Fight Back: Home Repair Scams
Elderly low-income seniors long have been a favored target among home repair scam artists, who sell unnecessary and overpriced "home improvements" and even go so far as to attach liens to the homes of seniors who refuse to pay for shoddy or incomplete work, according to the National Consumer Law Center. Seniors can protect themselves from unscrupulous contractors by following these tips:
Never purchase home improvement services from a door-to-door contractor or on the basis of a television commercial.
Always get a second estimate for the same job from another contractor before you sign a contract for work to be performed.
Always get a written contract or estimate that describes the job, the price, the hourly rate for any additional work and the contractor's clean-up responsibilities.
Get references and call them.
Visit other job sites to review work previously preformed by the contractor.
Watch out for bait-and-switch tactics and shady financing schemes.
Source: National Consumer Law Center
Monday, February 27, 2006
Thursday, February 23, 2006
REMODELING ACTIVITY SLOWS
REMODELING ACTIVITY SLOWS
With rising interest rates curbing refinancing activities, which homeowners often use to fund remodeling projects, the remodeling market slowed during the fourth quarter of 2005, according to the National Association of Home Builders' Remodeling Market Index (RMI). For the first time since the first quarter of 2003, the RMI components dipped below 50; indices above 50 indicate more remodelers view market conditions as good versus poor.
During the fourth quarter of 2005, the current market conditions component, based on existing home additions, alterations and repairs being completed, declined 4.3 points to 46.6, while the future expectations index, determined by factors such as the amount of work committed for the next three months and the backlog of remodeling jobs, slipped to 47.5 from 51.8. Regionally, the West reported the strongest remodeling activity with the current and future RMI components increasing to 58.5 and 63.5, respectively. Remodeling activity declined in the South, Northeast, and Midwest regions.
With rising interest rates curbing refinancing activities, which homeowners often use to fund remodeling projects, the remodeling market slowed during the fourth quarter of 2005, according to the National Association of Home Builders' Remodeling Market Index (RMI). For the first time since the first quarter of 2003, the RMI components dipped below 50; indices above 50 indicate more remodelers view market conditions as good versus poor.
During the fourth quarter of 2005, the current market conditions component, based on existing home additions, alterations and repairs being completed, declined 4.3 points to 46.6, while the future expectations index, determined by factors such as the amount of work committed for the next three months and the backlog of remodeling jobs, slipped to 47.5 from 51.8. Regionally, the West reported the strongest remodeling activity with the current and future RMI components increasing to 58.5 and 63.5, respectively. Remodeling activity declined in the South, Northeast, and Midwest regions.
LEADING INDEX SIGNALS ECONOMIC GROWTH IN THE NEAR TERM
LEADING INDEX SIGNALS ECONOMIC GROWTH IN THE NEAR TERM
The U.S. leading index rose for the fourth consecutive month in January, increasing 1.1 percent to 140.1 (1996=100), The Conference Board recently reported. Six of the 10 indicators composing the leading index rose in December, including initial claims for unemployment insurance, real money supply, building permits, vendor performance, stock prices and interest rate spread. A key barometer of economic conditions, the leading index has increased in five of the last six months, suggesting economic growth is "likely to pick up in the near term," according to the report.The coincident and lagging indices, which reflect current and past economic activity, respectively, also increased in January. The coincident index edged up 0.2 percent to 121.7, while the lagging index rose 0.7 percent to 122.8.
The U.S. leading index rose for the fourth consecutive month in January, increasing 1.1 percent to 140.1 (1996=100), The Conference Board recently reported. Six of the 10 indicators composing the leading index rose in December, including initial claims for unemployment insurance, real money supply, building permits, vendor performance, stock prices and interest rate spread. A key barometer of economic conditions, the leading index has increased in five of the last six months, suggesting economic growth is "likely to pick up in the near term," according to the report.The coincident and lagging indices, which reflect current and past economic activity, respectively, also increased in January. The coincident index edged up 0.2 percent to 121.7, while the lagging index rose 0.7 percent to 122.8.
Wednesday, February 08, 2006
30-year U.S. Treasury bonds - why is it coming back now and who wants it.
**The last sales of 30-year bonds, known as the "long bond," were made in August 2001. On Oct, 31, 2001, then-Treasury Under Secretary Peter Fisher announced: "We do not need the 30-year bond to meet the government's current financing needs, nor those that we expect to face in the coming years."
**At the time, Treasury was stepping up its short-term borrowing in the wake of Sept. 11, 2001, terror attacks that had deepened an economic downturn and helped wipe out a brief period of budget surpluses. But Treasury maintained it did not need the bond because it felt the long-term budget outlook was strong.
**Since then, U.S. budget deficits have continued to soar as wars in Afghanistan and Iraq and relief to hurricane-hit U.S. Gulf Coast states have climbed, leading to a projected $423 billion deficit for fiscal 2006 ending Sept. 30. On May 4, 2005, Treasury said it was considering bringing the long bond back to give it a broader borrowing range. "We're doing this, really, because times have changed," said Treasury Assistant Secretary Timothy Bitsberger.
**Sales of 30-year bonds started in 1977 to create a very low-risk debt instrument. The bond became a risk-free gold standard by which much private-sector debt was priced. While the size of auctions shrank in the late 1990s and the early part of this decade, making it less of a benchmark for setting other interest rates, it is still highly prized by investors ranging from individuals to pension funds that want or need it to add certainty to long-term planning.
**At the time, Treasury was stepping up its short-term borrowing in the wake of Sept. 11, 2001, terror attacks that had deepened an economic downturn and helped wipe out a brief period of budget surpluses. But Treasury maintained it did not need the bond because it felt the long-term budget outlook was strong.
**Since then, U.S. budget deficits have continued to soar as wars in Afghanistan and Iraq and relief to hurricane-hit U.S. Gulf Coast states have climbed, leading to a projected $423 billion deficit for fiscal 2006 ending Sept. 30. On May 4, 2005, Treasury said it was considering bringing the long bond back to give it a broader borrowing range. "We're doing this, really, because times have changed," said Treasury Assistant Secretary Timothy Bitsberger.
**Sales of 30-year bonds started in 1977 to create a very low-risk debt instrument. The bond became a risk-free gold standard by which much private-sector debt was priced. While the size of auctions shrank in the late 1990s and the early part of this decade, making it less of a benchmark for setting other interest rates, it is still highly prized by investors ranging from individuals to pension funds that want or need it to add certainty to long-term planning.
Monday, February 06, 2006
30 Year bond is back after 5 years.
After nearly a 5-year hiatus, the United States Department of the Treasury will reintroduce 30-year Treasury Bonds. On February 9th, 2006 the Long Bond will be up for auction. But many interest rate followers are fearful that the added supply of paper will cause overall bond prices to decline and home loan rates to rise. Are those fears justified? Let’s take a closer look.
Bonds are essentially a form of debt and are sold by companies and governments to raise money. In turn, an investor who purchases bonds receives a return on the investment in the form of interest payments. For example, let’s say the city where you live is proposing to build a new sports stadium but does not have the funds available for construction. They sell bonds in order to raise the funds needed.
The same goes for the government. When the government is in need of funds, they offer bonds to investors and pay interest over the life of the bond. The US uses Treasury Bills (maturity of 1-year or less), Notes (maturity of more than 1-year up to 10-years) and Bonds (maturity greater than 10-years) to raise cash.
Back in October of 2001, the US government suspended issuance of 30-year bonds due to a budget surplus. However, since 2001 the government has undergone many expenses (e.g., funding of the war in Iraq, and increased costs for Medicare and Medicaid) that require additional funding via sales of Treasury securities.
So, will the reintroduction of the long bond push home loan rates higher? Not materially. The reintroduction of the 30-year bonds was announced in August 2005 and it is likely that the market has already reflected this news. The amount to be auctioned is $14 Billion dollars…sounds like a lot, but a relatively small amount that should be easily absorbed. And even if rates blipped higher, it should be temporary.
Bonds are essentially a form of debt and are sold by companies and governments to raise money. In turn, an investor who purchases bonds receives a return on the investment in the form of interest payments. For example, let’s say the city where you live is proposing to build a new sports stadium but does not have the funds available for construction. They sell bonds in order to raise the funds needed.
The same goes for the government. When the government is in need of funds, they offer bonds to investors and pay interest over the life of the bond. The US uses Treasury Bills (maturity of 1-year or less), Notes (maturity of more than 1-year up to 10-years) and Bonds (maturity greater than 10-years) to raise cash.
Back in October of 2001, the US government suspended issuance of 30-year bonds due to a budget surplus. However, since 2001 the government has undergone many expenses (e.g., funding of the war in Iraq, and increased costs for Medicare and Medicaid) that require additional funding via sales of Treasury securities.
So, will the reintroduction of the long bond push home loan rates higher? Not materially. The reintroduction of the 30-year bonds was announced in August 2005 and it is likely that the market has already reflected this news. The amount to be auctioned is $14 Billion dollars…sounds like a lot, but a relatively small amount that should be easily absorbed. And even if rates blipped higher, it should be temporary.
Thursday, February 02, 2006
Fed raised Fed Funds rate
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-1/2 percent.
Tuesday, January 24, 2006
The Appraisal Process
The appraisal process often baffles consumers. They may feel their home is worth a higher dollar amount, and the appraised value doesn't always make sense to them. It is important to know that appraisal guidelines are dictated by the lenders, and in some states, it is a requirement to also disclose what the appraisal will be used for because there are different rules to follow depending on the purpose.
In effect, lender guidelines force appraisers to put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value. For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes, because the only way to get those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months, and some lenders will want to look at both closed and pending sales, to see if there is any room for negotiation. This is a safeguard to prevent appraisers from attaching too high a value to the home in question. This guideline further states that appraisers can only base their opinion on the value of homes that have actually closed escrow. Any supporting comparison from pending sales will reinforce the reference to the closed sale given.
However, when property values are increasing drastically within a marketplace, the appraiser is generally permitted to make a concession and put more weight on the evidence provided by comparisons to pending sales and listings, allowing for a “real time” appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to try to push the value up higher than the market will support, otherwise the property evaluation would then be exposed to a severe appraisal review.
Provides by James Gill, a senior loan executive with Peninsula Mortgage 310 375-6456
In effect, lender guidelines force appraisers to put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value. For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes, because the only way to get those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months, and some lenders will want to look at both closed and pending sales, to see if there is any room for negotiation. This is a safeguard to prevent appraisers from attaching too high a value to the home in question. This guideline further states that appraisers can only base their opinion on the value of homes that have actually closed escrow. Any supporting comparison from pending sales will reinforce the reference to the closed sale given.
However, when property values are increasing drastically within a marketplace, the appraiser is generally permitted to make a concession and put more weight on the evidence provided by comparisons to pending sales and listings, allowing for a “real time” appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to try to push the value up higher than the market will support, otherwise the property evaluation would then be exposed to a severe appraisal review.
Provides by James Gill, a senior loan executive with Peninsula Mortgage 310 375-6456
Friday, January 20, 2006
Reverse Mortgages
This was an interesting article from "Market Watch"The number of Americans over age 65 is expected to double in the next 30 years to 70 million. And those older Americans will be living longer. But with one of the lowest savings rates in the world, just what will they live on?
In the years to come, more and more retirees are likely to be looking to tap one of their largest assets to get by financially -- their home equity. Reverse mortgages are one option they might consider.
In the years to come, more and more retirees are likely to be looking to tap one of their largest assets to get by financially -- their home equity. Reverse mortgages are one option they might consider.
Wednesday, January 18, 2006
Good Heating system advice
Experts advise that you hire a licensed professional to give your home heating and cooling systems the once over at least once a year.
When properly maintained, home heating systems are not only safer, but work more efficiently to help offset the rising costs of fuel. Clean, efficient systems also last longer.
When properly maintained, home heating systems are not only safer, but work more efficiently to help offset the rising costs of fuel. Clean, efficient systems also last longer.
Monday, January 09, 2006
The new Federal estate tax exclusion for 2006
Some good news – the new Federal estate tax exclusion increased in 2006 to $2 million per person. In the past ten years, that amount has increased over 230 percent, as the figure is up from $600,000 in 1996. Count on this tax exclusion figure to remain in effect until 2009, then the amount is scheduled to increase one more time to $3,500,000 per person. After 2010, it will supposedly be repealed altogether.
Estate tax differs from income tax in that income tax is owed every year on any revenue. Estate tax is owed on the net value of your estate at the time of your death if you leave your assets to any beneficiary other than your spouse. To break this down, let’s say you pass away and leave your entire estate to your children. Your estate is made up of everything you own and includes such items as residential property, life insurance proceeds, IRAs, automobiles, jewelry, cash accounts, etc. If you total the amount of all assets and subtract any debts that you may owe against property or automobiles, the remaining value is known as your "net estate value" and that is the “net value” that could be subject to estate tax.
Important: Your C.P.A. is the best person to educate you about estate taxes.
Estate tax differs from income tax in that income tax is owed every year on any revenue. Estate tax is owed on the net value of your estate at the time of your death if you leave your assets to any beneficiary other than your spouse. To break this down, let’s say you pass away and leave your entire estate to your children. Your estate is made up of everything you own and includes such items as residential property, life insurance proceeds, IRAs, automobiles, jewelry, cash accounts, etc. If you total the amount of all assets and subtract any debts that you may owe against property or automobiles, the remaining value is known as your "net estate value" and that is the “net value” that could be subject to estate tax.
Important: Your C.P.A. is the best person to educate you about estate taxes.
Thursday, January 05, 2006
2005 California housing market stats... FYI
2005 California housing market eclipses previous records
LOS ANGELES (Dec. 28) – The California residential real estate market in 2005 will be one for the record books, eclipsing the annual sales and median home price records set in 2004, according to the California Association of REALTORS® (C.A.R.).
Here are some highlights from 2005 and a look ahead to 2006: - Sales of detached, existing single-family homes are expected to reach 635,000 in 2005, an increase of 1.8 percent over last year’s record sales of 624,700. Sales are anticipated to decline by 2 percent in 2006. - 2005 will be a record year for home prices. The median price of a single-family home in California crossed the $500,000 threshold for the first time in April 2005. The annual median is expected to reach $523,150 in 2005 and increase 10 percent to $573,500 in 2006. - The median price of a single-family home increased by double-digits for the fourth consecutive year in 2005, though the pace of price appreciation slowed from the 18 to 21 percent annual gains of the previous three years to 16 percent in 2005.- C.A.R.’s Unsold Inventory Index averaged 3.3 months in 2005. Inventory levels are expected to rise moderately in 2006 but will remain low by historic standards, fueling continued price appreciation in the California market. - The interest rate for a fixed-rate mortgage (FRM) remained below 6 percent for much of 2005, only surpassing 6 percent in the last months of the year. For all of 2005, the FRM averaged 5.8 percent. In 2006, the interest rate for the FRM is projected to increase but remain low by historic standards in the low- to mid-6 percent range. - The interest rate for a one-year adjustable-rate mortgage (ARM) averaged 4.5 percent in 2005, finishing just over 5 percent at year-end. The interest rate for the one-year ARM is expected to remain within the low- to mid-5 percent range during 2006. - With home prices reaching record levels, more homebuyers extended themselves financially in 2005 by utilizing alternative loan products. The share of homebuyers who used adjustable-rate and hybrid loans increased from 11 percent in 2003 to 43 percent in 2005, while the share of fixed-rate loans dropped from 89 percent in 2003 to 57 percent in 2005. The last time more than 40 percent of homebuyers used adjustable-rate loans was in 1994. - Fannie Mae and Freddie Mac increased the single-family conforming mortgage loan limit from $359,650 this year to $417,000 in 2006, which could benefit more than 28,590 families in California. However, the increase in the loan limit is still far too low to benefit most homebuyers in California, as the median price of a home in California is 29 percent higher than the new loan limits. Nineteen counties in California have a median home price above the new limit. - Internet use by homebuyers and sellers continued to climb in 2005. Based on C.A.R.’s “Internet Versus Traditional Buyers Survey,” the percentage of homebuyers using the Internet increased from 56 percent in 2004 to 62 percent in 2005. - The share of sellers who used the Internet in their homeselling process surpassed 50 percent for the first time, rising from 47 percent in 2004 to 57 percent in 2005, according to C.A.R.’s “Survey of California Home Sellers.”
Leading the Way...® in California real estate for 100 years, the California Association of REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
# # #
LOS ANGELES (Dec. 28) – The California residential real estate market in 2005 will be one for the record books, eclipsing the annual sales and median home price records set in 2004, according to the California Association of REALTORS® (C.A.R.).
Here are some highlights from 2005 and a look ahead to 2006: - Sales of detached, existing single-family homes are expected to reach 635,000 in 2005, an increase of 1.8 percent over last year’s record sales of 624,700. Sales are anticipated to decline by 2 percent in 2006. - 2005 will be a record year for home prices. The median price of a single-family home in California crossed the $500,000 threshold for the first time in April 2005. The annual median is expected to reach $523,150 in 2005 and increase 10 percent to $573,500 in 2006. - The median price of a single-family home increased by double-digits for the fourth consecutive year in 2005, though the pace of price appreciation slowed from the 18 to 21 percent annual gains of the previous three years to 16 percent in 2005.- C.A.R.’s Unsold Inventory Index averaged 3.3 months in 2005. Inventory levels are expected to rise moderately in 2006 but will remain low by historic standards, fueling continued price appreciation in the California market. - The interest rate for a fixed-rate mortgage (FRM) remained below 6 percent for much of 2005, only surpassing 6 percent in the last months of the year. For all of 2005, the FRM averaged 5.8 percent. In 2006, the interest rate for the FRM is projected to increase but remain low by historic standards in the low- to mid-6 percent range. - The interest rate for a one-year adjustable-rate mortgage (ARM) averaged 4.5 percent in 2005, finishing just over 5 percent at year-end. The interest rate for the one-year ARM is expected to remain within the low- to mid-5 percent range during 2006. - With home prices reaching record levels, more homebuyers extended themselves financially in 2005 by utilizing alternative loan products. The share of homebuyers who used adjustable-rate and hybrid loans increased from 11 percent in 2003 to 43 percent in 2005, while the share of fixed-rate loans dropped from 89 percent in 2003 to 57 percent in 2005. The last time more than 40 percent of homebuyers used adjustable-rate loans was in 1994. - Fannie Mae and Freddie Mac increased the single-family conforming mortgage loan limit from $359,650 this year to $417,000 in 2006, which could benefit more than 28,590 families in California. However, the increase in the loan limit is still far too low to benefit most homebuyers in California, as the median price of a home in California is 29 percent higher than the new loan limits. Nineteen counties in California have a median home price above the new limit. - Internet use by homebuyers and sellers continued to climb in 2005. Based on C.A.R.’s “Internet Versus Traditional Buyers Survey,” the percentage of homebuyers using the Internet increased from 56 percent in 2004 to 62 percent in 2005. - The share of sellers who used the Internet in their homeselling process surpassed 50 percent for the first time, rising from 47 percent in 2004 to 57 percent in 2005, according to C.A.R.’s “Survey of California Home Sellers.”
Leading the Way...® in California real estate for 100 years, the California Association of REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
# # #
Monday, January 02, 2006
Patriot Act extended.
With the U.S.A. Patriot Act set to expire at the end of 2005, the Senate decided on December 21 to extend the Act for six months so the House and Senate could make revisions to the Act next year. The House voted to reauthorize the Patriot Act for four years before it adjourned for the holidays the prior week.
Tuesday, December 27, 2005
Inverted Yield curve...
The Yield curve has just inverted!
An "Inverted Yield Curve" means the 2-Year Note Yield moves above the 10-Year Note Yield. But more importantly, history has shown this to be a recessionary signal. We don't see an Inverted Yield Curve signaling a recession this time. Why? Our Fed Funds rate has risen 325bp since June 2004. The 2-Year Note Yield moved higher with the Fed hikes since it is short-term paper. But, the 10-year Note Yield actually moved sideways to lower during this timeframe because of the inflation-fighting mechanism behind the hikes. Longer-term paper is more concerned with inflation rather than actual Fed moves. Bottom Line...Things are different this time because the Fed moves have pushed the 2-Year Note Yield higher, while foreign buying and contained inflation have helped reduce the 10-year Note Yield. The economy is and will continue to be strong and a recession is not in the cards.
Stocks may be set for a "Santa Claus Rally" and a run at the 11,000 mark this week. But first the Index has to break through the 10,940 barrier. This pesky level has been a solid ceiling of resistance for stocks many times during 2005. Each failed attempt to break this level has resulted in stocks dropping and bonds improving. It is no coincidence that mortgage bonds are near a ceiling in their range as well at this time. Bond traders will closely watch stocks to see how they react. If stocks bust above the ceiling, bond prices will drop. But if stocks again fail to break through, mortgage bonds should improve nicely. Remember, stocks and bonds often compete for the same investment dollar.
An "Inverted Yield Curve" means the 2-Year Note Yield moves above the 10-Year Note Yield. But more importantly, history has shown this to be a recessionary signal. We don't see an Inverted Yield Curve signaling a recession this time. Why? Our Fed Funds rate has risen 325bp since June 2004. The 2-Year Note Yield moved higher with the Fed hikes since it is short-term paper. But, the 10-year Note Yield actually moved sideways to lower during this timeframe because of the inflation-fighting mechanism behind the hikes. Longer-term paper is more concerned with inflation rather than actual Fed moves. Bottom Line...Things are different this time because the Fed moves have pushed the 2-Year Note Yield higher, while foreign buying and contained inflation have helped reduce the 10-year Note Yield. The economy is and will continue to be strong and a recession is not in the cards.
Stocks may be set for a "Santa Claus Rally" and a run at the 11,000 mark this week. But first the Index has to break through the 10,940 barrier. This pesky level has been a solid ceiling of resistance for stocks many times during 2005. Each failed attempt to break this level has resulted in stocks dropping and bonds improving. It is no coincidence that mortgage bonds are near a ceiling in their range as well at this time. Bond traders will closely watch stocks to see how they react. If stocks bust above the ceiling, bond prices will drop. But if stocks again fail to break through, mortgage bonds should improve nicely. Remember, stocks and bonds often compete for the same investment dollar.
Monday, December 19, 2005
Tax Planning Thoughts...
Many people start seriously thinking about tax season after the start of the New Year…which is actually a bit too late. Ideally, taxes should be planned two years at a time to save the most tax money. So before the year is over, it’s wise to look at the acceleration or postponement of deductions and income between years. For example, many taxpayers want to minimize the current year’s tax bill, so making sure your state income tax is paid in December rather than January can help. Additionally, you can pay Real Estate taxes and even January’s home loan payment in December to beef up your deductions. In fact, you are eligible to take the deduction if the checks are mailed in December…even if they are not cleared until January.
But watch out for AMT, Alternative Minimum Tax, which can erase your deductions. Testing to see if you fall into this trap may cause you to do the opposite – pushing some deductions off until next year, paying them in January rather than December. The same holds true for income. It is sometimes possible to accelerate or delay commissions, bonuses, billings, etc…and that can help you maximize tax savings.
You should always consult your tax pro on the strategy that is best for your own situation, but you can start by visiting www.irs.gov/newsroom. This link contains a list of the new inflation adjusted dollar amounts for many important tax figures for 2006. Comparing the allowable deductions for 2006 versus 2005 will help you choose in which year to take advantage of certain deductions. And remember, the time to consult with a CPA is now, not after the New Year begins…so if you need a referral for a qualified tax planner, please contact me.
But watch out for AMT, Alternative Minimum Tax, which can erase your deductions. Testing to see if you fall into this trap may cause you to do the opposite – pushing some deductions off until next year, paying them in January rather than December. The same holds true for income. It is sometimes possible to accelerate or delay commissions, bonuses, billings, etc…and that can help you maximize tax savings.
You should always consult your tax pro on the strategy that is best for your own situation, but you can start by visiting www.irs.gov/newsroom. This link contains a list of the new inflation adjusted dollar amounts for many important tax figures for 2006. Comparing the allowable deductions for 2006 versus 2005 will help you choose in which year to take advantage of certain deductions. And remember, the time to consult with a CPA is now, not after the New Year begins…so if you need a referral for a qualified tax planner, please contact me.
Thursday, December 01, 2005
REVISED CONFORMING LOAN LIMITS FALL SHORT
More than 28,590 families in California will be able to benefit from Fannie Mae's and Freddie Mac's recent announcements that each will increase its single-family mortgage loan limit from $359,650 to $417,000 in 2006, according to an analysis by C.A.R.
"While this is good news for many homebuyers, Fannie Mae's and Freddie Mac's new loan limits do not go far enough to benefit most homebuyers in California," said C.A.R. President Vince Malta. "Conforming loan limits need to more accurately reflect the cost of housing in California, where the median price of a home is more than double that of the nation.
"The current median home price in California is $538,770, more than 29 percent higher than the national conforming loan limit of $417,000. In addition, California has 19 counties with a median home price above the national conforming loan limit.
"While this is good news for many homebuyers, Fannie Mae's and Freddie Mac's new loan limits do not go far enough to benefit most homebuyers in California," said C.A.R. President Vince Malta. "Conforming loan limits need to more accurately reflect the cost of housing in California, where the median price of a home is more than double that of the nation.
"The current median home price in California is $538,770, more than 29 percent higher than the national conforming loan limit of $417,000. In addition, California has 19 counties with a median home price above the national conforming loan limit.
Friday, November 25, 2005
Another view about 'bubbles' from Realty Times
Real Estate Bubble Theorists No More Than Squealers
by M. Anthony Carr
Have you ever squirted a little kid in the back with a stream of cold water on a hot summer day? I've seen this throughout our neighborhood and it's actually sadistically humorous to watch the little tykes squeal and run away from their parental tormentors.
Those who keep whining about the coming "burst" of the "real estate bubble" remind of these squealers. Sometimes I feel like the lone voice of reason crying out in the wilderness.
The real estate bubble naysayers whine about the "bubble" as if the whole national real estate market were nothing more than another over-inflated stock exchange -- like the New York Stock Exchange and Nasdaq. Folks -- it's not. Real estate, like politics, is local and I wish those real estate journalists scaring the buyers with quotes from their stock market experts would just stop what they're doing and consider some real facts.
Fact: The top hot real estate markets in the U.S.A. are also the top hot job markets.
Fact: Houses are where the jobs go at night.
Fact: Without enough houses in a hot job market, your housing inventory will escalate in price.
Fact: There are "pockets" of over inflated real estate
Fact: Unlike the stock market -- you have to live somewhere. Whether renting or buying, there is an automatic necessity for the ownership of real estate -- either by a homeowner or an investor.
There is no built-in necessity for owning stocks, thus all comparisons between the two products is moot.
In the midst of the hot markets across the country (where the squealing is the loudest and most piercing) citizens of those jurisdictions must look to the local economy to determine their risks.
In the Washington, D.C. area, the Northern Virginia Association of Realtors looks at those numbers every single year at its annual Economic Summit held at George Mason University. Unfortunately, most of the press gives it passing coverage -- I think especially this year, because the economists did not fall in line with "the sky is falling" mantra heard by critics of a strong housing market.
The summit was reported on in the trade association's latest monthly publication, The Update. "In a nutshell, you couldn't be in a better market," according to Dr. Stephen Fuller, Director for the Center for Regional Analysis and School of Public Policy at George Mason University. "If you're worried about some bubble, or slow down, or something that's evil, just put yourself in any other market," he said. "They envy us."
To put it bluntly folks, we're going to have a housing problem in the future -- but it's not the bursting kind. It's the "How can I make $60,000 a year and have to live out of the trunk of my car" kind. You see, in the Washington, D.C. area and other hot job market areas, the reason housing is climbing in value is simply because there's not enough of it.
Dr. Fuller reports the regions surrounding Washington, D.C. have done a fantastic job of drawing jobs to the area -- 287,000 in the last five years. However, they have done a sorry job in providing houses for all these people. This year, there's a deficit in housing in this region of 463,300 units. That means that while people can take jobs here, they won't be able to live nearby to work them. They'll have to commute in a couple of hours.
The numbers don't get any better, Fuller says. By 2030, there will be a shortfall of housing units in the Washington, D.C. area of 716,000 units.
Okay, bubble squealers -- where's the bubble?
The vocabulary being used by journalists is leftover from when the stock market inexplicably rose in value when there was no reason but hype driving the market. Companies were raising lots of venture capital and creating products that they couldn't sell, meaning they ate through the borrowed funds and finally burst.
In hot real estate markets, there's no hype. There are real jobs being created by real companies, creating real products and selling them to real consumers. Real money is being made and these real companies need real employees to make it happen -- local governments should wake up and realize that we need real houses to put them into as well. If you want to quell the fear -- build more houses.
Now -- would all the squealers please stop? You're giving me a headache.
by M. Anthony Carr
Have you ever squirted a little kid in the back with a stream of cold water on a hot summer day? I've seen this throughout our neighborhood and it's actually sadistically humorous to watch the little tykes squeal and run away from their parental tormentors.
Those who keep whining about the coming "burst" of the "real estate bubble" remind of these squealers. Sometimes I feel like the lone voice of reason crying out in the wilderness.
The real estate bubble naysayers whine about the "bubble" as if the whole national real estate market were nothing more than another over-inflated stock exchange -- like the New York Stock Exchange and Nasdaq. Folks -- it's not. Real estate, like politics, is local and I wish those real estate journalists scaring the buyers with quotes from their stock market experts would just stop what they're doing and consider some real facts.
Fact: The top hot real estate markets in the U.S.A. are also the top hot job markets.
Fact: Houses are where the jobs go at night.
Fact: Without enough houses in a hot job market, your housing inventory will escalate in price.
Fact: There are "pockets" of over inflated real estate
Fact: Unlike the stock market -- you have to live somewhere. Whether renting or buying, there is an automatic necessity for the ownership of real estate -- either by a homeowner or an investor.
There is no built-in necessity for owning stocks, thus all comparisons between the two products is moot.
In the midst of the hot markets across the country (where the squealing is the loudest and most piercing) citizens of those jurisdictions must look to the local economy to determine their risks.
In the Washington, D.C. area, the Northern Virginia Association of Realtors looks at those numbers every single year at its annual Economic Summit held at George Mason University. Unfortunately, most of the press gives it passing coverage -- I think especially this year, because the economists did not fall in line with "the sky is falling" mantra heard by critics of a strong housing market.
The summit was reported on in the trade association's latest monthly publication, The Update. "In a nutshell, you couldn't be in a better market," according to Dr. Stephen Fuller, Director for the Center for Regional Analysis and School of Public Policy at George Mason University. "If you're worried about some bubble, or slow down, or something that's evil, just put yourself in any other market," he said. "They envy us."
To put it bluntly folks, we're going to have a housing problem in the future -- but it's not the bursting kind. It's the "How can I make $60,000 a year and have to live out of the trunk of my car" kind. You see, in the Washington, D.C. area and other hot job market areas, the reason housing is climbing in value is simply because there's not enough of it.
Dr. Fuller reports the regions surrounding Washington, D.C. have done a fantastic job of drawing jobs to the area -- 287,000 in the last five years. However, they have done a sorry job in providing houses for all these people. This year, there's a deficit in housing in this region of 463,300 units. That means that while people can take jobs here, they won't be able to live nearby to work them. They'll have to commute in a couple of hours.
The numbers don't get any better, Fuller says. By 2030, there will be a shortfall of housing units in the Washington, D.C. area of 716,000 units.
Okay, bubble squealers -- where's the bubble?
The vocabulary being used by journalists is leftover from when the stock market inexplicably rose in value when there was no reason but hype driving the market. Companies were raising lots of venture capital and creating products that they couldn't sell, meaning they ate through the borrowed funds and finally burst.
In hot real estate markets, there's no hype. There are real jobs being created by real companies, creating real products and selling them to real consumers. Real money is being made and these real companies need real employees to make it happen -- local governments should wake up and realize that we need real houses to put them into as well. If you want to quell the fear -- build more houses.
Now -- would all the squealers please stop? You're giving me a headache.
Wednesday, November 23, 2005
housing bubble? read on...
Market-by-Market Home Price Analysis Reports October 2005 These downloadable 10-page reports show that the facts simply do not support the possibility of a housing bust -- not for these 130 markets and not for the nation.
http://www.realtor.org/research.nsf/pages/anti-bubblereports
These reports were done by the National Association of Realtors... FYI
http://www.realtor.org/research.nsf/pages/anti-bubblereports
These reports were done by the National Association of Realtors... FYI
Tuesday, November 22, 2005
Local Real Estate Thoughts
Welcome to the Holiday time of year!
If you turned to CNBC business news today, all you saw was a local real estate lady talking about how she was selling all her speculative properties. She was built up to be some kind of GURU a couple of years back. Now they interviewed her again and she said she is selling all her speculative "flipping" investments now. That all the money has been made! It was all pretty scary until you realized that her properties were along Century Blvd in Inglewood. I would be selling them too!
If you stayed tuned in, another story that was getting very little press was the Feds indication that they were done raising the 'discount' rate. This was big news and turned the stock market around in a hurry. This could indicate that mortgage rates have topped again, at least for the next 5 weeks or so.
It is true that properties are staying on the market longer now, but I can tell you first hand, there are still buyers all around the South bay. As long as you price your home in line with a comparable sale in your area, it will sell. Remember, it is the holiday time and those buyers that are out there now are real.
Call me, I will help you get the job done.
If you turned to CNBC business news today, all you saw was a local real estate lady talking about how she was selling all her speculative properties. She was built up to be some kind of GURU a couple of years back. Now they interviewed her again and she said she is selling all her speculative "flipping" investments now. That all the money has been made! It was all pretty scary until you realized that her properties were along Century Blvd in Inglewood. I would be selling them too!
If you stayed tuned in, another story that was getting very little press was the Feds indication that they were done raising the 'discount' rate. This was big news and turned the stock market around in a hurry. This could indicate that mortgage rates have topped again, at least for the next 5 weeks or so.
It is true that properties are staying on the market longer now, but I can tell you first hand, there are still buyers all around the South bay. As long as you price your home in line with a comparable sale in your area, it will sell. Remember, it is the holiday time and those buyers that are out there now are real.
Call me, I will help you get the job done.
Monday, November 21, 2005
Real property Assessments / Proposition 13
Real Property Assessments
The California Constitution requires that all property be taxed, unless otherwise exempted under the California Constitution or United States Constitution. Article XIII-A of the California Constitution requires that real property be reappraised only when such property undergoes a change of ownership or has new construction.
The assessment roll, and tax bills, show land values and improvement values. "Improvements" include buildings or anything of a structural nature (such as swimming pools, paving, etc.). When you have an "improvement" value, it doesn't usually mean that you have recently "improved" your property.
Proposition 13
This was passed by the voters in June, 1978 and subsequently changed the taxation of real property in California. As a result :
* The average tax rate is approximately 1.25 %
* Real property is reappraised only when:
1) Change in ownership occurs
2) New Construction is completed.
3) New construction is partially completed on the lien date (Jan. 1); or
4) A decline in value (from Prop 8) *
* Except for these four instances, real property assessments cannot be increased by more than 2% annually, regardless of the rate of inflation.
Change of ownership Reappraisals
When a publicly recorded transfer occurs, the Assessor generally receives a copy of the deed and determines whether a reappraisal is required under state law. If it is required, an appraisal is made to determine the new market value of the property. The property owner is notified of the new assessment. The property owner has the right to appeal the value, if he/she does not agree with it.
The transfer of property between husband and wife does not cause a reappraisal for property tax purposes. This includes Transfers resulting from divorce or death. Also, the addition of joint tenants, whether related or not, does not result in a reappraisal. There are other exclusions.
New Construction Appraisals
Copies of building permits are sent to the Assessor's Office by the cities and County. New buildings, additions, and other structures require an appraisal. Structural repairs, replacement, or maintenance are not approachable in most situations.
We appraise new construction and add it to the existing land or improvement assessed value. Thereafter the new assessed value does not change except for the annual 2% trend.
See the complete brochure in the adobe 'acrobat' format here.
The California Constitution requires that all property be taxed, unless otherwise exempted under the California Constitution or United States Constitution. Article XIII-A of the California Constitution requires that real property be reappraised only when such property undergoes a change of ownership or has new construction.
The assessment roll, and tax bills, show land values and improvement values. "Improvements" include buildings or anything of a structural nature (such as swimming pools, paving, etc.). When you have an "improvement" value, it doesn't usually mean that you have recently "improved" your property.
Proposition 13
This was passed by the voters in June, 1978 and subsequently changed the taxation of real property in California. As a result :
* The average tax rate is approximately 1.25 %
* Real property is reappraised only when:
1) Change in ownership occurs
2) New Construction is completed.
3) New construction is partially completed on the lien date (Jan. 1); or
4) A decline in value (from Prop 8) *
* Except for these four instances, real property assessments cannot be increased by more than 2% annually, regardless of the rate of inflation.
Change of ownership Reappraisals
When a publicly recorded transfer occurs, the Assessor generally receives a copy of the deed and determines whether a reappraisal is required under state law. If it is required, an appraisal is made to determine the new market value of the property. The property owner is notified of the new assessment. The property owner has the right to appeal the value, if he/she does not agree with it.
The transfer of property between husband and wife does not cause a reappraisal for property tax purposes. This includes Transfers resulting from divorce or death. Also, the addition of joint tenants, whether related or not, does not result in a reappraisal. There are other exclusions.
New Construction Appraisals
Copies of building permits are sent to the Assessor's Office by the cities and County. New buildings, additions, and other structures require an appraisal. Structural repairs, replacement, or maintenance are not approachable in most situations.
We appraise new construction and add it to the existing land or improvement assessed value. Thereafter the new assessed value does not change except for the annual 2% trend.
See the complete brochure in the adobe 'acrobat' format here.
Friday, November 18, 2005
Interesting 'Interest Rate' perspective...
Don't Let Those Rates Scare You - by David Reed
I just did a radio interview with a station out in Los Angeles. The topic was, of course, about interest rates and the mortgage market in general. Another guest on the show was a Financial Planner that was also going to give his two cents. Or one cent, depending upon your perspective. The host of the show asked us both, "So, rates are at some of the highest levels we've seen for a couple of years … what will that do to the housing market?"
Now, me being a Texan, I minded my manners and let the other gentleman speak first. "Well," he began "it doesn't look good at all. Rates are up nearly .5 percent since earlier this year and that means thousands of additional dollars the homebuyer will have to pay." Apparently he did some math beforehand because he continued with, "On a typical $500,000 loan (this is California, remember) an extra .5 percent means another $160 more each month in payments. Over 30 years, that means another $57,000 over the life of the loan. Home prices are high enough without this."
What a nerd. Yeah, rates have gone up, but gone up from what? From record lows, that's what. Let's not get too spoiled here. 30 year fixed rates used to be in the high sevens and low eights way, way back in what -- September 2000? Give me a break here. Just take any historical mortgage rate chart and you'll see that compared to rates going all the way back to the Paleolithic period we're still in pretty good shape. And I think it's irresponsible for so-called "pundits" to tell people how screwed they'll be if they buy a house right now.
The "housing bubble" we've been reading about could also be a self-fulfilling prophecy if we're not careful. An interest rate goes from 6.00 to 6.50 percent and the sky is falling? Yeah, yeah I know. "But David, that knocks a lot of people out of homeownership." Fair enough, but buy a smaller house, I say. Instead of a $300,000 loan, get a $285,000 one. That's the typical qualifying difference between 6.00 and 6.50 percent.
"Well, David, much of the market now is for investment homes … we can't kill that." Okay. But nobody's killing anything, the market's simply adjusting. If people want to buy investment properties they're going to have to buy fewer or smaller ones or negotiate a better deal. Heck, any good Realtor can do that one for you.
It's just that I get steamed when an "expert" predicts disaster and encourages people not to buy something because of an interest rate move. And a small one at that. Will there be fewer homes sold in 2006? Probably. But fewer than what? 2005? 2004? 2003?
I suggest we all kick back a little bit and understand that often when consumers read an article or listen to a radio show that just sometimes they might actually be paying attention. "Gosh honey, may be we shouldn't buy that home after all. That guy just said we'd lose $57,000." Fair debate and honest discussions are one thing. Scaring consumers is quite another. Published: November 18, 2005
I just did a radio interview with a station out in Los Angeles. The topic was, of course, about interest rates and the mortgage market in general. Another guest on the show was a Financial Planner that was also going to give his two cents. Or one cent, depending upon your perspective. The host of the show asked us both, "So, rates are at some of the highest levels we've seen for a couple of years … what will that do to the housing market?"
Now, me being a Texan, I minded my manners and let the other gentleman speak first. "Well," he began "it doesn't look good at all. Rates are up nearly .5 percent since earlier this year and that means thousands of additional dollars the homebuyer will have to pay." Apparently he did some math beforehand because he continued with, "On a typical $500,000 loan (this is California, remember) an extra .5 percent means another $160 more each month in payments. Over 30 years, that means another $57,000 over the life of the loan. Home prices are high enough without this."
What a nerd. Yeah, rates have gone up, but gone up from what? From record lows, that's what. Let's not get too spoiled here. 30 year fixed rates used to be in the high sevens and low eights way, way back in what -- September 2000? Give me a break here. Just take any historical mortgage rate chart and you'll see that compared to rates going all the way back to the Paleolithic period we're still in pretty good shape. And I think it's irresponsible for so-called "pundits" to tell people how screwed they'll be if they buy a house right now.
The "housing bubble" we've been reading about could also be a self-fulfilling prophecy if we're not careful. An interest rate goes from 6.00 to 6.50 percent and the sky is falling? Yeah, yeah I know. "But David, that knocks a lot of people out of homeownership." Fair enough, but buy a smaller house, I say. Instead of a $300,000 loan, get a $285,000 one. That's the typical qualifying difference between 6.00 and 6.50 percent.
"Well, David, much of the market now is for investment homes … we can't kill that." Okay. But nobody's killing anything, the market's simply adjusting. If people want to buy investment properties they're going to have to buy fewer or smaller ones or negotiate a better deal. Heck, any good Realtor can do that one for you.
It's just that I get steamed when an "expert" predicts disaster and encourages people not to buy something because of an interest rate move. And a small one at that. Will there be fewer homes sold in 2006? Probably. But fewer than what? 2005? 2004? 2003?
I suggest we all kick back a little bit and understand that often when consumers read an article or listen to a radio show that just sometimes they might actually be paying attention. "Gosh honey, may be we shouldn't buy that home after all. That guy just said we'd lose $57,000." Fair debate and honest discussions are one thing. Scaring consumers is quite another. Published: November 18, 2005
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