottie Herman, president and CEO of Douglas Elliman Real Estate, called the housing market "hot."

While people haven't been moving, factors are now starting to change, she said. "They're just starting to gain their equity back so they can actually make a move," Herman said.

In addition, Millennials, the typical age for first-time home buyers, were sitting out of the market, but she thinks the generation is going to start buying.

Herman is predicting "sustainable growth," nothing like the double-digit prices moves that occurred prerecession.

As for new home sales, they've been about 20 percent higher since last year, but most of that activity has been on the high end of the market, Thornburg noted.

Lower-priced new construction has still been constrained by the weak labor market and tight credit conditions, he said. As long as those things pick up, he believes the builders who will do better are those who focus on the lower end of the market.


6 Crucial, Overlooked Factors in Renting or Buying a Home


Are you overlooking crucial factors in your search for a home? Both renters and homebuyers consider factors like the bedrooms, bathrooms, square footage and rent or mortgage payment. But these aren't the only qualities that will determine whether a home is the right fit.

These six often-ignored factors can make a massive difference in how happy you'll feel with a property.

1. Sunlight

Sunlight has been scientifically proven to affect your mood, productivity and energy levels. If every room in a house has high, narrow windows (or few windows at all), you could find yourself living in a pretty gloomy atmosphere.

In addition, if your windows are north-facing, you'll get less sunlight than those with south-facing window exposures (assuming you live in the northern hemisphere).

You can supplement lack of natural light to some extent with lamps and overhead lighting, but it's not the same. There's no substitute for natural light.

2. East- and West-Facing Rooms

Speaking of natural light, you also want to bear in mind which direction your home is facing, as this will affect the amount of sunlight certain rooms get throughout the day.

If the kitchen is on western side of the house, for instance, your kitchen will heat from the afternoon sun, meaning the kitchen will be hottest right before you return home from work. That's unpleasant, especially since the heat from the oven and stove will also cause kitchen temperatures to rise. In the summer, this one-two punch of heat might tempt you to dine out more, which can affect both your health and your finances.

Likewise, bedrooms that have eastern-facing exposures may get direct sunlight early in the morning - which can be either a positive or negative feature, depending on whether you're a morning bird or a night owl.

3. Walkability to Local Amenities

The more you can walk to local attractions like stores, restaurants and schools, the less dependent you'll be on owning a vehicle. This can mean lower gas bills (and other auto savings) for you, as well as an overall healthier lifestyle. It can also make you feel more connected to your community.

4. Commute Time

Is buying your "dream home" worth spending an hour fighting traffic to reach work everyday? We spend enough of our lives at work as it is; cutting into your personal time even further with a hefty commute can make you miserable, even if you live in the nicest of houses.

If the home you're considering is close to your current workplace, how long do you plan on staying at that job? What are the most likely neighborhoods where your next job might be held?

5. Neighborhood Noise and Activity

Visit any property you're considering at different times of day to get a feel for when the neighborhood gets busy. You might find it's hectic and noisy during rush hour, or that the streets fill up on the weekends because you're located close to shopping and dining attractions. You might notice that the sidewalks are bustling with people during the daytimes but not late at night, or vice versa.

Make sure the ebb and flow of the neighborhood's energy levels match your own, or you could find yourself resenting your location.

6. Layout

If you work from home, is the office right next to the family room, where your kids will be roughhousing and shouting?

Will guests have to walk through your bedroom to access the upstairs balcony?

Is the bathroom directly off the kitchen, and will any resulting wafts or aroma cause you or your guests to feel grossed out?

It's not just the number of rooms in a house that matters; it's also the layout of those rooms. Make sure the flow makes sense for your needs and won't cause awkward or annoying situations.

Remember, when you're searching for a home, obvious criteria like the number of bedrooms, bathrooms, square footage and price will remain at the forefront. But non-obvious factors, such as natural light and neighborhood noise, will make a massive impact in your day-to-day experience. Weigh these with the importance they deserve.

5 Ways You're Wasting Money
by U.S. News


From extravagant weddings to cable television, some expenses will wreck your wallet. 


When you were young, and if you got an allowance, your parents probably told you not to waste your money on candy, comic books, video games or some other equivalent whenever you tended to go overboard on purchases.


But as you quickly figured out, what is a complete waste to some people is a perfectly reasonable purchase for others. Still, it's hard to argue with Joan Fradella, a West Palm Beach, Florida, resident when she says, "Our garbage dumps are filled with purchasing mistakes."


Fradella, who used to be a purchasing agent for a consumer electronics company before co-founding a divorce mediation company, says everyone should think long and hard before whipping out their wallets. "There are reasons we don't give credit cards to toddlers. We shouldn't treat our hard-earned money as if it is Monopoly money," she says.


Still, since there is no rule book for what constitutes a waste of money, everyone has to go with their gut.


And, of course, there must be a million ways consumers can waste their money. So this is not a comprehensive list of possibilities for throwing away your income.


Credit cards.

While many consumers use credit cards wisely, lots don't - and there are certain cards you shouldn't bother with, according to Dak Hartsock, a resident of Naples, Florida, and chief investment officer at ACI Wealth Advisors, an investment advisory firm.


"If you have a credit card with an interest rate over 11 percent, you should get rid of it," he says. "Once you get north of 11 percent or so, the interest expense piles up so fast that many regular Americans can't ever catch up. Credit cards are loaded guns for many Americans. If you don't pay attention, you are going to get hurt."


If it helps, Hartsock says that when it comes to borrowing money, try to think like the CEO of your own company. His rationale? If you were running a public corporation, and the interest rate on the company's debt jumped from 7 percent to 27.99 percent, "the company would be in deep trouble," Hartsock says.


And then what would happen? You would be fired, he adds.



Again, like credit cards, you can pay for a wedding responsibly or you can go off the deep end. "The final price of a wedding usually ends up being about the price of the down payment on a new couple's house," says Rick Salmeron, a certified financial planner with his own firm, Salmeron Financial, in Dallas.


The problem, as he sees it: "The majority of couples end up super-sizing their wedding, blowing dollars on stuff they had never originally budgeted for. So many variables are ripe [for] emotional impulse purchases - the wedding dress, makeup and hair, DJ, decorations, food, wedding favors, invitations, photography ... the list is seemingly endless."


If you're still not convinced, Salmeron puts his distaste for extravagant weddings this way: "So many marriages fail due to financial problems. Why create a financial hardship on your savings account on day one? What's so romantic about that?"


Cable TV.

"People spend well over $1,000 a year just so they can watch five to 10 of the 200-plus channels they're paying for, and the cable companies keep luring them back into long-term contracts with promo deals that expire after a few months, then the rates go through the roof again," says Steve Belk, a Houston-based entrepreneur who created, an online guide for doing just that.


But Belk is hardly alone in his stance. In 2013, surveyed 2,046 adults; forty-five percent of respondents said cable TV is a waste of money, but 81 percent of them admitted to being paying customers.

Hartsock agrees it's a wallet wrecker. "I've never met anyone that wasn't paying at least $80 a month or $960 a year," he says. "You can basically duplicate cable with a combination of Apple TV ($69 per YEAR), Netflix ($7.99 a month), and Amazon Prime ($99 per year). Total annual bill, $263.88 before tax."

If you really want to shred money, buy a car incorrectly or one you can't afford. "Buying a new car just generally doesn't make a lot of sense for most people in the lower- to middle-income ranges because the depreciation credit is likely to be more than they can use on their taxes," Hartsock says. "If you have to get a car, it's a better use of money to get a certified used."

He offers the suggestion that if, for instance, you bought a certified used Audi or Lexus - not exactly shabby cars - with fewer than 100,000 miles on them, "not only are you avoiding the huge depreciation that occurs as soon as you buy it off the lot, you still get the warranty coverage."


And be sure to get your financing straightened out before you go to a dealership. "Once you know what car you want, it's only a matter of shopping around for the best price out the door and not [having] to worry about financing and APR with a car dealership," says Edgar Cerecerez, a marketing specialist for a software company in Lake Forest, California, who bought a Honda Fit earlier this year.


He had planned to get a used Honda but actually found financing that was less for a newer car. In any case, by comparison shopping first and using an online automobile calculator, he knew exactly what he was getting into before buying his car. He estimates he saved at least $720 from financing alone, and of course, some consumers might save potentially thousands by nailing down the loan before going into a dealership.



It isn't that you shouldn't splurge. But you may be doing it too much, particularly at restaurants, according to Danny Kofke, a retirement consultant in Atlanta.


"If you are like me, you usually need a doggie bag to go because you cannot eat your entire meal. Why pay more money for an appetizer when all it does is take up space in your belly before your meal is even brought out? In addition, soft drinks and even tea can now cost over $2. If you have a family of four, that is over $8 in just drinks."


Kofke says he can easily spend more than $12 on drinks - he and his wife have four kids. "Order water instead, and you can save a huge chunk of change," he says.


And, sure, splurging a little may not be like buying an overpriced car, but if you're splurging every day, it's easy to see how you could really mess up your finances.


Robert Godlewski, an Atlanta resident, has a similar mindset. He is a public relations guy for a university and is just, as he puts it, "a regular guy" who is admittedly in an "ornery mood," due to some lousy weather in the area lately, but he feels like a lot of people mindlessly splurge on dumb things. "Why do people feel they have to buy an expensive cup of coffee on their way to work?" he grouses. "Can't they get up five minutes earlier and make it themselves? I thought that was why instant coffee was invented."


He also thinks some people waste their money on overpriced premium cable subscription channels.


But while some consumers love their coffee and premium cable channels, nobody can fault him on where he thinks everyone's wasted money should go instead: "People should spend money, if you will, on their damn retirement accounts."


It's official:  The first quarter saw a refinance mini-boom
by HousingWire

A continually low-interest rate climate led to borrowers refinancing at an increased rate in the first quarter, according to a new report from Freddie Mac.


Freddie Mac's quarterly refinance analysis for the first quarter of 2015 found that 63% of the single-family loans originated in the first quarter were refinances, compared to approximately 52% for the full year 2014, according to Freddie's data.


Additionally, Freddie Mac reported that approximately 27% of borrowers increased their loan amount when refinancing in the first quarter, either by cashing out equity or consolidating loans, compared to 29% in the fourth quarter of 2014.


For comparison, in the first quarter of 2014, 17% of borrowers increased their loan amount, but the first quarter of 2015 is still well below the peak of 89% in 2006.


"Many homeowners took advantage of low mortgage rates by refinancing in the first quarter of 2015. Relatively younger loans refinanced as the median age of a refinanced loan declined to 5.6 years, down from 6.8 years in the prior quarter," Len Kiefer, Freddie Mac deputy chief economist, said.


"Refinance borrowers are primarily looking to reduce payments and pay down principal faster," Kiefer continued. "We estimate that borrowers who refinanced in the first quarter will save on net more than $1.4 billion in interest payments over the first 12 months of their new loan. Nearly a third of borrowers who refinanced shortened their loan term."


According to the Freddie Mac report, the net dollars of home equity converted to cash as part of a refinance remained low when compared to historical volumes.


In the first quarter, an estimated $7.7 billion in net home equity was cashed out during a refinance of conventional prime-credit home mortgages, down from the revised $7.6 billion the previous quarter in 2014 dollars, Freddie Mac said. The peak in cash-out refinance volume was $84 billion during the second quarter of 2006, with an annual volume of $320.6 billion.


Freddie Mac's report also showed that of borrowers who refinanced during the first quarter of 2015, 34% shortened their loan term, down slightly from the previous quarter. Of eligible borrowers who used the Home Affordable Refinance Program, 36% shortened their term. During the past four quarters, more than one-third of HARP borrowers shortened their term.


The average interest rate reduction in the first quarter was about 1.2 percentage points, a reduction of about 24%, Freddie Mac said. On a $200,000 loan, that equals savings of roughly $2,500 in interest during the next 12 months.


Homeowners who refinanced through HARP benefited from an average rate reduction of 1.8 percentage points and will save an average of $3,500 in interest during the first 12 months or about $290 monthly.


Additionally, roughly 73% of those who refinanced their first-lien home mortgage maintained about the same loan amount or lowered their principal balance by paying in additional money at the closing table, about the same as last quarter, Freddie Mac said in the report.


Freddie's report also stated that more than 95% of refinancing borrowers chose a fixed-rate loan. Fixed-rate loans were preferred regardless of what the original loan product had been, Freddie's report stated. For example, 76% of borrowers who had a hybrid ARM refinanced into a fixed-rate loan during the first quarter. In contrast, only 3% of borrowers who had a fixed-rate loan chose an ARM.


For all other (non-HARP) refinances during the fourth quarter, the median property value was up 5% between the dates of placement of the old loan and the new refinance loan. The prior loan had a median age of 5.6 years down from 6.8 years in the fourth quarter of 2014, Freddie said.

Floyd Mayweather does a lot of "crazy things" with money
by Boxing Junkie

The Foundation

In 2007, about the same time of those Grand Rapids weekend bashes, Mayweather started his own charitable foundation. The Floyd Mayweather Foundation donated $500 in 2013, according to the most recent public tax records available.


In 2011, the foundation spent $6,679 on charitable activities and made no donations, records show.


In 2012, the foundation donated $40,695, including $25,000 to St. Jude's Ranch for Children in Boulder City, Nev., and $15,195 for Diamonds Love Foundation, a non-profit established by the family of retired boxer Shane Mosley.


In 2013, total expenses were $6,205, including $2,432 for a back-to-school fundraiser and $2,742 for a women's professional fundraiser.


The foundation was set up to handle smaller events and charitable givings in Las Vegas, such as the "Fight 4 Fitness" 5K run/2K walk Sunday, and Mayweather intends to get more involved after he retires from boxing, said Leonard Ellerbe, CEO of Mayweather Promotions.


"As an active fighter, it is difficult for him to put as much time and effort into it as he would like," Ellerbe said. "But he is happy to have it there as an avenue for giving back and for when he retires and his focus can intensify."

Since 2008, Mayweather has made private donations of about $1 million.

In addition to the $200,000 he gave Three Square Food Bank, he donated $255,000 to Rainbow Dreams Academy, a charter school for at-risk children in the Las Vegas area; $150,000 to the Habitat of Humanity chapter of Las Vegas; and $115,000 to the Susan G. Komen chapter of Southern Nevada; $140,000 to Michigan Golden Gloves; and $100,000 for amateur boxing tournaments in Nevada.


"He does so many things for so many people and doesn't want to be recognized for it," Ellerbe said.


How much Mayweather gives varies. For example, his charitable foundation is offering four annual scholarships for women pursuing careers in sports and entertainment.


Each of the scholarships is worth $1,000, paltry next to Mayweather's watch collection, a case of 24 handcrafted specimens worth a reported $6.4 million; his luxury car collection that includes three Bugatti's, sports cars Mayweather said are worth more than $6 million combined; underwhelming next to a betting slip Mayweather posted online showing he wagered $1.1 million on the University of Oregon football team to cover the spread spread against Arizona State during the 2012 season.


Oregon won 43-21, apparently so did Mayweather and yet Ellerbe recently found himself brushing aside concerns that that Mayweather could be headed for financial trouble.


"He could retire tomorrow and he would have nine figures in the bank," Ellerbe said.



Family business

Mayweather lives in a 22,000-square pad that features crystal chandeliers hanging from 24-foot high ceilings, a two-story movie theater and his self-described "million-dollar garage," where the boxer keeps his three Bugattis and other luxury cars that include the requisite Lamborghini, Porsche and Ferraris.


(He also travels on his private jet, a Gulfstream GIII).

Mayweather spent at least $2 million developing his own record label, Philthy Rich Records, said one-time Mayweather assistant Tasha Robinson-White, and the investment has yet to pay dividends. He also started his promotional company that manages lesser-known fighters and sells merchandise. But clearly, boxing pays the bills.


After retiring in 2007, he returned to the ring in September 2009 - about the same time the IRS was seeking back taxes. He recently indicated he is not fighting for the love of the sport.

"I'm to a point where I'm really over this," Mayweather said, adding that he intends to fulfill a six-fight deal with Showtime, with the last bout tentatively set for September. "I don't enjoy it like I once did.


"It's at a point now where it's a business."


It's become a family business.


Mayweather takes care of those around him, according to some of those around him. His payroll covers his father, Floyd Sr., who is training him for the fight; uncle Roger, a former boxer also involved in the training camp; and no fewer than eight other relatives and long-time friends.


"There's so many of us," said DeJuan Blake, a cousin who manages the 12 other fighters in Mayweather Promotions. "Sisters, cousins, our whole family."

Many of those folks are driving cars bought by Mayweather. Josh "Chop" Towbin of Towbin Dodge near Las Vegas said he has sold Mayweather more than 100 cars over the past 18 years and most of them were purchased as gifts - like the Bentley the boxer recently gave to his mother for her birthday.


"The important people around him are driving great stuff because of Champ," Towbin said.

Brazil said he appreciates nothing more than when Mayweather took his entire entourage to South Africa last year. Yet after recalling the group's visit to Soweto, Johannesburg and Robben Island, where Nelson Mandela served part of his 27-year sentence, Brazil thought back to Mayweather's Bugatti sports cars.


"Most people can't afford half of one and he has three," Brazil said. "What does that tell you?"