Home Prices Cool in December as Sales Slip

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December Home Prices Slip on Lower Sales
Daniel Acker/Bloomberg via Getty Images

WASHINGTON -- U.S. home prices slipped from November to December, and the year-over-year increase slowed, likely a result of weaker sales at the end of last year.

Real estate data provider CoreLogic said Tuesday that prices slipped 0.1 percent in December. It was the third straight month-to-month drop. Home prices had risen for eight straight months through September.

For all of 2013, prices rose a healthy 11 percent. That was roughly equal to the 11.4 percent price increase for the 12 months that ended in November.

CoreLogic's (CLGX) price figures aren't adjusted for seasonal patterns, such as cold winter weather, which typically slows sales.

Still, home sales slowed last fall, even excluding the effects of cold weather. A tight supply of available homes and a jump in mortgage rates over the summer have discouraged many buyers.

In addition, a measure of signed contracts plummeted in December, its seventh straight decline. A one- to two-month lag usually exists between a signed contract and a completed sale.

Higher mortgage rates have disrupted housing's recovery. %VIRTUAL-article-sponsoredlinks%Rates rose a full percentage point over the summer as speculation mounted that the Federal Reserve would soon wind down an $85-billion-a-month bond purchase program. The bond buying was intended to boost growth.

The Fed pared its purchases to $75 billion in January, and at the end of the month it said it would reduce them further, to $65 billion, this month. Fed officials said the economy was improving sufficiently to slowly reduce it stimulus.

The average rate on a 30-year mortgage fell to 4.32 percent last week, according to mortgage buyer Freddie Mac. That's still low by historical standards.

Despite the slowdown in the second half of last year, home sales totaled nearly 5.1 million in 2013, the strongest showing since 2006. That's not far from the annual pace of 5.5 million that analysts say is consistent with a healthy housing market.

Most economists expect sales and prices to keep rising this year, but at a slower pace. They forecast that both will likely rise around 5 percent, down from double-digit gains in 2013.

Steady job gains are putting more people to work and enabling them to buy a home. And rising prices should encourage more owners to sell their homes. A larger supply of available homes would likely boost sales.

10 Weird Ways States Tax You (and Don't)
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Home Prices Cool in December as Sales Slip
The Aloha State legislature, in an effort to preserve the uniqueness of their island paradise, has an "Exceptional Tree" tax allowance. Landowners can deduct up to $3,000 from their income for expenses such as pruning and fertilization for any tree designated as rare, big, old or a combination thereof. That's per tree. Top-bracket earners taxed at the state's highest rate (11 percent) would save $330 via the deduction.

The work must be done by a certified arborist, and the deduction can be claimed only every third year. The deduction was enacted in 2004. Hawaii has had a list of "Exceptional Trees" since 1975, and there are now estimated to be more than a thousand thus designated.
Maine legislators, a flinty bunch, don't see the harm in taxing anyone who deals in their official state fruit -- blueberries, at the rate of 1.5 cents per pound. The resulting revenues -- more than $1.6 million to state coffers in the fiscal year that ended in June 2013 -- are used to promote the crop and agricultural research.

The state also taxes harvesters and processors of hard-shell clams (known in the state as mahogany quahogs) at $1.25 a bushel, but state revenues for that are much lower. The taxes are levied at the wholesale level, but naturally, they end up being passed on to the consumer.
The Yellow Hammer State is the last in the union to tax a deck of cards as if it were a "vice," like alcohol and tobacco.

Taxing decks of cards, associated with gambling, was once fairly common, but most states have since set up separate control boards to regulate liquor and tobacco, and have let the cards slide.

But in Alabama, you'll still pay a 10 cent sales tax on any pack of cards you purchase. Retailers also have to pay $2 to the state each year for the privilege of selling playing cards.
"Merlyners" love their pollution-beleaguered Chesapeake Bay, the largest marine estuary in the U.S. In 2013, in part to meet federal pollution-control mandates, Free State legislators enacted fees on property owners in Baltimore and nine other Maryland counties, aimed at curbing storm water runoff. The fees were meant to fund programs to improve the water quality of the Bay.

Sounds simple enough, but the way Maryland legislators wrote the law has led to an angry backlash in some corners against this so-called "Rain Tax."

One way localities can calculate the tax is by measuring how much of a landowner's tract is "impervious" to precipitation seeping into the ground. So the more you've developed it with buildings, driveways, tennis courts and the like, the less it will absorb and the more you pay. That's how the tax is being implemented (through aerial and satellite photos) in Montgomery County, Md., a heavily developed suburb of Washington, D.C., and landowners are up in arms.

Other counties have rebelled, opting to pay for the pollution control programs out of general funds rather than pass the cost onto landowners. Maryland’s Republican candidate for governor, David Craig, has made the law's repeal part of his platform for the 2014 election.
The Sunflower State is among a bevy of jurisdictions that allows sale of lower-alcohol beer (the term of art is "cereal malt beverage") in convenience and grocery stores.

But Kansas also taxes "3.2" beer differently—and there lies the rub. At a liquor store, all products, including, say, a conventional six-pack of Budweiser (with 5 percent alcohol by volume), are taxed at a special rate of 8 percent. At the convenience store down the street, however, ordinary sales tax is levied on the lower-alcohol, cereal malt beverage bottle of Bud. That often ends up being more than the 8 percent alcohol tax. In Pomona, Kans., for example, the effective rate on the weaker beer would be 9.7 percent. Go figure.
When it comes to taxation, the rule is generally the stronger the booze, the higher the tax (that's why Kansas's beer tax scheme is an anomaly). California follows that curve, but at 100 proof, you better be ready to pay through the nose.

Distilled spirits are taxed at $3.30 a gallon if below 100 proof, or 50 percent alcohol. Go over that, like with Bacardi 151, and the tax doubles to $6.60. Maryland also notes the 100 proof point, but it only adds 1.5 cents per proof, per gallon to the relatively modest liquor tax of $1.50 per gallon, taking the Bacardi 151 to $2.27 per gallon.
Entertainment venues pay a business tax to the Silver State ranging from 5  to 10 percent on admissions fees (and food, drink and merchandise sales) whenever there’s live entertainment going on.

There are exemptions, however, including this one, for businesses that provide " ... Instrumental or vocal music, which may or may not be supplemented with commentary by the musicians, in a restaurant, lounge or similar area if such music does not routinely rise to the volume that interferes with casual conversation and if such music would not generally cause patrons to watch as well as listen."

So your piano player can play "Feelings" softly and even crack a few jokes, tax-free, for your business. Just make sure they're not funny enough to attract attention.
Want to own a plush or fuel-thirsty ride? That’ll cost you extra in the Garden State.

Cars that cost $45,000 or more or have a combined EPA fuel-mileage average of 19 or below pay an additional 0.4 percent on top of New Jersey’s 7 percent sales tax.
Businesses in D.C. that sell food or alcohol are required to charge customers 5 cents for every paper or plastic disposable bag they take. The store gets to keep a penny, and the balance goes to a government fund dedicated to cleaning up the Anacostia River.

Consumers and storekeepers grumbled at the program's debut in 2010. It has raised about $7 million so far, below expectations, but the program’s designers see this as a positive sign -- that shoppers have opted to bring their own reusable bags.
In the Land of Enchantment, making it to 100 years has a payoff beyond the chance that Willard Scott will wish you a happy birthday: You don't have to pay state income tax anymore.

If you've been physically present in the state for at least six months and a resident of the state on the last day of the year, and you’re not someone's dependent, you're eligible. You'll still need to file, and there are some complications if you're married and your spouse doesn't qualify.
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