Monthly Archives: April 2017

Secretary outlines state budget process

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Pennsylvania is facing a number of difficult budget challenges, both short- and long-term, according to the commonwealth’s Budget Secretary Randy Albright. The secretary and Sen. Pat Browne (R-Lehigh) addressed Realtors® at PAR’s Day on the Hill this week in Harrisburg.

One of the major debt issues Pennsylvania faces is the state employees/teachers pension fund. Albright said delaying making decisions on this issue continues to raise the debt pension level, which is currently at $62 billion.

Browne agreed, saying the state’s risk exposure was too high with the state pensions and it’s not in line with the private sector. “We need to make a real effort to move the commonwealth in that direction for the first time. It’s a burden that the state can no longer carry.”

“We continue to look at short-term fixes, but delay long-term solutions,” Albright said. “It’s those kind of funding decisions we can’t put off. We’ll need to work together as the legislature and the governor.”

The state has been facing an unexpected downturn in revenues, according to Albright. “The state missed $200 million in income last month and $680 million to date in this budget.”

“We’re working to find fresh ways to continue to deliver services,” Albright said. “We’re asking departments to take a hard look at what they’re doing now that we may not have to do.” Through those efforts, the state has identified $2 billion in savings by streamlining services.

“We’re working to maintain a level of service or providing an even better level,” he added.

An announced prison closing in Pittsburgh will save $100 million and combining four state human services agencies will save another $100 million.

Albright said they will look to close a loophole that allows businesses to avoid paying taxes on storage fees, as consumers are charged taxes.

Browne said the general assembly and the governor’s office have different approaches to the budget process. He said the budget has an approximately $3 billion hole.

“Our conversations need to be more than what’s needed to close this year’s budget,” he said. “Pennsylvania is carrying too much risk. And we need to address some of the long-term challenges.”

Browne said the Independent Fiscal Office estimates the state will face a $20 billion short fall in 2020, if some issues are not addressed.

He said one of the biggest challenges is human services, particularly with the growing number of senior citizens and their need for Medicare.

“It’s more expensive than what we can meet,” he said. “We need to provide services but get costs down.”

Browne added, “We need to make decisions to find a way to look toward the future. We want to continue to invest in our people.”

Realtors® advocate at the state capital

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We had a phenomenal turnout at PAR’s Day on the Hill event this week in Harrisburg. More than 100 Pennsylvania Realtors® met with 40 state legislators yesterday.

I can’t stress enough how important it is for Realtors® to meet with their legislators to explain how legislation could affect our clients, homeownership, the real estate industry and the state’s economy.

Realtors® focused their discussions on PAR’s key issues, which include:

House Bill 863 (Rothman, R-Cumberland), which would amend the Real Estate Licensing and Registration Act. PAR supported this legislation in the last legislative session and encouraged these amendments because it would enhance the level of service to consumers. The bill would incorporate the following requirements to RELRA: an additional 15 hours for salesperson pre-licensure education, allowing for a grandfathering process for those already enrolled in classes, a high school diploma or equivalent be required for licensure as a real estate salesperson, all courses for salesperson licenses be completed within 5 years prior to the date of taking and passing the exam, allowing for a grandfathering process for those already enrolled in classes, and allow licensees to conduct Broker Price Opinions with requirements. The House Professional Licensure Committee has scheduled a hearing on this bill in May.

House Bill 1001 (Helm, R-Dauphin), which would license home inspectors. This bill will set statewide standards for licensing home inspectors and standards for the home inspection report. PAR supports this legislation because property inspections have become a critical part of the transaction and should be regulated by the state to provide protection for consumers. The legislation will require home inspectors to be licensed by the Department of Labor and Industry and license applicants would have to: have a high school diploma or equivalent, complete a bureau-approved training program, pass a bureau-approved examination, and obtain liability insurance. Existing practitioners will be grandfathered. Renewal requires 16 hours of continuing education.

Seller’s Disclosure Issues – PAR has opposed numerous pieces of legislation over the past several legislative sessions pertaining to the Seller’s Property Disclosure. While the association understands the need for sellers to provide information to buyers, PAR believes that any amendments to the law should be addressed by the Pennsylvania Real Estate Commission, rather than by legislative action. Substantive policy changes to the seller’s disclosure should be made through the regulatory process, providing a balance between the seller’s requirements and the needs of the buyer to learn about material defects of a property.

Property Tax Assessment Reform – As the legislature considers property tax assessment reform, PAR urges it to consider several key points.  PAR supports a mandatory periodic reassessment not to exceed three years and an assessment system that is regulated by the state through a uniformity office. This entity would have the authority to oversee and enforce compliance, including adoption of a uniform and computerized mass assessment system, and a standard of training and continuing education to be instituted for assessors, appeals board members, auxiliary boards and any other individual that deals with assessment. The association believes an assessment system that is initially revenue neutral, yet allows for tax increases and decreases. In addition, PAR encourages a standardized appeals process that is fair and equitable, that does not rely on the sale of property as the sole basis for an assessment appeal by a taxing authority. The association also encourages the development of a funding mechanism, implemented and maintained by the state, whereby stakeholders (school districts, counties and municipalities) participate in the cost of reassessment in a proportionate manner.

Commercial Realtors® reporting more businesses opening in their areas

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More than half of commercial Realtors® reported that more businesses opened in their area in March, according to NAR’s Business Creation Index for March.

This was an increase of 15 percent from November. While 34 percent of commercial agents reported that they had not seen an increase in new businesses launching in March, this is the lowest percent since the survey began.

Retail businesses were the most common addition of new businesses, according to the survey. Fifty-nine percent of Realtors® said they saw retail stores opening, followed by food and beverage at 56 percent and health, medical or dental with 38 percent. Area-wise, the East South Central saw the most new businesses open, according to 63 percent of agents, followed by the Middle Atlantic, which includes Pennsylvania, at 57 percent and the South Atlantic and West North Atlantic, both at 56 percent.

More than one-half (52 percent) of agents said they saw more businesses opening than closing, a decrease of 3 percent from February, but an increase year-to-year. Twenty-nine percent reported that the ratio of businesses opening and closing is the same, an increase of 3 percent from February.

On the other end of the spectrum, 65 percent of agents said they had not noticed more businesses closing, a decrease of 8 percent from December. Nearly one-quarter reported that more businesses closed in March, an increase of 7 percent since December.

Retail shops were the most likely to close, according to the report. Thirty percent of agents reported that retail shops were the ones that closed, followed by 21 percent who said food or beverage and both office and real estate, said 8 percent.

The Mountain region was the most likely to report businesses closing (29 percent), followed by the Middle Atlantic, the East North Central and New England, who all hit 25 percent.

 

New home sales continue to increase in 2017

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Sales of new homes saw an additional increase in February, according to a recent press release from the National Association of Home Builders.

Newly-built single-family home sales increased 6.1 percent in February to a seasonally-adjusted annual rate of 592,000 units. In January, new home sales increased 3.7 percent.  The inventory of new homes for sale hit 266,000 in February, a 5.4 month supply if the sales pace stays the same. This is an increase of 12.8 percent from February 2016, according to Quicken Loans. The median sale price of new homes sold in February was $296,200, down from $312,900 in January, but 2.8 percent higher than last February’s level.

“February’s increase in new home sales is consistent with builders’ growing confidence in the housing market,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “Builders are encouraged by heightened consumer activity and by the expectation that regulatory costs will decline in the year ahead.”

“The uptick in mortgage interest rates is having a minimal effect on new home sales thus far,” said NAHB Chief Economist Robert Dietz. “Ongoing job creation, rising household formations and affordable home prices should keep the market on an upward trajectory in 2017.”

However, sales in regions across the nation differed greatly. In the Northeast, sales decreased 21.4 percent. Yet, in the Midwest, sales rose 30.9 percent, the West saw a 7.5 increase in sales and the South’s sales grew 3.6 percent.