3.8% Federal Sales Tax on the sale of your property!!

Did you realize that the Obama Care Bill will tax property owners  3.8% for any real estate transaction to pay for our nation’s health care?  Well, it’s true.  It starts January 1, 2013.  What that means is when you sell your $500,000 home next year, there could be an additional fee of $19,000 payable to the government to pay for the health care program,  if your profit from the sale is more then $250,000.  This will hurt owners of property in the more expensive areas like San Francisco, New York, Hawaii,  and especially retirees.  Retirees usually sell their homes to down size and use the rest of the money to enjoy the rest of their lives.  With this program, it’s going to eat up a lot of their money and may have to postpone retirement.

If you were thinking of selling your property any time soon, it would be a good idea to put it on the market now to avoid the changes.  Don’t forget, we are getting close to Fall and the holidays.
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More forclosures are coming

Home sales have declined in some areas and its due to high demand, low interest rates and a shortage of homes to buy.  This creates a change in the market place.  Not good for buyers but good for sellers.

Buyers around the bay area are going to be happy to see more homes on the market.  Currently homes that are under $400,000 are experiencing a seller’s market.  Most sellers are receiving multiple offers for their home.  Every home that I have made offers for my clients have had more then 1 offer.  One house in Hayward had 18 to 20 offers.  Another house in San Bruno had 6 offers. My listing in So. San Francisco received 2 offers above the asking price, right after my open house, and 1 was all cash.   My other listing in Pacifica received 8 offers, all over the asking price.  It’s like that all over the Bay Area.  It’s pretty discouraging for buyers today.

Maybe there is some relief coming soon.  There is a shadow inventory due to be release around summer.  I hope this will help the buyers that are trying to get into their home.

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Mixed messages

In the past few weeks the real estate market showed multiple signs of a rebound of some sort.  In 20 metropolitan areas prices rose 0.2% in August but were still down 3.8% year over year.  This may all change soon.  In September, pending sales were down 4.6%.  Could this be another beginning of a triple dip?  With Freddie Mac requesting for another $6 billion of your tax money and holding about 60,000 REOs from the market, which will take approx. 15 years to sell off, I don’t think our country’s rebound in a lot of areas will happen anytime soon and hope that the triple dip is not too severe.

Some help is on the way.  The Federal Housing Financing Agency is trying to help change the market.  They are making a few changes to the Home Affordable Refinancing Program to attract more borrowers and stimulate the mortgage industry and helping more homeowners.  The National Association of REALTORS are also concerned with the state of our real estate market and has a 5 point plan that could get us out of this triple dip situation and stabilize the market.  With any change, it will take a while for the changes to make a difference.  Let’s hope that it won’t be too long.

Foreclosures are up in the third quarter!!

There has been more then 610,000 foreclosures last month and represents a 1% increase then the previous quarter.  On average it took 336 days to complete the foreclosure process nation wide.  New York took 986 days to complete the process while Texas only took 86 days.  Wow, Texas seems to be doing something different. 

President Obama is expected to help struggling homeowners with their mortgage payments.  The Wall Street Journal reports,  “The administration’s plan is expected to eliminate “appraisals and extensive underwriting requirements for most borrowers” who are up-to-date on their mortgage and want to refinance at a lower rate”.  This should help those who have been keeping up with their payments and were looking for assistance in avoiding foreclosure. 

While most the country is having foreclosure problems, there are areas that are still doing well.  These areas are the most expensive areas in the United States.  The economy today doesn’t seem to hurt these types of properties.  In fact, it seems to have increased the sales activity  in this  price range.

How is your house doing?

In many areas in the nation, there are areas that are cheaper to buy a home then to rent.  You now can find a home for $100,000 in New York and through out the country including Hawaii. 

It may seem like some areas have not been affected by the economy but that is not true.   The properties that sell really quickly are usually the cream of the neighborhood.   

The Bay Area has been hit as well but not as bad as other areas.  It will be a while before we get out of this mess.

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How much is your home today?

The economy has driven our home values down and there is no end in site.  Many areas in the nation has experienced major price reductions.  Not all areas have been hit but California has 6 areas that had the largest drop in value out of the top 10 areas nationwide.   The prices have decreased more then 60% from 5 years ago.  This situation will not get any better anytime soon due to the 1,000,000+ foreclosures that the banks are holding this year and another 1,000.000+ foreclosures in next 2 years.  It will take a few years to sell off all of the phantom inventory before any appreciation can be realized in these areas.    

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Senate proposing to make financing harder

The Senate is proposing to change the FHA down payment to 5% and decrese the loan limits.  Why make it harder to qualify for a loan when FHA is critical in providing affordable financing to help decrease the growing foreclosed properties.  Currently the nation’s largest lending institutions own more then 872,000 homes which is twice that of 2007.  It will take 400 days for lenders to foreclose on the home and 176 days to sell it.  This will make our recovery even slower.  Although financing isn’t the only factor to a recovery, it is one of the most important factor to decrease the ever growing inventory.

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Keep Your Home California

The California Housing Finance Agency (CalHFA) is administering $2 billion in federal funds for borrowers who are at risk of losing their homes.  Borrowers who took out loans after January 1, 2009 are eligible for 4 different programs as long as the property is a primary resident, meet income requirements, and face a documented financial hardship.      

The four programs are the following:

  • The Unemployment Mortgage Assistance Program (UMA) which will help homeowners with their mortgage payments.  
  • The Mortgage Reinstatement Assistance Program (MRAP) which provides funds for  homeowners who have fallen behind in their payments
  • The Transition Assistance Program which provides relocation assistance
  • The Principal Reduction Program (PRP) which provides funds to reduce the outstanding principal balance.

GMAC, Guild Mortgage, CalHFA, and California Dept. of Veterans Affairs are the organization that offers all 4 programs.

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Is the market really turning around?

In January, pending home sales declined however, the data is based on contracts signed in January not closings.  According to Lawrence Yun, NAR Chief Economist, “The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” he said.  He expects the recovery will be a straight upward path because there is still an elevated level of shadow inventory of distressed homes and interest rates are still historically low.  

According to the Wall Street Journal, there are plenty of signs that the housing market finally bottoming out.  If investors and buyers continue to take advantage of the most affordable housing in decades, prices will probably bottom out in 2011.   

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Foreclosures are up

Lenders have foreclosed on 78,133 properties in January, which is up by 12% from the previous month but it is 11% less then a year ago.  Although there has been an increase in default notices, auctions, and bank repossessions in January, it is encouraging to know that the increase is 17% less then a year ago. 

5 states are responsible for more then 50% of the nation’s total foreclosure activity; California, Florida, Michigan, Arizona and Illinois.  Nevada was the hardest hit state with the highest foreclosure rate in the nation.  Bank repossessions increased 16% from December which is more then  5 times the national average.  Even though we are seeing more foreclosures, they are less then what it was a year ago.  Let’s hope that this is a good sign that we might be on the right track to recovery.   

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