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Sunday, May 27, 2012
Monday, May 14, 2012
Inventory is down!!!
The nation has fewer homes for sale, and that's helping prices in markets where low supplies are meeting strong demand.
By Bill Sikes, AP
A home for sale in April in Framingham, Mass., near Boston.
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The U.S. had 2.37 million existing homes for sale at the end of March. That was down 22% from a year ago and 41% from the peak in mid-2007, the National Association of Realtors reported Wednesday.
First-quarter home sales, meanwhile, were up 5.3% from a year ago.
The combination of improving sales — coming off one of the worst years ever for home sales — and declining inventories is helping prices.
NAR says median existing single-family home prices rose in 74 of 146 U.S. markets in the first quarter, while they fell in 72 areas. In last year's fourth quarter, 29 markets showed gains from a year earlier.
"Given the steadily dwindling supply of inventory and notably higher listing prices … prices are expected to show further improvements," says Lawrence Yun, NAR chief economist.
At current levels, the housing inventory is at a more "normal" level, says CoreLogic economist Sam Khater. If home prices aren't already at the bottom, "We're not far away," he says.
Home price data from CoreLogic and Zillow both show prices up slightly in March from February. Meanwhile, Fiserv Case-Shiller predicts home prices will stabilize this summer and post a 0.8% drop for the year.
Fewer homes for sale
| The supply of U.S. homes for sale in March each year: | |
 | |
| Mar-07 |
3.38 million
|
| |
| Mar-08 |
3.41 million
|
| |
| Mar-09 |
3.09 million
|
| |
| Mar-10 |
3.09 million
|
| |
| Mar-11 |
3.03 million
|
| |
| Mar-12 |
2.37 million*
|
| |
| * = Preliminary; source: National Association of Realtors | |
| |
As prices rise, after six years of declines, sellers who have kept homes off the market will increasingly put them on, says Jed Kolko, Trulia economist.
"But buyers will come out, too," says Stan Humphries, Zillow economist.
The broad trend is for home sales to be 5% to 10% above last year, he says.
Some markets are already seeing tight supplies, leading to price gains.
In Phoenix, the supply of homes for sale in March was down 64% from a year earlier, says Michael Orr, real estate expert at Arizona State University.
Home inventories in Phoenix peaked in late 2010 and began to fall. Now, prices for homes under $500,000 are rising and "there's no sign of it stopping, because supplies are so tight," Orr says.
Yun says NAR has noticed "broad shortages of lower-priced homes," most notably in Phoenix; suburban Washington, D.C.; Orange County, Calif.; Naples, Fla.; Seattle; andNorth Dakota.
Foreclosures may rise following the recent $25 billion foreclosure settlement between mortgage servicers and federal and state officials. But the number of foreclosed homes for sale isn't likely to swamp markets due to increased efforts to modify home loans or allow short sales, Khater says.
For
Sunday, April 15, 2012
Mortgage Debt Relief Act Extension?
Obama budget proposes Mortgage Debt Relief Act extension
The Mortgage Debt Relief Act (MDRA) of 2007 is getting a vote of confidence from the Obama Administration.
And that could save you tens of thousands of dollars.
The administration’s 2013 national budget proposal includes a provision to extend MDRA through 2014 and perhaps beyond.
You remember the MDRA? Real estate professionals and consumer advocates have been warning those who could benefit from MDRA to get their qualifying real estate transactions in gear because the MDRA, a mortgage debt-forgiveness tax exclusion is currently due to expire this year.
MDRA is a federal tax law that allows qualified taxpayers to exclude from taxation, income derived from the forgiveness or discharge of debt associated with a mortgage on a principle residence.
In a short sale, the difference between the amount owed on the mortgage and the amount of the sale, can be considered income. A short sale occurs when a lender agrees to write off – forgives or discharges – a portion of your mortgage, typically a portion that is higher than the value of your home, provided a capable buyer is available.
Robert Aldana, a 25-year real estate veteran and publisher of“LetsTalkRealEstate.com,” offers this example:
Let’s say you borrowed $500,000 for a home and later sell it as a short sale or lose it in foreclosure, but the lender gets only $200,000 and doesn’t come after you for the difference (in some states, including California, the lender can’t come after you for the difference in a short sale). You gained $300,000 because you borrowed that amount without having to pay it back.
If you are in the 35 percent tax bracket, then you would owe the IRS a whopping $105,000. Only in the 15 percent or so bracket? You would still owe $45,000.
Likewise, in a mortgage modification or other mortgage restructuring that includes a principal reduction, the amount of the reduction can be considered taxable income.
This year, Aldana and others have chided homeowners considering a short sale, mortgage modification or other workout that will come with forgiven debt, to get a move on. Those transactions can take time, lasting as much as a year and cause them to lose the exclusion, currently scheduled to expire at the end of 2012.
And the budget proposal, right now, is just that.
“Five to six months can be the norm, but there are some exceptions to the rule and you never know how long a short sale will take. I’ve witnessed short sales taking more than a year to complete,” Aldana writes.
MDRA has allowed struggling homeowners to unload a tax burden under certain circumstances.
• The exclusion applies to up to $2 million ($1 million if married and filing separately) in forgiven debt for calendars years 2007 through 2012, but only if the forgiven debt is related to a decline in the home’s value or the taxpayer’s financial situation.
• The exclusion applies only to the debt on the principal residence. Vacation homes, investment properties and other second homes don’t qualify.
• The tax rule can be applied to debt used to refinance your home, provided the principal balance of the old mortgage, immediately before the refinancing, would have qualified.
On Page 22 of “General Explanations of the Administration’s Fiscal Year 2013 Revenue Proposals,” the “Extend Exclusion From Income For Cancellation Of Certain Home Mortgage Debt” section explains the proposal for an extension on MDRA as necessary in the continued housing crisis.
Despite the many government-backed and private-based mortgage relief programs, millions of homeowners still face foreclosure and, because many have a mortgage that’s larger than the value of their home, they may have to have debt discharged.
The tax exemption helps foster short sales and modifications that might not otherwise occur because the already struggling homeowner would see a tax on the added income as a prohibitive cost.
The budget provision proposals reads: “Facilitating home mortgage modifications remains important for the continued recovery of the residential real estate market. The importance is demonstrated by the fact that HAMP (Home Affordable Modification Program) has been extended through the end of 2013.”
Likewise the Obama Administration, over time, has added improvements to theHome Affordable Refinance Program (HARP) to make it available to more home owners.
Extending MDRA through 2014 may not be the end of the rule.
“An extension beyond January 1, 2015, may be appropriate to correspond to the availability of additional homeowner relief as a result of government actions or other arrangements,” the proposal reads.
Wednesday, April 4, 2012
The 2007-2012 Mortgage Debt Relief Act
Bills .com is a website that offer simple money solutions. Below may be helpful for anyone thinking about a short sale. I advise my clients always speak to an attorney and an accountant who specializes in distressed sales before listing their home as a short sale. The 2007 Debt Relief Act will expire the end of 2012. Stay tuned for more blog updates regarding expiration.
Information on 1099 Income From Short Sale
Will IRS provide me any payment plan for the taxes that I owe after the short sale deficiency balance is reported via 1099?
I am going through the short sale process with lender agreeing for short sale. Lender says that the deficiency balance on mortgage and home equity loan will be reported to IRS via 1099 form. At this time I am looking at $80,000 deficiency balance. If I agree to this and go for short sale, Can the bank still come after me for the balance after reporting to IRS on 1099. Since I am going through this process as I cannot afford to make payments, Will IRS provide me any payment plan for the taxes that I owe after the deficiency balance is reported via 1099? Are there any other things that I should talk to the banker before signing the purchase agreement offered by the buyer in this short sale proceeding? I really appreciate your answers to these two questions as soon as possible. I have to sign these documents in 2 days.
Bill's Answer:Bills.com Resident Expert
You might avoid paying taxes on the imputed income indicated in the 1099-C as per the "Mortgage Forgiveness Debt Relief Act of 2007 (HR 3648)." Mortgage Debt Relief Act will save some homeowners facing short-sales or foreclosures from paying federal taxes on the “forgiven” debt. There are very specific requirements:
- The mortgage is for the homeowner's principal residence. The relief does not apply to any debt forgiveness for any vacation or investment home.
- Forgiveness is only for the “acquisition indebtedness” of the principal residence. Acquisition Indebtedness is defined as the debt used to acquire, construct or rehabilitate the home.
- No relief is available for cash-out mortgages whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, a home equity line of credit or a similar arrangement. Exception: If the cash-out was specifically used to improve the home and the homeowner has adequate records to prove it.
This bill relieves the specific homeowner of their federal tax liability but does NOT relieve the homeowner of their state income tax liability.
If you have refinanced your mortgage, have a second, a third or if this is an investment property -- you likely do not fall under the protection of this act at all. I strongly suggest that you enlist the counsel of an experienced attorney and for tax implications, get expert advice from an income tax professional (CPA). Ask the tax professional if you are eligible to use the IRS Form 982, so you can refrain from declaring as income any amount listed on a 1099-C you receive for cancellation of debt. You can read more on the FAQ section of the IRS document Home Foreclosure and Debt Cancellation.
I hope this information helps you Find. Learn & Save.
Best,
Bill
Thursday, February 16, 2012
Home Issues- by John VanderMde
Home Issues, post 3, Siding.
Siding is much more important on the OBX than most other areas... why? Because it doesn't rain straight down here very often, so it pays to think of the siding as performing the same function as a roof - it MUST be designed and installed in such a way to channel water away from the vulnerable openings and structural elements of the home.
I'm going to list the different types of siding, and their relative advantages and problems, but first, let's talk about what's under the siding - the "vapor barrier" or "house wrap". Siding can and will fail, so it's VERY important to have an waterproof material underneath, and there is only one proven material for this purpose on the OBX - saturated felt paper, more commonly known as "tar paper". Some builders try to use Tyvek or Typar plastic house wraps - and this tends to be a very bad idea. Both of those materials will allow moisture to penetrate through to the sheathing, and I've seen homes that needed all the framing and sheathing on an entire side replaced due to rot.
Tar paper is MUCH more water resistant, and has stood the test of time on countless oceanfront homes taking the full beating from mother natures storms. It seems to allow the sheathing to dry out better too when water does make it in through a crack or knot hole somewhere when compared to plastic house wraps.
Ok, on to some common siding materials, and the good and bad points of each one:
Vinyl Siding - It's quick and easy to install, and doesn't need paint. However, it's also the first to come off in a windstorm, and it's color will fade over time with sun exposure. The fake shingle is generally the best type, as it's heavier and less prone to tearing off in high winds. Vinyl tends to "hang" on the house rather than be attached securely to it, as the nails must not be nailed tight to the siding to allow for expansion during hot weather.
Textured Plywood Siding (T-111, etc) - Cheap and easy to install, you'll find this on many older homes. It must be kept painted though, as it will break down over time with sun exposure, to the point it will erode off the walls.
Wood Lap Siding - Commonly found on older homes, it generally performs well if kept painted and caulked. However, the quality of the wood has dropped while the price has increased, so you will rarely find it on newer homes. Keep an eye on knots, cracks, and splits that might let water penetrate.
Cedar Shake Siding - My personal favorite, and a traditional choice on the OBX. It can be painted, but it generally works well without paint if it's the red cedar variety. Some oils can prolong the shingle life, especially where exposed to strong sun. It's the most waterproof of the wood sidings, as there is a triple layer of wood at each point - the shingles are 18" long, but only 6" is exposed, so you have a bit of redundancy should one shingle crack or split, plus the nails in each shingle are protected from the elements so they don't rust.
HardiPlank Siding - This is a material made from concrete and wood fibers, and is generally found as Lap Siding, though it can be used in sheet or shingle form too. It must be painted, but the paint will last much, much longer than paint will on wood. Care must be taken to use stainless steel nails or rust streaks will mar the home eventually - "Blind Nailing" will help with this, but the end of each board will still require a face nail or two. HardiPlank has the potential to be the longest lasting and lowest maintenance of any of the siding types generally used - it's only been in widespread use for 15 years or so, but with no failures I know of, and many homes still have the original paint.
Tuesday, January 31, 2012
From John VanderMyde- Home Issues, post 2
Home Issues, post 2
In the last post I covered some typical issues found on the ground level, and now I'm going to discuss from the ground to the first floor.
Pilings & Plumbing:
Many homes here are built on pilings, which is an excellent foundation system for sand. Instead of "pressure" bearing, pilings are "friction" bearing, which means they are much less susceptible to shifting or cracking over time when compared to a masonry foundation.
Look for pilings to be 8"x8" rather than the 6"x6" size that was used in the 70's. Look where the pilings meet the ground for any sign of rot. Look for pilings to be braced with large "X"s of 2x10s rather than smaller "Y" supports under the beam.
The one disadvantage of pilings is that the house will shake more than on a masonry foundation, especially if there are no rooms on the ground level. Enclosed garages and storage areas can really help the rigidity of the house by creating "shear walls" of plywood between pilings.
Next, look to see if any plumbing is exposed. If there are any supply side pipes exposed to the wind, you can bet they will freeze during a winter cold snap. Copper pipes will burst or split, and so will polybutylene (gray pipes). PEX (white or red) will handle freezing weather better, but if the sun shines on the pipes, make sure it's the red PEX as that type is UV resistant.
The grey Polybutylene pipes have other problems which have been well publicized, but here's a synopsis: If there are plastic elbows with aluminum crimps - plan on replacing all the plumbing. It WILL leak. If there are copper elbows and copper crimps, it should be ok in conditioned spaces, but will still have a high incidence of failure when exposed to temperature extremes outside. PEX is a far superior material, and it usually only costs around $1000 per bathroom to replace, plus any drywall repair.
More to come soon!
Friday, January 27, 2012
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