All the best in 2013!
Pook
Monday, December 31, 2012
Friday, December 21, 2012
Looks Like the World Didn't End!
If you can read this, then it looks like the end of the Mayan calendar didn't mean the end of the world! I'm happy to say, in spite of great issues that face our country today, we are still a strong nation filled with great promise, hope, and resolve.
As the Winter Solstice marks the both the longest day (as in hours of daylight, not hours in the day) and shortest night, we happily look forward to more daylight and more brightness in our lives.
If you're currently somewhere where the snow is coming down and the winds are blowing fiercely, remember that Phoenix is just a few hours away by plane. The real estate market here continues to improve and, in addition to our healthy resale market, there are many new homes being built by companies that understand the bright future of this area.
Wishing you and those you hold dear, a day that celebrates new beginnings!
Tuesday, December 18, 2012
Barclays: ‘Turning Point’ for Home Owners in 2013
Courtesy of REALTOR®Mag/National Association of REALTORS®
Daily Real Estate News |
Tuesday, December 18, 2012
Real estate wealth is expected to give a long-awaited boost to consumer spending in 2013.
"This would mark an important turning point for household balance sheets, where net-wealth effects from falling financial prices and the collapse of the housing market have been significant impediments to the strength of consumer spending and, in turn, the pace of the broader recovery," Barclays reports.
Meanwhile, housing starts are projected to reach 944,000 in the first quarter of the new year and then rise to 973,000 by the second quarter, according to the report. Also, housing inventories are expected to increase modestly through the year.
“New-home inventories have fallen to their lowest levels ever, as home builders have held housing starts below even the depressed pace of new-home sales in recent years,” according to the report. “Now that new- and existing-home sales are on sustained upward trends, new-home inventories have fallen enough that builders need to raise housing starts to prevent inventories from falling further.”
Source: “Barclays: Housing market to remain resilient,” HousingWire (Dec. 17, 2012)
FHA Home Loan Changes Coming January 1st
Courtesy of Bill Kamboukos of Strategic Mortgage
FHA Home loans will have new changes going into effect on January 1st, 2013. Recently, HUD, which oversees the FHA announced their latest budget numbers and announced a slew of new methods they will use to try make the agency's finances more balanced.
Specifically, here are the two most important parts of their announcements for someone considering get an FHA loan after January 1st.
1) FHA Mortgage Insurance annual premiums (MIP) will be moving from 1.25% to 1.35% for borrowers who make a 5% or less down payment.
In addition, the new policy to never allow for the cancellation of this mortgage insurance will also hurt new homeowners who decide to keep FHA loans for the long term. As they will never be able to eliminate the mortgage insurance associated with it. In fact, those who have an existing FHA loan, also may be further deterred from refinancing into a new FHA loan, knowing that they will never be able eliminate the mortgage insurance associated with it. In the end, this may not be the last changes we see with FHA loans, but it is yet again in our opinion a negative for the FHA loan going forward. However, with mortgage loan rates at all time lows and FHA loans still only requiring a 3.5% down payment, FHA loans still provide a very attractive option for buyers with a lower down payment requirement.
In the end, this may not be the last changes we see with FHA loans, but it is yet again in our opinion a negative for the FHA loan going forward. However, with mortgage loan rates at all time lows and FHA loans still only requiring a 3.5% down payment, FHA loans still provide a very attractive option for buyers with a lower down payment requirement.
FHA Home loans will have new changes going into effect on January 1st, 2013. Recently, HUD, which oversees the FHA announced their latest budget numbers and announced a slew of new methods they will use to try make the agency's finances more balanced.
Specifically, here are the two most important parts of their announcements for someone considering get an FHA loan after January 1st.
1) FHA Mortgage Insurance annual premiums (MIP) will be moving from 1.25% to 1.35% for borrowers who make a 5% or less down payment.
2) The
policy of a homeowner being able to cancel the MIP on their FHA loan
after 5 years, if they are at 78% of the value of their home will be
eliminated.Now
moving from 1.25% to 1.35% on an annual basis may not seem like a big
deal, but is just the latest escalation of mortgage insurance premiums
on FHA loans. Just three years ago, monthly mortgage insurance on FHA
loans were set at .55%. That means that in the past three years as the
Government has crafted programs to push down home loan interest rates,
the FHA has raised the annual cost of their mortgage insurance from
$91.67 per month to $225 per month on a $200,000 loan. That's quite a
jump and unfortunately, as we had warned in past articles, it doesn't
seem as there is an end in sight.
In addition, the new policy to never allow for the cancellation of this mortgage insurance will also hurt new homeowners who decide to keep FHA loans for the long term. As they will never be able to eliminate the mortgage insurance associated with it. In fact, those who have an existing FHA loan, also may be further deterred from refinancing into a new FHA loan, knowing that they will never be able eliminate the mortgage insurance associated with it. In the end, this may not be the last changes we see with FHA loans, but it is yet again in our opinion a negative for the FHA loan going forward. However, with mortgage loan rates at all time lows and FHA loans still only requiring a 3.5% down payment, FHA loans still provide a very attractive option for buyers with a lower down payment requirement.
In the end, this may not be the last changes we see with FHA loans, but it is yet again in our opinion a negative for the FHA loan going forward. However, with mortgage loan rates at all time lows and FHA loans still only requiring a 3.5% down payment, FHA loans still provide a very attractive option for buyers with a lower down payment requirement.
Monday, December 17, 2012
Tell Congress: Do No Harm to Housing
The mortgage interest deduction is vital to the stability of the American housing market and economy. Please join me in telling Congress to oppose any plan that modifies or excludes the deductibility of mortgage interest. Contact your representatives now... before it's too late.
Top 10 Things You Need to Know About the 3.8% Tax
- When you add up all of your income from every possible source, and that total is less than $200,000 ($250,000 on a joint tax return), you will not be subject to this tax.
- The 3.8% tax will never be collected as a transfer tax on real estate of any type, so you’ll never pay this tax at the time that you purchase a home or other investment property.
- You’ll never pay this tax at settlement when you sell your home or investment property. Any capital gain you realize at settlement is just one component of that year’s gross income.
- If you sell your principal residence, you will still receive the full benefit of the $250,000 (single tax return)/$500,000 (married filing joint tax return) exclusion on the sale of that home. If your capital gain is greater than these amounts, then you will include any gain above these amounts as income on your Form 1040 tax return. Even then, if your total income (including this taxable portion of gain on your residence) is less than the $200,000/$250,000 amounts, you will not pay this tax. If your total income is more than these amounts, a formula will protect some portion of your investment.
- The tax applies to other types of investment income, not just real estate. If your income is more than the $200,000/$250,000 amount, then the tax formula will be applied to capital gains, interest income, dividend income and net rents (i.e., rents after expenses).
- The tax goes into effect in 2013. If you have investment income in 2013, you won’t pay the 3.8% tax until you file your 2013 Form 1040 tax return in 2014. The 3.8% tax for any later year will be paid in the following calendar year when the tax returns are filed.
- In any particular year, if you have no income from capital gains, rents, interest or dividends, you’ll never pay this tax, even if you have millions of dollars of other types of income.
- The formula that determines the amount of 3.8% tax due will always protect $200,000 ($250,000 on a joint return) of your income from any burden of the 3.8% tax. For example, if you are single and have a total of $201,000 income, the 3.8% tax would never be imposed on more than $1,000.
- It’s true that investment income from rents on an investment property could be subject to the 3.8% tax. But: The only rental income that would be included in your gross income and therefore possibly subject to the tax is net rental income: gross rents minus expenses like depreciation, interest, property tax, maintenance and utilities.
- The tax was enacted along with the health care legislation in 2010. It was added to the package just hours before the final vote and without review. NAR strongly opposed the tax at the time, and remains hopeful that it will not go into effect. The tax will no doubt be debated during the upcoming tax reform debates in 2013.
Thursday, November 22, 2012
Wishing You and Yours a Very Happy Thanksgiving
As you are surrounded by friends and family today and as you think about those who may be separated by distance or circumstance, may you find peace and joy in the beauty and blessings of your life.
From my family to yours, best wishes for a wonderful Thanksgiving.
Fondest regards,
Pook
As has become my personal tradition each year, I share the words of Abigail Van Buren (Dear Abby)...
O,
heavenly Father: We thank thee for food and remember the hungry. We
thank thee for health and remember the sick. We thank thee for friends
and remember the friendless. We thank thee for freedom and remember the
enslaved. May these remembrances stir us to service, that thy gifts to
us may be used for others.
Saturday, November 10, 2012
Happy 237th Birthday to the United States Marine Corps
The Semper Fi Fund is a nonprofit organization providing financial support for injured and critically ill members of the U.S. Armed Forces and their families during times of hospitalization and recovery, as well as assistance for those with ongoing medical needs.
The Semper Fi Fund works directly with American heroes who have sacrificed much for our country. Their injuries are often severe, and the path to recovery or rehabilitation can be long and costly. When these members of the Armed Forces are hospitalized and receiving treatment, the related medical costs can be staggering. Additionally, these situations can cause other costs to grow quickly, such as time off of work, childcare, plane fare, and other travel expenses. These heroes deserve the best care and support we can offer in their time of need.
Your donation – no matter how large or small – makes a huge difference. It helps the Semper Fi Fund provide service member and family support, specialized & adaptive equipment, adaptive housing, adaptive transportation, education and career transition assistance, PTSD and TBI support, and so much more.
You have the power to make a difference. Help GoDaddy help those heroes who've given so much for our freedom. Click HERE to donate.
The Semper Fi Fund works directly with American heroes who have sacrificed much for our country. Their injuries are often severe, and the path to recovery or rehabilitation can be long and costly. When these members of the Armed Forces are hospitalized and receiving treatment, the related medical costs can be staggering. Additionally, these situations can cause other costs to grow quickly, such as time off of work, childcare, plane fare, and other travel expenses. These heroes deserve the best care and support we can offer in their time of need.
Your donation – no matter how large or small – makes a huge difference. It helps the Semper Fi Fund provide service member and family support, specialized & adaptive equipment, adaptive housing, adaptive transportation, education and career transition assistance, PTSD and TBI support, and so much more.
You have the power to make a difference. Help GoDaddy help those heroes who've given so much for our freedom. Click HERE to donate.
THE FEW, THE PROUD
Veterans Day 2012
Veterans Day is celebrated on November 11th, the anniversary of the signing of the Armistice that finished World War I. The main hostilities of WWI were properly finished at the 11th hour of the 11th day of the 11th month of 1918, with Germany signing the Armistice.
Heartfelt thanks go out to the men and women who have served in our armed forces, protecting our nation, and preserving the freedoms we cherish.
Tuesday, October 30, 2012
US Home Prices Climb for Seventh Straight Month
Source:
U.S. single-family home prices rose in August, the latest sign that the housing market is on the mend, a closely watched survey showed on Tuesday.
The
S&P/Case Shiller composite index of 20 metropolitan areas gained
0.5 percent on a seasonally adjusted basis, in line with economists'
forecasts.
By: CNBC.com With Reuters
U.S. single-family home prices rose in August, the latest sign that the housing market is on the mend, a closely watched survey showed on Tuesday.
 |
It was
the seventh straight month of increases, extending the longest
continuous string of gains since prices were boosted by the homebuyer
tax credit in 2009 and 2010.
The
sustained good news in home prices "makes us optimistic for continued
recovery in the housing market," David Blitzer, chairman of the index
committee at S&P Dow Jones Indices, said in a statement.
"Even as we end the seasonally strong home buying period, the statistics are positive," said Blitzer.
On a non-seasonally adjusted basis, prices fared better, gaining 0.9 percent.
Prices in the 20 cities climbed 2 percent year-over-year, topping expectations for a 1.9 percent increase.
Robert
Gray, managing partner of real estate private equity firm TerraCap
Management, said the residential recovery bodes well for the commercial
sector: "We think the commercial real estate market, including hotels,
office complexes and some retail properties, will now start to recover.
Those who missed the boat on the residential recovery would be wise to
look into commercial real estate."
S&P
500 futures edged up following the data, but the stock market will be
closed for a second day in a row in the wake of a powerful storm that
hit the east coast.
Compared
to a year ago, prices in Phoenix surged 18.8 percent, the fourth month
in a row the hard-hit city has seen double-digit yearly gains, the
report said.
Prices
in Las Vegas — also one of the more distressed areas in the years since
the end of the housing boom - were up 0.9 percent compared to a year
ago, the first annual increase since January 2007.
Of the 20 cities in the index, three saw a yearly decline in prices, with Atlanta faring the worst, down 6.1 percent.
Homeowners see market on the rebound
Source: The Republic | azcentral.com
For the past five years, tens of thousands of homeowners have been frozen in place, unable to sell their homes for a profit.
Now, there are signs a thaw is under way.
Sales by owners who are not facing foreclosure or a distressed sale are on the increase again, a trend that real-estate analysts and agents say points to a fuller housing-market recovery eagerly awaited but still in the early stages.
Also, foreclosures and short sales, which have dominated the market and dragged down metro Phoenix's home prices since the crash, have been slowing steadily this year.
Profits made by regular sellers haven't been huge so far, but they have risen with the region's 35 percent increase in median home prices over the past year. More people who have owned their homes a long time find they can sell and make a satisfactory profit. More who bought near the height of the boom are no longer underwater, meaning they now owe less than what their house is worth.
In August, the median price of a regular home sale in metro Phoenix climbed slightly to $185,000, about $30,000 more than the median for all sales, according to new data from Arizona State University's College of Business.
Last month, the number of regular resales, or homes sold by an owner without lender aid, was 81 percent higher than the same month a year earlier.
"The latest trend is normal sellers are back," said Jim Sexton of the Phoenix office of RealtyOne Group. "We are going back to normal, with an owner occupant moving to another Valley house after selling a home for a profit."
Jason and Kate Raber are part of that awakening market.
The couple paid $188,000 for a three-bedroom house in Chandler in 2004, right as the boom was beginning. The value of their home dropped during the crash but then began rising steadily during the last three years.
The Rabers, who didn't have children when they bought the house and now have three, decided it was time to sell. They listed their home for $229,000 and sold it the next day for $232,000 at the end of September.
Their agent, John Gluch of HomeSmart Realty, said the couple were surprised that the offers came in so high and so quickly and that they were able to sell their home for more than the asking price the next day.
The Rabers are buying a larger home in Chandler closer to their parents.
"The market has finally improved enough for many regular sellers to make a move," Gluch said.
People who needed to sell and move for a job had to rely on their lender to approve a short sale, which allows borrowers to sell for less than they owe on their mortgage. Others who lost a job or saw their income fall often had no option but to stop payments and face foreclosure.
The area's drop in values left almost 60 percent of homeowners underwater in 2009, according to CoreLogic, a national real-estate data company.
Federal foreclosure-aid programs helped some borrowers, but foreclosures still soared to 10,000 a month three years ago.
Demand from buyers, particularly investors purchasing foreclosures in metro Phoenix, has pushed prices up since last fall and allowed more homeowners to sell.
New data shows fewer than 30 percent of metro Phoenix homeowners are underwater.
Many homeowners want to be closer to jobs or schools but have had to wait for home values to rise so they could move.
Tom and April King wanted to sell their north Scottsdale home in the McDowell Mountain Ranch community last year and move closer to Tom's job in Phoenix.
They bought the house in 2003 for $610,000. In March 2011, they tried to sell it for $650,000 and received an offer, but the appraisal came in at $620,000, so the deal fell through.
The Kings made some improvements, including new flooring. At the end of August, the couple re-listed their home for $670,000.
Their agent, Jeff Sibbach of Realty One Group, said the house attracted multiple offers and sold within days.
"As home prices and sales climb, homeowners are becoming unlocked in their houses," he said. "People finally have the chance to move up or move down."
But now, as metro Phoenix home values are climbing, retirees or others who planned to be in their home for a while are taking steps to sell or are considering it.
For some long-term homeowners, selling now may be a bittersweet experience. On the one hand, they may be rewarded with more profit because they resisted the temptation to pull tons of cash out of their home in the bubble and gorge on furniture, cars and vacations -- or jump from a modest home to a luxury home and get in over their heads.
On the other hand, their home now may sell for far less than it would have in 2006.
Then there are those who bought mid-crash but decided to hang on until the market bottomed out and started recovering.
Darin Kastning and Patrick Rizzo moved from their longtime home in Washington state to Gilbert four years ago to retire. The couple paid $160,000.
They got a great deal on their house and "fell in love with the desert."
But Rizzo said they began to miss their families in Washington, yet they still decided to hold onto their house until they could make a "nice" profit. The couple closed on the sale of their Gilbert house last week. They sold the home for about $50,000 more than they paid, said their agent, Diane Brennan of Scottsdale-based Trillium Properties.
"The word is getting out that regular homeowners can sell," said Brennan, who hosts the "That Real Estate Show" on KTAR radio. "Some people are already getting overly eager and overpricing."
More can sell for a profit, but, if they can wait a few years, they might be able to make a bigger profit. There are predictions of soaring values again, so some wonder if it's better to wait. Some are choosing to rent out their current homes because the market for tenants is strong.
Yet no one is sure how long prices will continue to climb and at what pace. Metro Phoenix's huge group of investor homeowners is a wild card; if many of their homes go up for sale at once, prices could level off or deflate. In addition, anyone who waits to sell in an appreciating market and then buys in the same market may pay a higher price for the next home. Mortgage interest rates also can be unpredictable; historically, they are now at basement levels.
One option is to rent the house out and become a landlord, trying to buy time before selling. But that has its own complications, and an investor may need to hire a property-management firm to maintain the home and collect rent.
Instead, many regular homeowners are deciding to sell; as a result, the supply of homes is growing.
James Caylor didn't think he would be able to sell his north Phoenix home in July when he found a better-paying job in Chicago. He considered renting it out but didn't want the hassle of worrying about late rent payments or a tenant damaging the home.
Caylor put his house, which he bought in the mid-1990s, on the market for $170,000, almost double what he owed, and sold it within days. An investor bought the house and paid cash, so Caylor was able to close the deal fast and is looking to buy in Chicago.
Caylor had no qualms about selling to an investor, and the deal went through easily because the investor paid cash. Caylor was glad since he had already moved out of state.
If prices continue to rise, fewer investors will buy because the houses will be too expensive to rent out for a profit. That will open the door for more regular homeowners as long as they can still afford the prices.
"There are lots of regular buyers out there waiting for a chance to buy," said Mike Orr, publisher of the Cromford Report and real-estate analyst at ASU. "We will know the market is in a full recovery when regular owners can sell and regular buyers can afford those homes."
For the past five years, tens of thousands of homeowners have been frozen in place, unable to sell their homes for a profit.
Now, there are signs a thaw is under way.
Sales by owners who are not facing foreclosure or a distressed sale are on the increase again, a trend that real-estate analysts and agents say points to a fuller housing-market recovery eagerly awaited but still in the early stages.
Also, foreclosures and short sales, which have dominated the market and dragged down metro Phoenix's home prices since the crash, have been slowing steadily this year.
Profits made by regular sellers haven't been huge so far, but they have risen with the region's 35 percent increase in median home prices over the past year. More people who have owned their homes a long time find they can sell and make a satisfactory profit. More who bought near the height of the boom are no longer underwater, meaning they now owe less than what their house is worth.
In August, the median price of a regular home sale in metro Phoenix climbed slightly to $185,000, about $30,000 more than the median for all sales, according to new data from Arizona State University's College of Business.
Last month, the number of regular resales, or homes sold by an owner without lender aid, was 81 percent higher than the same month a year earlier.
"The latest trend is normal sellers are back," said Jim Sexton of the Phoenix office of RealtyOne Group. "We are going back to normal, with an owner occupant moving to another Valley house after selling a home for a profit."
Jason and Kate Raber are part of that awakening market.
The couple paid $188,000 for a three-bedroom house in Chandler in 2004, right as the boom was beginning. The value of their home dropped during the crash but then began rising steadily during the last three years.
The Rabers, who didn't have children when they bought the house and now have three, decided it was time to sell. They listed their home for $229,000 and sold it the next day for $232,000 at the end of September.
Their agent, John Gluch of HomeSmart Realty, said the couple were surprised that the offers came in so high and so quickly and that they were able to sell their home for more than the asking price the next day.
The Rabers are buying a larger home in Chandler closer to their parents.
"The market has finally improved enough for many regular sellers to make a move," Gluch said.
Getting 'unlocked'
Since home values plummeted more than 50 percent during the crash, many Phoenix-area homeowners have been unable to move or refinance, particularly if they bought near the peak.People who needed to sell and move for a job had to rely on their lender to approve a short sale, which allows borrowers to sell for less than they owe on their mortgage. Others who lost a job or saw their income fall often had no option but to stop payments and face foreclosure.
The area's drop in values left almost 60 percent of homeowners underwater in 2009, according to CoreLogic, a national real-estate data company.
Federal foreclosure-aid programs helped some borrowers, but foreclosures still soared to 10,000 a month three years ago.
Demand from buyers, particularly investors purchasing foreclosures in metro Phoenix, has pushed prices up since last fall and allowed more homeowners to sell.
New data shows fewer than 30 percent of metro Phoenix homeowners are underwater.
Many homeowners want to be closer to jobs or schools but have had to wait for home values to rise so they could move.
Tom and April King wanted to sell their north Scottsdale home in the McDowell Mountain Ranch community last year and move closer to Tom's job in Phoenix.
They bought the house in 2003 for $610,000. In March 2011, they tried to sell it for $650,000 and received an offer, but the appraisal came in at $620,000, so the deal fell through.
The Kings made some improvements, including new flooring. At the end of August, the couple re-listed their home for $670,000.
Their agent, Jeff Sibbach of Realty One Group, said the house attracted multiple offers and sold within days.
"As home prices and sales climb, homeowners are becoming unlocked in their houses," he said. "People finally have the chance to move up or move down."
Long-term owners
Some people, including empty-nesters, bought many years ago and have wanted to downsize or move up to a bigger home using their equity. However, many homeowners lost equity during the crash or spent it before the downturn via home-equity loans.But now, as metro Phoenix home values are climbing, retirees or others who planned to be in their home for a while are taking steps to sell or are considering it.
For some long-term homeowners, selling now may be a bittersweet experience. On the one hand, they may be rewarded with more profit because they resisted the temptation to pull tons of cash out of their home in the bubble and gorge on furniture, cars and vacations -- or jump from a modest home to a luxury home and get in over their heads.
On the other hand, their home now may sell for far less than it would have in 2006.
Then there are those who bought mid-crash but decided to hang on until the market bottomed out and started recovering.
Darin Kastning and Patrick Rizzo moved from their longtime home in Washington state to Gilbert four years ago to retire. The couple paid $160,000.
They got a great deal on their house and "fell in love with the desert."
But Rizzo said they began to miss their families in Washington, yet they still decided to hold onto their house until they could make a "nice" profit. The couple closed on the sale of their Gilbert house last week. They sold the home for about $50,000 more than they paid, said their agent, Diane Brennan of Scottsdale-based Trillium Properties.
"The word is getting out that regular homeowners can sell," said Brennan, who hosts the "That Real Estate Show" on KTAR radio. "Some people are already getting overly eager and overpricing."
Hold or sell?
Now that home prices are steadily climbing, regular homeowners face a dilemma.More can sell for a profit, but, if they can wait a few years, they might be able to make a bigger profit. There are predictions of soaring values again, so some wonder if it's better to wait. Some are choosing to rent out their current homes because the market for tenants is strong.
Yet no one is sure how long prices will continue to climb and at what pace. Metro Phoenix's huge group of investor homeowners is a wild card; if many of their homes go up for sale at once, prices could level off or deflate. In addition, anyone who waits to sell in an appreciating market and then buys in the same market may pay a higher price for the next home. Mortgage interest rates also can be unpredictable; historically, they are now at basement levels.
One option is to rent the house out and become a landlord, trying to buy time before selling. But that has its own complications, and an investor may need to hire a property-management firm to maintain the home and collect rent.
Instead, many regular homeowners are deciding to sell; as a result, the supply of homes is growing.
James Caylor didn't think he would be able to sell his north Phoenix home in July when he found a better-paying job in Chicago. He considered renting it out but didn't want the hassle of worrying about late rent payments or a tenant damaging the home.
Caylor put his house, which he bought in the mid-1990s, on the market for $170,000, almost double what he owed, and sold it within days. An investor bought the house and paid cash, so Caylor was able to close the deal fast and is looking to buy in Chicago.
Selling to investors
A record number of investors continue to buy metro Phoenix homes each month, despite rising prices. Since foreclosures have slowed, investors are now outbidding regular buyers for homes owned by regular owners. Most investors are looking for houses costing $100,000 to $200,000 that are less than 10 years old, such as Caylor's home.Caylor had no qualms about selling to an investor, and the deal went through easily because the investor paid cash. Caylor was glad since he had already moved out of state.
If prices continue to rise, fewer investors will buy because the houses will be too expensive to rent out for a profit. That will open the door for more regular homeowners as long as they can still afford the prices.
"There are lots of regular buyers out there waiting for a chance to buy," said Mike Orr, publisher of the Cromford Report and real-estate analyst at ASU. "We will know the market is in a full recovery when regular owners can sell and regular buyers can afford those homes."
Read more: http://www.azcentral.com/arizonarepublic/news/articles/2012/10/27/20121027phoenix-housing-market-rebound-new.html#ixzz2Amf40g8m
Tuesday, September 11, 2012
Remembering 9/11
Following the attack on the World Trade Center on
September 11, 2001, I, like many others, was moved to put my thoughts
and feelings down on paper. Each year on 9/11 I like to share it as a
memorial to those who died on that day and a tribute to those who worked
so hard sifting through the rubble in the aftermath.
May the painful memories of September 11, 2001 remind us that beyond the darkness there is a light...
Wishing you a day of peaceful reflection.
May the painful memories of September 11, 2001 remind us that beyond the darkness there is a light...
Wishing you a day of peaceful reflection.
Monday, September 10, 2012
Latest Market Stats for PV and Scottsdale
The
latest market stats for PV and Scottsdale have been posted at my
website. These are current through August 2012. Contact me if you
would like stats for any other Metro Phoenix city or zip code.
Health Insurance for Self-Employed
Today at our regular office meeting, Paige Matisse, an extremely knowledgeable representative of ABBA
(America's Business Benefit Association), discussed affordable health
insurance for self-employed individuals and small business owners,
noting that ABBA can save individuals and families THOUSANDS of dollars a
year. Several of my associates are currently using ABBA health
insurance and they discussed the huge savings they now enjoy (almost
half of what they were paying previously) since switching to ABBA
insurance. It was noted that individuals who have a spouse who has
employer-sponsored health benefits may find it much cheaper to switch to
an ABBA insurance plan rather than pay for coverage under their
spouse's plan. Children up to age 26 can also be covered.
I have no connection with ABBA and no personal need for their service, but I thought it sounded like a terrific solution for many folks who are currently paying outrageously high insurance premiums. Savings can also be found for travel and consumer and business services. If you or someone you know would like additional information, please contact me for Paige Matisse's contact information. She can also provide you with contact information for a Medicare insurance broker, for those who are eligible.
The following additional information about ABBA membership comes from the ABBA website:
ENDORSED MAJOR MEDICAL INSURANCE PLANS
Membership in ABBA entitles you to apply for quality health insurance plans directly through select, endorsed insurance companies. Membership in ABBA is not required in all states.MAJOR MEDICAL INSURANCE PLANS*
Today, health insurance needs to provide you with choices. Through ABBA endorsed plans, you have choices of:
HSA-QUALIFIED HIGH DEDUCTIBLE HEALTH PLANS
Health Saving Accounts or HSA-qualified plans, available in conjunction with the major medical insurance plan, combine high-deductible health insurance with a tax-favored savings account. Money in the savings account can help pay the deductible and out-of-pocket expenses. Money left in the health savings account earns interest and is yours to keep or spend on qualified medical expenses. There is no “use it or lose it” restriction with an HSA.*
ABBA MEMBER Packages:
THE MORE YOU USE YOUR ABBA MEMBERSHIP PACKAGE, THE MORE YOU SAVE!
There are a variety of membership packages available, starting as low as $19.50 per month for the basic ABBA Principal membership package. ABBA Personal, Professional, and Protection upgraded packages are also available, and have a variety of consumer and business benefits. For more information contact your ABBA membership representative or call 1-866-566-2701.
All ABBA membership packages include the following valuable features:
I have no connection with ABBA and no personal need for their service, but I thought it sounded like a terrific solution for many folks who are currently paying outrageously high insurance premiums. Savings can also be found for travel and consumer and business services. If you or someone you know would like additional information, please contact me for Paige Matisse's contact information. She can also provide you with contact information for a Medicare insurance broker, for those who are eligible.
The following additional information about ABBA membership comes from the ABBA website:
ENDORSED MAJOR MEDICAL INSURANCE PLANS
Membership in ABBA entitles you to apply for quality health insurance plans directly through select, endorsed insurance companies. Membership in ABBA is not required in all states.MAJOR MEDICAL INSURANCE PLANS*
Today, health insurance needs to provide you with choices. Through ABBA endorsed plans, you have choices of:
- Lifetime benefit per covered person
- Calendar-year maximum benefit per covered person
- Calendar-year deductible plus coinsurance
- After your deductible and out-of-pocket maximum, plans pay balance of covered expenses.** (Subject to all terms, limitations and exclusions of coverage)
- In designing your plan, remember that by paying a higher deductible and coinsurance you will lower your premium.
- You cannot be singled out for premium increase or cancellation based on claims.
HSA-QUALIFIED HIGH DEDUCTIBLE HEALTH PLANS
Health Saving Accounts or HSA-qualified plans, available in conjunction with the major medical insurance plan, combine high-deductible health insurance with a tax-favored savings account. Money in the savings account can help pay the deductible and out-of-pocket expenses. Money left in the health savings account earns interest and is yours to keep or spend on qualified medical expenses. There is no “use it or lose it” restriction with an HSA.*
ABBA MEMBER Packages:
THE MORE YOU USE YOUR ABBA MEMBERSHIP PACKAGE, THE MORE YOU SAVE!
There are a variety of membership packages available, starting as low as $19.50 per month for the basic ABBA Principal membership package. ABBA Personal, Professional, and Protection upgraded packages are also available, and have a variety of consumer and business benefits. For more information contact your ABBA membership representative or call 1-866-566-2701.
All ABBA membership packages include the following valuable features:
|
Identity theft insurance Pays up to $2,500 - with no deductible - for expenses resulting from identiy theft. This benefit can help pay for expenses you incur as a result of identity fraud, including attorney fees, notarized affidavits, lost wages and certified mail. |
Medical air travel assistance When traveling more than 100 miles from your permanent residence, you will have a range of services to assist you in the event of an emergency, including emergency evacuation/repatriation, vehicle return, transportation of mortal remains, transportation of escort, minor children return/escort. (Not available to residents of Florida or Connecticut.) |
|
Roadside assistance Through Road America, 24-hour coverage for the first $50 per occurrence for defined roadside emergency expenses. (Pre-registration required). |
Emergency helicopter rescue plan Pays up to $4,000 for necessary transport for a certified injury. (Not available to residents of Florida.) |
Sunday, September 2, 2012
Labor Day Message
Have a safe and restful holiday!
The History of Labor Day
The information below comes from History.com.
Labor Day, an annual celebration of workers and their achievements, originated during one of American labor history’s most dismal chapters. In the late 1800s, at the height of the Industrial Revolution in the United States, the average American worked 12-hour days and seven-day weeks in order to eke out a basic living. Despite restrictions in some states, children as young as 5 or 6 toiled in mills, factories and mines across the country, earning a fraction of their adult counterparts’ wages. People of all ages, particularly the very poor and recent immigrants, often faced extremely unsafe working conditions, with insufficient access to fresh air, sanitary facilities and breaks.
As manufacturing increasingly supplanted agriculture as the wellspring of American employment, labor unions, which had first appeared in the late 18th century, grew more prominent and vocal. They began organizing strikes and rallies to protest poor conditions and compel employers to renegotiate hours and pay. Many of these events turned violent during this period, including the infamous Haymarket Riot of 1886, in which several Chicago policemen and workers were killed. Others gave rise to longstanding traditions: On September 5, 1882, 10,000 workers took unpaid time off to march from City Hall to Union Square in New York City, holding the first Labor Day parade in U.S. history. The idea of a “workingmen’s holiday,” celebrated on the first Monday in September, caught on in other industrial centers across the country, and many states passed legislation recognizing it.
Congress would not legalize the holiday until 12 years later, when a watershed moment in American labor history brought workers’ rights squarely into the public’s view. On May 11, 1894, employees of the Pullman Palace Car Company in Chicago went on strike to protest wage cuts and the firing of union representatives. On June 26, the American Railroad Union, led by Eugene V. Debs, called for a boycott of all Pullman railway cars, crippling railroad traffic nationwide. To break the strike, the federal government dispatched troops to Chicago, unleashing a wave of riots that resulted in the deaths of more than a dozen workers. In the wake of this massive unrest and in an attempt to repair ties with American workers, Congress passed an act making Labor Day a legal holiday in the District of Columbia and the territories.
More than a century later, the true founder of Labor Day has yet to be identified. Many credit Peter J. McGuire, cofounder of the American Federation of Labor, while others have suggested that Matthew Maguire, a secretary of the Central Labor Union, first proposed the holiday.
Labor Day is still celebrated in cities and towns across the United States with parades, picnics, barbecues, fireworks displays and other public gatherings. For many Americans, particularly children and young adults, it represents the end of the summer and the start of the back-to-school season.
Observed on the first Monday in September, Labor Day pays tribute
to the contributions and achievements of American workers. It was
created by the labor movement in the late 19th century and became a
federal holiday in 1894. Labor Day also symbolizes the end of summer for
many Americans, and is celebrated with parties, parades and athletic
events.
Labor Day, an annual celebration of workers and their achievements, originated during one of American labor history’s most dismal chapters. In the late 1800s, at the height of the Industrial Revolution in the United States, the average American worked 12-hour days and seven-day weeks in order to eke out a basic living. Despite restrictions in some states, children as young as 5 or 6 toiled in mills, factories and mines across the country, earning a fraction of their adult counterparts’ wages. People of all ages, particularly the very poor and recent immigrants, often faced extremely unsafe working conditions, with insufficient access to fresh air, sanitary facilities and breaks.
As manufacturing increasingly supplanted agriculture as the wellspring of American employment, labor unions, which had first appeared in the late 18th century, grew more prominent and vocal. They began organizing strikes and rallies to protest poor conditions and compel employers to renegotiate hours and pay. Many of these events turned violent during this period, including the infamous Haymarket Riot of 1886, in which several Chicago policemen and workers were killed. Others gave rise to longstanding traditions: On September 5, 1882, 10,000 workers took unpaid time off to march from City Hall to Union Square in New York City, holding the first Labor Day parade in U.S. history. The idea of a “workingmen’s holiday,” celebrated on the first Monday in September, caught on in other industrial centers across the country, and many states passed legislation recognizing it.
Congress would not legalize the holiday until 12 years later, when a watershed moment in American labor history brought workers’ rights squarely into the public’s view. On May 11, 1894, employees of the Pullman Palace Car Company in Chicago went on strike to protest wage cuts and the firing of union representatives. On June 26, the American Railroad Union, led by Eugene V. Debs, called for a boycott of all Pullman railway cars, crippling railroad traffic nationwide. To break the strike, the federal government dispatched troops to Chicago, unleashing a wave of riots that resulted in the deaths of more than a dozen workers. In the wake of this massive unrest and in an attempt to repair ties with American workers, Congress passed an act making Labor Day a legal holiday in the District of Columbia and the territories.
More than a century later, the true founder of Labor Day has yet to be identified. Many credit Peter J. McGuire, cofounder of the American Federation of Labor, while others have suggested that Matthew Maguire, a secretary of the Central Labor Union, first proposed the holiday.
Labor Day is still celebrated in cities and towns across the United States with parades, picnics, barbecues, fireworks displays and other public gatherings. For many Americans, particularly children and young adults, it represents the end of the summer and the start of the back-to-school season.
U.S. house prices rebound reports S&P/Case-Shiller Home Price Index
Source: Global Property Guide
August 29, 2012
The U.S. property industry had shown better growth momentum in the first semester as the latest S.&P./Case-Shiller Home Price Index showed house prices recovering in hard-hit areas like Detroit, Miami, and Atlanta.
Home prices moved up for the first time since 2010 when sales get a boost from a temporary tax credit for home buyers.
The S&P/Case-Schiller Home Price Index showed that year-on-year national prices rose 1.2% and in 20 major cities, 0.5%. Industry experts regard the index quite reliable because it traces the actual price differences of homes sold and resold over time.
The data indicated that though prices were still low, some price gains were noted from May to June.
The city of Atlanta, broke the worst annual price decline, and rose 4% in the months of May and June. In Miami, prices went up 1.6% in June after posting 1.4% in May. Detroit prices soared 6% from May to June.
Although the data still points to a slow recovery, economists perceive it is a strong one considering the factors that encouraged investors to buy properties: very low prices; the limited housing inventory resulting to competitive bids, and an interest rates decline urged qualified buyers to acquire mortgage during the first semester 2012.
Other cities that showed strong house prices include San Francisco, rising 18%; prices in Phoenix rose 14% while 4.5% increase was recorded in Las Vegas.
The forthcoming elections and the unsteady consumer confidence will weigh on the housing sector, says Mr. David M. Blitzer, chairman of the index committee for S&P Dow Jones Indices in a report by New York Times.
Nonetheless, all the underpinnings look better, adds Mr. Blitzer.
August 29, 2012
The U.S. property industry had shown better growth momentum in the first semester as the latest S.&P./Case-Shiller Home Price Index showed house prices recovering in hard-hit areas like Detroit, Miami, and Atlanta. Home prices moved up for the first time since 2010 when sales get a boost from a temporary tax credit for home buyers.
The S&P/Case-Schiller Home Price Index showed that year-on-year national prices rose 1.2% and in 20 major cities, 0.5%. Industry experts regard the index quite reliable because it traces the actual price differences of homes sold and resold over time.
The data indicated that though prices were still low, some price gains were noted from May to June.
The city of Atlanta, broke the worst annual price decline, and rose 4% in the months of May and June. In Miami, prices went up 1.6% in June after posting 1.4% in May. Detroit prices soared 6% from May to June.
Although the data still points to a slow recovery, economists perceive it is a strong one considering the factors that encouraged investors to buy properties: very low prices; the limited housing inventory resulting to competitive bids, and an interest rates decline urged qualified buyers to acquire mortgage during the first semester 2012.
Other cities that showed strong house prices include San Francisco, rising 18%; prices in Phoenix rose 14% while 4.5% increase was recorded in Las Vegas.
The forthcoming elections and the unsteady consumer confidence will weigh on the housing sector, says Mr. David M. Blitzer, chairman of the index committee for S&P Dow Jones Indices in a report by New York Times.
Nonetheless, all the underpinnings look better, adds Mr. Blitzer.
Wednesday, July 25, 2012
Pook's Message - 7/25/12
Several folks have recently asked me
about the "House Seller Tax" that is supposedly going into effect in
2013 as part of the new Health Care Bill. It's a topic that I posted
about in July 2011, but, folks are still wondering if and how this will
affect home sellers. It seems the folks at Keeping Current Matters
have been asked about this issue, too, as they've reposted their
previous post about the tax. To help explain this tax (which will only
affect certain people), I've included KCM's newest posting about it in Today's Topics.
Today's second article, Yea! Home Prices Hitting Bottom. Now, the Bad News,
may be a little scary for sellers, but it contains some very good
rational for selling now. For sellers in the Phoenix area, things are
brighter than for sellers in many parts of the country. While
our market took a huge hit, our turnaround has been much stronger, with
an increase in the number of closed sales and increasing prices. Sales
price increases vary greatly by area and price range, but the upward
trend is there, with inventory down and short sales and foreclosures
fading from the market. Is this the right time for you to sell? See how you feel after reading this article...
June stats are now posted at my website. July stats will be posted as soon as available.
Paradise Valley Stats
Scottsdale Stats
June stats are now posted at my website. July stats will be posted as soon as available.
Paradise Valley Stats
Scottsdale Stats
Is There a 3.8% House Seller Tax in the Health Care Bill?
Courtesy of Keeping Current Matters/The KCM Blog
Posted: 17 Jul 2012 04:00 AM PDT
The political rhetoric surrounding the presidential election has
renewed the debate about the Administration’s Health Care Bill. We are
again getting many questions about a possible 3.8% tax on home sales
that some claim is in the bill. To answer these questions, we have
decided to re-run a blog we posted earlier this year. – The KCM Crew
We have received many questions about a possible 3.8% tax which will be put on home sales beginning in 2013. We want to do our best to clarify this situation for everyone. We are not accountants and give you this information just as a simple answer to the misconception. Understand that, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information.
A little history on the confusion
Fact Check.org explains it this way:
The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.
We can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. (This provision begins on page 33 of the reconciliation bill that was passed and signed into law.) And it does say the tax falls on “net gain … attributable to the disposition of property.” That would include the sale of a home. But the bill also says the tax falls only on that portion of any gain that is “taken into account in computing taxable income” under the existing tax code. And the fact is, the first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already. (That exclusion doesn’t apply to vacation homes or rental properties.)
The Joint Committee on Taxation, the group of nonpartisan tax experts that Congress relies on to analyze tax proposals, underscores this in a footnote on page 135 of its report on the bill. The note states: “Gross income does not include … excluded gain from the sale of a principal residence.”
And just to be sure, we checked with William Ahern, director of policy and communications for the nonprofit, pro-business Tax Foundation. “Some home sales would see a tax increase under this bill,” Ahern told us, “but it would have to be a second home or a principal residence generating [a gain of] more than $250,000 ($500,000 for a couple).”
Simple Explanation:
The following simple explanation comes from midiShaw:
The tax will affect those sellers of real property who will be otherwise taxed on capital gains under current tax laws. Under current laws, if you sell your primary residence and meet the ‘time ‘ criteria, you are exempt up to $250,000 or $500,000 (filing individually or jointly). Any amount realized OVER that amount is taxable under current tax schedules based on income. As such, this new tax will apparently be added to the current capital gains tax burden IF your income is over $200,000/$250,000 (filing individually or jointly). For those selling second homes and investment properties, the tax, once again, will be applied to the amount of gain realized.
Detailed Explanation:
The following also comes from midiShaw in a comment to the above answer.
Beginning in 2013, the national health care reform legislation that became law in March, 2010, imposes a new 3.8 percent tax on certain investment income. The new tax will apply to single filers with incomes over $200,000 and married taxpayers with incomes over $250,000. Under the law, the investment tax provisions in Chapter 2A of the Internal Revenue Code are placed under the heading “Unearned Income Medicare Contribution.” In general, this new Medicare tax will apply to investment income that is subject to income tax, which includes capital gains. Pursuant to IRC Section 1402 (C)(1)(A)(iii), the investment income to which this new tax applies includes “net gain” (to the extent taken into account in computing taxable income) attributed to the disposition of property that qualifies as a capital asset under Section 1221 (capital gains), as well as gains on other property that are considered part of ordinary income.
We offer this just as an explanation. Remember, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information.
Posted: 17 Jul 2012 04:00 AM PDT
The political rhetoric surrounding the presidential election has
renewed the debate about the Administration’s Health Care Bill. We are
again getting many questions about a possible 3.8% tax on home sales
that some claim is in the bill. To answer these questions, we have
decided to re-run a blog we posted earlier this year. – The KCM CrewWe have received many questions about a possible 3.8% tax which will be put on home sales beginning in 2013. We want to do our best to clarify this situation for everyone. We are not accountants and give you this information just as a simple answer to the misconception. Understand that, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information.
A little history on the confusion
Fact Check.org explains it this way:
The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.
We can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. (This provision begins on page 33 of the reconciliation bill that was passed and signed into law.) And it does say the tax falls on “net gain … attributable to the disposition of property.” That would include the sale of a home. But the bill also says the tax falls only on that portion of any gain that is “taken into account in computing taxable income” under the existing tax code. And the fact is, the first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already. (That exclusion doesn’t apply to vacation homes or rental properties.)
The Joint Committee on Taxation, the group of nonpartisan tax experts that Congress relies on to analyze tax proposals, underscores this in a footnote on page 135 of its report on the bill. The note states: “Gross income does not include … excluded gain from the sale of a principal residence.”
And just to be sure, we checked with William Ahern, director of policy and communications for the nonprofit, pro-business Tax Foundation. “Some home sales would see a tax increase under this bill,” Ahern told us, “but it would have to be a second home or a principal residence generating [a gain of] more than $250,000 ($500,000 for a couple).”
Simple Explanation:
The following simple explanation comes from midiShaw:The tax will affect those sellers of real property who will be otherwise taxed on capital gains under current tax laws. Under current laws, if you sell your primary residence and meet the ‘time ‘ criteria, you are exempt up to $250,000 or $500,000 (filing individually or jointly). Any amount realized OVER that amount is taxable under current tax schedules based on income. As such, this new tax will apparently be added to the current capital gains tax burden IF your income is over $200,000/$250,000 (filing individually or jointly). For those selling second homes and investment properties, the tax, once again, will be applied to the amount of gain realized.
Detailed Explanation:
The following also comes from midiShaw in a comment to the above answer.
Beginning in 2013, the national health care reform legislation that became law in March, 2010, imposes a new 3.8 percent tax on certain investment income. The new tax will apply to single filers with incomes over $200,000 and married taxpayers with incomes over $250,000. Under the law, the investment tax provisions in Chapter 2A of the Internal Revenue Code are placed under the heading “Unearned Income Medicare Contribution.” In general, this new Medicare tax will apply to investment income that is subject to income tax, which includes capital gains. Pursuant to IRC Section 1402 (C)(1)(A)(iii), the investment income to which this new tax applies includes “net gain” (to the extent taken into account in computing taxable income) attributed to the disposition of property that qualifies as a capital asset under Section 1221 (capital gains), as well as gains on other property that are considered part of ordinary income.
We offer this just as an explanation. Remember, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information.
Yea! Home Prices Hitting Bottom. Now, the Bad News.
Source:
This is a great time to buy a home in many parts of the country. There are signs that the downward price spiral is bottoming out. Mortgage rates are at historic lows.
The next few years could well be remembered as the best opportunity for Americans to buy homes since the postwar baby boom.
But one group's opportunity is another group's problem. Tens of millions of baby boomers and other home owners have seen their equity shrunken or wiped out completely. Many were counting on their homes to help finance their retirements. Often they have been waiting for years for the market to turn. Now they find themselves on the short end of the deal, sellers into the buyer's market of the century.
"It's a really challenging environment to be a seller," says Lawrence Glazer, wealth adviser at Mayflower Advisors in Boston. "Unfortunately, many people planning to retire may have no choice."
So what if you are on the wrong side of the trade? As ever, there isn't a single, simple answer, but if you're in this situation, here's a checklist to help you out.
1. Don't hold your breath.
Yes, house prices nationwide have stabilized. Of the 20 cities tracked by the Standard & Poor's/Case-Shiller Home Price index, 16 are in the black for this year. But the housing market isn't like the stock market. Bouncebacks are typically slow.
The last crash took more than a decade to work through—and this market could take an especially long time because the huge accumulation of empty, foreclosed houses will hold down prices for all properties.
When adjusted for inflation, the Case-Shiller index didn't return to its 1989 peak until 2000. Some markets, such as New York and Los Angeles, didn't hit new highs until 2002. This time may be even worse because the bubble was much, much bigger. Some locations may not recover their inflation-adjusted peak in our lifetimes.
Harvard's Joint Center for Housing Studies calculates that there is a backlog of around two million home loans in foreclosure, waiting to come onto the market. Some estimates put the number much higher, especially when you include "shadow inventory" held back by banks.
Unless you are willing to wait for a long time, you may not want to get too hung up waiting for a big rebound.
2. Look at your local market.
As the housing market recovers, expect to welcome back the old Realtor's adage: Location, location, location.
Don't expect all markets to rise at the same rate. According to Case-Shiller, Phoenix home prices are up 9% in a year. Meanwhile, Atlanta is down 17% and New York is down 4%.
Where will prices go from here? That's likely to depend on two factors: rents and valuations. If it's cheaper to own than to rent, and rents in your neighborhood are rising, you can expect prices to rise in due course. If it's cheaper to rent, or if rents are stagnant, it's another matter.
3. Be realistic.
The true value of your home isn't what you paid or refinanced for in 2006, but what it's worth now. And the true value of your equity isn't what you put into the home, it's what you would get if you sold it.
Money spent on that new kitchen? Irrelevant. The pool? Ditto. Too many investors get hung up on past or "sunk" costs. Don't hang around until you "get your money back." That money is gone.
4. Know your 'negative equity.'
Harvard's Joint Center estimates that 11 million American home owners are underwater on their mortgages—in other words, the loan is worth more than the home. Housing-data company Zillow puts the figure closer to 16 million—nearly one mortgage in three.
If you're in this position, you need to understand your legal status. Home owners who are underwater typically feel they can't sell until they are level again. But that isn't true. Your bank may be willing to accept a "short sale," where you sell for what you can get and they eat the loss.
In about half of the states, banks can't come after a mortgage borrower for a shortfall. Even in the rest, they can't take what you don't have.
If you are hoping to "get back to even" before selling, you will need to do some basic math. If your home is worth 20% less than the mortgage, you will need a 25% price rise from current levels to break even.
If your home is worth half the mortgage, as is the case in some of the worst-hit areas, you will need prices to double from here. So if you owe $400,000 on your Tampa home but it's only worth $200,000 today, prices would have to rise by 7% a year for 10 years just to get you back to even. How likely is that?
So, ask yourself: How long are you willing to wait? And how much will it cost you—in time and money—while you do?
5. Look at your cash flow.
Forget prices and the market for a moment, and look at your own cash flow.
Too many investors overcomplicate things. How much is it costing you per month or year to stay in your own home—in terms of mortgage, property taxes, fees, maintenance and other expenses?
Mortgage rates have collapsed to historic levels. Those with good credit can lock in a 30-year loan for less than 4%. As you can take a tax deduction for interest and property taxes, it may be costing you even less than it first appears.
On the other hand, how much would it cost to rent a home instead? If it is cheaper to own, which is true in many places now, it may make sense to hang on and wait for the market to recover. But if it is much cheaper to rent, you may be better off selling at a loss and renting instead.
6. Put your own finances first.
Smart financial management, like charity, begins at home. Investors need to put more weight on their own financial and personal needs than on national economic or other data.
Many home owners have put their lives on hold—such as delaying a move to a retirement community or taking a job in another city—as they have waited for a rebound in home prices.
This is time lost. It rarely makes sense. Economists would point out that these home owners are ignoring hefty, but invisible, "opportunity costs."
They are missing out on salaries, investments or life experiences that they otherwise would have enjoyed if they had sold earlier and moved.
7. Sell today, buy tomorrow.
You live in, say, Chicago. You want to retire to, say, San Diego, to be near your children and grandchildren. You've been on hold. Why?
Yes, prices in Chicago are down 36% over the past six years. But San Diego is down 39%. What you lose with one hand, you gain with another. In your new home you may be able to lock in a low fixed-rate mortgage.
The bottom line? The national housing market may take many years to recover. It's a buyer's market, but home owners hoping to sell need to do their math first.
Write to Brett Arends at brett.arends@wsj.com
 |
Article By Brett Arends
Sat, Jul 14, 2012 9:16 PM EDT
|
This is a great time to buy a home in many parts of the country. There are signs that the downward price spiral is bottoming out. Mortgage rates are at historic lows.
The next few years could well be remembered as the best opportunity for Americans to buy homes since the postwar baby boom.
But one group's opportunity is another group's problem. Tens of millions of baby boomers and other home owners have seen their equity shrunken or wiped out completely. Many were counting on their homes to help finance their retirements. Often they have been waiting for years for the market to turn. Now they find themselves on the short end of the deal, sellers into the buyer's market of the century.
"It's a really challenging environment to be a seller," says Lawrence Glazer, wealth adviser at Mayflower Advisors in Boston. "Unfortunately, many people planning to retire may have no choice."
So what if you are on the wrong side of the trade? As ever, there isn't a single, simple answer, but if you're in this situation, here's a checklist to help you out.
1. Don't hold your breath.
Yes, house prices nationwide have stabilized. Of the 20 cities tracked by the Standard & Poor's/Case-Shiller Home Price index, 16 are in the black for this year. But the housing market isn't like the stock market. Bouncebacks are typically slow.
The last crash took more than a decade to work through—and this market could take an especially long time because the huge accumulation of empty, foreclosed houses will hold down prices for all properties.
When adjusted for inflation, the Case-Shiller index didn't return to its 1989 peak until 2000. Some markets, such as New York and Los Angeles, didn't hit new highs until 2002. This time may be even worse because the bubble was much, much bigger. Some locations may not recover their inflation-adjusted peak in our lifetimes.
Harvard's Joint Center for Housing Studies calculates that there is a backlog of around two million home loans in foreclosure, waiting to come onto the market. Some estimates put the number much higher, especially when you include "shadow inventory" held back by banks.
Unless you are willing to wait for a long time, you may not want to get too hung up waiting for a big rebound.
2. Look at your local market.
As the housing market recovers, expect to welcome back the old Realtor's adage: Location, location, location.
Don't expect all markets to rise at the same rate. According to Case-Shiller, Phoenix home prices are up 9% in a year. Meanwhile, Atlanta is down 17% and New York is down 4%.
Where will prices go from here? That's likely to depend on two factors: rents and valuations. If it's cheaper to own than to rent, and rents in your neighborhood are rising, you can expect prices to rise in due course. If it's cheaper to rent, or if rents are stagnant, it's another matter.
3. Be realistic.
The true value of your home isn't what you paid or refinanced for in 2006, but what it's worth now. And the true value of your equity isn't what you put into the home, it's what you would get if you sold it.
Money spent on that new kitchen? Irrelevant. The pool? Ditto. Too many investors get hung up on past or "sunk" costs. Don't hang around until you "get your money back." That money is gone.
4. Know your 'negative equity.'
Harvard's Joint Center estimates that 11 million American home owners are underwater on their mortgages—in other words, the loan is worth more than the home. Housing-data company Zillow puts the figure closer to 16 million—nearly one mortgage in three.
If you're in this position, you need to understand your legal status. Home owners who are underwater typically feel they can't sell until they are level again. But that isn't true. Your bank may be willing to accept a "short sale," where you sell for what you can get and they eat the loss.
In about half of the states, banks can't come after a mortgage borrower for a shortfall. Even in the rest, they can't take what you don't have.
If you are hoping to "get back to even" before selling, you will need to do some basic math. If your home is worth 20% less than the mortgage, you will need a 25% price rise from current levels to break even.
If your home is worth half the mortgage, as is the case in some of the worst-hit areas, you will need prices to double from here. So if you owe $400,000 on your Tampa home but it's only worth $200,000 today, prices would have to rise by 7% a year for 10 years just to get you back to even. How likely is that?
So, ask yourself: How long are you willing to wait? And how much will it cost you—in time and money—while you do?
5. Look at your cash flow.
Forget prices and the market for a moment, and look at your own cash flow.
Too many investors overcomplicate things. How much is it costing you per month or year to stay in your own home—in terms of mortgage, property taxes, fees, maintenance and other expenses?
Mortgage rates have collapsed to historic levels. Those with good credit can lock in a 30-year loan for less than 4%. As you can take a tax deduction for interest and property taxes, it may be costing you even less than it first appears.
On the other hand, how much would it cost to rent a home instead? If it is cheaper to own, which is true in many places now, it may make sense to hang on and wait for the market to recover. But if it is much cheaper to rent, you may be better off selling at a loss and renting instead.
6. Put your own finances first.
Smart financial management, like charity, begins at home. Investors need to put more weight on their own financial and personal needs than on national economic or other data.
Many home owners have put their lives on hold—such as delaying a move to a retirement community or taking a job in another city—as they have waited for a rebound in home prices.
This is time lost. It rarely makes sense. Economists would point out that these home owners are ignoring hefty, but invisible, "opportunity costs."
They are missing out on salaries, investments or life experiences that they otherwise would have enjoyed if they had sold earlier and moved.
7. Sell today, buy tomorrow.
You live in, say, Chicago. You want to retire to, say, San Diego, to be near your children and grandchildren. You've been on hold. Why?
Yes, prices in Chicago are down 36% over the past six years. But San Diego is down 39%. What you lose with one hand, you gain with another. In your new home you may be able to lock in a low fixed-rate mortgage.
The bottom line? The national housing market may take many years to recover. It's a buyer's market, but home owners hoping to sell need to do their math first.
Write to Brett Arends at brett.arends@wsj.com
Mortgage rates drop again, Freddie Mac says; 30-year at 3.53%
The average rate on a 30-year
fixed mortgage hit another new low this week, dropping to 3.53% from
3.56% last week, according to Freddie Mac's survey of what lenders are offering to well-qualified borrowers.With the Federal Reserve aggressively pushing rates down and few signs of inflation on the horizon, it was 12th time in 13 weeks that a new record was set, Freddie Mac economist Frank Nothaft said in the report Thursday morning.
Freddie Mac said the 15-year fixed loan, which has been a popular part of the recent boom in refinancings, averaged 2.83%, down from 2.86% and also a new record.
The typical start rate on a five-year hybrid loan, which has a fixed rate until it turns adjustable in the sixth year, was at a record low level as well: 2.69%, down from 2.74%.
Borrowers would have paid 0.7% of the loan amount in upfront lender fees to obtain the 30-year fixed loan and 0.6% for the 15-year fixed and five-year hybrid, Freddie Mac said.
Freddie Mac asks lenders each week about the terms they are offering to solid borrowers for loans of up to $417,000. Industry pros say well-qualified borrowers can often do slightly better by shopping around, and it’s possible to "buy down" rates by paying additional discount points to lenders.
The survey excludes additional third-party closing costs such as appraisals and title insurance.
Carpet or Hardwood?
Source: houselogic
Courtesy of the National Association of REALTORS®
Your heart (and feet) say carpet, but your head says hardwood. Here are 5 good reasons to go with your heart.
Read more: http://www.houselogic.com/
Courtesy of the National Association of REALTORS®
Your heart (and feet) say carpet, but your head says hardwood. Here are 5 good reasons to go with your heart.
Read more: http://www.houselogic.com/
Saturday, July 7, 2012
SAFETY TIPS FOR WHEN THE TEMPS ARE HIGH
During these days of extremely high temperatures, stay inside as much as you can, stay hydrated, dress in light colored and lightweight clothing, and don't overexert yourself or your pet. Walk your pet in the cooler morning hours and be sure to check the ground temperature by touch to see if it's too hot for Fido's feet. Remember to take water for both of you.
Those of us who live in the desert are used to 3-digit temperatures, but we, too, need a reminder about how to recognize the symptoms of heat-related health emergencies - heat cramps (heat stress), heat exhaustion, and heatstroke.
Heatstroke is a life-threatening condition for both humans and pets and recognizing the signs can mean the difference between life and death. Please read the following articles to learn how to recognize heat-related health emergencies and know what to do when they happen.
Be safe and be cool!
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