U.S. Housing Market Numbers are Up in the First Quarter
Coming Home to the U.S. Housing Market
The U.S. housing market showed signs of weakening in 2014 as home prices increased significantly in many parts of the country.
First-time homebuyers took a more cautious stance, and high-end homes made up most of the residential property sales. However, things appeared to be changing at the beginning of this year, but it is uncertain how long the positive situation will last.
With that in mind, here is a look at the current state of the U.S. housing market as the first quarter of 2015 winds down.
Mortgage Applications See Uptick
According to the Mortgage Bankers Association, mortgage applications increased by about 49 percent in a single week in the beginning of January, 2015.
The main reason for the increase was a drop in mortgage interest rates, which fell to their lowest level since May, 2013.
Other factors that prompted more homebuyers to obtain mortgages included improvement in the job market, increase in credit availability and announcement of a decrease in Federal Housing Administration mortgage insurance rates. Purchase application volume rose by nearly 24 percent, which was the highest since September, 2013.
A decline in foreclosures nationwide is another sign of potential housing recovery.
Data released by RealtyTrac revealed that a total of 643,193 homes in the U.S. entered the foreclosure process in 2014, a 70-percent drop from the 2.14 million homes recorded in 2009.
The number of homes that were repossessed by banks dropped 29 percent last year, reaching the lowest level since 2006. Foreclosure is still a concern in several states, but it is no longer a nationwide problem.
Who Benefits from the Current Housing Market Situation?
Many residential construction companies are doing well because of a rise in demand for new homes.
According to the Commerce Department, the number of residential construction permits that were granted to builders increased by 4.8 percent in October, 2014, which was a six-year high.
Additionally, starts of single-family homes grew 4.2 percent to an annualized rate of 696,000 in the same month, the highest level since November, 2013.
Besides construction companies, people who are looking for construction jobs are also benefiting from the current housing market situation.
In an article published on the National Association of Home Builders website, it is said that residential construction jobs increased slightly to pass the 300,000 mark in June last year.
Those who are learning how to become a home inspector should have little or no trouble finding a good job in the near future as demand for construction and building inspectors is expected to increase by about 12 percent from 2012 to 2022, according to the Bureau of Labor Statistics.
What to Expect for the Remaining Nine Months
As more Millenials reach their early twenties in 2015, it is expected that household formation will increase significantly, which will in turn lead to a rise in demand for new homes. There may also be more existing homes available for sale as more homeowners emerge from underwater.
Additionally, economists are predicting that increases in home prices will decelerate and mortgage rates will increase this year.
Despite a robust economy, strong job growth, positive consumer confidence and low interest rates, there are signs indicating that the U.S. housing market recovery may be faltering.
Lastly, it is expected to experience some softness in 2015.
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About the Author: John McMalcolm is a freelance writer who writes on a wide range of subjects, from construction to finance.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.