Happy New Year!

Please take a moment to view my NewYear's card:  CLICK HERE

All the best in 2013!

Pook

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!

Barclays: ‘Turning Point’ for Home Owners in 2013

Courtesy of REALTOR®Mag/National Association of REALTORS®

Daily Real Estate News | Tuesday, December 18, 2012 

Falling housing inventories and an increase in demand bode well for the market's recovery next year, according to Barclays 2013 housing outlook report. 

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 1^st.

 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.  

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

Courtesy of the Scottsdale Area Association of REALTORS®

Originally presented by SAAR on July 31, 2012 

As always, you are advised to contact your personal financial advisor to see how this will affect you. 

1. 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.
2. 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.
3. 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.
4. 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.
5. 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).
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.