Note: To follow is an excerpt of an interview with Michael A. Anderson, CES, Certified Exchange Specialist. Michael is president of Exchange Services, LLC, an affiliate of Zions Bank that serves the QI needs of the affiliate banks and national customer base.
Mosca: Section 1031 of the Internal Revenue Code provides a series of different things for different types of investors. What is a 1031 tax-deferred exchange as it relates to the real estate investment and why is it so valuable?
Anderson: The point of owning real estate is to have it appreciate in value and if you want to change that or sell that property, you may have a substantial tax liability as a result through capital gains taxes, both state and federal. Section 1031 allows you to exchange one investment property for another and doing so appropriately defers the capital gains tax that might be due in such a transaction if it were a sale. As you near closing for the sale of your investment property, you have to decide whether to do an exchange or not before you actually close on your sale. As you near that point, you decide to call a qualified intermediary or QI like myself or any of my colleagues in the business and the QI will set up some documents for you which will convert your sale into an exchange. What that does is it transfers typically the right to receive the proceeds of the sale to the qualified intermediary, so when the sale closes the funds go to the QI to hold them for you while you go look for your replacement property. You have to acquire or identify your short list of replacement properties within 45 days of the sale and you have to actually close those properties you want to acquire within 180 days of the sale or the due date of the tax return for the year in which the sale took place including extension. Planning ahead always helps in life and this is another situation where planning ahead helps you avoid heartburn at the last moment.
Mosca: What separates or makes Zions Bank or your Exchange Services, LLC different or unique from the typical exchange provider?
Anderson: At Exchange Services, we use the qualified trust model, which means that we don't own the funds. Typically the QIs in the past have used the safe harbor where the QI gets to own the funds in between and they get to do with it whatever they want in general. Under the qualified trust model, we create a trust for the taxpayer and the funds belong to the taxpayer but are restricted from their access according to the safe harbor for the qualified trust by means of the trust. We also invest the funds in separate bank accounts, which have the benefit of FDIC insurance.
Mosca: As an example, I am one investor of maybe 17 who has invested in a tenant in common property and that property is going to sell in September. I want to invest the gain again in another income property. What is the process from there?
Anderson: Basically what we do is compare some documentation to convert your sale to an exchange. Then, at the closing, the funds come to us and we hold them in a qualified trust account for your benefit while you go look for new property and you have up to 45 days to identify your short list and then you have up to 180 days to actually close on your replacement property.
Mosca: Another example, I am investor and I feel it does not make sense to exchange today with the way the market is and it is better to just pay the taxes. What do you say about that?
Anderson: Whenever you pay the tax, the tax money is gone and it is really hard to make up that loss from a return basis. Some people are saying tax rates may go up and there is a good chance that they will. We have even done some modeling here and it turns out that even if rates go up say to 35 or 39%; it's hard to catch up once you pay that big chunk of capital gains tax. It doesn't mean you shouldn't do it in certain situations but it's just giving yourself a handicap that's hard to catch up with. A 1031 is a good way for people to create flexibility in their investor plans as they decide to go from one type of investment, say your duplex or into a TIC or other sort of vehicle. It's a great way to do so without being penalized.
Mosca: One of the overriding themes of this program is the importance of relationships with experts in this business to success. Do you agree?
Anderson: This past weekend, I was at a conference of people in our industry -- the Federation of Exchange Accommodators. We review there and talk to each other about what we are doing and about new authority and regulations and decisions on related parties and vacation homes and partnership return questions and it's a fun time to get together and talk shop and catch up on things. It is important to look for people who have those professional qualifications and in our industry it for the Certified Exchange Specialist. I would encourage people to look for professionals as you say that are qualified and have made commitment to the industry.
Mosca: Mike, we are now in a global economy. Does the law apply to foreign properties?
Anderson: Generally, you can exchange domestic properties for domestic properties and foreign properties for foreign properties.
Mosca: Is there any discussion to change that or do you think it's always going to stay domestic to domestic and foreign to foreign?
Anderson: It's hard to know what Congress is going to do at any given time. There has not been as much pressure on that as there has been on other issues.
Mosca: What are some of the other issues coming up in the months or years ahead?
Anderson: There is concern about folks who are unwittingly involved as customers in failures and offering some sort of relief for them, especially those that lost a lot of money in capital and had to pay 'boot.' I'd like to see some support for those folks, but I don't know what hope there is for that. Boot is income that is subject to tax; the tax liability is called boot in an exchange.
Mosca: Can you talk about some of the different ways to protect customer funds?
Anderson: Certainly. Some problems came as a result of honest mistakes and not necessarily unscrupulous activities. It happens either way. The most important thing is to understand who is holding your money, who they are, what their qualifications are, what their management strategy is, and what they're holding strategy is. For example, there are three safe harbors the IRS allows for this kind of a procedure. One is the qualified intermediary, one the qualified trust, and the other, the qualified escrow. The qualified intermediary approach has been more common. Basically the qualified intermediary receives the funds and they are the qualified intermediary's funds in the interim. The qualified intermediary can go invest those funds and if they pay that taxpayer 2% and they can make 4% or 5%, they keep the difference. Under the qualified escrow, qualified trust model the funds belonged to the taxpayer and are just held in escrow or in trust for the taxpayer. Again, in a situation where there is a bankruptcy or some question about who the funds belonged to, the qualified trust or the qualified escrow models are much clearer legally belonging to the taxpayer then the qualified intermediary approach. Most of the qualified intermediaries are very honest, very straightforward. It's an actual layer of protection we give to our customers. We do not put them in pooled accounts. We put every single taxpayer in a different, separate bank account. Plus, we pay all the interest to the taxpayer.
Mosca: What is your golden nugget for today?
Anderson: Even though the economy has had some turbulence recently, don't lose heart, look forward, be careful, think things through, don't throw away your money needlessly, make good decisions, analyze, underwrite, ask questions, and we will all make it through this.
Written by: Peter L. Mosca / Realty Times, June 18, 2009
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Monday, June 29, 2009
Friday, June 26, 2009
Saving For Your New Home!
No Money to Buy a Home? Try These Savings Tips
For many people, buying their own home is still the American dream. Yet, it remains out of reach for a lot of people, even though the housing affordability index in many areas of the country is as good as it's ever been. But if you're not prepared to buy a house, then the index doesn't mean a thing to you—except, perhaps, to create a painful sting and a constant reminder that you're missing out on a good opportunity to buy real estate at lower prices. For more on affordability, see my column, Housing Most Affordable: May be Time to Move from Renting to Owning.
That's advice that many experts are giving to those who are planning to stay in the same house for a few years. The cost of buying and relocating in a short period (a couple years) can make the concept of buying not appealing or cost effective. But if it's for the long term, owning can make perfect sense. But what if you're a first-time buyer or you haven't owned a home in a while, how do you prepare for what is often the largest purchase you'll ever make? Buying a home isn't that difficult but it does require you to make sure that you're in the right financial (and emotional) position to do it. How do you get there when so many other expenses often take precedence? Simple but not necessarily easy steps can help you position to transition from renter to home owner. It starts with getting familiar with your financial picture. If you are aware of what lenders are looking for before you apply for a loan, you'll have a greater chance of getting it and it'll be helpful when you meet with your real estate agent. No time will be wasted looking at homes that aren't in your price range. You will have a clear-cut idea of what you can afford and then you can confidently look for the most suitable home.
Take a keen look at your budget. This presumes that you have a budget. If not, develop one. You can use numerous software programs to create a budget; many are free, or you can even use a basic spreadsheet. If you're self-employed, take a look at free online bookkeeping software offered by Outright.com. It can help you track your income and expenses for your business allowing you to create a better recording system to help you save time and money. Review credit history. If you have no idea how your credit looks, then it's time to give it a review. When you take a look at your credit report, you will be able to see if there are errors or dings from late payments that are negatively affecting your credit score. This gives you a chance to dispute errors or work to clean up your credit before you apply for a home loan. When I reviewed my credit cards, I found a few hundred dollars that had been automatically billed to my credit card in erroneous subscription fees. Your credit card can file a dispute with the companies and credit the funds back to your account. It pays to double check; you just never know what you'll find.
Redistribute your money. Don't think of it as cutting back, but rather as moving your money from one place to another. For example, if you're spending $3 on a specialty coffee five days a week, think about making your java at home and putting that $15 a week into an account that is going to be used to purchase your home. It all adds up and most of the time, we don't realize how much money a dollar spent here or there can accumulate.
Another way to redistribute money is to examine your insurance policies and consider raising the deductibles. A lot of people want low deductibles in case of a loss or an accident, but you can actually save money and redistribute that money into an account that is set aside for purchasing your home. But some statistics show that the average person files a claim only once every 13 years, according to insurance broker, Michael Rice of Thomas Ward Insurance Group. So raising your deductible from, say, $500 to $1,000 can give you an annual premium savings of 10 to 15 percent. Rice also recommends paying your premium in full if the insurance company offers you a discount to do so; some offer a five percent or more deduction and you won't be charged administrative fees for periodic billing.
Keep your eye on the goal. Staying focused on the goal of buying a home will help you to remember that cutting costs now will allow you to have what you want in the long run. Our society is accustomed to instantaneous gratification so delaying the reward can be very challenging but well worth it. Owning your own home and, being able to purchase it while in a down market, is an exciting win-win.
Article Published in Realty Times
Published: April 17, 2009
by Phoebe Chongchua
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
For many people, buying their own home is still the American dream. Yet, it remains out of reach for a lot of people, even though the housing affordability index in many areas of the country is as good as it's ever been. But if you're not prepared to buy a house, then the index doesn't mean a thing to you—except, perhaps, to create a painful sting and a constant reminder that you're missing out on a good opportunity to buy real estate at lower prices. For more on affordability, see my column, Housing Most Affordable: May be Time to Move from Renting to Owning.
That's advice that many experts are giving to those who are planning to stay in the same house for a few years. The cost of buying and relocating in a short period (a couple years) can make the concept of buying not appealing or cost effective. But if it's for the long term, owning can make perfect sense. But what if you're a first-time buyer or you haven't owned a home in a while, how do you prepare for what is often the largest purchase you'll ever make? Buying a home isn't that difficult but it does require you to make sure that you're in the right financial (and emotional) position to do it. How do you get there when so many other expenses often take precedence? Simple but not necessarily easy steps can help you position to transition from renter to home owner. It starts with getting familiar with your financial picture. If you are aware of what lenders are looking for before you apply for a loan, you'll have a greater chance of getting it and it'll be helpful when you meet with your real estate agent. No time will be wasted looking at homes that aren't in your price range. You will have a clear-cut idea of what you can afford and then you can confidently look for the most suitable home.
Take a keen look at your budget. This presumes that you have a budget. If not, develop one. You can use numerous software programs to create a budget; many are free, or you can even use a basic spreadsheet. If you're self-employed, take a look at free online bookkeeping software offered by Outright.com. It can help you track your income and expenses for your business allowing you to create a better recording system to help you save time and money. Review credit history. If you have no idea how your credit looks, then it's time to give it a review. When you take a look at your credit report, you will be able to see if there are errors or dings from late payments that are negatively affecting your credit score. This gives you a chance to dispute errors or work to clean up your credit before you apply for a home loan. When I reviewed my credit cards, I found a few hundred dollars that had been automatically billed to my credit card in erroneous subscription fees. Your credit card can file a dispute with the companies and credit the funds back to your account. It pays to double check; you just never know what you'll find.
Redistribute your money. Don't think of it as cutting back, but rather as moving your money from one place to another. For example, if you're spending $3 on a specialty coffee five days a week, think about making your java at home and putting that $15 a week into an account that is going to be used to purchase your home. It all adds up and most of the time, we don't realize how much money a dollar spent here or there can accumulate.
Another way to redistribute money is to examine your insurance policies and consider raising the deductibles. A lot of people want low deductibles in case of a loss or an accident, but you can actually save money and redistribute that money into an account that is set aside for purchasing your home. But some statistics show that the average person files a claim only once every 13 years, according to insurance broker, Michael Rice of Thomas Ward Insurance Group. So raising your deductible from, say, $500 to $1,000 can give you an annual premium savings of 10 to 15 percent. Rice also recommends paying your premium in full if the insurance company offers you a discount to do so; some offer a five percent or more deduction and you won't be charged administrative fees for periodic billing.
Keep your eye on the goal. Staying focused on the goal of buying a home will help you to remember that cutting costs now will allow you to have what you want in the long run. Our society is accustomed to instantaneous gratification so delaying the reward can be very challenging but well worth it. Owning your own home and, being able to purchase it while in a down market, is an exciting win-win.
Article Published in Realty Times
Published: April 17, 2009
by Phoebe Chongchua
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Wednesday, June 24, 2009
Hiking In Lake Tahoe
I am so fortunate to live in such a beautiful area with so many miles of gorgeous Sierra Nevada Wilderness to explore. There are enough hiking trails on Lake Tahoe’s North and East shore to keep an avid hiker like myself busy for years. There are so many trails that you can choose from based on your preference of scenery, location, elevation, distance and difficulty. These trails are all delightful in their own way. The striking great outdoors trails of the Northern Sierra Nevada are the best way to enjoy these mountains. So, pack up your gear and head out for a fabulous day in the Sierras!
Marlette Lake Trail
A great hike if you want to pack a lunch and take a leisurely hike. This up hill hike leads you through picturesque north canyon, lined with aspens, and many varieties of wild-flowers to Marlette Lake Dam. This trail provides wonderful views of the Carson Valley
as well as beautiful views of Lake Tahoe. Just before Snow Peak, the trail forks. The left fork leads you down steep switch backs to the road to Marlette Lake. The right fork eventually leads you to Tunnel Creek. This is a human-made reservoir. This is also a popular biking trail. If you want to continue on with this trail and make it more of a challenge then you can keep going until you end up at Tunnel Creek. As with any hike be prepared with lots of water. Hydration is very important at this elevation. The elevation is 7000’/8600’. It is 5 miles to Marlette Lake and 13 miles to Tunnel Creek. I really recommend this hike especially in the fall when the aspens change colors. It is spectacular.
Mt. Rose
Not to be confused with the ski area by the same name, Mt. Rose is one of the North Shore’s three 10,000 feet plus peaks. This is a great hike with lots of turns, small drops, rocky staircases, and a number of technical rocky spots. You will be amazed by the vast and panoramic views of Lake Tahoe. Mt. Rose at 10,778 feet is one of the highest peaks in the Lake Tahoe region. Only minutes from Incline Village, this hike offers beautiful meadows filled with lupine, paint brush and larkspur wildflowers in June and July. This round trip hike is 12 miles, quit strenuous, but well worth it!
Skunk Harbor
No, this does not mean that it stinks of skunks. Much of history of Lake Tahoe was shaped by the gold and silver mining rushes of the 1850’. This is also the case of Skunk Harbor. This is a great short walk, only 3 miles round trip, through a mixed conifer forest with filtered views of Lake Tahoe along the way. Look for remains of an old railroad grade along the way, built in the 1870s as part of the network to supply timber to Virginia City. Bring your beach towel as this leads you to a small picturesque cove which offers swimming and sunbathing in the summer. The elevation is 6,228 feet to 6,800 feet. This hike is less then a 10 minute drive from Incline Village. This is an easy hike and the road is stroller friendly, but don’t forget when you go down, you must eventually go up. The hiking trails that I just highlighted as well as many of the other trails hook up to one of the most world’s premier trails….. THE TAHOE RIM TRAIL…
Tahoe Rim Trail
The Tahoe Rim Trail is a 165-mile path that traverses the ridgeline of Lake Tahoe’s crown of peaks. The rim trail offers sweeping views of the Lake and much of it is accessible to everyone from casual day hikers to hardcore backpackers. The Tahoe Rim Trail offers some of the best options as it can be accessed from anywhere around the lake or surrounding areas. You can enjoy a nice day trip from any Tahoe Rim trailheads by simply going out in one direction for as long as you can and then turning around and returning to your car. The Rim Trail is sorted by location so you can start from any point around the lake. I love this hike. I usually start this hike at Tunnel Creek; it goes up three miles and connects to the Rim. It’s great for a short run up hill if you want a challenge. This trail offers something for everyone.
Hiking and Backpacking Tips
You don’t have to be a wilderness survival expert to go off tramping through the woods but you do need to always be prepared. The best weather in the morning here in Tahoe can change rapidly, so dress accordingly. Extra layers are always good. Bring plenty of water, high energy bars, sun glasses, bandages, matches, sunscreen, a whistle and a hat. Oh, and a partner for those long hikes. If you plan on going on a long day hike, it is always a good idea to bring a compass. Always let someone know where you are going and how long you will be gone. I know what it’s like carrying all these things, so putting them in a fanny pack is a good idea. Even though you don’t want to bring that CELL PHONE it is still a good idea. Most important is footwear. It is essential to make sure they are comfortable…So be prepared and have a great day!!! That’s all folks…
This article appeared in the May/June issue of the Coldwell Banker E-Newsletter
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Marlette Lake Trail
A great hike if you want to pack a lunch and take a leisurely hike. This up hill hike leads you through picturesque north canyon, lined with aspens, and many varieties of wild-flowers to Marlette Lake Dam. This trail provides wonderful views of the Carson Valley
as well as beautiful views of Lake Tahoe. Just before Snow Peak, the trail forks. The left fork leads you down steep switch backs to the road to Marlette Lake. The right fork eventually leads you to Tunnel Creek. This is a human-made reservoir. This is also a popular biking trail. If you want to continue on with this trail and make it more of a challenge then you can keep going until you end up at Tunnel Creek. As with any hike be prepared with lots of water. Hydration is very important at this elevation. The elevation is 7000’/8600’. It is 5 miles to Marlette Lake and 13 miles to Tunnel Creek. I really recommend this hike especially in the fall when the aspens change colors. It is spectacular.
Mt. Rose
Not to be confused with the ski area by the same name, Mt. Rose is one of the North Shore’s three 10,000 feet plus peaks. This is a great hike with lots of turns, small drops, rocky staircases, and a number of technical rocky spots. You will be amazed by the vast and panoramic views of Lake Tahoe. Mt. Rose at 10,778 feet is one of the highest peaks in the Lake Tahoe region. Only minutes from Incline Village, this hike offers beautiful meadows filled with lupine, paint brush and larkspur wildflowers in June and July. This round trip hike is 12 miles, quit strenuous, but well worth it!
Skunk Harbor
No, this does not mean that it stinks of skunks. Much of history of Lake Tahoe was shaped by the gold and silver mining rushes of the 1850’. This is also the case of Skunk Harbor. This is a great short walk, only 3 miles round trip, through a mixed conifer forest with filtered views of Lake Tahoe along the way. Look for remains of an old railroad grade along the way, built in the 1870s as part of the network to supply timber to Virginia City. Bring your beach towel as this leads you to a small picturesque cove which offers swimming and sunbathing in the summer. The elevation is 6,228 feet to 6,800 feet. This hike is less then a 10 minute drive from Incline Village. This is an easy hike and the road is stroller friendly, but don’t forget when you go down, you must eventually go up. The hiking trails that I just highlighted as well as many of the other trails hook up to one of the most world’s premier trails….. THE TAHOE RIM TRAIL…
Tahoe Rim Trail
The Tahoe Rim Trail is a 165-mile path that traverses the ridgeline of Lake Tahoe’s crown of peaks. The rim trail offers sweeping views of the Lake and much of it is accessible to everyone from casual day hikers to hardcore backpackers. The Tahoe Rim Trail offers some of the best options as it can be accessed from anywhere around the lake or surrounding areas. You can enjoy a nice day trip from any Tahoe Rim trailheads by simply going out in one direction for as long as you can and then turning around and returning to your car. The Rim Trail is sorted by location so you can start from any point around the lake. I love this hike. I usually start this hike at Tunnel Creek; it goes up three miles and connects to the Rim. It’s great for a short run up hill if you want a challenge. This trail offers something for everyone.
Hiking and Backpacking Tips
You don’t have to be a wilderness survival expert to go off tramping through the woods but you do need to always be prepared. The best weather in the morning here in Tahoe can change rapidly, so dress accordingly. Extra layers are always good. Bring plenty of water, high energy bars, sun glasses, bandages, matches, sunscreen, a whistle and a hat. Oh, and a partner for those long hikes. If you plan on going on a long day hike, it is always a good idea to bring a compass. Always let someone know where you are going and how long you will be gone. I know what it’s like carrying all these things, so putting them in a fanny pack is a good idea. Even though you don’t want to bring that CELL PHONE it is still a good idea. Most important is footwear. It is essential to make sure they are comfortable…So be prepared and have a great day!!! That’s all folks…
This article appeared in the May/June issue of the Coldwell Banker E-Newsletter
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Monday, June 22, 2009
Washington Report: Housing Tax Credit
A campaign to extend and expand the housing tax credit officially got underway on Capitol Hill last week.
Bills have now been introduced in both the Senate and the House to open up the credit, to all buyers, keep it on the books through next year, and get rid of the current income limitations.
On the House side, two Texas congressional representatives - one a Democrat, the other a Republican - have filed bills calling for a broadening of the first-time buyer credit to cover all home purchasers in the coming year, whether they already own houses or not.
Democratic Congresswoman Eddie Bernice Johnson of Dallas wants to extend the November 30 expiration date for the credit through the end of 2010. Her bill would also remove the income limits of the current program, which start phasing down the amount of the credit at $75,000 for singles and $150,000 for married couples.
Johnson's Republican colleague from the Dallas-Ft. Worth area, Kenny Marchant, also introduced a bill that would open up the credit to all buyers, without income limits, but only through June of next year.
But Congressman Marchant's bill adds a whole new element to the mix - a $3,000 tax credit for people who refinance their home loans. Why? Marchant says the idea is to encourage more people to “take advantage of (today's) low mortgage rates,” or to use the money to build equity in their homes “if they're a little underwater.”
In the Senate, Georgia Republican Johnny Isakson introduced a bill last week that would nearly double the maximum credit to $15,000, open to anyone who buys a house, regardless of income.
Isakson, who's a former realty company executive, has pushed for a $15,000 credit before - most recently during debate over the national economic stimulus package last February. Congress didn't buy it.
Meanwhile, the influential “Business Roundtable” lobby group, which represents some of the largest corporations in the country, urged Congress last week to broaden the credit to $15,000 -- along the lines suggested by Isakson.
So with the big push for a larger and longer tax credit getting underway, should potential home buyers assume these efforts are going to be successful and worth postponing a purchase?
Probably not.
None of the bills is likely to get much attention from the tax committees in the House or Senate until the Fall - maybe a month or two before the November 30 expiration date for the first-time buyer credit.
Although a short-term extension of the $8,000 credit is a distinct possibility, opening up the program to all buyers will be an uphill battle.
Don't count on it.
Written by Kenneth R. Harney / Realty Times - June 15, 2009
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Bills have now been introduced in both the Senate and the House to open up the credit, to all buyers, keep it on the books through next year, and get rid of the current income limitations.
On the House side, two Texas congressional representatives - one a Democrat, the other a Republican - have filed bills calling for a broadening of the first-time buyer credit to cover all home purchasers in the coming year, whether they already own houses or not.
Democratic Congresswoman Eddie Bernice Johnson of Dallas wants to extend the November 30 expiration date for the credit through the end of 2010. Her bill would also remove the income limits of the current program, which start phasing down the amount of the credit at $75,000 for singles and $150,000 for married couples.
Johnson's Republican colleague from the Dallas-Ft. Worth area, Kenny Marchant, also introduced a bill that would open up the credit to all buyers, without income limits, but only through June of next year.
But Congressman Marchant's bill adds a whole new element to the mix - a $3,000 tax credit for people who refinance their home loans. Why? Marchant says the idea is to encourage more people to “take advantage of (today's) low mortgage rates,” or to use the money to build equity in their homes “if they're a little underwater.”
In the Senate, Georgia Republican Johnny Isakson introduced a bill last week that would nearly double the maximum credit to $15,000, open to anyone who buys a house, regardless of income.
Isakson, who's a former realty company executive, has pushed for a $15,000 credit before - most recently during debate over the national economic stimulus package last February. Congress didn't buy it.
Meanwhile, the influential “Business Roundtable” lobby group, which represents some of the largest corporations in the country, urged Congress last week to broaden the credit to $15,000 -- along the lines suggested by Isakson.
So with the big push for a larger and longer tax credit getting underway, should potential home buyers assume these efforts are going to be successful and worth postponing a purchase?
Probably not.
None of the bills is likely to get much attention from the tax committees in the House or Senate until the Fall - maybe a month or two before the November 30 expiration date for the first-time buyer credit.
Although a short-term extension of the $8,000 credit is a distinct possibility, opening up the program to all buyers will be an uphill battle.
Don't count on it.
Written by Kenneth R. Harney / Realty Times - June 15, 2009
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Friday, June 19, 2009
What Buyer's CAN'T See!
Selling Home May Be Influenced by What Buyers Can't See
It’s not always what buyers can see in a home that causes them to want to buy it or not. Sometimes it’s the way the home feels. I’m not talking about staging, the size, or how spacious the home is, although those factors are important too. In this column I’m focusing on how buyers’ allergies may be affected when they tour your home.
“We have about 300 million Americans and about 60 million of them have allergies or asthma,” says, Mike Tringale, Director of External Affairs for the Asthma and Allergy Foundation of America (AAFA).
Allergy problems can be debilitating for sufferers. Many will go to great lengths to avoid any possible influences that might bring on symptoms. Allergies and asthma are increasing, Tringale says, “some of that may actually be because of the houses we’re living in.” He adds, “it all comes down to the air quality in the home.” According to AAFA, there are some simple steps that you can take to help clear the air in your home and reduce any harmful fumes—making it more appealing to those with allergies and even those without.
Tringale says do this three-step process: take an organized approach to looking at how your home is built, look at materials used in your home, and understand the types of cleaning agents that you’re using and how they can affect indoor air quality.
Check for mold. Mold is one of the most common indoor allergens. “Look for cracks in foundation. Check to see if the windows are completely sealed or if moisture is getting in—too much moisture can lead to a mold problem,” says Tringale. He adds that there are also housing products, such as wallboard, that are mold resistant. So be sure to check for those items when replacing housing materials.
Clean with hydrogen peroxide or sodium perborate not bleach. Bleach is a common cleaning chemical but it has a very strong odor and, people with highly sensitive allergies to bleach, often immediately can sense symptoms coming on even if with just a brief exposure to the chemical.
Use PVC-free shower curtains. Hard to imagine that a pretty shower curtain can wreak such havoc on people’s allergies, but the polyvinyl chloride shower curtains can release more than 100 volatile organic compounds (VOCs) including two (toluene and xylene) that are classified as hazardous pollutants by the Environmental Protection Agency. Having PVC shower curtains hanging around while your home is being shown can make those suffering from allergies feel the need to escape quickly.
Opt for area rugs instead of wall-to-wall carpeting. The U.S. Green Building Council provides information on “going green,” the Council says carpeting can be particularly troublesome because the padding underneath is very difficult to clean or remove for drying. Carpets also harbor dirt, organic detritus, and moisture and can become a significant source for mold and mildew. Instead use area rugs over a hard-surface floor. The Council also recommends avoiding all biocide-treated (moth repellent) wool or cotton carpets.
Use products that contain low volatile organic compounds (VOCs). A lot of homeowners will paint just before they list their homes for sale. But Tringale says, if you do, be sure to use paints that contain low VOCs. “Many paints contain volatile organic compounds and smells that can linger for weeks and cause all kinds of symptoms including eye irritations for people,” says Tringale.
“If you’re re-staining your floors ask for the low VOC stains, or even better, put in pre-treated floors rather than raw wood that you then have to apply polyurethane over the top of,” says Tringale. He cautions sellers to “Make smart choices; otherwise you’re going to have a house that is really chemically offensive to buyers who are walking through.”
Published in Realty Times
Written by: Phoebe Chongchua
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
It’s not always what buyers can see in a home that causes them to want to buy it or not. Sometimes it’s the way the home feels. I’m not talking about staging, the size, or how spacious the home is, although those factors are important too. In this column I’m focusing on how buyers’ allergies may be affected when they tour your home.
“We have about 300 million Americans and about 60 million of them have allergies or asthma,” says, Mike Tringale, Director of External Affairs for the Asthma and Allergy Foundation of America (AAFA).
Allergy problems can be debilitating for sufferers. Many will go to great lengths to avoid any possible influences that might bring on symptoms. Allergies and asthma are increasing, Tringale says, “some of that may actually be because of the houses we’re living in.” He adds, “it all comes down to the air quality in the home.” According to AAFA, there are some simple steps that you can take to help clear the air in your home and reduce any harmful fumes—making it more appealing to those with allergies and even those without.
Tringale says do this three-step process: take an organized approach to looking at how your home is built, look at materials used in your home, and understand the types of cleaning agents that you’re using and how they can affect indoor air quality.
Check for mold. Mold is one of the most common indoor allergens. “Look for cracks in foundation. Check to see if the windows are completely sealed or if moisture is getting in—too much moisture can lead to a mold problem,” says Tringale. He adds that there are also housing products, such as wallboard, that are mold resistant. So be sure to check for those items when replacing housing materials.
Clean with hydrogen peroxide or sodium perborate not bleach. Bleach is a common cleaning chemical but it has a very strong odor and, people with highly sensitive allergies to bleach, often immediately can sense symptoms coming on even if with just a brief exposure to the chemical.
Use PVC-free shower curtains. Hard to imagine that a pretty shower curtain can wreak such havoc on people’s allergies, but the polyvinyl chloride shower curtains can release more than 100 volatile organic compounds (VOCs) including two (toluene and xylene) that are classified as hazardous pollutants by the Environmental Protection Agency. Having PVC shower curtains hanging around while your home is being shown can make those suffering from allergies feel the need to escape quickly.
Opt for area rugs instead of wall-to-wall carpeting. The U.S. Green Building Council provides information on “going green,” the Council says carpeting can be particularly troublesome because the padding underneath is very difficult to clean or remove for drying. Carpets also harbor dirt, organic detritus, and moisture and can become a significant source for mold and mildew. Instead use area rugs over a hard-surface floor. The Council also recommends avoiding all biocide-treated (moth repellent) wool or cotton carpets.
Use products that contain low volatile organic compounds (VOCs). A lot of homeowners will paint just before they list their homes for sale. But Tringale says, if you do, be sure to use paints that contain low VOCs. “Many paints contain volatile organic compounds and smells that can linger for weeks and cause all kinds of symptoms including eye irritations for people,” says Tringale.
“If you’re re-staining your floors ask for the low VOC stains, or even better, put in pre-treated floors rather than raw wood that you then have to apply polyurethane over the top of,” says Tringale. He cautions sellers to “Make smart choices; otherwise you’re going to have a house that is really chemically offensive to buyers who are walking through.”
Published in Realty Times
Written by: Phoebe Chongchua
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Wednesday, June 17, 2009
Assuring Accurate Appraisals, Part II: What's A Consumer To Do?
An appraisal of a home is always supposed to be a fair, impartial and professional evaluation of a property's true value and not under pressure from special interests.
The risk-management tool is designed to assure the owner gets a fair price, the buyer pays the right price and the lender's risk in making the loan is commensurate with the property's true value.
Unfortunately, during the height of the housing boom, appraisers were pressured to up the value of homes. Now, during the housing downturn, appraisers are being pressured to lower the value of homes.
Either way, consumers, both buyers and sellers, are caught in the middle.
"It's an ever-changing pendulum," says Jim Amorin, president of the Appraisal Institute.
No longer arrived at by using a simple drive-by inspection, computerized automated valuation model (AVM) or even just comparative analyses of similar properties, appraisals have become yet another sticking point along the already viscous road to home ownership.
"Everyone got seduced by double digit property value increases and never thought the bottom would come. Doing an appraisal today is a complex deal with foreclosure sales, short sales and fewer sales. You want to get the most experienced folks doing appraisals," Amorin added.
So, through all the muck, how can consumers be sure the appraiser's work is on the up and up?
It's not easy.
Appraisers are typically hired by the lender to protect its stake in a home buying transaction. That means the appraiser is beholden to his or her employee -- the lender -- not necessarily the buyer nor the seller.
However, both the seller and the buyer can play a role in the appraisal process through a process of due diligence known as looking over the lender's shoulder.
Here's how.
When the appraisal choice is yours or if you are the seller, demand the lender use only local, licensed and certified appraisers with trade group designations. Seek referrals from family, friends, co-workers or others you trust who've recently enjoyed satisfactory work from an appraiser.
Even if the choice isn't yours, you can ask the lender, or get your real estate agent to ask the lender for the appraiser's credentials.
"The buyer can ask how the appraisal was done, but you need to speak to the lender about the appraisal if you have any questions," said Ted Faravelli, Jr. an expert witness, forensic real estate analyst and executive director of the California Association of Real Estate Appraisers.
First, a local appraiser is much more familiar with local market and property conditions than outsiders.
Some states license appraisers. Others both license and certify them at a higher level of education and professional requirements.
Affiliation with the Appraisal Institute or other trade group is also key. Institute members typically work beyond state licensing and certification requirements to earn a Senior Residential Appraiser (SAR) designation just as real estate agents work beyond state licensing requirements to achieve designations based on greater education and experience.
"SARs are much more experienced. They have more education and they are held to a higher code of ethics than state licensing. If you hire one, you'll get a true estimate of a home," says Jim Amorin, president of the Appraisal Institute.
The Appraisal Institute is comprised solely of real estate appraisers, but the American Society of Appraisers, which includes members from all appraisal disciplines, likewise grants accredited member real estate appraisers designations based on achievements that go beyond state requirements.
Local work, an unblemished license, certification and designations are good indications of an experienced and ethical appraiser, but not a blanket guarantee.
Determine how much of the appraiser's work is done for lenders. A high number could mean the appraiser is just returning predetermined values the lender wants, rather than true market values. If all of an appraiser's work is done for a lender and the appraiser tells you he or she never comes in with a value that is lower or higher than the sales price, find another appraiser, whenever possible.
Consider appraisers who also do estate and trust work because they are under pressure to be accurate -- not high or low. Another indication of quality is forensic or litigation work. Ask the appraiser how he or she helps litigants. The answer should be that he or she is an advocate for market value, not the litigant. Appraisers are legally required to be impartial.
Buyers and sellers can ask their real estate agent to see a copy of the appraisal before the deal closes.
"Ask to get it in ample time to look it over. The first page has the factual information about the property, location, physical description, etc. The second page is where the value analysis takes place," said Amorin.
If the appraisal was a drive-buy or automatic valuation model-generated (AVM) some assumptions could have been made about the property and its description. If you know from your own ownership or inspection of the property that the information is inaccurate, tell the lender.
"Every borrower is entitled to a copy of the appraisal and they need to make sure they get it. A lot of them never do. You need to ask for it and you need to read it. If there's anything in there that you take exception to, you need to bring it to the attention of lenders," said Faravelli.
Home buyers should also make sure to leave their financing contingencies in place until the lender has signed off on the appraisal. That makes financing contingent upon the buyer's approval of the appraisal.
Written by: Broderick Perkins / Realty Times
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
The risk-management tool is designed to assure the owner gets a fair price, the buyer pays the right price and the lender's risk in making the loan is commensurate with the property's true value.
Unfortunately, during the height of the housing boom, appraisers were pressured to up the value of homes. Now, during the housing downturn, appraisers are being pressured to lower the value of homes.
Either way, consumers, both buyers and sellers, are caught in the middle.
"It's an ever-changing pendulum," says Jim Amorin, president of the Appraisal Institute.
No longer arrived at by using a simple drive-by inspection, computerized automated valuation model (AVM) or even just comparative analyses of similar properties, appraisals have become yet another sticking point along the already viscous road to home ownership.
"Everyone got seduced by double digit property value increases and never thought the bottom would come. Doing an appraisal today is a complex deal with foreclosure sales, short sales and fewer sales. You want to get the most experienced folks doing appraisals," Amorin added.
So, through all the muck, how can consumers be sure the appraiser's work is on the up and up?
It's not easy.
Appraisers are typically hired by the lender to protect its stake in a home buying transaction. That means the appraiser is beholden to his or her employee -- the lender -- not necessarily the buyer nor the seller.
However, both the seller and the buyer can play a role in the appraisal process through a process of due diligence known as looking over the lender's shoulder.
Here's how.
When the appraisal choice is yours or if you are the seller, demand the lender use only local, licensed and certified appraisers with trade group designations. Seek referrals from family, friends, co-workers or others you trust who've recently enjoyed satisfactory work from an appraiser.
Even if the choice isn't yours, you can ask the lender, or get your real estate agent to ask the lender for the appraiser's credentials.
"The buyer can ask how the appraisal was done, but you need to speak to the lender about the appraisal if you have any questions," said Ted Faravelli, Jr. an expert witness, forensic real estate analyst and executive director of the California Association of Real Estate Appraisers.
First, a local appraiser is much more familiar with local market and property conditions than outsiders.
Some states license appraisers. Others both license and certify them at a higher level of education and professional requirements.
Affiliation with the Appraisal Institute or other trade group is also key. Institute members typically work beyond state licensing and certification requirements to earn a Senior Residential Appraiser (SAR) designation just as real estate agents work beyond state licensing requirements to achieve designations based on greater education and experience.
"SARs are much more experienced. They have more education and they are held to a higher code of ethics than state licensing. If you hire one, you'll get a true estimate of a home," says Jim Amorin, president of the Appraisal Institute.
The Appraisal Institute is comprised solely of real estate appraisers, but the American Society of Appraisers, which includes members from all appraisal disciplines, likewise grants accredited member real estate appraisers designations based on achievements that go beyond state requirements.
Local work, an unblemished license, certification and designations are good indications of an experienced and ethical appraiser, but not a blanket guarantee.
Determine how much of the appraiser's work is done for lenders. A high number could mean the appraiser is just returning predetermined values the lender wants, rather than true market values. If all of an appraiser's work is done for a lender and the appraiser tells you he or she never comes in with a value that is lower or higher than the sales price, find another appraiser, whenever possible.
Consider appraisers who also do estate and trust work because they are under pressure to be accurate -- not high or low. Another indication of quality is forensic or litigation work. Ask the appraiser how he or she helps litigants. The answer should be that he or she is an advocate for market value, not the litigant. Appraisers are legally required to be impartial.
Buyers and sellers can ask their real estate agent to see a copy of the appraisal before the deal closes.
"Ask to get it in ample time to look it over. The first page has the factual information about the property, location, physical description, etc. The second page is where the value analysis takes place," said Amorin.
If the appraisal was a drive-buy or automatic valuation model-generated (AVM) some assumptions could have been made about the property and its description. If you know from your own ownership or inspection of the property that the information is inaccurate, tell the lender.
"Every borrower is entitled to a copy of the appraisal and they need to make sure they get it. A lot of them never do. You need to ask for it and you need to read it. If there's anything in there that you take exception to, you need to bring it to the attention of lenders," said Faravelli.
Home buyers should also make sure to leave their financing contingencies in place until the lender has signed off on the appraisal. That makes financing contingent upon the buyer's approval of the appraisal.
Written by: Broderick Perkins / Realty Times
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Monday, June 15, 2009
Drop in Housing Prices Still Occurring but Market Activity Increasing
Experts aren’t saying the end of falling house prices is over; however, market activity is increasing in some areas and affordability continues to be the key critical factor for those wanting to buy a home.
“We are seeing the resale sales volume in a lot of markets is rebounding. In California, some of the volume is coming back pretty strongly but most of that is attributable to distressed sales,” says Wayne Yamano Senior Manager at John Burns Real Estate Consulting.
The Los Angeles Times recently reported that some markets such as Phoenix have increased activity resulting in bidding wars over foreclosures and short sales. Some are even calling it a quasi-boom there. But is this a real sign of improvement? Is a national housing recovery going to look like what some say is happening in Phoenix? “There are a lot of things that we look at and we certainly wouldn’t call it a turn-around until we see some kind of stability in price and we’re not seeing that yet,” says Yamano.
Reports indicate that more homes are selling in Phoenix than at any time since 2006 and prices are appearing to be on the path to stabilizing. But the foreclosed and distressed properties are being sold at big discounts, which, say agents, in that market is bringing out buyers.
But for much of the nation, home prices are still declining; however, it’s signs like these that breathe life and hope into the national real estate market.
“The silver lining is that the pace of decline in a lot the measures that we have been looking at like job growth, which has turned negative, and price declines… are not falling as quickly as they used to, so certainly that’s promising,” says Yamano.
The key factor these days is how affordable houses are becoming in many areas. “Affordability is the big story right now. And affordability all across the country is a lot better than it has been in any time in the last few years for sure. In markets like Phoenix, it’s the best time ever,” says Yamano.
“The way we’re looking at that is we compare housing costs to income. All across history, we’re finding that that ratio is the most favorable now. In markets like Phoenix, it actually is cheaper to buy a home (if you consider the tax benefits of buying a home) than it is to rent the median apartment out there,” he says.
It’s not exactly comparing apples to apples because you may not rent the same size home that you would buy but the point here is that the gap between buying a home and renting has significantly decreased. “During the boom when prices were high that gap was pretty large,” says Yamano. But now, says Yamano, “In a lot of markets, we’ve crossed that threshold, so it’s cheaper to own a home than to rent.” “Our sources at RealtyTrac tell us that 70 percent of REOs at the end of last year weren’t listed for sale, so that doesn’t show up in the supply numbers. So, that’s definitely going to put some downward pressure on price,” says Yamano.
Of course, this opportunity is even more intriguing because of the still-low interest rates for home loans. Yamano says timing the market is very difficult. “If you’re making a decision for your family, maybe you need a larger house because you have a baby on the way—you shouldn’t really try to time the market—you should buy a house for what it is—for shelter rather than an investment.” If you’re waiting for further decline you could find that house prices drop but interest rates rise. “The interest rates are at very historically low levels and we don’t think that they’ll stay there for very long. We actually even saw a pretty [significant] jump over the last couple of weeks. Maybe prices will come down a little bit, but if you see interest rates go up as well then it’s kind of wash—your home payment ends up being the same,” says Yamano.
Written by: Phoebe Chongchua / Realty Times on June 12, 2009
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
“We are seeing the resale sales volume in a lot of markets is rebounding. In California, some of the volume is coming back pretty strongly but most of that is attributable to distressed sales,” says Wayne Yamano Senior Manager at John Burns Real Estate Consulting.
The Los Angeles Times recently reported that some markets such as Phoenix have increased activity resulting in bidding wars over foreclosures and short sales. Some are even calling it a quasi-boom there. But is this a real sign of improvement? Is a national housing recovery going to look like what some say is happening in Phoenix? “There are a lot of things that we look at and we certainly wouldn’t call it a turn-around until we see some kind of stability in price and we’re not seeing that yet,” says Yamano.
Reports indicate that more homes are selling in Phoenix than at any time since 2006 and prices are appearing to be on the path to stabilizing. But the foreclosed and distressed properties are being sold at big discounts, which, say agents, in that market is bringing out buyers.
But for much of the nation, home prices are still declining; however, it’s signs like these that breathe life and hope into the national real estate market.
“The silver lining is that the pace of decline in a lot the measures that we have been looking at like job growth, which has turned negative, and price declines… are not falling as quickly as they used to, so certainly that’s promising,” says Yamano.
The key factor these days is how affordable houses are becoming in many areas. “Affordability is the big story right now. And affordability all across the country is a lot better than it has been in any time in the last few years for sure. In markets like Phoenix, it’s the best time ever,” says Yamano.
“The way we’re looking at that is we compare housing costs to income. All across history, we’re finding that that ratio is the most favorable now. In markets like Phoenix, it actually is cheaper to buy a home (if you consider the tax benefits of buying a home) than it is to rent the median apartment out there,” he says.
It’s not exactly comparing apples to apples because you may not rent the same size home that you would buy but the point here is that the gap between buying a home and renting has significantly decreased. “During the boom when prices were high that gap was pretty large,” says Yamano. But now, says Yamano, “In a lot of markets, we’ve crossed that threshold, so it’s cheaper to own a home than to rent.” “Our sources at RealtyTrac tell us that 70 percent of REOs at the end of last year weren’t listed for sale, so that doesn’t show up in the supply numbers. So, that’s definitely going to put some downward pressure on price,” says Yamano.
Of course, this opportunity is even more intriguing because of the still-low interest rates for home loans. Yamano says timing the market is very difficult. “If you’re making a decision for your family, maybe you need a larger house because you have a baby on the way—you shouldn’t really try to time the market—you should buy a house for what it is—for shelter rather than an investment.” If you’re waiting for further decline you could find that house prices drop but interest rates rise. “The interest rates are at very historically low levels and we don’t think that they’ll stay there for very long. We actually even saw a pretty [significant] jump over the last couple of weeks. Maybe prices will come down a little bit, but if you see interest rates go up as well then it’s kind of wash—your home payment ends up being the same,” says Yamano.
Written by: Phoebe Chongchua / Realty Times on June 12, 2009
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Friday, June 12, 2009
Markets Have Hit Rock Bottom?
Markets May Have Hit Bottom
Three bits of news came across my desk this week that may be pointing out that we may have it the bottom on the slumbering real estate market.
Sales of new single-family homes jumped 16.2 percent in April -- the largest increase in 14 years (Commerce Department)
This obviously reflects what's happening; we're in a buyers market. I hear the concern for buyers wondering if the prices of houses are going to fall further. They might -- and they might not. Nevertheless, buyers are taking advantage of several aspects of the market that make it favorable to purchase:
*Lower prices
*Low interest rates
*Seller contribution to closing (tens of thousands of dollars)
*Free upgrades, i.e., finished basements, decks, finer appointments, etc.
Some buyers continue to wait for prices to move upward to signal the sign of the end of depreciating real estate; they'll also wait and miss out on the add-ons that are being thrown in at the base pricing. Instead of getting the $15,000 in closing and a $25,000 mortgage, they'll pay a little more for the house with a security that the prices have stopped falling. Their confidence in a recovering market outstrips their desire for free upgrades and cash at the table.
Keep in mind that as the market starts to turn, so will the offers of seller subsidies.
A second bit of news is:
More than half of the nation's housing markets are appreciating or have at least stabilized (HousingPredictor.com).
The trending out there is showing that where a year ago more than two-thirds of the major metropolitan housing markets were faltering, now the trend is upward -- meaning that while some may still be in a negative range, it's less negative than before, i.e., moving from -5 percent to -1 percent -- could we soon be in positive territory? The trend is upward. Buyers take notice and get in now while you can. Once prices begin their move upward, if coupled with a continuing growing economy, the interest rates may start moving upward alongside the upwardly mobile house prices, meaning more money per month.
The forward-looking index for the commercial real estate market rose in the first quarter to the highest level on record. The index has risen for eight consecutive quarters (National Association of Realtors)
Why is commercial real estate important to the residential buyer? Commercial development signals job growth. With job growth comes more pressure on the number of houses available to those taking the jobs.
Meanwhile, the Office of Federal Housing Enterprise Oversight released the first quarter numbers for 2007. Average home prices nationally were 4.3 percent higher in the first quarter of 2007 than in the same period in 2006.
Not taking away the pain many homeowners felt during this latest downturn and many of the foreclosures that hit with sub-prime market -- there was no bubble burst. In fact, it WAS a soft landing as many had predicted.
Here's another concern fence-sitting buyers should take into account -- interest rates. They're heading upward again. Buoyed by strong economic gains and growing corporate profits, the stock market keeps heading upward. Thus, the bonds move upward as well (I'm simplifying it, of course.) and the interest rates for real estate mortgages follow suit.
In the last few months average mortgage rates have crept up to 6.35 percent from 6.03 in March, costing home shoppers buying power as the cost of money increases along with the average cost of the price of a house.
Thus if the prices continue their upward climb, let's say at a mere 4 percent over the coming months, the average priced home (nationally) at $220,500, according to the National Association of Realtors, would then be priced $8,820 more at $229,320. Thus, the average house requires a higher mortgage. With just the interest rate jump since March, that money will now cost even more with a higher interest rate coupled with a higher price.
Waiting, while making sense in the short-term, could come back to bite a buyer in the long haul.
Published in Realty Times Newsletter
Written by M. Anthony Carr
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Three bits of news came across my desk this week that may be pointing out that we may have it the bottom on the slumbering real estate market.
Sales of new single-family homes jumped 16.2 percent in April -- the largest increase in 14 years (Commerce Department)
This obviously reflects what's happening; we're in a buyers market. I hear the concern for buyers wondering if the prices of houses are going to fall further. They might -- and they might not. Nevertheless, buyers are taking advantage of several aspects of the market that make it favorable to purchase:
*Lower prices
*Low interest rates
*Seller contribution to closing (tens of thousands of dollars)
*Free upgrades, i.e., finished basements, decks, finer appointments, etc.
Some buyers continue to wait for prices to move upward to signal the sign of the end of depreciating real estate; they'll also wait and miss out on the add-ons that are being thrown in at the base pricing. Instead of getting the $15,000 in closing and a $25,000 mortgage, they'll pay a little more for the house with a security that the prices have stopped falling. Their confidence in a recovering market outstrips their desire for free upgrades and cash at the table.
Keep in mind that as the market starts to turn, so will the offers of seller subsidies.
A second bit of news is:
More than half of the nation's housing markets are appreciating or have at least stabilized (HousingPredictor.com).
The trending out there is showing that where a year ago more than two-thirds of the major metropolitan housing markets were faltering, now the trend is upward -- meaning that while some may still be in a negative range, it's less negative than before, i.e., moving from -5 percent to -1 percent -- could we soon be in positive territory? The trend is upward. Buyers take notice and get in now while you can. Once prices begin their move upward, if coupled with a continuing growing economy, the interest rates may start moving upward alongside the upwardly mobile house prices, meaning more money per month.
The forward-looking index for the commercial real estate market rose in the first quarter to the highest level on record. The index has risen for eight consecutive quarters (National Association of Realtors)
Why is commercial real estate important to the residential buyer? Commercial development signals job growth. With job growth comes more pressure on the number of houses available to those taking the jobs.
Meanwhile, the Office of Federal Housing Enterprise Oversight released the first quarter numbers for 2007. Average home prices nationally were 4.3 percent higher in the first quarter of 2007 than in the same period in 2006.
Not taking away the pain many homeowners felt during this latest downturn and many of the foreclosures that hit with sub-prime market -- there was no bubble burst. In fact, it WAS a soft landing as many had predicted.
Here's another concern fence-sitting buyers should take into account -- interest rates. They're heading upward again. Buoyed by strong economic gains and growing corporate profits, the stock market keeps heading upward. Thus, the bonds move upward as well (I'm simplifying it, of course.) and the interest rates for real estate mortgages follow suit.
In the last few months average mortgage rates have crept up to 6.35 percent from 6.03 in March, costing home shoppers buying power as the cost of money increases along with the average cost of the price of a house.
Thus if the prices continue their upward climb, let's say at a mere 4 percent over the coming months, the average priced home (nationally) at $220,500, according to the National Association of Realtors, would then be priced $8,820 more at $229,320. Thus, the average house requires a higher mortgage. With just the interest rate jump since March, that money will now cost even more with a higher interest rate coupled with a higher price.
Waiting, while making sense in the short-term, could come back to bite a buyer in the long haul.
Published in Realty Times Newsletter
Written by M. Anthony Carr
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Wednesday, June 10, 2009
May Round Up: Rates Tick Upward
In Freddie Mac's results of its Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 4.91 percent with an average 0.7 point for the week ending May 28, 2009, up from the previous week when it averaged 4.82 percent. Last year at this time, the 30-year FRM averaged 6.08 percent.
The 15-year FRM averaged 4.53 percent with an average 0.7 point, up from the previous week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 5.66 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.82 percent, with an average 0.6 point, up from the previous week when it averaged 4.79 percent. A year ago, the 5-year ARM averaged 5.62 percent.
One-year Treasury-indexed ARMs averaged 4.69 percent with an average 0.6 point, down from the previous week when it averaged 4.82 percent. At this time last year, the 1-year ARM averaged 5.22 percent. The 1-year ARM has not been lower since the week ending September 29, 2005, when it averaged 4.68 percent.
"Fixed-rate mortgage rates followed long-term bond yields higher this week as financial markets try to discern the state of the economy," said Frank Nothaft, Freddie Mac vice president and chief economist. "Consumer confidence rose again in May and represented the largest two-month rally since records began in 1967. According to the National Association for Business Economics, the consensus of a recent survey of 45 professional forecasters called for the recession to end in the second half of this year, but the recovery is to be more moderate than the previous survey.
"Housing continues to be a drag on the economy, however. Although single-family existing home sales rose 2.5 percent in April, inventories of homes for sale also rose to 9.6 months from 9.0 in March, according to the National Association of Realtors® (NAR). Moreover, the NAR noted that sales of distressed homes made up 45 percent of the purchases in April. Such types of sales mixed with a large supply of unsold homes keep depressing house prices. For example, a new research report from the Federal Housing Finance Agency found that sales of distressed homes accelerated the measured decline in California's home values by 5.3% from the peak in 2006 through the first quarter of 2009."
Fast Fixes Can Help Sell a Home
* It's not rocket science: Houses that look fresh and attractive sell faster than beat-up homes.
* Here are some cheap tricks from Money Magazine for boosting appeal:
* Buy a new mailbox, house numbers, doorbell, and knocker .
* Green the grass with nitrogen-rich fertilizer.
* Edge and mulch the flowerbeds.
* Replace the bathroom faucet.
* Install beadboard over dated bathroom tile.
* New paint.
* Replace switchplates and outlet covers.
* Install stone tile over existing Formica countertops.
Big Wins for Move-Up Buyers
Potential home buyers who aren’t eligible for the $8,000 first-time home buyer tax credit because they currently own a home actually have what could be an even bigger advantage - the opportunity to buy a new home that is bigger and better than they could have just a year or two before.
"Now may be an ideal time for any family looking to upgrade from their starter home to one more suited to their current or future needs," said Joe Robson, chairman of the National Association of Home Builders and a home builder from Tulsa, Okla. "Buyers are able to get more home for their money by taking advantage of current prices and interest rates, along with the bargaining power that comes from the large number of homes on the market."
Here are the top five reasons current home owners should consider upgrading to their dream home:
1. Interest rates are at historic lows, which means you can buy more house than you could a year ago - for the same monthly mortgage payment.
2. Prices have come down. Even if your current home is worth less than during the last housing market peak, your dream home is likely more affordable too.
3. There are plenty of homes on the market right now, both new construction and existing, giving you lots of choice - and negotiating power.
4. You can move in to your new home faster, as many builders either have completed homes in inventory or they can start work right away due to the production slowdown.
5. You may have outgrown your home, but it’s probably someone else’s ideal starter home. With the $8,000 tax credit expiring Nov. 30, now is the time to market your home to first-time buyers.
The current housing market offers unprecedented opportunities for first-time and move-up buyers alike.
Do You Marry the Credit Score?
Some think that the good credit will outweigh the bad credit. Or some hear that lenders average everyone's credit scores together. If Jane has an 800 credit score and John has a 400 credit, score, their combined score would be 800 + 400 = 1200 divided by two, giving a not-so-terrible-after-all score of 600. Okay, close to terrible but certainly nothing near 400.
Of course, that's not so. In either case. Good credit doesn't erase bad credit. In fact, bad credit will kill the deal altogether. And scores aren't averaged, they're examined independently and the 400 score would render the 800 score impotent.
If a spouse or joint borrower has bad credit, and the person with good credit can qualify on her own, then leave the person with bad credit off the mortgage and simply include him on the title.
Written by: Realty Times Staff
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
The 15-year FRM averaged 4.53 percent with an average 0.7 point, up from the previous week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 5.66 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.82 percent, with an average 0.6 point, up from the previous week when it averaged 4.79 percent. A year ago, the 5-year ARM averaged 5.62 percent.
One-year Treasury-indexed ARMs averaged 4.69 percent with an average 0.6 point, down from the previous week when it averaged 4.82 percent. At this time last year, the 1-year ARM averaged 5.22 percent. The 1-year ARM has not been lower since the week ending September 29, 2005, when it averaged 4.68 percent.
"Fixed-rate mortgage rates followed long-term bond yields higher this week as financial markets try to discern the state of the economy," said Frank Nothaft, Freddie Mac vice president and chief economist. "Consumer confidence rose again in May and represented the largest two-month rally since records began in 1967. According to the National Association for Business Economics, the consensus of a recent survey of 45 professional forecasters called for the recession to end in the second half of this year, but the recovery is to be more moderate than the previous survey.
"Housing continues to be a drag on the economy, however. Although single-family existing home sales rose 2.5 percent in April, inventories of homes for sale also rose to 9.6 months from 9.0 in March, according to the National Association of Realtors® (NAR). Moreover, the NAR noted that sales of distressed homes made up 45 percent of the purchases in April. Such types of sales mixed with a large supply of unsold homes keep depressing house prices. For example, a new research report from the Federal Housing Finance Agency found that sales of distressed homes accelerated the measured decline in California's home values by 5.3% from the peak in 2006 through the first quarter of 2009."
Fast Fixes Can Help Sell a Home
* It's not rocket science: Houses that look fresh and attractive sell faster than beat-up homes.
* Here are some cheap tricks from Money Magazine for boosting appeal:
* Buy a new mailbox, house numbers, doorbell, and knocker .
* Green the grass with nitrogen-rich fertilizer.
* Edge and mulch the flowerbeds.
* Replace the bathroom faucet.
* Install beadboard over dated bathroom tile.
* New paint.
* Replace switchplates and outlet covers.
* Install stone tile over existing Formica countertops.
Big Wins for Move-Up Buyers
Potential home buyers who aren’t eligible for the $8,000 first-time home buyer tax credit because they currently own a home actually have what could be an even bigger advantage - the opportunity to buy a new home that is bigger and better than they could have just a year or two before.
"Now may be an ideal time for any family looking to upgrade from their starter home to one more suited to their current or future needs," said Joe Robson, chairman of the National Association of Home Builders and a home builder from Tulsa, Okla. "Buyers are able to get more home for their money by taking advantage of current prices and interest rates, along with the bargaining power that comes from the large number of homes on the market."
Here are the top five reasons current home owners should consider upgrading to their dream home:
1. Interest rates are at historic lows, which means you can buy more house than you could a year ago - for the same monthly mortgage payment.
2. Prices have come down. Even if your current home is worth less than during the last housing market peak, your dream home is likely more affordable too.
3. There are plenty of homes on the market right now, both new construction and existing, giving you lots of choice - and negotiating power.
4. You can move in to your new home faster, as many builders either have completed homes in inventory or they can start work right away due to the production slowdown.
5. You may have outgrown your home, but it’s probably someone else’s ideal starter home. With the $8,000 tax credit expiring Nov. 30, now is the time to market your home to first-time buyers.
The current housing market offers unprecedented opportunities for first-time and move-up buyers alike.
Do You Marry the Credit Score?
Some think that the good credit will outweigh the bad credit. Or some hear that lenders average everyone's credit scores together. If Jane has an 800 credit score and John has a 400 credit, score, their combined score would be 800 + 400 = 1200 divided by two, giving a not-so-terrible-after-all score of 600. Okay, close to terrible but certainly nothing near 400.
Of course, that's not so. In either case. Good credit doesn't erase bad credit. In fact, bad credit will kill the deal altogether. And scores aren't averaged, they're examined independently and the 400 score would render the 800 score impotent.
If a spouse or joint borrower has bad credit, and the person with good credit can qualify on her own, then leave the person with bad credit off the mortgage and simply include him on the title.
Written by: Realty Times Staff
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Monday, June 8, 2009
Kids Camps in Incline Village
While there is plenty to do with the whole family in Lake Tahoe this Spring and Summer including an array of outdoor activities such as water sports, river rafting, hiking, biking, tennis, golf or just plain old sightseeing just to name a few - There are also several “camps” that are just kids – no grown ups allowed! You will benefit from some time off and will be thrilled to know your kids are having the time of their life.
Summer Camp XTREME for kids 5-12 years is hosted by the Incline Village General Improvement District (IVGID). There are 7 weeks of camps that run from June 16 through August 15. Campers will enjoy weekly theme field trips that include the Shakespeare Festival, Environmental Science Day, the Planetarium, kayaking, the Nevada Museum of Art, miniature golf, beaches around Tahoe, Wild Waters (water park) and many more. Mixed in with these adventures are activities which include arts & crafts, games, sports and contests. Camp times are from 7:30 AM – 5:30 PM. Resident and nonresident rates apply. For more information on all IVGID camps call (775) 832-1310. Ask about other youth and teen programs too. www.inclinevillage-nv.gov/news_events/view/summer_camp_xtreme_for_kids_5_12_years
Camp Invention is for kids entering grades 1-6. The Camp runs July 13 - 17 from 9AM-4PM and includes lunch and snacks. Camp Invention encourages children to create exciting new games and transform ordinary household items into extraordinary inventions. Children participate daily in five activity oriented modules focused on science literacy, math, history and the arts. For registration and more info visit www.campinvention.org
Day & Week Camps for kids from 6-14 years. Hosted by Incline Village’s Lake Tahoe School, these camps begin July 13 and run through July 30. Depending on the age and interests of your child, they can choose either half-day or full-day camps. The indoor events they are offering this year include Drama, Spanish Immersion, Wet and Wild Watercolor, Computer Animation, Photography, Rock and Roll, Jazz Band and Rockets.
Four day outdoor adventures include Hiking, River Rafting, Biking, Kayaking, Sailing and Rock Climbing. www.laketahoeschool.org/downloads/summer09.pdf
Overnight Camps & Backpacking in Desolation Wilderness for ages 10 - 14. Limited to 8 campers, this trip is scheduled for July 27 - 30. Your kids will learn to thrive in the wilderness. Hike, swim, cook, backpack & ferry across Echo Lake are just a few of the
fun activities during this 3 day adventure! www.laketahoeschool.org/downloads/summer09.pdf
Kids Tennis Camps for kids 5-12 years. Incline Tennis Center is a beautiful facility surrounded by towering Pines. IVGID’s week long youth tennis programs are 4 hours per day and are taught by USPTA Certified Professionals. The kids walk to the nearby Rec Center pool for their 1/2 day break, so don’t forget to pack their swim suit and towel! Sessions begin June 22 and run through August 21. Resident and non-resident rates apply. Check out the fun at www.inclinerecreation.com/tennis/youth
Kids Tennis Camps for kids 3 - 12 years. For your children that are just now trying their hand at tennis, there are 3 week camps that meet twice a week, either Monday & Wednesday or Tuesday & Thursday. This is a great way for your kids to learn proper
tennis skills. Drop ins are welcome. www.inclinerecreation.com/tennis/youth
Camp Hyatt for kids 3-12 years. Camp Hyatt is an exciting year-round program offered to registered hotel guests only. It’s a fun way to discover the culture, history & environment of Lake Tahoe. Summer activities include: Nighttime Astronomy; Swimming; Exploring Lake Tahoe & Outdoor Summer Drive - In Movies. For questions or reservations contact Camp Hyatt 775-832-1234 (x6714) Concierge Desk (x51)
This article appeared in the May/June issue of the Coldwell Banker E-Newsletter
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Summer Camp XTREME for kids 5-12 years is hosted by the Incline Village General Improvement District (IVGID). There are 7 weeks of camps that run from June 16 through August 15. Campers will enjoy weekly theme field trips that include the Shakespeare Festival, Environmental Science Day, the Planetarium, kayaking, the Nevada Museum of Art, miniature golf, beaches around Tahoe, Wild Waters (water park) and many more. Mixed in with these adventures are activities which include arts & crafts, games, sports and contests. Camp times are from 7:30 AM – 5:30 PM. Resident and nonresident rates apply. For more information on all IVGID camps call (775) 832-1310. Ask about other youth and teen programs too. www.inclinevillage-nv.gov/news_events/view/summer_camp_xtreme_for_kids_5_12_years
Camp Invention is for kids entering grades 1-6. The Camp runs July 13 - 17 from 9AM-4PM and includes lunch and snacks. Camp Invention encourages children to create exciting new games and transform ordinary household items into extraordinary inventions. Children participate daily in five activity oriented modules focused on science literacy, math, history and the arts. For registration and more info visit www.campinvention.org
Day & Week Camps for kids from 6-14 years. Hosted by Incline Village’s Lake Tahoe School, these camps begin July 13 and run through July 30. Depending on the age and interests of your child, they can choose either half-day or full-day camps. The indoor events they are offering this year include Drama, Spanish Immersion, Wet and Wild Watercolor, Computer Animation, Photography, Rock and Roll, Jazz Band and Rockets.
Four day outdoor adventures include Hiking, River Rafting, Biking, Kayaking, Sailing and Rock Climbing. www.laketahoeschool.org/downloads/summer09.pdf
Overnight Camps & Backpacking in Desolation Wilderness for ages 10 - 14. Limited to 8 campers, this trip is scheduled for July 27 - 30. Your kids will learn to thrive in the wilderness. Hike, swim, cook, backpack & ferry across Echo Lake are just a few of the
fun activities during this 3 day adventure! www.laketahoeschool.org/downloads/summer09.pdf
Kids Tennis Camps for kids 5-12 years. Incline Tennis Center is a beautiful facility surrounded by towering Pines. IVGID’s week long youth tennis programs are 4 hours per day and are taught by USPTA Certified Professionals. The kids walk to the nearby Rec Center pool for their 1/2 day break, so don’t forget to pack their swim suit and towel! Sessions begin June 22 and run through August 21. Resident and non-resident rates apply. Check out the fun at www.inclinerecreation.com/tennis/youth
Kids Tennis Camps for kids 3 - 12 years. For your children that are just now trying their hand at tennis, there are 3 week camps that meet twice a week, either Monday & Wednesday or Tuesday & Thursday. This is a great way for your kids to learn proper
tennis skills. Drop ins are welcome. www.inclinerecreation.com/tennis/youth
Camp Hyatt for kids 3-12 years. Camp Hyatt is an exciting year-round program offered to registered hotel guests only. It’s a fun way to discover the culture, history & environment of Lake Tahoe. Summer activities include: Nighttime Astronomy; Swimming; Exploring Lake Tahoe & Outdoor Summer Drive - In Movies. For questions or reservations contact Camp Hyatt 775-832-1234 (x6714) Concierge Desk (x51)
This article appeared in the May/June issue of the Coldwell Banker E-Newsletter
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Friday, June 5, 2009
Going Green May Help Sell Your Home
It's becoming the buzz word in housing -- "green" homes are what many buyers are interested in these days. According to the National Association of Home Builders (NAHB), as much as 90 percent of home buyers think that energy efficiency is a very important factor when shopping for a home. These same buyers are also very interested in environment-friendly features including having housing close to parks, public transportation, and well-designed neighborhoods with sidewalks.
The National Association of Home Builders Remodelers (NAHBR) -- a council of NAHB -- says that most homeowners choose green remodeling projects to help conserve energy. NAHBR recommends the following top ways to increase energy efficiency.
Install appropriate insulation in area to be remodeled.
Install high-efficiency windows instead of those that minimally meet the energy code.
Seal all exterior penetrations in areas being remodeled.
Purchase only Energy Star®-rated appliances.
Install only low-flow water fixtures.
Upgrade to at least an Energy Star®-rated water heater, or better yet, a tankless water heater.
Purchase the highest efficiency HVAC system you can afford and make sure it is correctly sized for the area you want to condition.
But going green can seem like a huge challenge. There are so many products and things to consider. And if you're selling your home you may wonder if going green is going to give you more or less green in your bank account. NAHBR says that "72 percent of consumers report energy-efficient features in a home would influence their purchase decision." The council also adds that "61 percent of consumers would spend more than $5,000 upfront to save on utility costs." And, consider this, there are approximately 125 million single-family homes in the U.S. but most were built before energy-efficiency developments, which means if your home has newly renovated green remodeling, it can be a buyer's dream. Featuring your green renovations when you list your home for sale could give you that added value and unique market advantage.
How to get started. Deciding to make your home green doesn't have to be overwhelming nor do you have to make the entire house eco-friendly. Try things like installing energy-efficient lighting such as compact fluorescents. Also, change out any old appliances that are using up lots of energy.
Once you've done this, compare your utility bills so that you can show the reduction to your real estate agent. Your agent can then point out the energy-savings to potential buyers. With utility bills on the rise, any savings can be a major influence on buyers. If they see that similar homes cost more to operate than yours, you will at the very least grab their attention.
Get rid of energy-hog appliances. Sometimes homeowners don't want to replace an appliance because they are selling their home, but replacing an energy-hog appliance can be a cost-effective way to increase the value of your home. Energy Star-certified appliances use less energy and are more efficient to operate. Many of these appliances are 10 percent to 50 percent more efficient than standard models.
Don't forget to sell what you can't see. Insulation isn't something homeowners often think to promote, but, if your home is well insulated, it can be a big selling point.
Make it a healthy home. Going green isn't just about saving money; it's also about preserving the earth and our lives. Many people suffer from allergies, asthma, and chemical sensitivities. For instance, if you have placed pollen screens on your home, be sure to promote that feature. It will likely be considered an added bonus.
Published in Realty Times
The National Association of Home Builders Remodelers (NAHBR) -- a council of NAHB -- says that most homeowners choose green remodeling projects to help conserve energy. NAHBR recommends the following top ways to increase energy efficiency.
Install appropriate insulation in area to be remodeled.
Install high-efficiency windows instead of those that minimally meet the energy code.
Seal all exterior penetrations in areas being remodeled.
Purchase only Energy Star®-rated appliances.
Install only low-flow water fixtures.
Upgrade to at least an Energy Star®-rated water heater, or better yet, a tankless water heater.
Purchase the highest efficiency HVAC system you can afford and make sure it is correctly sized for the area you want to condition.
But going green can seem like a huge challenge. There are so many products and things to consider. And if you're selling your home you may wonder if going green is going to give you more or less green in your bank account. NAHBR says that "72 percent of consumers report energy-efficient features in a home would influence their purchase decision." The council also adds that "61 percent of consumers would spend more than $5,000 upfront to save on utility costs." And, consider this, there are approximately 125 million single-family homes in the U.S. but most were built before energy-efficiency developments, which means if your home has newly renovated green remodeling, it can be a buyer's dream. Featuring your green renovations when you list your home for sale could give you that added value and unique market advantage.
How to get started. Deciding to make your home green doesn't have to be overwhelming nor do you have to make the entire house eco-friendly. Try things like installing energy-efficient lighting such as compact fluorescents. Also, change out any old appliances that are using up lots of energy.
Once you've done this, compare your utility bills so that you can show the reduction to your real estate agent. Your agent can then point out the energy-savings to potential buyers. With utility bills on the rise, any savings can be a major influence on buyers. If they see that similar homes cost more to operate than yours, you will at the very least grab their attention.
Get rid of energy-hog appliances. Sometimes homeowners don't want to replace an appliance because they are selling their home, but replacing an energy-hog appliance can be a cost-effective way to increase the value of your home. Energy Star-certified appliances use less energy and are more efficient to operate. Many of these appliances are 10 percent to 50 percent more efficient than standard models.
Don't forget to sell what you can't see. Insulation isn't something homeowners often think to promote, but, if your home is well insulated, it can be a big selling point.
Make it a healthy home. Going green isn't just about saving money; it's also about preserving the earth and our lives. Many people suffer from allergies, asthma, and chemical sensitivities. For instance, if you have placed pollen screens on your home, be sure to promote that feature. It will likely be considered an added bonus.
Published in Realty Times
Written by Phoebe Chongchua
June 5, 2009
June 5, 2009
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Wednesday, June 3, 2009
The Waiting Game
A recent study by John Burns Real Estate shows that real estate is now as affordable as it's been in the past 38 years. The study tells us that median home prices, when viewed against median mortgage rates and incomes, are wildly affordable.
The peak of unaffordability was in 2006, when an average family in the US needed to spend 44% of their income to purchase an average single family home. These numbers are fine and dandy, but they're obviously a national average, which means certain areas are more affordable, and many more areas less affordable. What's most interesting to me in the study isn't the affordability index, it's the information that homeowners revealed by another survey mentioned in this Wall Street Journal story.
The American Institute of Certified Public Accountants released their own ironic study that reveals 79% of Americans have no intention of buying or selling a home anytime soon. No word from the detail oriented CPA's on what the definition of "anytime soon" may be. In their study, the brilliant, financially savvy American public made comments that forced the CPA's to come to this mind numbing conclusion " Two-thirds of those who plan to sell are waiting for home values to come back up before putting their homes on the market".
American public, lean in a little, because I'm only going to tell you this once. If you're waiting for values to come back up before selling your home, you had better be prepared to wait. And wait. When you're done waiting, go grab a water and take a bathroom break, and then wait some more. The thing about home values is that this Realtor just doesn't see them coming back to where they were for a long, long time. Values were so very high, so very artificially inflated in several markets in this country, that values will not return to those levels for several years to come.
By several I mean 5-8. By 5-8 I might mean a decade. It's the cold hard truth of the revised attitude our nation has towards housing. We're smack dab in the middle of a period where housing prices might rise a little one quarter, and fall a little the next. We're in a sideways market, and that's going to be the new reality of housing for several years to come. While that might not excite you, it's not entirely a bad thing either.
I've long been saying that a rebound in the housing market will mean a rebound in liquidity first, and a possible rebound in pricing later. The 40% that many national markets have lopped off in mere months, might very well take 5-8 years to rebuild. So homeowners who are waiting out the bad times, you really need to assess your situation. Really take a look at why you're wanting to sell in the first place. Are you selling to cash out and retire? If you are, you probably don't have 5-10 years to wait. Are you selling to move up to a larger, nicer home? If so, selling low and buying low is the same as selling high and buying high. Value a dollar at a dollar, and movement, whether it's up, down, or lateral, doesn't make a difference. Selling a home you think is worth $500k for $400k and buying a home that another seller thinks is worth $500k for $400k isn't any different than selling and buying for the perceived some day value. Are you selling to move to a tropical island because you love coconuts and automatic weapon yielding natives? Sell now, because even 80 cents on your US housing dollar will last you a long time in Honduras.
I think people are waiting for the wrong reasons. Then again, I think people generally buy and sell real estate when they do for the wrong reasons anyway. If you're a buyer, buy because you love what you're buying. Buy because the lifestyle you're looking to live can more easily be accomplished with the purchase than without. If you're selling, sell because you want to sell. Sell because you need to sell. Sell because your neighbor is driving you crazy. Sell because the house you've always had your eye on just hit the market. Sell to move up in the market. Sell to downsize. Sell to liquidate, but if you really want to sell, just sell already. If you're waiting to sell until markets rebound, please realize that doesn't mean to list in October. That means you'll be listing several years down the road, and the reason you were planning on selling in the first place might not exist at that magical time in the future. None of us are promised today, let alone tomorrow. Let alone 6 years from now when you can possibly sell your home for 15% more money.
If you're in no hurry to sell, do your neighbors a favor and take your home off the open market. If you're wanting to sell, be realistic in your asking price and aggressive in your hunt for a buyer. If you're a buyer, John Burns seems to be telling you that it's a pretty good time to buy. I'm telling you it's a good time to buy, and my reasons are not the same as Mr. Burns'. Buy because you want to. Buy because you can. Buy because you know the purchase will make you look like a real estate savant 15 years from now. Welcome to 2009 and the new rules of real estate. Sell low, hopefully buy lower.
This article was written by: David Curry and appeared in Realty Times on June 3, 2009
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
The peak of unaffordability was in 2006, when an average family in the US needed to spend 44% of their income to purchase an average single family home. These numbers are fine and dandy, but they're obviously a national average, which means certain areas are more affordable, and many more areas less affordable. What's most interesting to me in the study isn't the affordability index, it's the information that homeowners revealed by another survey mentioned in this Wall Street Journal story.
The American Institute of Certified Public Accountants released their own ironic study that reveals 79% of Americans have no intention of buying or selling a home anytime soon. No word from the detail oriented CPA's on what the definition of "anytime soon" may be. In their study, the brilliant, financially savvy American public made comments that forced the CPA's to come to this mind numbing conclusion " Two-thirds of those who plan to sell are waiting for home values to come back up before putting their homes on the market".
American public, lean in a little, because I'm only going to tell you this once. If you're waiting for values to come back up before selling your home, you had better be prepared to wait. And wait. When you're done waiting, go grab a water and take a bathroom break, and then wait some more. The thing about home values is that this Realtor just doesn't see them coming back to where they were for a long, long time. Values were so very high, so very artificially inflated in several markets in this country, that values will not return to those levels for several years to come.
By several I mean 5-8. By 5-8 I might mean a decade. It's the cold hard truth of the revised attitude our nation has towards housing. We're smack dab in the middle of a period where housing prices might rise a little one quarter, and fall a little the next. We're in a sideways market, and that's going to be the new reality of housing for several years to come. While that might not excite you, it's not entirely a bad thing either.
I've long been saying that a rebound in the housing market will mean a rebound in liquidity first, and a possible rebound in pricing later. The 40% that many national markets have lopped off in mere months, might very well take 5-8 years to rebuild. So homeowners who are waiting out the bad times, you really need to assess your situation. Really take a look at why you're wanting to sell in the first place. Are you selling to cash out and retire? If you are, you probably don't have 5-10 years to wait. Are you selling to move up to a larger, nicer home? If so, selling low and buying low is the same as selling high and buying high. Value a dollar at a dollar, and movement, whether it's up, down, or lateral, doesn't make a difference. Selling a home you think is worth $500k for $400k and buying a home that another seller thinks is worth $500k for $400k isn't any different than selling and buying for the perceived some day value. Are you selling to move to a tropical island because you love coconuts and automatic weapon yielding natives? Sell now, because even 80 cents on your US housing dollar will last you a long time in Honduras.
I think people are waiting for the wrong reasons. Then again, I think people generally buy and sell real estate when they do for the wrong reasons anyway. If you're a buyer, buy because you love what you're buying. Buy because the lifestyle you're looking to live can more easily be accomplished with the purchase than without. If you're selling, sell because you want to sell. Sell because you need to sell. Sell because your neighbor is driving you crazy. Sell because the house you've always had your eye on just hit the market. Sell to move up in the market. Sell to downsize. Sell to liquidate, but if you really want to sell, just sell already. If you're waiting to sell until markets rebound, please realize that doesn't mean to list in October. That means you'll be listing several years down the road, and the reason you were planning on selling in the first place might not exist at that magical time in the future. None of us are promised today, let alone tomorrow. Let alone 6 years from now when you can possibly sell your home for 15% more money.
If you're in no hurry to sell, do your neighbors a favor and take your home off the open market. If you're wanting to sell, be realistic in your asking price and aggressive in your hunt for a buyer. If you're a buyer, John Burns seems to be telling you that it's a pretty good time to buy. I'm telling you it's a good time to buy, and my reasons are not the same as Mr. Burns'. Buy because you want to. Buy because you can. Buy because you know the purchase will make you look like a real estate savant 15 years from now. Welcome to 2009 and the new rules of real estate. Sell low, hopefully buy lower.
This article was written by: David Curry and appeared in Realty Times on June 3, 2009
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Monday, June 1, 2009
Real Estate Outlook: Recovery Underway
The pattern gets clearer week after week: We are looking at a slow-motion housing recovery that is itself feeding into a broader economic recovery that should have us out of recession later this year.
Now that's not to ignore the fact that there are markets in the country that still face very challenging economic dynamics - with no real turnaround in view yet on housing sales, prices and unemployment.
But the national numbers are telling us something important, and they increasingly look positive.
Take the last new home construction starts and permits reports. Your local paper or the network news may have said housing starts dropped again, but that was misleading.
The facts are that the Commerce Department found that apartment starts - new multifamily units - took a drop in April, but starts of new single family homes were up by 3 percent, and permits for future construction of detached single family homes jumped by nearly 4 percent.
That's the second straight month of increases . Home builders themselves are seeing a turnaround - more shoppers in their models and showrooms, more contracts, fewer cancellations.
The latest survey of builder confidence - released last week by Wells Fargo and the National Asociation of Home Builders - found sentiment up again for the second straight month. So this is for real.
Consumer confidence in the economic outlook also continues to get better and better. The latest University of Michigan consumer sentiment poll took a three point jump overall…and a 6 percent jump in terms of consumers' expectations for economic improvements ahead.
There are other, less widely publicized signs that we've digging out of the recession as well. For example, economists at Northwestern University say the fact that new weekly claims for unemployment insurance peaked last month - and have been dropping ever since - is a sign that the national economy is past the worst.
Treasury Secretary Timothy Geithner told a congressional panel about other, more technical indicators of growth ahead -- such as narrowing spreads on corporate and municipal bonds, smaller risk premiums on short-term inter-bank loans and decreased credit protection costs at the largest U.S. banks.
Finally, consumer interest rates continue to be about as stimulative for economic expansion as they possibly could: Mortgage rates dropped last week by a tenth of a percent -- 30-year fixed rate mortgages are at 4,7 percent with an average one point, and 15-year rates are at 4.4 percent.
Remember back to how you felt last September and October when the global financial system was falling apart? Now think about how you feel about the economy today.
It's a refreshing comparison.
Written by: Ken Harney / Realty Times
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Now that's not to ignore the fact that there are markets in the country that still face very challenging economic dynamics - with no real turnaround in view yet on housing sales, prices and unemployment.
But the national numbers are telling us something important, and they increasingly look positive.
Take the last new home construction starts and permits reports. Your local paper or the network news may have said housing starts dropped again, but that was misleading.
The facts are that the Commerce Department found that apartment starts - new multifamily units - took a drop in April, but starts of new single family homes were up by 3 percent, and permits for future construction of detached single family homes jumped by nearly 4 percent.
That's the second straight month of increases . Home builders themselves are seeing a turnaround - more shoppers in their models and showrooms, more contracts, fewer cancellations.
The latest survey of builder confidence - released last week by Wells Fargo and the National Asociation of Home Builders - found sentiment up again for the second straight month. So this is for real.
Consumer confidence in the economic outlook also continues to get better and better. The latest University of Michigan consumer sentiment poll took a three point jump overall…and a 6 percent jump in terms of consumers' expectations for economic improvements ahead.
There are other, less widely publicized signs that we've digging out of the recession as well. For example, economists at Northwestern University say the fact that new weekly claims for unemployment insurance peaked last month - and have been dropping ever since - is a sign that the national economy is past the worst.
Treasury Secretary Timothy Geithner told a congressional panel about other, more technical indicators of growth ahead -- such as narrowing spreads on corporate and municipal bonds, smaller risk premiums on short-term inter-bank loans and decreased credit protection costs at the largest U.S. banks.
Finally, consumer interest rates continue to be about as stimulative for economic expansion as they possibly could: Mortgage rates dropped last week by a tenth of a percent -- 30-year fixed rate mortgages are at 4,7 percent with an average one point, and 15-year rates are at 4.4 percent.
Remember back to how you felt last September and October when the global financial system was falling apart? Now think about how you feel about the economy today.
It's a refreshing comparison.
Written by: Ken Harney / Realty Times
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
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