KeNo's Housing and Economic Portal: Wednesday January 12 Housing and Economic stories

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1 out of 3 Americans has zero dollars in retirement account - (www.mybudget360.com) Retirement account fantasy and middle class erosion – 1 out of 3 Americans has zero dollars in a retirement account. From 1950 to 1989 top 1 percent earned roughly 7 to 8 percent of nationwide income. Today it is inching closer to 20 percent resembling pre-Great Depression levels. Many Americans live precariously close to the edge of financial insolvency flirting with economic disaster daily. If you casually browse mainstream articles and watch any amount of television you would think that the US still had a vibrant and strong middle class. When we pull back the covers on the current financial situation we realize that many Americans are merely getting by and many would like to live in some 1984 Orwellian fantasy world where suddenly things are back to financial equilibrium. 43 million Americans are depending on government food assistance to get by.

One in Four Borrowers Is Underwater - (www.online.wsj.com) The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery. Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif. These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn't expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply. Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American. Most U.S. homeowners still have some equity, and nearly 24 million owner-occupied homes don't have any mortgage, according to the Census Bureau. But negative equity "is an outstanding risk hanging over the mortgage market," said Mark Fleming, chief economist of First American Core Logic. "It lowers homeowners' mobility because they can't sell, even if they want to move to get a new job." Borrowers who owe more than 120% of their home's value, he said, were more likely to default.

Foreclosures Still Dragging Down Housing, Economy - (www.npr.org) The housing market has remained at the center of the nation's economic troubles throughout 2010. The housing market started the year flat on its back, and it's ending the year in nearly the same condition. Home sales are still depressed, home-building remains near a 50-year low, and home prices are still about 30 percent below their peak. Part of the problem this year has clearly been high unemployment. But the ongoing foreclosure crisis also keeps glutting the market with unsold homes. Meanwhile, the government's efforts to prevent foreclosures over the past year were a pretty big disappointment to many people. A Homeowner's Struggle With The Foreclosure Prevention Program: Debra Dahlmer, 55, has lived in her home in Gloucester, Mass., for most of her life. Over the years, most of the family has worked at the nearby Gorton's frozen fish processing plant. But back in 2008, Dahlmer's husband passed away. She never missed a mortgage payment. But she could see she was running out of money and would soon fall behind.

In Praise of Volunteer Fire Departments (Do we really need paid union fire departments anywhere? What about police?) - (Mish at globaleconomicanalysis.blogspot.com) According to the National Volunteer Fire Council, 73 percent of firefighters in the United States are members of Volunteer Fire Fighters. I fail to see why 95% or even 99% percent of them could not be. Perhaps some would not do it for property tax reductions. Perhaps it depends on what one's property taxes are. Perhaps not. Those 73% right now get nothing at all! Let's look at it another way. How many would do it for tax rebates plus $500 a month tax free to both state and federal government? With unemployment at 10% and underemployment at 20%, I bet I could fill every fire department in the country. Would those people require training? Of course they would. Moreover, we would need a phase-in transition period to get to an all-volunteer state. I would not want all rookies, nor would anyone else. Thus, we could not get to 99% overnight. Could we get there in 5-7 years? Yes, we could.

'Crash taxes' are growing in popularity among cash-strapped California cities - (www.latimes.com) At least 50 cities in the state have adopted so-called crash-tax laws allowing local governments to seek reimbursement from insurance companies for the costs of sending public emergency crews to accident scenes. The fees can amount to hundreds or even thousands of dollars. If insurers don't pay, cities can hire collection agents to seek payment from the motorists involved. Sacramento, with nearly half a million residents, soon could be the largest city in California to do so. The City Council has scheduled a vote next month to establish what it's calling a "fire cost recovery charge." The fee would reimburse the city for a variety of emergency-related chores, including cleaning up hazardous fluids, putting out vehicle fires and responding to gas line explosions and downed power poles. Proposed fees would range from $432 for a "scene stabilization" to $2,275 for a helicopter evacuation. The measure is expected to raise as much as $500,000 a year, city spokeswoman Linda Tucker said. "To me, it's an outrage. We're already paying these people — the police department, the fire department, the emergency vehicle drivers — handsome salaries and benefits," said Lew Uhler, president of the National Tax Limitation Committee. "Either we stop this kind of nonsense or we should quit paying taxes for these kind of services." The practice isn't limited to cities in struggling California. It's gaining momentum nationwide as cash-strapped communities seek a way to offset budget cuts.
This month, New York Mayor Michael R. Bloomberg proposed charging drivers there as much as $490 when firefighters respond to an accident or a vehicle fire, beginning July 1. A public hearing is set for January.