Your Financial Guide

Housing affordability conditions for all buyers reached a milestone in the first quarter, according to the National Association of Realtors.

NARs composite quarterly Housing Affordability Index* rose to a record high of 205.9 in first quarter, 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. This is the first time the quarterly index broke the 200 mark; recordkeeping began in 1970.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said market conditions are optimal for home buyers. For those with good credit, weve never seen better housing affordability conditions or market opportunities than we see at present, he said.

Read more…

For over seventy years, the relationship between employee and employer not only encompassed the exchange of services for compensation, but extended to obligations in the form of pensions and Other Post Employment Benefits (OPEB), specifically medical care. These benefits are staples of the American dream and marketplace with their related expenditures built into the cost of products and services. As U.S. economic dominance has shifted, the ability of U.S. companies to pass along the costs — which many foreign competitors do not have — associated with retirement to consumers has significantly diminished to a level that endangers many companies’ competitiveness. The bear markets of 2000-2002, and 2007-2008 drastically reduced private funds’ pension fund reserves, while the bull markets of 2003-2007, and 2009 to the present added some of the amounts back, although the funds remain significantly underfunded. The cur Read more…

Readers Question: Why do global imbalances and the high demand for US securities such as US Treasuries and mortgage backed securities help keep US interest rates low

In the mid 2000s, the global economy could be characterised in a few ways. This is a simplification, but it should help to understand.

• US had strong economic growth, led by consumer spending. US had large current account deficit (imports were greater than exports)
• China had strong export sales. China had large current account surplus (exports greater than exports)
• With a current account surplus, China was receiving increasing foreign currency reserves. Therefore, China used these export revenues to buy US securities.
• One reason China wanted to buy US securities is that by buying dollar assets, it increased the value of the dollar and reduced the value of the Yuan.

Read more…

Before you begin your home searches, prepare yourself by reading Ten Steps to Homeownership.

Before anyone begins looking for a home, the home-buying process requires thorough preparation. Buyers who have been preapproved for a home loan often have their offers taken more seriously by owners. With increased preparation, you can tackle the process of acquiring the financing you need with more self-assurance.

Read more…

As of the 15th of March, BDO Romania will have a new Tax Partner, who will also act as the network’s International Tax Coordinator. Dan Barascu has more than 10 years of experience in tax consulting and, up until recently, has been managing the tax department of an important national consulting company, member of another international network.

Dan has relevant experience, having been involved in many tax consulting and tax compliance projects for companies from an extensive range of industry sectors. He is also a member of the Chamber of Fiscal Consultants (CCF), since the very first public exam organized by this institution, when only 24 of the candidates were admitted, as well as a CECCAR member. A

Read more…

What is the difference between a liquidity issue and solvency issue?

• A Liquidity issue (crisis) occurs when a firm (or country) has a temporary cash flow problem. Its assets are greater than its debts, but some assets are illiquid (e.g. it takes a long time to sell a house. A bank cant suddenly demand a mortgage loan back) Therefore although in theory assets are greater than debts, it cant meet its current payment requirements.
• A Solvency crisis occurs when a country has debts that it cant meet through its assets. i.e. even if it could sell all its assets, it would still be unable to repay its debts.

To be insolvent is much more serious because even if you have access to temporary funds it cant solve the underlying problem of excess debts.

Example of Solvency Crisis

When Lehman Brothers went under, its debts (liabilities) were much greater than its assets.

Read more…

Existing-home sales rose in January, marking three gains in the past four months, while inventories continued to improve, according to the National Association of Realtors.

Total existing-home sales¹, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 4.3 percent to a seasonally adjusted annual rate of 4.57 million in January from a downwardly revised 4.38 million-unit pace in December and are 0.7 percent above a spike to 4.54 million in January 2011.

Lawrence Yun, NAR chief economist, said strong gains in contract activity in recent months show buyers are responding to very favorable market conditions.

Read more…