Breaking News!

10-Steps to Burglar-Proof Your Home 

This information is provided courtesy of Michael Harper Real Estate
 Your Home IS Our Business 
  1. Maintain your property. Keep snow shoveled off of your walkway and driveway, as well as removing holiday decorations and fallen tree branches in a timely manner. This shows would-be burglars that your home is occupied.
  2. Know your neighbors. Introduce yourself and speak regularly. This way you know who lives at the house and likewise. If there is an intruder, all parties will know who belongs and who doesn't.
  3. Assess your home's vulnerability. Walk to the curb and face your house. Ask yourself, "How would I get in if I were locked out?" The first thing you think of, whether it's the window with a broken lock or the door that won't shut all the way, is exactly how a thief will get in. Think like a burglar, and then address the issues the come to mind.
  4. Respect the power of lighting. Criminals are cowards, and they don't want to be seen. A well-lit house is a deterrent because thieves don't want the increased witness potential. Easy tools include dusk-to-dawn adapters that go into existing light fixtures and motion detectors. But beware of leaving your exterior lights on at all times, which signifies the occupant is gone for an extended period of time.
  5. Use technology to make your home look occupied. Smart home technology makes it easier to make it appear that someone is home even when they're not. If you have purchased different brands of devices throughout the years, a device like Wink Hub (http://www.wink.com/products/) allows them to all communicate with each other and you to control them all on your smart phone. There are also simple light/lamp timing devices available at hardware stores.
  6. Lock your doors. No matter where you live, you should always lock your doors and keep your garage door closed. Some facts sellers should know: In 30 percent of burglaries, the criminals access the home through an unlocked door or window; 34 percent of burglars use the front door to get inside; and 22 percent use the back door.
  7. Reinforce your locks. A good door lock is nothing without a solid frame. Invest in a solid door jam and strike plate first. Know the difference between a single-cylinder and a double-cylinder deadbolt. Double cylinder deadbolts are recommended because they require a key to get in and out. For safety and emergency escape purposes, you must leave the key in when you are home. But they are against safety regulations in some places, so check with your local police department's crime prevention office.
  8. Blare the sirens. Burglars are usually in and out in less than five minutes, and they know police can't respond to an alarm that quickly. Their bigger concern is witnesses to their crime. For that reason, an external alarm siren is invaluable, whether as part of a monitored security system or a DIY alarm. Even if you don't have an alarm, it's not a bad idea to invest in fake security signs and post them near doors. Even fake security system yard signs give burglars pause.
  9. Consider surveillance cameras. Video doorbells such as Ring (https://ring.com/) allow homeowners to view streaming video of what and who is outside their door on their smart phone. The device has a motion detector feature as well. The HD video assures that you can see a clear image and the two-way voice feature allows you to talk to them no matter where you are. Most state and local regulations require warning people that they are being recorded, which can be accomplished by printing simple paper signs and posting them near doors and windows. This can be effective even if you don't actually have the cameras installed!
  10. Mark your valuables and record details. Use invisible ink pens or engravers to mark identifying information (driver's license or state ID numbers) on items. Log serial numbers and take photos of your belongings. Check to see if your police department participates in the Operation Identification program. They will have stickers for you to place on doors or windows warning would-be thieves that your items are marked. These steps may prevent them from pawning or selling stolen items and can help you reclaim recovered belongings.

 

Don't Let the word "BUDGET" Strike Fear in Your Heart!

Read on for tips to save money while not being a slave to a "budget":
 

Thanks to KCM and Intuit for this great infographic!!

Call me to discuss how this type of painless budgeting can get you into the next home you want faster!

 

 

 

Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five major reasons purchasers should consider buying:

Supply Is Shrinking

With inventory declining in many regions, finding a home of your dreams may become more difficult going forward. There are buyers in more and more markets surprised that there is no longer a large assortment of houses to choose from. The best homes in the best locations sell first. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy.

Price Increases Are on the Horizon

Prices were expected to bounce along the bottom this winter. However, many pricing indices (examples: CoreLogic, FHFA, LPS, Case Shiller) are reporting that prices are continuing to rise.

Rents Are Skyrocketing

Rents historically increase by 3.2% on an annual basis. A study issued earlier this year projects rent increases of 4% for the next two years. Trulia recently reported that rents this year have actually shot up by 5.4%.

Interest Rates Are Projected to Rise

The Mortgage Bankers Association has projected that the 30-year mortgage interest rate will be 4.4% by the end of 2013. That is an increase of approximately one full point over current rates.

Buy Low, Sell High

We would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’. It’s time to buy.

Call me to discuss how I might serve you in your real estate transaction.  Remember:

Your Home IS My Business!

 

 

 

 

The National Association of Realtors’ (NAR) September Existing Home Sales Report is in!

The report shows a modest decline in sales while inventory continuted to tighten.  Meanwhile, the national median home price recorded its seventh back-to-back monthly increase from a year earlier!

Total existing-home sales fell 1.7% but are 11% above the pace in September 2011.

Other findings revealed in the report:

  • Existing-home price: the national median was $183,900 in September, up 11.3 percent from a year ago.
  • Distressed homes – foreclosures and short sales accounted for 24 percent of September sales (13 percent were foreclosures and 11 percent were short sales), up from 22 percent in August and down from 30 percent in September 2011.
  • Foreclosures sold for an average discount of 21 percent below market value in August.
  • Short sales were discounted 13 percent below market value in August.
  • Housing inventory at the end September fell 3.3 percent which represents a 5.9-month supply at the current sales pace, down from a 6.0-month supply in August. Listed inventory is 20.0 percent below a year ago when there was an 8.1-month supply.
  • Time on market: the median was 70 days in September, unchanged from August, but down 30.7% from 101 days in September 2011.
  • First-time buyers accounted for 32 percent of purchasers in September, compared with 31 percent in August; they were 32 percent in September 2011.
  • All-cash sales were at 28 percent of transactions in September, up from 27 percent in August; they were 30 percent in September 2011.
  • Investors, who account for most cash sales, purchased 18 percent of homes in September, unchanged from August; they were 19 percent in September 2011.

Single Family Homes and Condominiums and Co-ops

Existing Single-family home sales declined 1.9 percent to a seasonally adjusted annual rate of 4.21 million in September from 4.29 million in August, but are 10.8 percent higher than the 3.80 million-unit level in September 2011. The median existing single-family home price was $184,300 in September, up 11.4 percent from a year ago.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 540,000 in September, but are 12.5 percent above the 480,000-unit pace a year ago. The median existing condo price was $181,000 in September, which is 10.0 percent higher than September 2011.

Regional Numbers

Northeast: Existing-home sales fell 6.3 percent to an annual level of 590,000 in September but are 7.3 percent above September 2011. The median price in the Northeast was $238,700, up 4.1 percent from a year ago.

Midwest: Existing-home sales slipped 0.9 percent in September to a pace of 1.10 million but are 19.6 percent higher than a year ago. The median price in the Midwest was $145,200, up 7.0 percent from September 2011.

South: Existing-home sales increased 0.5 percent to an annual level of 1.93 million in September and are 14.2 percent above September 2011. The median price in the region was $163,600, up 13.1 percent from a year ago.

West: Existing-home sales fell 3.4 percent to an annual pace of 1.13 million in September but are 0.9 percent above a year ago. With continuing inventory shortages in the region, the median price in the West was $246,300, which is 18.4 percent higher than September 2011.

Lawrence Yun, NAR chief economist, commented:

“Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery. More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West.”

 

 

WHY ARE MANY EXPERTS ARE BEGINNING TO CALL A BOTTON IN HOUSE PRICES?

Writing in the Financial Times, Roger Altman, former deputy Treasury secretary, explained why he is so bullish on housing:

“This surge will be driven by a combination of improving house prices, a lower inventory of homes for sale, rising rates of household formation and population growth, and improving access to mortgage credit.”

Altman gave his thoughts on each point:

PRICES

“The S&P/Case-Shiller Composite 20 City Home Price index has risen 8 per cent since March. Indeed, Barclays has projected that, by 2015, nominal home prices will exceed their 2006 peak. Home affordability is also way up, as the ratio of mortgage payments to both income and rents has never been more favourable. Moreover, the relationship of home prices to household income is back to the level of 30 years ago. Rising prices and affordability, of course, lead directly to the buying and building of homes.”

HOUSING INVENTORY

“The levels of relevant supply have fallen sharply. The number of homes for sale has fallen back to its long-term average of 2m. Yes, there is a larger “shadow inventory” of homes that are in foreclosure or carry delinquent or defaulted mortgages. However, many of these are distressed, in that they have not been physically maintained. This means that the supply has become two-tiered – quality homes and distressed homes. For most buyers, only the first of these two markets is relevant and the supply there is approaching its lowest level since 1992.”

POPULATION GROWTH

“Housing demand is going to be strong, driven by demographics. The International Monetary Fund forecasts that the US population will increase by 15m during the 2012-17 period, more than the increase of the past five years. The two groups of the population that are growing fastest are the over-55s and the so-called echo boomers, the grandchildren of the baby-boom generation. The first group has the highest rate of home ownership. The second has been renting disproportionately, and is primed to start buying. JPMorgan estimates that 6m new units of housing are needed by 2017 just to serve the bigger population.

HOUSEHOLD FORMATIONS

“There is the coming recovery in household formation. According to JPMorgan, this rate was steady at about 1.4m annually from 1958 up to 2007. But, it plunged below 500,000 for the three years following the financial crisis, as young people moved in together or lived with parents. Now it has doubled from that level and estimates of pent-up households are at an all-time high. Most expect formation rates to rise much further still, exceeding the 50-year average for a few years.”

IMPROVING ACCESS to MORTGAGE CREDIT

“The availability of mortgage credit is starting to improve. Underwriting standards tightened sharply following 2008 and the proportion of home sales that are financed by new mortgages is now at a 10-year low. However, household finances have improved sharply, with debt service ratios returning to pre-crisis levels. Moreover, banks also need the income from originating mortgages. Mortgage credit availability is therefore opening up, which also boosts home sales.”

It seems apparent that many aspects of the housing market are in the process of turning much more positive!  Call me - let's discuss what YOU think about this trend and how it might affect your real estate decisions.

 

 

 

 

3.8% Tax on Housing included in Healthcare Law?  Here are Some Answers and Resources!

Here are 10 things you need to know, according to the National Association of Realtors (NAR):

 

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 $1000.

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.

This is complicated stuff, which is part of why it's so easy to misunderstand. So follow along with this illustration: Let's say that Don and Donna bought a home in Southern California in 1965 for $50,000. Today, the home is worth $650,000. If the couple sold the house, their profit would be $600,000 (for now, we'll ignore the costs of selling and home improvements, which typically would reduce that number).

The first $500,000 of that profit would be tax-free, thanks to a federal law that went into effect May 6, 1997. The remaining $100,000 would be subject to a capital gains tax rate of up to 20% (the maximum capital gains tax rate is currently 15%, but that's scheduled to rise in 2013). It might also be subject to the 3.8% tax, let's see.

The next step is to add the $100,000 profit (or "net investment income") to Don and Donna's adjusted gross income (AGI). If the profit pushes their AGI over $250,000, the new tax would apply to either:
  • The net investment income amount -- the profit over the exemption limit of $500,000 ($250,000 for singles).
  • The amount that their AGI exceeds $250,000 ($200,000 for singles) in income

Don and Donna would owe tax on whichever of those two options is less.

Head spinning yet? Here's how it would work in our example.

If the couple's AGI was $50,000 without the home sale and $150,000 with it, they wouldn't be subject to the 3.8% tax. (They'd still have to pay the capital gains tax, however, which would be $20,000 on their $100,000 of profit above the exemption limit.)

If, on the other hand, their AGI was $200,000 and the remaining home sale profit pushed it to $300,000, they (or their tax software or their accountant) would compare the amount more than $250,000 ($50,000) with the amount of investment income ($100,000) and pay the 3.8% tax on the lower of those two amounts. So they would pay an additional $1,900 (3.8% of $50,000).

Are there circumstances when the tax could affect people who aren't big earners? You bet. If the home profit is large enough, it could push anyone into a bracket where that person might face the tax.  Here's THAT illustration:

Let's assume now that Don and Donna's house sold for $900,000. After deducting the home's cost (and once again ignoring the costs of selling and improvements), their profit is $850,000. Subtract their $500,000 exemption, and you're left with $350,000. That's enough to trigger the tax, even if their AGI before the home sale was zero. Then they'd owe an additional $3,800 (3.8% of $100,000, the amount of net investment income over the $250,000 AGI limit), on top of capital gains taxes on the $350,000.

It's safe to say that the vast majority of home sellers won't pay this new tax, at least at this point. In July 2012, the median sales price for existing homes was $181,500, according to the National Association of Realtors. That means half of homes sold for less. Homes that sold for more than $500,000 accounted for just 11% of home sales.

Now that you've got this simplified version, call your tax professional who is familiar with your situation to discuss how this might affect your transactions.  No tax pro on your team?  Call me - I have an excellent recommendation!

 

Now's the Time if you Want to Buy That Retirement / Second Home!

When the economy was exploding in the early 2000s, many of us began to dream about purchasing that vacation home on the lake or securing a home in a more appropriate location for our retirement years. However, with the booming economy came skyrocketing house prices. Many of the homes we fell in love with quickly became out of reach financially. Perhaps we should take a second look at these same homes today.

With prices dropping by over 30% in some markets and with interest rates at historic lows, this may be the perfect time to do what we and our families have always dreamt of doing – buying that second home. Let’s look at the numbers.

Back in 2006 we may have seen the ‘perfect’ home but the $500,000 price tag was just out of reach. Today, we could probably get that home for $400,000 (if not less). We also would be financing it at the current mortgage rate instead of the rates available six years ago. The table below shows the difference in impact on our family’s finances:

Not every family is in the financial position to take advantage of the tremendous opportunities the current real estate market offers. But, if yours is, this may be the time for dreams to come true.  Give me a call and we'll discuss the options!

 

 

10 Tax Tips for Home Sellers - It's NOT too Early to Plan for Your Taxes!

1. You are usually eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

4. If you can exclude all of the gain, you do not need to report the sale on your tax return.

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

6. You cannot deduct a loss from the sale of your main home.

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

9. If you received the first-time homebuyer credit and within 36 months of the date of purchase the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, see IRS Publication 523, Selling Your Home.

 
People say: “It takes a village to raise a child”.
The realities of today’s life (two family incomes and such) have forced a family to lean on others (neighbors, relatives, teachers, etc.) to protect and teach our young people about culture, history and acceptable behaviors.  Parents are the leaders of these teams!  Teams, because of their ability to provide specialized solutions to problems, have often proved to be more efficient deliverers of information than from a single source.
 

In real estate today (maybe more than ever), it also takes a team. As with a basketball team, each member needs a certain skill set as well as proper coaching on how to weave the different skills into a cohesive unit to achieve the desired outcome. The evolution of how things work has created a necessity of excellent communication between all the players. The needs of buyers and sellers have developed an even broader need for new members of a great team.

The team necessary for a smooth real estate transaction starts of course with the buyer and/or seller.  The first additions are a knowledgeable and experienced real estate agent and a similarly-qualified loan officer.  A great working relationship between an agent and a loan officer is the obvious first connection. Changing mortgage guidelines, appraisal challenges and qualification standards requires everyone working together. But, there are so many others whose expertise may be needed to properly advise today’s clients as you see below:

An Accountant

One of the reasons people buy a home is that they hear of the tax advantages. What really are they? How will the purchase affect my monthly cash flow? Should we adjust our exemptions with our employer? What about home repairs and depreciation? What about parents who gift money to their kids…is there a smart way to do it?

And for sellers, especially people who may not be buying a new home, what are the consequences of their sale? Capital Gains Tax? Can/should they consider “gifting” proceeds to relatives? Long term health care? Life Insurance? That leads to …

A Financial Planner

How does buying or selling real estate impact cash flow and long term savings and planning?  This is the first question for your financial planner helping you through this important transaction.

Attorneys

Divorce attorneys, estate attorneys, elder care attorneys and even bankruptcy attorneys have a role in many transactions these days. Choices made without their counsel can have very damaging repercussions.

Home Inspectors, Termite Companies and Home Improvement Contractors

These professionals protect customers from nightmares, or explain the costs associated with preventing or curing problems.  Your real estate agent should be able to provide you with these contacts with whom he has had reliable results.

Making a decision to buy or sell a home has far reaching effects. To think your real estate agent or loan officer is an expert in everything is not prudent. However, aligning yourself with a professional who surrounds themselves with other professionals is extremely wise. Make sure the people you work with have a network of related experts that you can tap into. You need to be represented by a TEAM!

Call me today to help you assemble your team for the best possible results!

 
 
Sizzle vs. Steak or Steak AND Sizzle??
 
It’s often difficult to choose who to workwith in a real estate transaction because it’s tough to know the great agents and loan officers. I believe finding the great ones can truly prove to be a gift to your future.  Is your agent or loan officer a "steak"?  The "sizzle"?  Or a steak WITH sizzle?  Read on . . .
 

What is the “Steak”?

To me, that’s the part of the agent or loan officer’s expertise. They are fluent in their industry, their available products and inventory, the current market conditions, and the entire process that you will be undergoing. The “steak” is about using their excellence in execution to deliver a comprehensive solution for their clients.

What is the “Sizzle”?

To me, that’s the branding, marketing and name recognition the agent and/or loan officer has. It’s the websites, Twitter accounts, Facebook personal/business/community pages, LinkedIn, FourSquare and Pinterest stuff. It’s the glossy brochures and advertising they do. Sizzle is about drawing attention in order to create a buzz.

It is rare to find an agent or loan officer that is both, and when you do find them, I will argue that you have almost a moral obligation to tell everyone you know about them.

It puts homeowners, for example, in an awkward position. Do I want an agent who is awesome at Sizzle -  one who garners attention for my home, or do I want an agent who is a great technician that can identify a good deal and make sure it closes? Of course, we want both, but which is more important to YOU?

Similarly, do buyers today need the big name brand lender or loan officer that is advertising their services everywhere or should they find a true advisor who understands interest rate movements, tax consequences, and how a mortgage can impact long term financial planning? It would be great if you could have both, but which is a requirement for YOU?

I truly believe that real estate and mortgage professionals need to be experts and superior marketers, but which is more important? Because of that old 80/20 rule, it seems you might have to choose one or the other. Do you need credible advice when buying or selling or better promotion of your property (because you’re comfortable in your own knowledge base)? Do you subscribe to the quantity over quality mantra or vice versa?

The advice is…first decide whether you want steak or sizzle. Then, decide what the person talking to you offers…OR hold out until you can find that diamond in the rough who embodies both.

Give me a call and we can discuss real estate - or fishing or golf or music - and YOU decide if I'm the diamond in the rough for you and I can steer you toward mortgage professionals who are also sizzling steaks!

 
 
Do National Real Estate Headlines Actually Influence Local Markets?
 
This is a question we are frequently asked. Local real estate professionals know the best information for either buyers or sellers is local market data. However, we must realize that what happens in the national real estate market dramatically impacts regional and local markets. For example:

Are 30 year mortgage interest rates in North Dakota under 4% because of what happened in the their market over the last few years?

Of course not. They benefit from lower rates because of what happened in the national economy (if not the world economy).

Buyers all over the country are concerned about the reports of distressed properties about to come to market and what impact they will have on house values. The truth is only a handful of states will be adversely affected. However, if overall consumer confidence is shaken, every market is impacted. This is why it is important that you work with a real estate professional that understands three things:

1.  What the national headlines are saying and why they ar saying it.

2.  What effect the issue may or MAY NOT have on our local market.

3.  How to simply and effectively explain both of the above to you.

 

Agents who just ignore national headlines are hiding their heads in the sand. Agents who use the headlines as scare tactics to unfairly influence the actions of their customers are engaging in unethical behavior. Agents who take the time to keep abreast of the national real estate issues and are patient in explaining how these issues will impact you in the local market are true professionals.

 

The first two types of agents could cost you dearly. The last group will maximize the outcome of your real estate transaction – both personally and financially.

Just in case you're wondering, I spend hours each week reading and discussing international, national, and local economic issues so that I can assess our local conditions.  Give me a call; I'd like to discuss it with you, too!

 
Everybody Calm Down - the Sky is Not Falling!
 
After weeks of continuous good news about the housing market, the naysayers jumped all over this month’s Pending Sales Report from the National Association of Realtors (NAR). Pending sales were down from the previous month. This must be proof that all that other positive news on real estate should be ignored – right? WRONG!!

It is true that this month’s numbers were down from last month. However, we must realize we are comparing the numbers to the best month in two years. The numbers are 14.4% higher than the same month last year. Below is a graph showing the pending sales numbers over the last two years. You can decide whether it is showing a recovering market or not.

 

Call me - it would be great to discuss with you how this news could affect your real estate situation as well as how it is playing out in our own community.  719-963-9671

 
 
SALES ARE UP.  PRICES STILL HAVE A WAYS TO GO.
 
We believe the housing market is recovering. We believe that sales will be robust through the rest of the year. However, we also believe that the increase in demand will not impact prices in a big way as we think there will also be an increase in the supply of homes coming to the market. This increase in supply will offset the increase in demand. The increase in supply will be fueled by two categories of inventory:
  • Foreclosures entering the market as a result of the National Mortgage Settlement
  • Pent up supply of homeowners who have been unable to sell their homes over the last several years.

There have been several recent headlines making strong statements about home values in the country. We must be sure to read the ENTIRE report – not just the headlines. Here are four headlines and the portion of the report that reflects the caution in their ‘cautious optimism’.

HEADLINE: LPS Home Price Index Shows U.S. Home Price Increase of 0.2 Percent in February; Early Data Suggests Further Increase of 0.3 Percent is Likely During March

 

CAUTION:

“Reasons for caution are clear, as we’ve been here before. Non-seasonally adjusted prices increased for a few months in early 2009, 2010 and 2011 – trends that all ended by summer, after which all the gains – and then some – were lost. As is true this month, those temporary increases were on low sales volumes – about 30 percent lower than at any point since 1998. Furthermore, the inventory of distressed homes remains high, which will continue to put a drag on prices.”

HEADLINE: Foreclosure hotspots show signs of housing turnaround

 

CAUTION:

“However, much will depend on the continued health of our economy, specifically job rates, and how lenders will release their foreclosure inventories now that the 49 state AG Agreement has been signed.”

HEADLINE: Fiserv Expects Home Prices to Stabilize

It is true that this month’s numbers were down from last month. However, we must realize we are comparing the numbers to the best month in two years. The numbers are 14.4% higher than the same month last year. Below is a graph showing the pending sales numbers over the last two years. You can decide whether it is showing a recovering market or not.

 

Call me - it would be great to discuss what this means to your real estate situation and for our community.  719-963-6971

 

 

 

We are often asked where we believe home values are headed. To answer this question we want to quote three separate reports that have been published in the last 60 days: the Home Price Expectations Survey (HPES), the Urban Land Institute Real Estate Consensus Forecast (ULI) and the Demand Institute’s Report (DIR): The Shifting Nature of U.S. Housing Demand. Here are their projections:

A slow but steady return is projected by all.  This is great news for sellers in the future!  The news for buyers is once again:  NOW is the time to get your home and mortgage at the best cost possible!

Are 30 year mortgage interest rates in North Dakota under 4% because of what happened in the their market over the last few years?

Of course not. They benefit from lower rates because of what happened in the national economy (if not the world economy).

Buyers all over the country are concerned about the reports of distressed properties about to come to market and what impact they will have on house values. The truth is only a handful of states will be adversely affected. However, if overall consumer confidence is shaken, every market is impacted. This is why it is important that you work with a real estate professional that understands three things:

  1. What the national headlines are saying and why they are saying it
  2. What effect the issue may or MAY NOT have on your local market
  3. How to simply and effectively explain both of the above to you

Agents who just ignore national headlines are hiding their heads in the sand. Agents who use the headlines as scare tactics to unfairly influence the actions of their customers are engaging in unethical behavior. Agents who take the time to keep abreast of the national real estate issues and are patient in explaining how these issues will impact you in the local market are true professionals.

The first two types of agents could cost you dearly. The last group will maximize the outcome of your real estate transaction – both personally and financially.

Just in case you're wondering:  I spend hours a week reading local, national, and international news feeds and talking to professionals in many different disciplines to gather a clear picture of what is and might happen in our local economy.  Give me a call and we'll talk more about it!

CAUTION:

“On the other hand, nearly one-half of the metro areas, or 191, saw prices decrease by more than 2 percent, including double-digit losses in Atlanta (-12.8 percent), Reno, Nevada (-10.8 percent), and Tucson, Arizona (-10 percent).

In the fourth quarter of 2011, the average price of a U.S. single-family home fell four percent from the year-ago period, and Fiserv Case-Shiller projects a further decline of 0.8 percent by the end of 2012.”

HEADLINE: Home Prices in March Show Monthly Gain: CoreLogic

 

CAUTION:

“Even with price gains above 5 percent for leading states and CBSAs, Capital Economics said in response to the CoreLogic report that over the year, prices are more likely to stabilize rather than make a dramatic climb.

“There are fears in some quarters, triggered by recent disappointing GDP and payrolls data, of a sharp slowdown in economic growth which could derail the fledgling improvement in the housing market,” said Paul Diggle, property economist for Capital Economics.”

Call me to discuss this and any other real estate situations!
 
 
 
 
 
 
 
 
Short Sale vs Foreclosure:  10 Common Myths Busted
 
It’s likely you’ve heard the term “short sale” thrown around quite a bit. But what, exactly, is a short sale?
  • Your house must be worth less than you owe on it.
  • You must be able to prove that you are the victim of a true financial hardship, such as a decrease in wages, job loss, or medical condition that has altered your ability to make the same income as when the loan was originated. Divorce, estate situations, etc… also qualify.

Now that you have a basic understanding of what a short sale is, there are some huge misconceptions when it comes to a short sale vs. a foreclosure. We take the most common myths surrounding both short sales and foreclosures and give a brief explanation. LET’S BUST SOME MYTHS!!

1.) If you let your home go to foreclosure you are done with the situation and you can walk away with a clean slate.  The reality is that this couldn’t be any farther from the truth in most situations. You could end up with an IRS tax liability and still owing the bank money. Let me explain. Please keep in mind that if your property does go into foreclosure you may be liable for the difference of what is owed on the property versus what is sells for at auction, in the form of a deficiency balance! Please note this is state specific and in most states you will be liable for the shortfall, but in some states the bank may not always be able to pursue the debt. Check your state law as it varies widely from state to state.

Here is an example of how a deficiency balance works

If you owe $200,000 on the property and it sells at auction for $150,000, you could be liable for the $50,000 difference if your state law allows it.

Not only could you be liable for the difference to the bank, but in some situations you could also be liable to the IRS! Although there are exemptions (mostly for principle residences) under the Mortgage Debt Forgiveness Act, there are times when you could be taxed on both a short sale and a foreclosure, even in a principle residence situation. Since the tax code on this is a little complicated and I am not a CPA, I advise always talking to a CPA when in this situation as you are weighing your options. Hard to believe?  Well, believe it or not, the IRS counts the difference between the sale and the charged off debt as a “gain” on your taxes. That’s right-you lost money and it’s counted as a gain! (I didn’t make that rule, that’s a wonderful brainchild of the IRS). Banks and the IRS can go as far as attaching your wages. Not to mention if you let your home go to foreclosure you will have that on your credit, as well.

Guess What?  A short sale can alleviate your liability to the bank, in most situations. There are also exceptions to this, but in most cases banks are releasing homeowners from the deficiency balance on a short sale.

2.) There are no options to avoid foreclosure. Now more than ever, there are options to avoid foreclosure. Besides a short sale, loan modifications along with deed in lieu are also examples of the many options. In most cases (but not all) a short sale is the best option. Either way, there are more options today than there have ever been to avoid foreclosure.

3.) Banks do not want to participate in a short sale, or, it is too hard to qualify for a short sale. Banks would rather perform a short sale than a foreclosure any day. A foreclosure takes a long time and creates a huge expense for the banks; a short sale saves both time and money. Banks have more foreclosure inventory than ever before, and certainly do not want any more. Banks more than ever welcome short sales. Qualifying for a short sale is easier than you think, you need to have a true financial hardship, or a change in your finances and your house has to be worth less than what you owe on it. Not only do consumers, but banks also now have government incentive to participate in short sales.

4.) Short sales are not that common. At this present time, short sales range from 10-50 % of sales in various markets and it is predic