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US DEBT CLOCK

CASE-SHILLER HOME PRICE INDEX RISES

A May 2009 increase of 0.5% in the closely watched Case-Shiller home price index indicates that the US housing recovery is seen possible now. Prices tumbled more than 32% from their peak in 2Q 2006. Case said that prices may be at the bottom now.

· Preventative risk--management must be a priority going forward, according to Shiller.

· He also stated that the mortgage contract structure must be made to protect home-buyers in case of a downturn. “The new standard for mortgage should be a continuous work-out mortgage,” so that “if home prices fall then your mortgage payment will go down.”

· Shiller cautioned that recent bank bailouts were “extraordinary events that we should want to prevent as much as possible in the future.”

· In June new home sales jumped 11%, the biggest monthly gain in 8 years according the US Commerce Department.

· National association of Realtors said existing home sales rose for the 3^rd straight month in June.

But, with unemployment and foreclosures still rising, caution was advised. Shiller said that confidence in the US financial system is crucial for an economic recovery, and can be best restored by having a clear regulatory framework for investors. He mentioned that foreign investors who were thinking about putting money in this country are feeling somewhat less assured.

REPORTS SHOWING HOUSING MARKET ON THE MEND

With sales up in all four regions of the United States, and the number of previously occupied homes sold in June being the third month in a row to go up, this kind of expansion has not been seen in almost 5 years.

Sales roses 3.6% according to the National Association of Realtors. The foreclosure market is shrinking. It is meaningful that about on third of homes sold in June were foreclosure related, down from nearly half of those sold earlier this year. See the Federal Housing Finance Agency report showing home prices rose almost 1% in May.

There has never been a better time to buy a home in Florida with interest rates down and home prices so much lower than in recent years. The “best buys” are starting to be snatched up now.

NEW PLAN BEING DISCUSSED FOR HOUSES IN FORECLOSURE

According to the Florida Association of Realtors, a plan being developed by both Obama and Congress will allow homeowners to rent their foreclosed home for at least 5 years, maybe as long as 10 years. Motivated by the thought that Florida doesn’t need any more vacant homes, and that the modification plans have not been as successful as Congress hoped, the overall economy as well as the real estate situation in Florida could change for the better with this plan. Florida’s foreclosure rate remains third highest in the nation. One in every 33 households received a default notice, auction notice or bank repossession. One plan is for lenders selling foreclosed homes to approved professional landlords. Another idea is for lenders to sell to private investors, or keep the home and hire a management firm to handle the rental. However, some warn of banks wanting to shed properties rather than become landlords and selling to low-balling investors, which would knock prices farther down.

LET IT SNOW… LET IT SNOW… and BRING YOUR MITTENS to a “COOL” EVENT

The last time your editor saw snow in Palm Beach County was when visiting during the winter of 1976, when snow briefly fell in Palm Beach near the water. Palm Beach County will have it’s own winter wonderland this weekend at the Palm Beach Zoo in Dreher Park, Southern Boulevard just east of I-95, for “little kids” and “big kids”. “Winter in July” will be held from 10 am to 4 pm both days. Forty… yes FORTY TONS of snow will fall. Many ice-age fossils will be on display. You can go on a fossil dig, make a fossil shark-tooth necklace, enjoy children’s entertainment, have animal encounters, visit the “sand box” to create your own cool treat, relax in the Florida Pioneer House and hear Arctic-themed stories, meet the “Snow Queen” and learn about sun safety. Go “ice-fishing” and see what prize you can reel in. Admission for adults is $12.95, Seniors 60 and up $9.95, Children 3-12 $8.95, children under 3 and zoo embers are free. The purpose is to educate children about the importance of sun safety and let them experience the wonders of winter without leaving Palm Beach County. The event is co-sponsored by South Florida Parenting Magazine and Panera Bread Company. Sun Safety materials are provided by the Skin Cancer Foundation and Armchem. Daily events at The Zoo include an interactive “Wings Over Water” show with 20 trained birds, 11-3 weekdays and 11-2 weekends This is sponsored by AirTran. The “Wild Things Show’ includes New Guinea Singing Dogs Mic and Sidney, Scooter the South Asian binturong, Xena the African pygmy hedgehog and Boris the Scarlet Macaw and a Brazilian rainbow boa. Come visit and enjoy seeing all the animals!

THE USUALLY GLOOMY CASE-SHILLER INDEX STARTING TO REPORT REAL ESTATE GAINS

With the overall report slightly negative for last month, if Dallas, Denver, DC, Seattle, San Francisco, Atlanta, Boston and Cleveland are showing small increase in home sales, will FLORIDA BE NEXT? According to Realty Times, “even the most bearish of researchers agree: prices are bottoming out, even in some of the hardest hit areas.” They report that detached houses resales were up 56% over a year ago, and condo sales up 30%. Sale prices, however, were down, e.g., down 38% in Phoenix. Consumer confidence is up, especially in willingness to consider “big ticket” items, such as a home. With mortgage rates still very low, this may be THE LAST BEST TIME to buy, RIGHT NOW. Keep in mind that with so many job losses every month and unemployment rates very high, touch credit and underwriting, it is not yet “happy days are here again” by any means. But how nice it is to see a start to home sales trending UP.

INSURANCE PURCHASE TRENDS

According to an article in the July issue of Insurance News Net Magazine, “After Americans lost their shirts in the federally regulated equities market, they were able to find refuge with the guarantees afforded by indexed annuities… Americans who placed over $150 billion in these secure products since 1995 have been sleeping easier at night because of the guarantees.”

Seeking a flight to safety for their reduced holdings, and this includes families who now have one income instead of two, many are placing funds in affordable term insurance, applications for which have climbed steadily over the years.

Marilyn can tell you about term policies that can be converted to cash value universal or whole life policies when you are ready to increase premiums as the economy improves. Meanwhile, your family will be protected. For example Marilyn just wrote an application for a 47 year old male, non-smoker, preferred status, for $750,000. Term is 15 years; convertible. Premium: under $72/month. Premiums will vary with age, tobacco usage and health status. It is predicted that in the future longer term policies will not be available or will be disproportionally more expensive.

Fixed annuities were up 74% for 1Q09 vs. 1Q08. Life insurance applications for the age 60+ group climbed 11.3% in May-09 compared to May-08.

Marilyn Farber Jacobs (561-988-0070) is a Licensed Advisor / Insurance Agent with American Life & Health Group, Inc.