Homeowners' tax deduction in danger?

... Reading the other day the headlines in the San Jose Mercury News: "Coveted tax break in peril?"

With the negotiations going on in Washington to avert the "fiscal cliff", we all know that there will be some combination of cost reduction measures and tax increase, whatever this combination will be.  But the tax deduction for homeowners regarding the interest paid on their loan is definitely in consideration.

For the main parts of the nation, this is not an issue, but for the Bay area, where according to this article, 40% of the purchase loans in the Counties of Santa Clara and San Mateo are for more than $500,000, it is a big deal.  13% of those loans were for more than $800,000, and 10% were for more than $900,000.

One way to find money is to reduce this interest deduction.  If the maximum mortgage cap is brought down from the present $1million to $500,000, over 10 years, it would raise $41.4 billion according to this article, which would look good to reduce the deficit of course. 

What would you do, if in the course of reducing the deficit, the politicians were to take away part of the mortgage deduction?  Most likely, if you own a house in the Bay Area, you have a significant mortgage attached to that house.  Would it affect you?  Would you agree with that?

Francis

Silicon Valley real estate

Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

Scams of the year…

Scams of the year…

The troubled housing market, an array of new mortgage programs, and general consumer confusion over the new rules set the stage for a host of scams, from Ponzi schemes to rigged bidding at real estate auctions to “reverse staging”, where investors make negative cosmetic changes to a property to get a low appraisal, sell it to a cohort, then flip the property for a higher price.

The big news was the uptick in “foreclosure rescue” companies and mortgage modification scams. In one version, scam artists find victims via foreclosures notices in newspapers, the internet and public records, offer a loan modification for an up-front fee, then disappear with the money. By mid-year, such scams were up 60%, according to the nonprofit Homeownership Preservation Foundation.

State officials also warned of a new scam from callers promising to help owners apply for the Keep Your Home California program for fees of up to $900, although applying is free.

In May, armed forces members were warned of HAMP scams from companies using official government logos, promising guaranteed results and charging high fees for help or information that could be obtained for free.

Prepaid rental listing services also are in question sometimes, as shown in this article from the Department of Real Estate.

As always, in real estate, it is good to conduct your due diligence before hiring services.  Remember to call me for professional contacts, or professional advice.  I do not know everything but I sure will share my knowledge and help you if I can.

Thanks for reading!

Francis

Silicon Valley real estate

Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

Should you buy during the Holidays?

Should you buy a home during the holidays?

Once Thanksgiving is over, the real estate world typically starts to wind down for the holidays and doesn’t usually reawaken until after New Year’s. But potential home buyers who are prepared to close in today’s competitive market may want to keep house hunting while everyone else is waiting for spring.

This article from UT San Diego explains that REALTORS® especially recommend that serious home buyers continue shopping if they have repeatedly lost out on deals because of a limited and continually decreasing supply of homes. Buying intensity typically cools down at the start of fall through early January, which could increase the odds for those with more patience.

Would-be buyers historically have bowed out during the winter season because they are overwhelmed by holiday spending and commitments. There’s also the aversion of moving in the middle of a school year. Consumer interest typically picks back up again in the New Year and peaks in the spring.

It is my experience that prices, statistically, go down at the end of the year. (pls refer to this past blog from June). This would be another reason in my opinion for not stopping a house hunting effort. - it is also true, from one of my recent blogs, that prices this year do not seem to abate as they did in previous years. I am afraid of what it may mean for the coming 2 or 3 months.

What does your crystal ball tell you?
Thanks for reading!
Francis

Local market trends

Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

South Bay among best US job markets

Reading this little article in the San Jose Mercury News, dated Nov. 30, about the job market in the Bay Area, it strikes me as something of the utmost interest in explaining why the real estate market is so imbalanced in the Silicon Valley. (i.e.: too much demand, not enough supply).

This article, which I will simply paraphrase, while giving all credits to the SJ Merc, explains that according to a report from the US bureau of Labor Statistics, the County of Santa Clara saw jobs increase by 3.5 % in the one-year period ending in October 2012.

The San Francisco - San Mateo - Marin metro region had an annual growth of 3.4 %, and the East Bay 2%. 

Only the Houston region in Texas showed a higher jobs increase: 3.6%

More work means more people attracted to the area. I believe there is also a parallel between freeway traffic and housing prices... Don't you think so? I have never seen 280 so congested after 3pm between Los Altos and San Francisco.

Thank you for reading!

Francis

Silicon Valley Real Estate

useful links

_____________________________________________________
Coldwell Banker invites you to warm and brighten the spirits of those in our community this holiday season by supporting One Warm Coat, a coat drive that collects and distributes warm coats to the less fortunate in our local community during the cold winter months.

Our office is accepting donations of new or gently used coats for One Warm Coat now until December 14.
To make a donation or for more information, please contact me today.

Things are improving...

It is hard to keep some perspective on the market nationwide, as we keep our eyes on the ball here in the Silicon Valley. While multiple offers rule here and buyers have a hard time finding, then purchasing a home, it is good to keep things in perspective and look at the big picture.
The market is still struggling, and shaky in some areas.

IMPROVEMENT – As of 9/30/12, 1 out of every 8.5 home mortgages (11.7%) in the USA are either delinquent or are in the foreclosure process. Compared with: 12/31/2009, when 1 out of every 6.7 home mortgages (15.0%) in the USA was either delinquent or was in the foreclosure process (source: MBA Mortgage Bankers Association).

While keeping things in perspective, let us remember too that about 1/3 of all houses in the US are owned free and clear:

According to the National Association of Realtors "Economists' Outlook blog":

Nationally, about 32 percent of homes were owned outright—without a mortgage. This varies from state to state. West Virginia has the highest share of homes owned outright, just 2 percent shy of half. This contrasts with California, Colorado, Maryland, DC, and Nevada where less than a quarter of owner-occupied homes were owned outright.

Thank you for reading!

Francis

Silicon Valley Real Estate

useful links

Coldwell Banker invites you to warm and brighten the spirits of those in our community this holiday season by supporting One Warm Coat, a coat drive that collects and distributes warm coats to the less fortunate in our local community during the cold winter months.

Our office is accepting donations of new or gently used coats for One Warm Coat now until December 14.
To make a donation or for more information, please contact me today.

Time to sell: suggestions for removing the clutter

Ah, time to sell the house, and you are still living in it....  What do you do?

 Well, the house is not “your home” any longer, it is a property that you are showing to the whole world, with the purpose of selling it for the higher price, with the least amount of hassle. Here are a few of my suggestions:

* Money and valuables: Cash, checkbooks, coins, jewelry, watches, figurines, anything of value that is small and can be easily removed: it is best to put all these away. It's just better for everyone if it's out of sight (of course, there are some exceptions, depending on the property). Many people will go through your property, kids as well as adults and their agents. Some items which may not have any monetary value, but are very valuable to you (i.e. sentimental value) are best removed too. Why take a chance?

* Personal photos. In some cases, a few pictures of your family can give a feeling that the house is full of love. But if you have pictures everywhere, it is too much. Buyers really get distracted by them. If buyers spend their time looking at your pictures, they will leave the house not remembering the property so well. I can attest to that.

* Bills and personal papers. You may not be able to remove these documents from the home all together, but it is best to take the time to organize them, and put them out of sight, or show them in an organized way. Bills and papers laying around will attract the buyers’ look – it is almost instinctive, isn’t it? Again, there, it distracts the buyers away from looking at the house.

* Guns, weapons. Wherever they are and with any form they take, it's better to remove them from the home prior to listing. For some reason, I have seen buyers become either very distracted, or uneasy.

* Clothes, Shoes! Unless there is a good reason for it, a pile of shoes or clothes gives a buyer two impressions: 1/ that there isn't enough storage in your home. 2/ that the house is messy. So, in order to avoid wondering which one, on the part of the buyer, it is best to put them away.

* Medicine. To avoid any trouble it's best to simply remove medicine from the counters, the cabinets, the bathroom etc… if at all possible.

* Items on your kitchen counter (and bathrooms too). It is best to remove everything from your counters. The cleaner you can leave the counters, the more buyers dream of being in there. Also, if you store things on the counters it gives the appearance that you do not have enough storage space.

* Clean the drawers. Here too, it is best to show them clear of too much stuff, and organized. A good way to look at things is: you are going to move eventually; why not move stuff in boxes ahead of time? Clean drawers are like clean cupboards: when buyers open them, they feel invited to fill them out with their own stuff. – instead of feeling overwhelmed by the move that will need to take place before they buy the house. Perception is as important (if not more) as reality when you show a house for sale. Perceiving an “easy” move is so much more soothing to the mind than perceiving a mayhem to come.

* Refrigerator. It is really refreshing to walk into a home that has a clean fridge (and I mean: outside). Buyer's can't imagine their own children's drawing on there if it is covered with yours, and/or covered with magnets. Anything that distracts a buyer’s attention from the house is best left out.

* Furniture. Finally, any furniture that is not essential to you should be removed if at all possible. The property will show larger, more spacious, and buyers can better imagine their own furniture in it. This is why houses for sale often have garages full of furniture and boxes. The move has started !... The type of furniture that stays is a whole other subject… leading to the big “S” word: staging.

Thanks for reading!

Francis

Silicon Valley real estate

Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

Foreclosures... any discount?

This article is an  "a propos" follow up on my last blog.  In this article one can see the actual average discount, according to Zillow, for the various areas in the US.  It does not detail the discount for the Silicon Valley, but it does give the figure for San Francisco.  I believe it may be closer to zero in most of the areas between Los Gatos and Menlo Park.

"Foreclosure discount declines to 7.7 percent nationwide in September"

An analysis by Zillow shows that home buyers nationwide could expect a discount of 7.7 percent in September when buying a bank-owned home compared with the same home in a non-distressed sale.

The discount narrowed from 9.1 percent in September 2011 and has fallen dramatically from a peak national discount of 23.7 percent in August 2009. Zillow compared the actual sale price of foreclosed homes nationwide to the estimated price of the same home were it to sell in a non-distressed transaction.

While foreclosure sales continue to offer buyers discounts over traditional sales in the majority of metro areas, some of the areas hardest hit by foreclosures also are those where the price gap between foreclosed and non-foreclosed homes is the smallest. Areas with the smallest foreclosure discounts in September were Phoenix, 0 percent; Las Vegas, 0 percent; Sacramento, Calif., 0.7 percent; and Riverside, Calif., 1.8 percent.

"The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability," said Zillow Chief Economist Dr. Stan Humphries.

Full article from Zillow.

Thanks for reading!
Francis

Silicon Valley real estate
Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

Are foreclosures good deals?

Are foreclosure sales good deals??

Favorable home prices and record-low interest rates combined with high demand and a severe shortage of available housing have created a highly competitive housing market in California, with nearly six in ten home sales receiving multiple offers, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2012 Annual Housing Market Survey.”

More than half (57 percent) of home sales received multiple offers in 2012, the highest in at least the past 12 years, with each home receiving an average of 4.2 offers, up from 3.5 offers in 2011.

Lower priced homes – typically real estate-owned (REO) or short sales – attracted more multiple offers than equity sales ("normal sales"). Seven of 10 REO sales and short sales received multiple offers, while only half of equity sales received more than one offer.  

It is my experience that REO's ( = foreclosure sales) and even short sales, in good areas with good schools, are not bought at a significant discount - if any at all.  On the other hand, in areas which are less desirable, one can find interesting bargains.  As always, where there is more risk, the price is more attractive.

 

For articles detailing better the draw-backs of such transactions, don't hesitate to send me a note.  - yes, there are draw-backs to REO's and short sales.
Thanks for reading,
Francis  

Silicon Valley Real Estate

useful links

A worthy non-profit: CSA