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Mortgage Deduction May Go |
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Attention Borrowers
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The L.A. Times reports that the new Federal debt ceiling plan could possiblyeliminate the mortgage interest tax deduction for homeowners. This could have significant financial implication for borrowers and for the real estate industry in general. While no new taxes were imposed, lawmakers are seeking ways to increase revenue.
There are two parts to the new Fed budget signed in August:
- an increase in the Federal debt ceiling, and
- spending cuts of about $917 billion.
A 12-member bi-partisan super-committee (six Dems, six Reps) has the task of slashing an additional $1.5 trillion from the deficit in the coming decade. Major cutbacks on real estate write-offs could come as early as Thanksgiving. Since majority rules, it takes only one lone Senator or House member out of the twelve to put the interest deduction into serious play.
Why target the homeowner mortgage write-off? Sheer size! The interest deduction on home mortgages will cost the Federal government $100 billion during fiscal 2011 and $107.3 billion in fiscal 2012. Between 2008-2012, the cumulative write-offs for mortgage interest are projected to total just under $500,000,000 (a half trillion dollars).
Defenders of the write-off argue that high levels of home ownership are essential to economic growth and social stability. Critics consider the write-off inherently unfair; skewed to benefit upper-income owners disproportionately in highly concentrated geographic areas along the West Coast, the Northeastern states and the mid-Atlantic.
CA homeowners, you are urged to contact State representatives on the importance of preserving real estate tax provisions. Below are phone numbers for your convenience:
Rep. Henry Waxman:
(310) 652-3095
Sen. Barbara Boxer: (213) 894-5000
Sen. Diane Feinstein:
(310) 914-7300
Let's have a happy Thanksgiving, and Happy New Year, too. |
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Ready, Set, STOP!
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Would-be home Buyers made real estate buying seem like a spectator sport this year. Realtors� and home Sellers alike were dazed as huge incentives were still not enough for pre-approved Buyers to make a deal. Low home values and bottom-of-the-barrel mortgage rates did not entice many prospects to write an offer. The L.A. Times called today's Buyer "spooked".
People waited years for a "deal" and now there is a plethora of affordable housing. American Buyers, unlike foreigners, are still worried about the poor short-term investment. Fickle news reports are driving this real estate market.
The month of June, which is typically one of the strongest for home sales, represented a 14% decline from June 2010 when the rush was on to qualify for the popular federal tax credit. After the government stimulus ended, Southland sales plunged and have remained weak.
The same month comparison, the median price was down 5% in 2011 from 2010. That said, Los Angeles county remains above price lows of the recession-era, which followed the financial crisis. Typically, a rising housing market helps propel the economy out of a recession. This time, the high unemployment rate and large numbers of "underwater"
borrowers, owing more than their house is worth, is stifling the market.
Distressed properties, homes in some phase of default, made up more than half the SoCal sales in June 2011. One in three sales were in foreclosure, one in five were short sales, selling for less than the outstanding debt. Meanwhile major banks are still trying to negotiate a settlement with state and federal regulators over foreclosure practices.
Californians, get used to the current status of single-digit increases in home values. This is not a new normal. This is what a regular housing market should be. |
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50+ YEAR LOWS
Today's mortgage rates have not been this low since 1960. When
gas was 25 cents per gallon; bread was 20 cents per loaf and the average cost of a house was $12,700. Helloooo, Buyers!!! |
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| Conforming Jumbos | |
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October 1st is the deadline when the higher conforming jumbo loan limit may decline, having a major
impact in high priced real estate markets like CA. The conforming loan limit determines the maximum value of a mortgage that FHA, Fannie Mae and Freddie Mac, government-sponsored enterprises, can buy or guarantee. During the economic crisis conforming limits were raised in high-priced areas to ensure access to capital for Buyers and re-financers. The current conforming loan limit is $729,750, normally $625,500. Unless Congress votes to extend the upper limit, as of October 1st the conforming loan cap will be reduced by $104,250.
What does this mean?
Borrowers will be paying more for a mortgage because they will be applying for a jumbo loan, which typically carries a higher interest rate, up to 1.5% additionally, and requires a higher down payment.
Delighted by this prospect are banks; megabanks and small community banks that generate mortgage loans. Yes, they have the assets to offer many jumbos loans. However, Buyers should be prepared for tougher evaluations by the banks. Buyers: establish a relationship now with a bank of your choice by opening an account, to hopefully get a good loan rate. |
TROUSDALE IMPROVES VIEWS
Trousdale Estates is a Beverly Hills planned community built on the former Doheny property, north of Sunset and east of Coldwater, started in the late 1950s. With
spacious mid-century homes, the area appeals to people who desire a one story residence and wide panoramic city, ocean and canyon views from LA to Malibu.
Years without an active Homeowners Association, Trousdale lost its watchdog to ensure that owners cutback trees and hedges which eventually blocked the view of neighboring homes. Now, after a 27-month discussion, the BH City Council has approved a view ordinance dealing with hedges, trees and fences at the rear of an upslope property that obstruct, in order to improve and preserve views. When a view is blocked by towering greenery the affected property's value is substantially lowered. This is a big win for Trousdale homeowners and wannnabe owners in this area. |
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MATCHMAKER for SENIORS |
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Somewhere out there is an ideal match, to meet your needs and desires. Designed specifically with you in mind, let me put together a real estate match anywhere in the nation.
If you want to sell a retail property, a commercial property, a vacation home, a primary residence or an office building, I will perform the ultimate connection. Buyers willing to pay top dollar are looking for a property just like the one you own. The investment and speculation market is strong...those are the primary Buyers in many areas.
Call Realtor Radom and tell me about the property you would like to sell...or buy. There is no obligation to discuss, and the information is kept confidential until you say, "matchmaker, find me a match." Pocket listings are a great source for agents and principles alike. |
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| Residence Corner |
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VINTAGE Westwood Horizons
Westwood Horizons on Tiverton, an independent Senior and short-term recovery residence, has a new owner Vintage Senior Living. Once a dormitory for UCLA college students, Vintage
Westwood Horizons offers spacious rooms. Plans are in the making to become an assist-living residence in two years. That is when a major re-do will take place.
Bel-Air Hotel This Realtor has a dream of one day living in a hotel, just like Eloise and her dog Weenie. However, here in CA I would chose the newly renovated Bel- Air Hotel, scheduled to re-open in mid-November. The Sultan of Brunei, owner of the hotel collection, spared no expense. Staying the Same: - Hercules, Chloe and Athena the mascot swans will return - Pink remains the dominant color - The signature bell tower, the grove of redwoods and the 80' swimming pool - Bar decor still contains the wood paneling, and the piano and fireplace remain in the same place What's New: - Check-in has moved to a new atrium in the original Bell building featuring a lobby lounge - New 12,000 sq. ft. building houses an added bell tower; a 4,134 sq. ft. La Prairie Spa and three new loft guest rooms with high ceilings and double-sided fireplaces - Room count totals 103 including a 6,755 sq. ft. Presidential Suite - All rooms have limestone floors (heated in the bathroom) and natural wood ceilings - The Terrace restaurant retains alcoves, and now boasts retractable rear walls with Swan Lake views and a front curtain for complete privacy - Wolfgang Puck will oversee all food and beverage services throughout the hotel including the main eatery called Wolfgang Puck at Hotel Bel-Air
Robinson-May Residence Project Rumor has it that the 9900 Wilshire multi-use project is back on track. Upscale condos and some retail mix with minor adjustments remain in the current plans, according to the BH Weekly. In 2004, New Pacific Realty bought the land for $33.5 million then sold the deal to Candy and Candy for a whopping $500 million. Then in 2008 the financial crisis included Candy's loan default to an Icelandic bank which brought devastation to Candy, the bank and the Beverly Hills 8-acre development. New owners are a Hong Kong-based private equity firm, which apparently bought the land and project for a mere $148.3 million in October 2010.
Wells Fargo Penalty
Wells Fargo & Co. was hit with a cease-and-desist order and a record civil money penalty over allegations that employees at its former subprime unit committed mortgage fraud and unnecessarily put borrowers into more expensive loans. The lender is also required to compensate impacted borrowers, which likely will cost between $4 million and $200 million. |
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| Franklin's Chimney | |
In ancient times, a "fire pit" was often built in-ground in the center of a hut or dwelling used for cooking and warming a room. The smoke escaped outside through holes in the roof, but most often would remain inside, adding to the ambiance. Fixing the problem of airflow and venting smoke outside, the Romans used tubes inside the walls to draw smoke out of bakeries. But, real chimneys appeared only in northern Europe, as found in an English castle dated 1185 A.D.
Early chimneys were made of clay and wattle (wooden poles intertwined with sticks and twigs). Most were built with stacks of brick and later built around tile liners. Ben Franklin developed a convection chamber in 1741 that greatly improved the efficiency of fireplaces and wood stoves. He also enhanced the airflow by pulling air from a basement and venting out a longer area at the top. Story has it, Franklin turned down the offer for a patent on his fireplace design stating he did not want to profit, but only wanted to let people benefit from his invention.
Later that same decade, Count Rumford designed a fireplace with a tall, shallow firebox that was better at drawing the smoke up and out of the building. The shallow design also improved greatly the amount of radiant heat projected into the room. Rumford's design is the foundation for modern fireplaces.
NOTE: Fireplaces need care and attention. Mortar wears away, cement at the top will crack, rain caps wear out and dampers sometimes break. With regular maintenance and repairs they will last the life of the house.
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Short Sale Protection
California has a new law to protect homeowners pursuing a short sale, when the debt is larger than the value of their property. When two mortgages are outstanding, it is always the secondary or junior lien holder with the largest balance.
The purpose of a short sale is to obtain lender approval for a pay-off less than the outstanding debt, which would leave a balance owed by the borrower. Effective in July, the new law, Bill 458,
prohibits all lenders from pursuing deficiencies after a short sale closes. Statistics by DataQuick indicate short sales made up 17.7% of Southern CA home resales in June 2011. Once a short sale transaction is complete all lenders will consider the balance paid in-full. This is a major victory for CA homeowners. |
Most Expensive Office Rent in U.S. Sand Hill Road in Menlo Park CA
has the nation's honor of having the most expensive office rents on any street at $113.64/per sq. ft. |
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Myths of the Biz
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Learn the reality of real estate:
- Price reductions mean
something is wrong with the house. It means nothing more than finding the right price to attract a Buyer. On any given day there are more price reductions than sold properties in the MLS listings.
- Never submit a low-ball offer.
Being King or Queen of a castle does not mean the castle holds the same value to the next Buyer. Realtors� should always suggest writing an offer, no matter what the price. You never know what the Seller may accept on any given day, and never assume anything.
- Over-priced means Seller is not flexible. Not necessarily, especially if the house has been on the market for two months or longer without an offer. Sellers (mistakenly) believe that Buyers will make an offer even if the property is over-priced.
- Wait until price is reduced to make low-ball offer. If you are the first to submit an offer on a new listing, and the offer is more than 10% below the asking price, your chances of getting a reply from the Seller are slim. But, if you cannot afford market value, then keep an eye on the house for more days-on-market or possibly a price reduction before submitting an offer. Or, submit one and see what happens
- "AS-IS" means no price reduction. When a major flaw is detected during inspections, which has not been disclosed previously by the Seller, Buyers ask for a price reduction or ask the owner to fix the issue. Remember, the Seller must disclose the findings to the next prospect, so negotiate.
- Trust or Short sales mean lower than market value deals. For a short sale, the lending bank has a Board of Directors scrutinizing every price. And, in a Trust sale the proceeds are possibly divided among several heirs... with different motives. So, don't assume either case will agree to accept a low-ball offer.
- There is only one perfect house to buy. Nothing is perfect, especially a house. But, if you concentrate on your list of top five "must-haves" when looking, you will find a great home to buy.
- The longer the house is on the market, the more negotiable a Seller will be. Could be the Seller is stuck on a selling price for financial reasons; or is not motivated to sell unless a pre-determined price is obtained. At some point the Seller will give up and negotiate or take the house off the market.
Here is a tip for would-be homeowners: If you find an affordable house that you can see yourself living in, do not wait for anything. Make an offer. You never know. If the house sells at a price you wanted to offer, kick yourself. If mortgage rates go up while you are waiting for prices to go down - kick yourself.
Bank of America
Abuse Settlement
A settlement was reached with
HUD that releases B of A from liability for failing to adequately provide alternatives to foreclosure on 57,000 government-insured mortgages. The Bank agreed to waive $10 million in unpaid mortgage payments, plus work with the thousands of homeowners for a possible loan modification, a short sale or a foreclosure alternative. |
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| If you prefer the "Real Estate Newsletter" mailed to you, please e-mail: [email protected] |
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| Respecting your privacy and confidentiality, names and e-mails will only be used for providing pertinent material by Cynthia S. Radom and will not be shared with any other organization. |
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