Existing-Home Sales Decline 2.7% in April

WASHINGTON (May 21, 2021) – Existing-home sales waned in April, marking three straight months of declines, according to the National Association of Realtors®. All but one of the four major U.S. regions witnessed month-over-month drops in home sales, but each registered double-digit year-over-year gains for April.

Existing-Home Sales, April 2021

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 2.7% from March to a seasonally-adjusted annual rate of 5.85 million in April. Sales overall jumped year-over-year, up 33.9% from a year ago (4.37 million in April 2020).

“Home sales were down again in April from the prior month, as housing supply continues to fall short of demand,” said Lawrence Yun, NAR’s chief economist. “We’ll see more inventory come to the market later this year as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory.

“Despite the decline, housing demand is still strong compared to one year ago, evidenced by home sales from this January to April, which are up 20% compared to 2020,” Yun continued. “The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year.”

The median existing-home price2 for all housing types in April was $341,600, up 19.1% from April 2020 ($286,800), as every region recorded price increases. This is a record high and marks 110 straight months of year-over-year gains.

Total housing inventory3 at the end of April amounted to 1.16 million units, up 10.5% from March’s inventory and down 20.5% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, slightly up from March’s 2.1-month supply and down from the 4.0-month supply recorded in April 2020. These numbers continue to represent near-record lows. NAR first began tracking the single-family home supply in 1982.

Properties typically remained on the market for 17 days in April, down from 18 days in March and from 27 days in April 2020. Eighty-eight percent of the homes sold in April 2021 were on the market for less than a month.

First-time buyers were responsible for 31% of sales in April, down from 32% in March and 36% in April 2020. NAR’s 2020 Profile of Home Buyers and Sellers – released in late 20204 – revealed that the annual share of first-time buyers was 31%.

“First-time buyers in particular are having trouble securing that first home for a multitude of reasons, including not enough affordable properties, competition with cash buyers and properties leaving the market at such a rapid pace,” Yun said.

Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in April, up from 15% in March and 10% in April 2020. All-cash sales accounted for 25% of transactions in April, up from both 23% in March and 15% in April 2020.

Distressed sales5 – foreclosures and short sales – represented less than 1% of sales in April, equal to March’s percentage but down from 3% in April 2020.

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 3.06% in April, down from 3.08% in March. The average commitment rate across all of 2020 was 3.11%. Yun expects the 30-year fixed-rate mortgage to remain below 3.5% in 2021.

Single-family and Condo/Co-op Sales

Single-family home sales dropped to a seasonally-adjusted annual rate of 5.13 million in April, down 3.2% from 5.30 million in March, and up 28.9% from one year ago. The median existing single-family home price was $347,400 in April, up 20.3% from April 2020.

Existing condominium and co-op sales were recorded at a seasonally-adjusted annual rate of 720,000 units in April, up 1.4% from March and up 84.6% from one year ago. The median existing condo price was $300,400 in April, an increase of 12.6% from a year ago.

“The demand for homeownership in America is as strong as it’s ever been, and NAR continues working with policymakers across the country to find solutions to the issues we face in our industry,” said NAR President Charlie Oppler, a Realtor® from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby’s International Realty. “Ultimately, though, buyers still recognize that securing a home is one of the best ways to build long-term wealth, and Realtors® continue their work to make that dream a reality for families everywhere.”

Realtor.com®’s Market Hotness Index(link is external), measuring time-on-the-market data and unique viewers per property, revealed that the hottest metro areas as of May 13 were Manchester, N.H.; Concord, N.H.; Lafayette, Ind.; Janesville, Wis.; and Elkhart, Ind.

Regional Breakdown

Only the Midwest experienced higher sales from the prior month, but each of the four major U.S. regions recorded year-over-year increases.

Existing-home sales in the Northeast fell 3.9% from March, but the annual rate of 730,000 represents a 30.4% leap from a year ago. The median price in the Northeast was $381,100, up 22.0% from April 2020.

Existing-home sales in the Midwest grew 0.8% to an annual rate of 1,290,000 in April, a 13.2% increase from a year ago. The median price in the Midwest was $259,300, a 13.5% rise from April 2020.

Existing-home sales in the South decreased 3.7%, recording an annual rate of 2,600,000 in April, up 39.0% from the same time one year ago. The median price in the South was $289,600, a 15.8% jump from one year ago.

Existing-home sales in the West declined 3.1% from the month prior, posting an annual rate of 1,230,000 in April, a 53.8% surge from a year ago. The median price in the West was $501,200, up 19.9% from April 2020.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

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Tesla and Apple among the biggest decliners

Technology shares led U.S. stocks lower as surging commodity prices stoked concern about whether inflation will derail a growth rebound in the world’s largest economy and spoil a record stock rally.

The tech-heavy Nasdaq 100 Index tumbled 2.6% amid the growing anxiety over inflation, which can threaten longer-horizon revenues typical of the sector. Tesla and Apple were among the biggest decliners. The ARK Innovation ETF resumed its slide.

 The Dow Jones Industrial Average briefly topped 35,000 for the first time. The benchmark S&P 500 fell from an all-time high. Treasury yields edged higher as traders brace for a busy week of auctions.“Amid these new highs remember that the market doesn’t move only in one direction,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial.

“While a full economic recovery may already be priced into the market, the weak employment data could have temporarily eased worries about too-hot inflation and the necessity of interest rate hikes to combat it.”

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Artificial Intelligence

Artificial intelligence, commonly referred to as AI, represents both a risk and a benefit to the security of society, according to Bruce Schneier, security technologist, researcher, and lecturer at Harvard Kennedy School.

Schneier made his remarks about the risks of AI in an afternoon keynote session at the 2021 RSA Conference on May 17. Hacking for Schneier isn’t an action that is evil by definition; rather, it’s about subverting a system or a set of rules in a way that is unanticipated or unwanted by a system’s designers.

“All systems of rules can be hacked,” Schneier said. “Even the best-thought-out sets of rules will be incomplete or inconsistent, you’ll have ambiguities and things that designers haven’t thought of, and as long as there are people who want to subvert the goals in a system, there will be hacks.”

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Lockdown causes home insurance premiums to decrease

Insurance experts say that there has been a downward shift in home insurance


premiums due to a steep drop in reported crime since the start of the coronavirus lockdown.

In the last three months, the average buildings and contents policy has fallen by 0.3%.

However, average premiums are up 3% when looked at over a 12-month period. Overall, premiums have increased just 1.9% in the six-and-a-half years since Consumer Intelligence first started collecting data in February 2014. Despite premiums edging up to their highest recorded point in June – before falling back again in July – prices have remained broadly stable for the last three years.

Homeowners in the north and the east coast continue to pay the most for their insurance policies. They are the only two regions across the US to attract premiums that are higher than the national average.

This recent reduction to home insurance premiums has not been felt by both our age groups. Premiums for the under-50s have remained flat in the last three months. It’s only the over-50s who have benefited, with their annual policies now 0.9% cheaper than three months ago.

Older properties, those built between 1925-1940, saw premiums rise 4.4% in the last 12 months, the most of any segment. This was closely followed by houses erected this millennium (4%).

Robert J Russell – Broker Owner of InsurancePricedRight.com, concludes:

“It’s perhaps no coincidence that this period takes us through the recent lockdown where the vast majority of people were spending much more time at home. Crime rates and home claims have both declined in recent months, which is the most likely reason for this small deflation in premiums.”

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How much money do you have in your Life Insurance Policy?

Life insurance can provide much-needed cash for loved ones you leave behind when you die. That financial safety net for those who depend on you for support is the primary reason to buy a policy.

But life insurance also can provide cash for you while you’re living—that is, if you have a cash value life insurance policy. This is one of the perks of a permanent policy and a key reason it costs more than a term life insurance policy (along with lasting your entire life).

You can access the cash in a variety of ways. That’s right: It’s yours for the taking. Before you do this, though, understand your options and the pros and cons of each.

What Is Cash Value?

When you buy a cash value life insurance policy, the premium you pay doesn’t just go toward the death benefit—the amount that’s paid to your beneficiaries when you die. It also goes toward a cash value account and internal policy costs.

The cash value in a life insurance policy grows at either a fixed or variable rate, depending on the type of policy you have. A whole life insurance policy will have a fixed interest rate and usually pays dividends that will help the cash value grow. Universal life insurance often has variable rates, so cash value growth will depend on investment performance.

The cash value grows tax-deferred. You can even take cash out of a policy tax-free if you use the right strategy to access the cash.

Withdrawing the Cash You Need

Because the cash in a permanent life insurance policy is yours, you can withdraw it when you want. Simply call your insurance company to let it know how much you want to withdraw, and it will wire the cash to you or deposit it into your bank account, says Josh Hargrove, a Certified Financial Planner with Insight Wealth Partners in Plano, Texas.

Withdrawals are taken first from your “basis”—the amount you’ve paid into cash value through premiums. That money comes out tax-free because it’s considered a return of your basis. For example, if you have $50,000 in cash value and $30,000 of that is your basis, you could withdraw $30,000 tax-free. If you tap the earnings portion, though, you’ll have to pay taxes on the gains at your regular income tax rate, Hargrove says.

Withdrawing cash for a life insurance policy also will reduce the death benefit. That means your beneficiaries will get less when you die—which is something to consider before withdrawing cash from a policy.

Cash Withdrawal Pros and Cons

Pros: No interest is paid on a withdrawal.

Cons: A withdrawal reduces your policy cash value and death benefit. It may be taxable if the withdrawal exceeds the amount of premiums paid.

Borrowing the Cash You Need

Rather than withdraw cash from your policy, you can borrow it.

A life insurance policy loan can be a fast and easy way to get cash for a purchase such as a car, for retirement income or to help cover costs temporarily if you lose a job.

“Loans are the most common way policy owners access cash in a policy as they are completely tax-free,” says Chris Abrams, founder of Abrams Insurance Solutions in San Diego (as long you’re not borrowing from a modified endowment contract).

Plus, you don’t have to pay back the amount you borrow. But if you don’t pay it back, the amount will be deducted from the death benefit that is paid to beneficiaries.

Like any loan, though, there’s a charge to borrow. So the amount owed will grow over time due to interest charges.

The benefit of a participating loan is that you can continue to earn interest on the outstanding loan amount. For example, if the interest rate on the loan is, say, 5% and the return on your cash value is 7%, you’d still earn 2% on the amount you’ve borrowed, Abrams says. On the flip side, if the rate of return dropped to 0% in a down market, you’d have to pay the full 5% interest rate on the loan.

When borrowing from your cash value, you have to be careful not to borrow too much. If the amount of the loan plus interest owed reaches the total cash value of the policy, the policy can lapse.

Policy Loan Pros and Cons

Pros: No loan application or credit check. You can repay the loan on your own schedule, and the money goes back into your policy instead of to a lender. You may earn a positive arbitrage on the money you borrow.

Cons: The interest rate may be higher than other options. The loan will be subtracted from the death benefit if you don’t pay it back.

Surrendering the Policy for Cash

You can surrender your policy entirely to get the full cash value, minus any surrender charge. And you’ll have to pay taxes on any gains earned on the cash value portion of the policy.  Plus, you’ll be giving up your life insurance coverage because surrendering a policy terminates it.

“Surrendering a policy is always the absolute last resort,” Abrams says. If you’re considering ditching your policy because you’re having trouble paying the premiums, you do have other options if you can’t pay your life insurance bill.

For example, you could reduce the policy’s face value to lower your premium, or use the cash value to convert the policy to paid-up status to keep some amount of coverage in place. You also can tap the cash value in your policy to pay your life insurance premiums temporarily if you’ve fallen on hard times. If you do this, be cautious not to deplete so much cash value that your policy lapses.

Policy Surrender Pros and Cons

Pros: If the policy has a surrender or cash value above the surrender charge, that is money in your pocket.

Cons: Possible surrender charges might wipe out any cash value. You might have to pay taxes. Your heirs will not receive a death benefit.

Sell Your Policy for Cash

You can get more than the cash value of your policy by selling it to a third party through a process called a life settlement. The third party will pay you a lump sum that’s less than the death benefit on the policy—but more than the cash value. The buyer will then pay the policy premiums. When you die, the investor collects the death benefit.

You could consider a life settlement if you have an immediate need for cash that trumps the need for life insurance.

You must be a certain age—typically 65—or have a certain level of health impairments in order to qualify for a life settlement. You’ll have better chances of selling your policy the older you are, says Lucas Siegel, CEO of Harbor Life Settlements.

You can be younger than age 65 to sell a life insurance policy through a life settlement, but you generally must be very ill. “Life settlements are calculated by understanding your life expectancy, and most third-party buyers prefer to purchase policies with a life expectancy of 10 years or less,” he says.

Being highly qualified by age and health condition also will help you get a bigger payment. Work with reputable life settlement companies, and get offers from more than one company.

Be aware that there can be fees associated with life settlements, and you’ll pay income taxes on the amount you receive from the sale of the policy.

Life Settlement Pros and Cons

Pros: You’ll get more cash than you would by surrendering your policy.

Cons: There are restrictions to qualify for a life settlement. The cash offer will be much less than the death benefit of the policy.

Look at Other Options

Before you choose any of these options for tapping the cash in your life insurance, speak with your insurance agent or financial advisor. Discuss how your policy will be impacted by each option. Also, consider whether there are better alternatives for coming up with the cash you need rather than using your cash value. If you bought the policy to provide a financial safety net for your loved ones after your death, you don’t want to jeopardize that by raiding your policy for cash.

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Progressive reveals profits in face of pandemic refunds

Despite reporting a significant drop in claims and providing auto insurance customers with premium refunds, Progressive generated a substantial profit during the pandemic – a detail that consumer advocates believe is unfair to customers.

In a filing with the Michigan Department of Insurance, Progressive reported that it saw a 28.7% drop in accident claims in March this year, compared to March 2019. The company also said that claims were down 31.9% in March compared to February.

Notably, Progressive did not share its data for the month of April – the month when most auto insurers saw their biggest drop in accident claims.

Progressive’s actuary indicated that the company could provide a 22.8% refund, after expenses, to provide recompense to customers during the COVID-19 pandemic. But the insurer instead chose to refund 20% for April and May, saying the amount was its “best estimate of all associated effects.”

The insurer also revealed in a release that it saw $1.3 billion net income for April and May this year. The amount is more than double the $566.3 million net income the company posted for April and May last year.

Consumer Federation of America insurance expert Douglas Heller criticized Progressive’s profits, calling them “beyond extraordinary.”

Heller previously called for auto insurers to provide more premium relief to customers, after determining that the insurers’ giveback programs were “relatively meager” compared to the change in risk.

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Hey You – Driver!! Get off the Phone!!

Dangers of Cell Phone Use and Texting While Driving

Whether it is someone talking on the phone in line at the grocery store or texting at the movie theater, cell phone usage is just about everywhere. In an emergency, a cell phone can be a lifesaver. Cell phone use while driving, however, is an entirely different story and studies have illustrated the increase in accident risk it creates.In a survey conducted by the Federal Traffic Safety Agency, 2 in 10 drivers said they text while driving. Among drivers ages 21 to 24, half said they sent or received texts while behind the wheel.Distraction from cell phone use while driving (hand held or hands free) extends a driver’s reaction as much as having a blood alcohol concentration at the legal limit of .08 percent. (University of Utah)The No.1 source of driver inattention is use of a wireless device. (Virginia Tech/NHTSA)

(Traffic Safety Facts-DOT HS 811 611)Drivers who use cell phones are four times as likely to get into crashes serious enough to injure themselves. (NHTSA, Insurance Institute for Highway Safety)10 percent of drivers aged 16 to 24 years old are on their phone at any one time.

(Traffic Safety Facts-DOT HS 811 611)Driving while distracted is a factor in 25 percent of police reported crashes.Driving while using a cell phone reduces the amount of brain activity associated with driving by 37 percent (Carnegie Mellon)

(Traffic Safety Facts-DOT HS 811 611)It is the conversation, not the device, that creates the danger. (FocusDriven)The biggest influence on how teens drive is their parents. Almost two-thirds of high school teens say their parents talk on a cell phone while driving; almost half say their parents speed; and almost a third say their parents don’t wear a safety belt. (AAA Study)

(Traffic Safety Facts-DOT HS 811 611)

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Alabama Insurance Laws change in 2020

Starting Jan. 1, a new car insurance law is going into effect that could impact what could happen if you’re pulled over.

The new car insurance law will give a break to people caught driving without insurance.

Currently, if insurance can’t be confirmed, the person has 30 days to provide it.

If they can’t, their registration is suspended, they get a $200 fine, and they have to provide proof of insurance.

A second violation within four years means a $400 fine, proof of insurance, and a four-month suspension of vehicle registration.

The change: The state is taking away the four-month suspension.

The department of revenue says that once someone has paid the four hundred dollars and provided proof of insurance, taking away that person’s ability to drive is an extra burden on taxpayers because that person may not be able to get to work, school or other places.

The law also changes the period for second and subsequent violations from four years to three.

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It’s time to break up with your Car Insurance Company

(Consumer Reports) – Car insurance premiums nationwide have never been higher. Many of us renew our policies year after year without shopping around. But a recent survey of Consumer Reports members found that an overwhelming majority of those who changed to another carrier saved money.

Shopping around for car insurance can save money. (Consumer Reports)

Here are some easy money-saving strategies for car insurance.

Ready to shop around? We found that some insurers are better than others at attracting and retaining customers. And when it comes to overall satisfaction, just two national companies made it to the top of the ratings.

InsurancePricedRight.com topped the ratings, with an overall satisfaction score of 92 due to their ability to shop with all the major companies. USAA primarily serves military families. Amica also did well, but you may need a clean driving record and good credit reports to get its best rates, then there are the other 30-40 companies that we choose from.

Even if you don’t switch companies, you can still save by asking for a lower rate if your car is older or your mileage is low, say around 6,000 miles a year.

The bottom line? Consumer Reports advises reviewing your car insurance once a year. It could really pay off.

Another way to save money is to allow your insurance company to track your driving habits electronically for things like speed, phone use, and even the time of day you drive. Good drivers get lower rates with some companies. But the opposite is also true; your rates could go up based on the data. It’s something to think about.

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Are you paying too much for car insurance?

For the last 34 years people have always wondered if they are getting a good deal on their insurance or not – and this is what I have heard from them since I got my Insurance License.

Auto insurance is mandated by most states, but how much you actually buy beyond the minimum — that’s up to you. States usually want you to have liability insurance; that covers those that you would run into or hurt. It’s also best to have medical coverage for you and those in your vehicle. But the insurance for the car or truck itself, well, you need to think about that. A lot of people are buying insurance they don’t need, and that won’t pay very much if they have a problem.

Here’s the deal. If your car has high miles –150,000 to 200,000 miles or more — or if it’s older than 10 years, what you’ll be paid if you have a problem with the car itself is so little, it might not be worth what you’re paying each and every month.

Now how do you know for sure? Well call your insurance company or your insurance agent and talk it through. And ask this one simple question: if your car is totaled, what will they pay you? Often that single answer will tell you exactly what you need to do next.

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