Saturday, December 30, 2006

Who pays this tax anyway?

The headline states, "Burden of Growth Shifting to Developers." My thoughts immediately were directed to local and state government and how they are finally doing something on behalf of the rest of us. The sub-heading, "Over 2 Years, State Law Nets Millions for Roads." Wow, how cool is that? Our government is finally coming through for us. YESSSS!

But, I'm never one to draw a conclusion from the headline so I made the mistake of reading the body of the article. Darn it. Why did I ruin my feel-good attitude with the content provided. It turns out that during the past two years developers have funded nearly $1 billion in new or improved county roads, bridges, lights, drainage systems and sidewalks.

The expenditures mark a fundamental shift in who carries the burden of paying for new development. For decades, most of those costs fell to the county. The results of the study look like this:

FY 2004 - Developers share of infrastructure - $8 million
FY 2005 - Developers share of infrastructure - $368 million
FY 2006 - Developers share of infrastructure - $554 million

Now that is a state law we can embrace. Right? Right?

The law requires builders and develepors to pay for infrastructure impovements not only in their development but within a five mile radius if the government determines the development will impact the given radius. The law was passed because consumers (users of government programs) have been complaining about too many tax increases and the burden those consumers are facing with ever escalating taxes. It said so right in the article. Interesting.

So, are developers now responsible for building schools, 24 hour emergency care, and Starbucks coffee houses? What is a development without a Starbucks two minutes away. But I digress.

The first question that popped into my simple mind was; what has the county government done with the $1 billion in savings during the past 24 months? I know, I know. We are not supposed to ask government officials those kinds of questions. We would't want them creating a silly answer.

The second question. Do government officials and newspaper editors really think that their constituency is so oblivious to reality to believe the headline. Apparently, the answer is yes.

For one to understand the operation of a business one must understand that the bulk of government imposed regulation will be passed on to the the end user via increased prices. I understand that many of my friends think that is such a simpleton approach but it is the truth. Will the builders pay some of the increased costs? Yes. Will they pass the bulk of the costs to the end user? Yes. Otherwise, they would operate on razor thin margins and the money used to fund the developers would flow to other activities and industries.

The strange twist to this story is that the state referred to in the article is Florida and the county is Hillsborough. The article was featured in a recent edition of The Tampa Tribune and I had the opportunity to read it as I was relaxing by the canal on a warm December morning during my trek to the Outback Bowl.

Now, without completing an in-depth analysis of the Florida real estate market let me tell you what is happening in Florida. Prices sky-rocketed in the past three years and have recently nose-dived. Much of the cost has been market-driven. For developers building new subdivisions, part of those increased costs are driven by government regulation. I stopped by a new development and talked with rep's from four different builders. To say the market for new homes is slow would be the understatement of the year in Florida. They will do almost anything to sell a new home in inventory. They are not building many spec homes at this point because it takes too long to sell them. Imagine making interest payments on 50 spec homes that sit on the market for the next 12 months. DOM for inventory is approaching one year.

Market forces are at work but what part of government regulation has impacted the new developers? I saw a billboard from a developer in the Tampa area that offered "UP to 60% off New Home Purchase." I laughed when I saw it but I'm sure the builder wasn't laughing.

I'm sure the politicians are laughing. The press and the public think that they have saved consumers $1 billion in taxes in the past couple years and no one has bothered to ask the officials what they have done with the $1 billion in savings.

So, who really pays the cost of development in Florida or elsewhere. It's obvious I think. And so do the laughing politicians.

Just Sold
Listed and Sold by Tim Rogers
Picture perfect home less than 2 yrs old on almost 1 acre minutes to everything. Barely lived in 4/2.5 with a huge deck to watch the deer. Upstairs bdrm has a private deck for peaceful summer evenings. Shows like a model home. Brand new 30x40 shop.
Need to sell? Call Tim for marketing expertise.

Thursday, December 28, 2006


Almost 2 acres and 2400 sq. ft. located in the historic town of Aaronsburg, PA.

Large 4 bedroom farmhouse with impressive country kitchen complete with fireplace. Center hall entry that leads to a large dining room with another fireplace. Very large rooms complement the 2400 sq. ft. of living space. The home is perched on a hill with lovely views of Aaronsburg.

Tuesday, December 19, 2006

A quick look ahead into the 2007 crystal ball and a quick look back in time.

One more reason to BUY a home. Did you know that according to the new 2005 American Community Survey analysis of data released in October by the U.S. Census Bureau the real cost of renting a home increased by 6.7% from 2000 to 2005. A quick survey of several cities showed Detroit +22.5%, San Diego +27.2%, and Dallas -3.0%. Home ownership not only provides the potential for substantial equity appreciation, but the ability to offset some income by filing itemized deductions on your annual taxes. Items related to home ownership that may be itemized on Schedule A include mortgage interest, points paid on a new loan, some home improvements including insulation for 2006, and property taxes,

Non deductible expenses include private mortgage insurance, property insurance, homeowners association dues, local assessments such as sidewalks to improve your neighborhood, and every day homeowner repairs.

Mortgage brokers believe that 2007 will bring an additonal crush of borrowers refinancing their exotic mortgages or borrowers jumping from a variety of ARM's to more traditional loan products while the rates are still at historical levels. Who knows what the FED will do next year? Looking back to January 2006 most experts thought that rates would rise steadily throughout the year. And they did for about half the year and then rates surprisingly fell back to the historic levels that they maintain today.

Industry experts believe as they did twelve months ago that interest rates will rise steadily throughout 2007. But will they rise in the short term and level off for the balance of the year? Will they gradually rise month after month ending the year at a high unseen in recent years? The fact remains that nobody knows what will happen with interest rates in 2007. It is possible that rates could fall in 2007.

So the question becomes - should I buy a house in 2007 or should I wait? The answer is simple. If you have the inclination and the resources to buy don't wait. Interest rates are at historically low levels. Property values in Centre County have fallen a bit in recent months. The chances are pretty good that prices won't go much lower. Even if they do and you buy a home, the annual rate of appreciation in the Centre Region will offset any short term price fallback.

Thursday, December 14, 2006

Thank you to the United States Armed Forces Around the Globe!

Those of you that know me know that I have the priviledge to coach a boys high school soccer team. When one has the opportunity to spend hundreds of hours with a group of kids during a four year span, you develop a certain bond with most of the kids that transcends sports and school. This morning I was standing in line to pay for a few things at a Convenience store when a tall guy grabbed me from behind. I whirled around to see a Marine in full dress staring down at me. As I turned I heard the words "Hey Coach." I was looking up at a former goalkeeper on our team and now a newly minted U.S. Marine.

What happened to that little boy I knew in youth soccer? Where did the young man go that spent so many hours goofin' on his coaches and teammates? The little guy is now a chiseled United States Marine. After I collected my thoughts I remembered that another member of the same team is now in the U.S. Army and left for Iraq about three weeks ago for a one year tour. I told the Marine to keep his Army teammate in his thoughts and as we departed I spent some time contemplating what a great country we live in. I remembered another teammate of their's that even as a sophomore would run around the field shouting Hoora! Hoora! We would break from the halftime huddle and he would always lead us in a big Hoora. Needless to say, he is now a United States Marine.

What makes America great? Its people I think. Its ideals as well. Without interjecting politics I can't imagine living anywhere else on the planet. We didn't go looking for a fight with terrorists. We didn't invade another country unprovoked. We don't sit around the Pentagon thinking of ways to burn billions of dollars just to see if the war machine still works. (Do we?)

What an amazing country we live in when there are still young people that are willing to volunteer to serve in the Armed Forces of the United States to serve and protect the freedoms of their families, friends and neighbors. They are not just good young men. They are the best kids from the nicest families. They come from all economic backgrounds and incomes. The kids are the cream of the crop. They have VOLUNTEERED to protect us. They are serving so I may take my young son to the wrestling matches he loves. They are serving so my wife and kids can vacation at the beach even if I am working. They are the best kids in America. I know. I've been around them for years.

I would like to thank them all and wish all of them godspeed and a healthy, safe return home.

Thank you all and in your honor I will post St. Crispin's Day to honor the Band of Brothers held so dearly by our soccer team over the years. This is for you.

St. Crispin's Day - Ye Band of Brothers

What's he that wishes so? My cousin Westmoreland? No, my fair cousin; If we are mark'd to die, we are enow To do our country loss; and if to live, The fewer men, the greater share of honour. God's will! I pray thee, wish not one man more. By Jove, I am not covetous for gold, Nor care I who doth feed upon my cost; It yearns me not if men my garments wear; Such outward things dwell not in my desires. But if it be a sin to covet honour, I am the most offending soul alive. No, faith, my coz, wish not a man from England. God's peace! I would not lose so great an honour As one man more methinks would share from me For the best hope I have. O, do not wish one more! Rather proclaim it, Westmoreland, through my host, That he which hath no stomach to this fight, Let him depart; his passport shall be made, And crowns for convoy put into his purse; We would not die in that man's company That fears his fellowship to die with us. This day is call'd the feast of Crispian. He that outlives this day, and comes safe home, Will stand a tip-toe when this day is nam'd, And rouse him at the name of Crispian. He that shall live this day, and see old age, Will yearly on the vigil feast his neighbours, And say 'To-morrow is Saint Crispian.' Then will he strip his sleeve and show his scars, And say 'These wounds I had on Crispian's day.' Old men forget; yet all shall be forgot, But he'll remember, with advantages, What feats he did that day. Then shall our names, Familiar in his mouth as household words- Harry the King, Luke, David, Jake- Be in their flowing cups freshly rememb'red. This story shall the good man teach his son; And Crispin Crispian shall ne'er go by, From this day to the ending of the world, But we in it shall be remembered- We few, we happy few, we band of brothers; For he to-day that sheds his blood with me Shall be my brother; be he ne'er so vile, This day shall gentle his condition; And gentlemen in England now-a-bed Shall think themselves accurs'd they were not here, And hold their manhoods cheap whiles any speaks That fought with us upon Saint Crispin's day.

MERRY CHRISTMAS to the United States Armed Forces.

Monday, December 04, 2006

There is NO Affordable Housing in State College/Centre County.

Or so the experts and politicians would have us believe. I've never been a politician but I have been in a position where I needed to sell a lot of newspapers so I understand the local press' fascination with reporting the story. What I don't understand is an editorial board bloviating without all of the facts. And what about the local political scene? A certain august body is tripping over itself to give away state prison land to the downtrodden or unlucky. Before the fat-cats start giving away economic opportunities to their campaign contributors and greasing the "old boy network," I think we need to take a step back and look at the situation through the barrel of a shotgun rather than the barrel of a .22 caliber rifle. For those non-hunters among you (after all it is the middle of deer season in PA.), we will look at the larger, wider housing pattern and not just focus on what the political class and journalists want us to believe.

I'm all for helping those that have a real need for affordable housing. After all, as a full time professional realtor I do it every day. Contrary to the stereotype that casts all realtors rubbing elbows with the ritzy elites and driving to Wegmans in their $90,000 BMW's and Mercedes Benz's, I have actually listed and sold a home as low as $14,500. I'm currently working with a client that called me after the trailer park he lives in morphed into prime commercial development land. So I'm out there where the rubber meets the road. I can tell you there is affordable housing available in the Centre Region. I will take you there. I will show you around. I will arrange financing for the buyer. Are there a small few that have a dire need? Absolutely! Let's invite the politicians and editors to help this small number. I can help the rest and without housing summits and wasted newspaper ink.

Before reviewing the MLS statistics I did a quick internet search (maybe the CDT doesn't allow their reporters access to the world wide web), but following is data I found in less than three minutes on an economic web site. The data are compiled from among other sources the Government Census and the numbers are as of 12/31/2005.

*56,954 Housing units available
*33,936 Owner occupied housing units.
* New construction growth since 2001 +5.7%
*3.1% of homes w/values greater than $500,000
*+25.5% increase in value since FY 2000
* 39.8% of residential real estate is valued at under $125,000
* Median price of owner occupied housing in 2005 - $144,200
* Median price of O/O property nationally in 2005 - $167,500

Following is a direct quote from the material: It can be understood that there is a fair amount of real estate that is affordable in Centre County, Pennsylvania. In 2005, 39.8 percent of residential real estate was valued under $125,000. An interesting observation for a bunch of folks that don't even live here.

Now, lets do the math. If there are 33,936 housing units available and 39.8% of them are priced below $125,000, then the total number of affordable housing units available is about 13,507. Of those, how many are on the market at any given time? Using the data provided we could assume that about 2% (% of total owner-occupied housing units on the market at any given time) or 270 affordable housing units are for sale in Centre County. Can we check our math. Of course we can or so my algebra teacher taught me a hundred years ago. Let's go to MLS statistics. Reviewing the current MLS data there are 135 homes for sale priced under $125,000. Using the HUD number of $179,900 there are 246 homes currently for sale in MLS. The numbers provided reflect 12/05/2006 which is the slowest time of the year in real estate. If we looked at the numbers this past summer there were over 200 homes priced at under $125,000 and 270 homes priced under $179,900. The math check does't work exactly but then we are talking about the real world as opposed to academia. The fact remains that there are 135/246 homes for sale in the affordable housing segement in Centre County. I can assure you that we have never run out of supply of these housing units.

Again, using HUD guidelines (they back up there guidelines by making mortgage money available), affordable housing to them is any home priced under $179,900 so there are 246 homes available in the affordable housing segment. The math almost works.

The questions then become; where are the affordable housing units located, how do we match those in need with those of us in the position to help, and finally, how do we arrange financing for those people that will need to purchase the affordable housing? Good questions all.

As I ponder those questions I'm reminded that I bought a home thirteen years ago in Spring Mills because it met my search criteria including affordability. Is it next store to the Wegmans? No. Is it across the street from the body politic in Bellefonte? No. Can I walk to my luxurious CDT editors office after having tea in the morning? No. Am I inconvenienced by the thirty minute drive to work every day? Sometimes. Do I complain about it? Never. After all I made a sacrifice to buy a home.

I'm sure many potential buyers in the affordable housing market contemplate this challenge. If they can barely afford a house and it is located miles away from essential services how can they afford to own a home and incur the commuting expenses? Excellent questions.

This is where our esteemed leaders can begin their search. Suppose the CDT and the politicians get together and looked at the infrastructure of Centre County. They could define those areas where affordable housing exists. They could create and execute a plan bringing much needed infrastructure services to those areas. Potential ideas could include CATA bus transportation, ride-sharing tax incentives, expanded public sewer and water service, etc. You get the idea. After all, isn't that what we expect of government services? We want them providing infrastructure rather than buying land and building homes.

When the infrastructure is improved perhaps they could make low-interest and low downpayment mortgage money available to those that need it most. I think the county has made an attempt at this but it is the best kept secret in the County. I'm a full time professional and if I don't know about it how will the people that need it ever find the resource? Sure, the CDT could promote it in their pages but who will pay that advertising bill? Perhaps the editors that tell us there is no affordable housing.

Now that we know there is affordable housing available let's get on with buying and selling it. For those few in dire need, let the CDT and the body politic help them or involve the private sector to do it more efficiently. Call me or visit for assistance in buying or selling affordable housing.

Saturday, December 02, 2006