HOME IRA COULD SAVE THE ECONOMY
>> Monday, May 31, 2010 –
CONSTRUCTION,
HOME,
HOUSING,
IRA,
SAVING
Norton Native Intelligence™
White Paper 2010
A Housing Solution
A Economic Solution
A National Solution
Housing, home ownership, construction, renovation, development and the chain of material goods filling them are the bedrock of the American economy. Some reports place the housing industry and its associated components accounting for as much as 30% of the Gross National Product , GNP. Growth, America’s growth may also be our nation’s largest industry when you factor into the mix lending, construction, marketing, household goods and services.
The recent boom to bust economic collapse sharply points to the importance of a stable housing market and the financial security of America’s citizens. The shaken public has been pelted with soaring foreclosure rates, the exposure of predatory lending practices, hyper inflated home prices - then collapse and mortgage rate interest resets. The homeowners’ tax credit program is predicated, upon expiration, to successfully remove some 4 million homes from inventory, but inventories of unsold properties remain at historic levels.
New Homes & Condos Available (1) 500,000 Homes
Resale Homes For Sale (2) 3,500,000 Homes
Phantom Foreclosure Inventory (3) 1,500,000 Homes
Vacant Developed Lot Inventory (4) 2,500,000 Lots
Potential Home Mortgage resets 2010 – 2012 (5) 3,000,000 Homes
Foreclosures 2009 (6) 2,600,000 Homes
Source
1 - Census NAR Estimates
2 – National Association of Realtors
3 – Forbes Magazine
4 - Metrostudy
5 – Credit Suisse
6 – Realty Trac
In today’s economic climate and investment uncertainty, personally held IRA’s, Roth IRA’s and 401K plans, while protected from access, have also taken a performance beating. It is estimated that over 1.4 trillion dollars is held in such accounts. The values were decimated in 2008 with slight recovery in 2009. Moreover, substantial amounts have been moved out of the stock market or indexes and are sitting sidelined, untouchable, stagnant in value but protected from further market losses.
White Paper 2010
A Housing Solution
A Economic Solution
A National Solution
Housing, home ownership, construction, renovation, development and the chain of material goods filling them are the bedrock of the American economy. Some reports place the housing industry and its associated components accounting for as much as 30% of the Gross National Product , GNP. Growth, America’s growth may also be our nation’s largest industry when you factor into the mix lending, construction, marketing, household goods and services.
The recent boom to bust economic collapse sharply points to the importance of a stable housing market and the financial security of America’s citizens. The shaken public has been pelted with soaring foreclosure rates, the exposure of predatory lending practices, hyper inflated home prices - then collapse and mortgage rate interest resets. The homeowners’ tax credit program is predicated, upon expiration, to successfully remove some 4 million homes from inventory, but inventories of unsold properties remain at historic levels.
New Homes & Condos Available (1) 500,000 Homes
Resale Homes For Sale (2) 3,500,000 Homes
Phantom Foreclosure Inventory (3) 1,500,000 Homes
Vacant Developed Lot Inventory (4) 2,500,000 Lots
Potential Home Mortgage resets 2010 – 2012 (5) 3,000,000 Homes
Foreclosures 2009 (6) 2,600,000 Homes
Source
1 - Census NAR Estimates
2 – National Association of Realtors
3 – Forbes Magazine
4 - Metrostudy
5 – Credit Suisse
6 – Realty Trac
In today’s economic climate and investment uncertainty, personally held IRA’s, Roth IRA’s and 401K plans, while protected from access, have also taken a performance beating. It is estimated that over 1.4 trillion dollars is held in such accounts. The values were decimated in 2008 with slight recovery in 2009. Moreover, substantial amounts have been moved out of the stock market or indexes and are sitting sidelined, untouchable, stagnant in value but protected from further market losses.
The bold solution to the housing based economy is to create a new IRA class of product called the HOME IRA, which would allow a portion – not all –of ones personal IRA, SEP IRA or 401K to be invested in an Individual's personal home, second home or rental property. This new investment class, with modern technology, can be tracked separately as a unit of a tax payer’s retirement account just as stock indexes, mutual funds or long term CD’s are recorded. While not as liquid as other investments, the HOME IRA provides the participant a degree of safety, security and comfort unlike other investment vehicles. Of course, many safeguards would need to be written into the legislation and IRA mechanics such as:
- No more than 50% of cumulative household IRA, 401K or SEP IRA could be applied to a HOME IRA.
- There would be a prohibition of home equity loans against the pledged collateral while the HOME IRA is in use.
- The HOME IRA could only be used for homeowner down payment, loan reduction/restructure or substantial remodeling, but ordinary upkeep or repair of a home would be prohibited.
- A required third party appraisal for price/investment verification every five years would help monitor and adjust portfolio value.
- Qualifying properties must be within the 50 US states
- At resale of the home, the Home IRA full proceeds must be reinvested in a home or principal and interest returned to a traditional IRA.
- The HOME IRA would stabilize the housing market, would stimulate both new purchases and major home renovation while continuing to remove outstanding product inventories.
- The provision would allow HOME IRA funds to pay down large outstanding mortgages thus freeing up ordinary taxpayer cash to flow back into the American economy thereby stimulating the same.
- Allows the taxpayers using HOME IRA’s to diversify their personal retirement portfolios through real estate ownership.
- Encourages lower and middle class income groups to invest through the Home IRA, 401K products in order to take future advantage of real estate investment opportunities in personal home ownership.
- The “renovation” feature will stimulate the home building, construction component and products supply chain and strengthen small business which would result in stabilization of employment moving the economy toward full employment.
- Return small home rental opportunities and investment to the middle class taxpayer and allows local taxpayers to invest money back into their local economy. It also creates a pool of potential rental home inventory, reducing the number of resale homes and providing affordable housing opportunities.
- Stabilizes the hard hit second home markets in Colorado, Florida, the mountain cabin regions and along both coasts, through the access to IRA/401K funds making those investments part of a taxpayers overall retirement program.
Conclusion
It is imperative the US economy return to its vibrant dominance on the World stage. Domestic production and employment are critical to the full recovery of our economy and real estate is the leading and integral component. The HOME IRA product and modification to current IRA. 401K regulations jumpstarts, if not accomplishes, America’s goal for full recovery.
Frank K. Norton. Jr.
The Norton Agency
It is imperative the US economy return to its vibrant dominance on the World stage. Domestic production and employment are critical to the full recovery of our economy and real estate is the leading and integral component. The HOME IRA product and modification to current IRA. 401K regulations jumpstarts, if not accomplishes, America’s goal for full recovery.
Frank K. Norton. Jr.
The Norton Agency
