Michigan: My Home

It's been quite awhile since I've posted, yet in the scheme of life, it was just a short time ago. So much has happened in my life it's crazy. The truth is, over the last 60 days, I've been through about 20 years of stuff. I'm just grateful to be here, alive and well, and doing better than ever.

Since it's been a couple months, I'm going to skip my promised article, and probably skip most of the economics all together. I have a passion for economics (hey, what can I say?), but I'm no Walter Williams. I can't explain it all in his simple, common sense manner. What I can do though is talk about stuff I like, and that's exactly what I'm gonna do here.

Now I don't know about you, but I'm tired of hearing all the negativity about Michigan. It's a bunch of bunk and it permeates the collective consciousness until all hope seems lost. I'd love a bunch of responses to this post, even those who disagree, but come up with something better than the "autos are laying people off/offering early retirements". Why? Because I'm 39 years old and I've heard that argument as long as I've been alive. I think 39 years of false predictions of hopelessness should be enough for anybody to realize that fallacy.

Markets go up. Markets go down.

As sure as the sun will rise in the morning, and set again at night, the markets will rise and fall.

Think about Michigan for just a little while. We have the Great Lakes! The largest sources of fresh water on the planet! Period. Amazing natural wonders unique only to us. We love the outdoors in Michigan. Who doesn't love "going up north"? Who else has that? We have some of the most amazing beaches, forests, lakes, rivers ... trails ... we have the largest groomed trail system in the United States with more than 6000 miles of trails! It's a blast for atv and orv's, but it's the ultimate in snowmobiling. I have snowmobiled from as far east as Upstate New York to as far west as the Rocky Mountains. As crazy as it may sound, the UP blows away the Rocky Mountains.

Has anyone been to Royal Oak lately? The place is booming! The Fifth Royal Oak will absolutely blow you away! I couldn't believe it myself, so go take a look for yourself. Realtors! Go check the place out! You may think I'm exaggerating, and that's okay. When you experience the place, you'll know I'm being conservative. And I mean this is the type of place that someone like Jennifer Aniston would own in NY City. There is simply nothing like it anywhere in Michigan.

I've read about some new office developments coming to town. These will help drive traffic to the local stores. I like to eat and be entertained, so I'm thrilled about Ronin, the new restaurant next to the Royal Oak Music Theatre. The food and atmosphere are simply incredible! The theatre is under stellar management and is bringing in more and more top-notch acts with better consistency, and you can see its popularity growing again. And anyone who's seen a good show at the theatre knows about Tania's awesome pizza right next door.

Drive around the neighborhoods of Royal Oak. More and more people are putting some investment into their homes and property. That's a good sign! People like it and are happy! People aren't "walking away" around here. Now as you're driving the neighborhoods, notice all the "for sale" signs, start looking, and get yourself a deal! Home prices are incredibly good right now. You're practically "getting away with something" at today's prices, particularly in Royal Oak.

Oh ... that's right, you're gonna wait to catch the bottom. Just like you caught the top too ... right?

I'm like Indiana Jones searching for that crystal ball, yet I've never found it. Why? Because there is no crystal ball. You have to make the right choice for you, at the time that is right for you. What the media says about "the market" doesn't dictate your life.

All I know is that if you're a first-time home buyer, or you've been leasing for the last two or three years ... prices for housing are low, and mortgage rates are low too. That's a one-two punch! Now is the time to take advantage of the situation and do something good for yourself. You deserve it! Go find yourself a home!

Homeowner Tax Relief Extended

Homeowners with a new mortgage that is covered by insurance can claim a tax break on the insurance for the first time this year.

The new break, called the qualified mortgage insurance deduction, lets taxpayers with an adjusted gross income of less than $100,000 write off the full cost of mortgage insurance. Folks who earn less than $109,000 can take a write-off for part of it.

To qualify, the mortgage must have originated between 2007 and 2010. The deduction can be taken for insurance on a principal residence or a second home.

Introduced by the Tax Relief and Health Care Act of 2006, the break initially applied only to the 2007 tax year, but it was extended through 2010 by the Mortgage Forgiveness Debt Relief Act of 2007.

"It's something we will definitely ask our clients about," said Jackie Perlman, senior tax research coordinator at H&R Block Inc. "If you come in and say you bought a home, we'll be checking it out and making sure you get that deduction."

The mortgage-insurance deduction will help first-time home buyers who are unable to put down 20%. Typically, "if you put down less than 20% down, that's where the lender would require private mortgage insurance," said Katie Monfre, a spokeswoman for Mortgage Guaranty Insurance Corp., a private mortgage insurer in Milwaukee owned by MGIC Investment Corp.

On average, the annual tax break from the deduction will be worth around $350 per taxpayer, according to the Mortgage Insurance Companies of America, which represents mortgage insurers.

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Whose side are they on?

Government efforts to stem foreclosures mean fewer chances for people priced out of the market.

Some people are cheering for a plunge in local housing prices: Those who watched the market rocket skyward and waited patiently for the return trip, resisting the temptation to spend more than they could afford.

Linda Werbner and Mark Muzeroll sat out the boom in a small Lynn condominium. Now they're eyeing the housing market "longingly but cautiously," Linda said, hoping for "a slew of homes to be had for a song."

They'd like to buy a small Colonial where Mark, a piano teacher, can play a partita at 2 a.m.

In Boston and other hyper-expensive markets, the surge in foreclosures and the resulting drop in prices isn't bad for everyone. Government efforts to limit foreclosures have the effect of favoring people who want to stay in their homes over the people who want to move in next.

Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, said he's torn by concern for homeowners, but "our hope for home buyers is that the market softens somewhat.

"When a market has been as hot as it's been for the last while, your hope is for prices to come down," he said.

Prices in the Boston area more than doubled between 1995 and 2005, even adjusting for inflation. Lax lending standards played a big part. Sellers raised prices, and buyers easily borrowed the wanted money.

By 2005, the area's median housing price was $492,000. Under federal standards, such a home was affordable to families making at least $135,000 a year. The area's median family income: $82,600.

Many families chose to stretch, agreeing to monthly mortgage payments that consumed a larger share of income than the recommended 28 percent - often a much larger share. Many of them are now are facing foreclosure.

Werbner and Muzeroll chose not to stretch. Werbner is a social worker. Muzeroll teaches piano. In 2003, the couple paid $155,000 for a 750-square-foot condo, with comfortable monthly payments. They watched the housing boom lift Lynn. Abandoned industrial buildings became desirable residential lofts. Prices went up, up, and away. New residents came flooding in. Then they watched the market start to collapse. Desirable residential lofts became difficult to sell. Prices started plunging. Residents started leaving.

They began dreaming about buying a sin gle-family home this spring.

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