Archive for July, 2008
Homeowner Rescue Plan Is No Free Ride.
July 28th, 2008 Categories: Taxes, Taxes and Taxes
The homeowner rescue plan that many people have been waiting for is almost law.
There is an old expression: Be careful for what you wish for!
A quick review of who gets help and the caveats that many people will not like are noted as follows:
First Time Homeowners:
The law will extend a tax credit up to $ 7,500 for these people. However purchase has to have occurred between April 8, 2008 and before July 1, 2009 (meaning by no later than June 30, 2009).
The CATCH: The tax credit has to be repaid at a rate of $ 500 per year up to 15 years. If the property is sold before that, yep you guess it, the homeowner has to pay the government the remaining balance.
Forgiveness To Allow Re-financing:
If a homeowner falls behind because (for instance) the loan has turned into an adjustable-rate-mortgage, the law encourages lenders to forgive some of the debt in order to re-finance.
The CATCH: There will be an equity sharing arrangement. If it is an FHA loan both the lender and the homeowner will share equally in any profit (appreciation) providing the homeowner maintains the property for five years or more. If less than 5 years, then the lender’s share will increase 10% for each year less than five years.
So if the homeowner sells the home in the second year, any appreciation will be shared with 80%+ going to the lender and 20% (or lower) to the homeowner.
No Resolutions:
Home lines of credit. There is no certainty how this is going to be handled but it may occur that the line of credit will be become a second. The rules however are vague to none. It is something that everyone will have to work through.- Down payment assistance. Good bye to down payment assistance programs such as Nehemiah and AmeriDream.
Property Tax Deduction. This segment of the law helps those that do not itemize deductions on Schedule A. For those that do not itemize the standard deduction will be increased by $ 500 for singles and $ 1,000 for couples filing jointly.
So if you are a couple that pays $ 800 in property taxes you will be able to deduct $ 1,000 under the new law.
Loan limits: Conforming mortgages (Fannie Mae and Freddie Mac) will remain at $ 417,000 until next year and after that it is can be higher. Higher is 115% of the median home prices in the area not to exceed $ 625,500.
FHA-insured mortgages will be $ 417,000; and as in conforming can be increase by 115% of the median home prices in the area, not to exceed $ 625,500.
Reverse mortgages. Insurance salesmen can not originate a reverse mortgage and the law prohibits originators from requiring homeowners to buy annuities or insurance products.
Fees for reverse mortgages cannot exceed 2% of up to $ 200,000. Above $ 200,000 the limit is $ 4,000 plus 1% of the loan amount above $ 200,000.
Manufactured homes. FHA type loans for manufactured homes limits have been increased to $ 70,000 up from $ 48,000.
Service members: If a service member had a mortgage before entering active duty, a lender cannot start foreclosure proceedings until nine months after the service member returns home from active duty.
In addition the interest rate on all previously existing debt are capped at 6%, including home loans. This 6% extends until one year after the service member returns from active duty.
Other items included in the law:
- The Office of Housing Counseling will be established.
- All mortgage brokers will have to be licensed and registered. This will be on a national level.
Your comments are welcomed.
Referenced used for this article is from Bankrate.com through MSN Money.
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Ventura County Real Estate Doing’s for Week Ending July 26, 2008
July 27th, 2008 Categories: Weekly Real Estate Activity In Ventura County
Well what do you know. Finally some recognition that the real estate market is turning around.
And from the print media no less.
Just passed by the House and Senate and awaiting the Presidents signature is the homeowners housing rescue plan.
As previously mentioned this bill is too little, too late. Yes it may help a few people but it certainly will help Freddie Mac and Salle Mae and give local political entities monies to buy “distressed”, “abandoned”, or whatever you want to call it, properties.
What the bill focuses on is the governments extension of social management. Of real concern are monies allocated to local governments to purchase and rehabilitate foreclosed homes.
In the small print, if citizens are not vigil, local governments can exercise eminent domain under the guise of “rehabilitation”, “abandoned” or “distressed”. It will not be called that but watch and you will see local governments exercise eminent domain citing “beautification” and “earth green” and any other limerick that suits their purpose.
This bill reminds me of a cartoon I saw recently. The cartoon showed a sign reading: “Stupidity Night. Pay full price and get in free.”
Ventura County Focus:
The Summer doldrums were evident this pastweek in Ventura County. Listing decreased slightly; sales decreased slightly as did days on the market for sold homes (72 days versus the prior weeks 81 days). The variance between average list price and average sales price of homes sold settle in at -3.8%, a decrease from the previous weeks -5.2%.
Comparison: July 26, 2007 through July 26, 2008
This next chart is rather revealing. This chart is a comparison of sales in the year 2007 versus 2008 for the same period (ending July 26 of both years).
Mentioned on many occasions on this web site was the fact that Ventura County has done very well on the downside of the real estate market.
Comparing July 26, 2007 with July 26, 2008, sales have decreased over the year from 3,995 (in 2007) to 3,464 (in 2008).
Of critical note is that the average sales prices of homes sold decreased approximately 16%.
Homes average sales price in 2007 was $ 810,022 and in 2008; the average home sales price in 2008 is approximately $ 740,754.
Areas with the highest decrease in home sales prices are Ventura (-21.8%); Oxnard (-31.1%); Fillmore (-30.6%); and Santa Paula (-24.3%).
Also mentioned periodically was that anything owned along the beaches is better than gold.
The Ventura beach area home valuesincreased but sales decreased when compared from 2007 to 2008. Ventura beach prices increased 43%over the last year for properties in the Ventura Beaches area. Prices in the year 2007 averaged $1,279,144; prices in 2008 averaged $ 1,828,969.
Oxnard beach properties price variance between 2007 and 2008 settle in at -10.2% less on a year to year comparison.
The Santa Rosa Valley area values from year to year comparisons was -9.7%.
So we indeed live a great area and appear to be immune at this time to economic factors that plague other areas such as the San Bernardino area.
So Ventura Beaches did the best on a year to year comparison. Fillmore homes sales values did the worse over the last year.
Your comments are most welcomed.
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Balloons In Santa Paula….
July 25th, 2008 Categories: In Case You Missed It---
Friday morning there were five balloons landing at the Santa Paula airport. Big day for those who want to go up in an hot air balloon.
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Ventura County Real Estate Doing’s for Week Ending July 19, 2008
July 20th, 2008 Categories: Weekly Real Estate Activity In Ventura County
What a difference a week makes.
The County experienced a further decline in listings (see chart below); home sales as expected decreased (it is summer); days on the market for sold homes increased; and properties selling for $ 500,000 or less are moving the fastest.
Quite unsettling are the guru’s who tell us how to handle money. They are finding themselves knee deep in alligators.
Zero down, 110% financing and all the other exotic finance packages that the banks and lenders pushed for the last several years are now coming to haunt them.
Excuse me….it is not them, it is us.
Freddie Mac and Fannie Mae are going to be helped through their crisis with money from Uncle Sam. Nope! Got that wrong again. We are giving them the money (good old taxes) from us.
Side Bar. Have you noticed which banks are in trouble. The large institutions. Smaller banks and mortgage companies are doing well for the most part. So if given a choice look at your smaller bank and credit unions. Their management appear to have their acts together.
Back to real estate.
Talk about the fox protecting the chickens.
The Senators that pushed for the creation of these quasi-government companies (Freddie Mac and Fannie Mae) some years ago, today head the committees that will write the legislation to help bail out these quasi-entities from their crisis.
You know something is wrong when federal or state government officials go on televison Sunday morning telling us all is well. Come Monday (or Tuesday) we find out what the problem is…..strange how that works out.
When government bails out anything, inflation is right around the corner. The Federal Reserve in at a cross roads. They do not want to raise interest rates but if inflation starts flexing its’ muscles, then rates will increase.
The impact to overall real estate market. Minimal if any.
Real estate in California is going to be great. Ventura, San Luis Obispo, and Santa Barbara counties will be excellent.
There are two articles that should be read to realize the strength of the Ventura County maret. Both articles give a better picture of the what is going to occur and the strenth of the Ventura market.
These articles are
- http://www.venturacountyretalk.com/2008/07/19/happy-days-are-here-again/
- and http://www.venturacountyretalk.com/2008/05/05/it-only-gets-better-we-are-on-the-upsidea-historical-perspective-of-home-prices-in-ventura-county-and-what-can-be-expected-in-the-next-10-years/ .
Within the next several months (maybe weeks) most if not all of the negative talk regarding mortgages, lenders, banks, real estate in general will disappear. The market has turned and things will be “happy” again.
What we will then hear and read is the chorus of properties becoming unaffordable. Then that cycle will begin over again. Good market or bad market, the media will dwell on the negative. Negativism sells.
One other note regarding Ventura County. As noted in the chart below, appreciation projection for the County will approximate 7.6% over the next 12 months; 17% over 24 months and 26.6% over a 36 month span. These are good numbers.
There should be no doubt but Ventura County real estate is UP. Should National economic scene goes south on us then the County will experience something less than what is being projected. Based on current economic, employment and other Federal data the above rates of appreciation should be realize.
Your comments are welcomed.
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Happy Days Are Here Again…..
July 19th, 2008 Categories: National and Local Real Estate Appreciation Forecast
Constantly all one hears or reads today is what is wrong with real estate.
Sales, mortgages, lenders, brokers, inventory have all had their share of headlines.
BUT the numbers show a different story.
A recent article in Barrons (July 14, 2008) entitled “Bottom’s Up: This Real-Estate Rout May Be Short Lived” by Jonathan R. Laing suggests that the pessimism that one read in the papers or hears on the news is overdone based on recent data.
Mr. Laing notes that sales of existing homes are showing tentative signs of increasing while the plunge in prices likely is nearing an end and inventories are getting smaller.
The chart below concurs with Mr. Laing’s observation that the “rout” may be over. Real estate has turned the corner for most parts of the United States. California is about ready to take off.
Properties in San Luis Obispo, Santa Maria, Santa Barbara, Ventura, Santa Paula will have significant appreciation over the next 36 months. 26% to 36% growth in 36 months is excellent growth. It does not get any better.
The areas just mentioned will experience a 7%+ annual growth over the next 12 months. Where can you get 7% on your money today? Banks? No! The stock market? Maybe. Commodities? Watch out.
It is readily apparent that all areas of California will be headed upward and will be a good investment. My God, look at San Diego, Chico, Redding and yes, San Bernardino. All are showing growth.
Hawaii will not share in this upswing. They have other “island type” problems that the rest of the United States doesn’t face (tourism is their major business. Travel will be difficult for the immediate time and unless a “fuel cure” is found instantly travel will be minimized by people for a significant period. Therefore Hawaii will suffer).
California has turned the corner. So the continued negative media coverage of real estate is mystifying. I guess that old adage “negative news sells” is alive and well.
Prices are at a point now that young people can afford to purchase a home.
Over the next 36 months, especially along the coast line, property values are going upward (some will say prices are crazy).
This is not a crystal ball assessment but a statistical evaluation of what is projected based on current economic, jobs, and federal figures collected from across the United States.
In a recent article “66 Cities Where Buying Makes Sense”, dated July 15, 2008 by Marilyn Lewis, MSN Real Estate, lists a number of cities that she thinks that if somebody wants to buy a home, these are the areas that make sense.
Her recommendations include Edinburg and a number of other cities in Texas; New Orleans, LA; Tulsa, OK; Detroit, MI and yes a number of areas in Florida.
Ms. Lewis also notes that despite the drop in home prices, long-term buyers in the top 20 U.S. metro markets have seen their property appreciate by 70% since the year 2000. Over an 8 year period that is an annual appreciation rate of 8.75% each year for 8 years. That is great when compared to the National average of 7.0%.
All the negative news about mortgage lenders, real estate sales, inventories in a few weeks will have all but disappeared.
Within the next year we will start hearing the chorus that homes are not affordable and the cycle begins again.
If buyers who have been waiting for the bottom have not acted by now, well they have just missed the train. As shown in the article: http://www.venturacountyretalk.com/2008/05/05/it-only-gets-better-we-are-on-the-upsidea-historical-perspective-of-home-prices-in-ventura-county-and-what-can-be-expected-in-the-next-10-years/ the California real estate market is going to be great.
Up……Anyone?
Your comments are welcomed.
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Are You A Real Estate Professional? Maybe Not, Says IRS.
July 17th, 2008 Categories: Taxes, Taxes and Taxes
This article was written by Diane Kennedy and sent to me by Sandyleee Sanderson of Star Investment Analyzer, LLC
If you’re a real estate investor who has ever taken a real estate loss on your tax return, there is a target on your back. For months, members on my Forum have been complaining about being selected for audit, and losing, based on the IRS’s new set of real estate professional guidelines.
Under tax law, a “real estate professional” isn’t always a licensed real estate agent or a broker. It’s a tax classification, and it’s an important one. As a regular real estate investor, you are limited to deducting $25,000 in passive losses each year, against your passive income. That amount begins phasing out once your taxable income tops $100,000 and disappears entirely when your income reaches $150,000. Real estate professionals have neither the dollar nor the income limitation, making this classification an important part of tax-planning.
When the market got hot, the number of real estate professionals shot up. But as the “tax gap” (the difference between taxes that should be paid and taxes that are paid) increases, government is looking for ways to turn things around, and this classification is squarely in the cross-hairs.
To meet the IRS requirements, you need two things: spend the majority of your working time spent performing qualified real estate activities (regardless of what you do), and rack up at least 750 hours. Qualified activities include “develop, redevelop, construct, reconstruct, acquire, convert, rent, operate, manage, lease or sell” real estate.
Practically speaking you won’t make the cut if you work elsewhere and report full-time W-2 income. And there’s a third hurdle: material participation. In a twist that can only make sense in the IRS world, real estate activities are one of two things: passive, or materially participating passive. If you have a passive loss, it can only be used against passive income. Period.
Materially participating passive losses, on the other hand, can be used against materially participating passive income and, in some cases, other income. This is where the power of the real estate professional classification comes in: the ability to take the loss from real estate investments against other income. Unfortunately, what has been acceptable in the past, no longer is. Here are three areas the IRS is focusing on right now:
Limited Partnership Interests: By definition, if you hold property in a limited partnership as a limited partner, you do not materially participate. This area is being hit hard, and the number of audits of limited partnerships has increased.
Failure to Aggregate Hours Worked: The material participation rule requires that you work 500 hours on each property you own, or make an election to aggregate all the properties together into a single 500-hour block. Fail to make this election, though, and you will run into trouble.
Failure to Meet 500 Hour Threshold: To get even the $25,000 deduction you’ve got to meet the 500-hour minimum, even if you aren’t going for full real estate professional status. Fail to meet this requirement and your passive loss will be limited to the amount of your passive income.
But the biggest change that we’re seeing is to the material participation rules, and what does and doesn’t constitute a real estate activity. For example, managing real estate is a qualified activity, but managing real estate through a third-party property management company is being challenged. So if you live hundreds of miles away from your rental properties, be on the lookout for this type of question. Another is research. The hours spent on researching properties and markets is being challenged by the IRS who consider this a passive activity.
Proper records are also becoming vital. Anyone looking to claim this classification must be keeping a detailed time log of dates, locations and activities, preferably backed up with photographs or other evidence showing you hard at work.
Finally, frustrating everyone is the fact that in many cases the “new” IRS rules (which came out in December of 2007) are being applied after the fact, and made retroactive to 2007 and earlier when the old rules were still in force. Both sides are appealing up to the Tax Court, hoping to either set a new precedent or rein in the IRS. Until the Tax Court rules one way or another on whether or not the IRS can apply new rules to old earnings, we’re in limbo. Reviewing your activities and taking steps to make sure you’re in compliance with the new rules may be your best plan.
Published: July 17, 2008
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ID Thieves Are Targeting Medical Information.
July 17th, 2008 Categories: Pre-Paid Legal Services
First (and still is ) personal ID theft. It graduated to stealing homes and now ID thieves are stealing personal medical information.
This article was re-printed in both the Star Duster Newsletter and L. A. Daily News but was originally published in the The Dallas Morning News. The writer is Pamela Yip.
When someone steals your identity, obtains loans in your name and then stiffs the lenders, the effects on your credit report can be devastating. It can take weeks, months or sometimes years – as well as plenty of frustration – to restore your good name.
Medical ID theft occurs when a thief uses some-one’s personal information – such as health insurance information – without the indiviuals’ consent to obtain medical services or goods, or to make false claims for medical services or goods.
Getting stuck with the bill for a medical procedure you never had is bad enough, but medical identify theft also has far more serious implications.
“Unlike purely financial forms of identity theft, medical identity theft may also harm its victims by creating false entries in their health records at hospitals, doctor’s offices, pharmacies and insurance companies,” said Pam Dixon, executive director of the World Privacy Forum, a nonprofit privacy-rights organization in Cardiff by the Sea (California).
Changes made to victims’ medical files and histories can remain for years and may not ever be corrected, or even discovered, which can have deadly consequences.
“Victims of medical identity theft may receive the wrong medical treatment, find their health insurance exhausted, and could become un-insurable for both life and health insurance coverage,” Dixon said. “They may fail physical exams for employment due to the presence of diseases in their health record that do not belong to them.”
Of the 8.3 million Americans who were victims of identity theft in 2005, three percent or 249,000, said someone had obtained medical treatment and services using their personal information, according to the Federal Trade Commission’s 2006 Identity Theft Survey Report, the most recent.
Now that medical ID theft is recognized as a type of identity theft, it is being reported more often, said Linda Foley, co-executive director of the Identity Theft Resource Center in San Diego (CA).
Elaine Anderson, senior vice president of compliance at Texas Health Resources, has seen evidence of that.
“Over the last three to four years, this has been something that’s been coming to my attention more frequently,” Anderson said. “We’ve taken it really seriously. Identity theft has become a real problem for our society.”
The most common way for consumers to discover that their personal information has been hijacked for medical services is when they receive a bill for a procedure they never received.
It this happens to you, contact the hospital, clinic or doctor who sent the bill and inform them of the error. Also, contact your health insurance company because the health care provider may have already billed the insurer.
To prevent medical identity theft, carefully study the “explanations of benefits” document that your health insurance company sends you detailing health services you obtained and their reimbursements.
Check to see that the dates and types of services match your records. If you spot anything suspicious – whether you owe money or not – call your insurer and health care provider immediately.
Guard your health insurance card as you would a credit card.
If you are checking in for an appointment and are asked for your Social Security Number, address and other personal information, make sure no one is lingering suspiciously near you.
The medical environment is a unique setting in which ID theft can take place.
When you are hospitalized, all types of employees can have access to your personal data. That includes employees in the billing department, nurses, doctors, and lab technicians.
The health insurance industry said that although several bills pending in Congress propose new data security requirements, insurers must remain vigilant about protecting patient health records.
If You Thin You Are A Victim Of Medical Identity Theft:
- Contact your health provider and your insurer. Most insurers have anti-fraud hot-lines staffed by experts who can talk you through what to do. Typically they will request a new insurance card for you and have a watch put on your old insurance card.
- File a police report. You may need this for health card providers and insurance companies.
- Correct erroneous and false information in your file. Sending copies of a police report to insurers, providers and credit bureaus may be a step in cleaning up the problem, though there is no guarantee that it will cure all the problems.
- Take detailed notes. Write down the name and contact information of everyone you speak to, as well as the date and what was discussed, in case you need to follow up. Also, make copies of letters and e-mails you send.
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One Of A Few……
July 15th, 2008 Categories: "Say What? Just Some Real Estate Talk
John Duffner Earns National Luxury Home Designation
Ventura County, California –July 15, 2008 – John Duffner, real estate broker associated with Rushing Real Estate and Investments, Inc. located in Santa Paula was recently awarded the Accredited Luxury Home Specialist (ALHS) Designation from The Luxury Home Council.
The Accredited Luxury Home Specialist (ALHS) Logo is testimony to the agent’s training and expertise in the luxury home marketplace. To display the ALHS logo and be accepted into the Luxury Home Council, each member must successfully complete the Accredited Luxury Home Specialist Course, represent a buyer or seller in at least two transactions where the purchase price is at least twice the average sales price and the agent must be in good standing with the National Association of REALTORS®.
Luxury Home Council Members receive numerous benefits to assist in marketing and selling upscale properties. Advantages of membership include access to the members only section of www.luxuryhomecouncil.com and www.luxuryhomesandproperties.com to market luxury listings, a subscription to The Luxury Home Expert a monthly online magazine, discounts on products and services, access to the REALTYU® Alumni Association and the ALHS database for networking and referral opportunities.
John Duffner joins an elite membership of top real estate agents throughout the United States.
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Monday Morning Coffee Break: Ventura County Real Estate Doing’s for Week Ending July 12, 2008
July 13th, 2008 Categories: Weekly Real Estate Activity In Ventura County
The news of the past week focused on IndyMac, Fannie Mae and Freddie Mac and not the real estate market.
Similar to the Bear-Sterns take over, the Federal Reserve opted to do the same with IndyMac Bank.
Whether IndyMac is sold or not will not hampered the real estate market. In a few weeks this IndyMac problem will disappear, just like Bear Sterns.
Steps will be taken to shore up Fannie Mae and Freddie Mac as well.
Real estate interest rates will continue to stay around 6% over the next serveral weeks. There will be up’s and down’s of from 1/4 to 3/8 point swings but on average interest rates will remain flat.
Germain to real estate is that good news is starting to ease out of the wood work. Foreclosures are still high but now there is evidence that may be phasing out shortly.
Price of homes attracting buyers are generally below $ 450,000.
Ventura County real estate appears to have hit its bottom as listing continue to decrease; properties sold continue to increase weekly; the number of days sold homes were on the market has decreased; and the variance between list price and sales price of sold homes decreased.
Couple this with the fact that some sellers are beginning to reverse course and have started to increase their list price. Not many as yet (only one’s and two’s) but this was not seen a month ago or longer.
So unless some uncharacteristical event occurs to the general economy of the United States, Ventura County real estate is on the upswing and affordable homes are being scooped up rapidly.
Real estate investors have to consider that with high fuel and food prices the home buyers will purchase homes that are closer to the job market, shopping areas and schools. That is why Ventura County real estate has had minimal downside impact compared to other areas.
Overall it appears that the real estate decline, in general, will have run its course by the end of this year or the first quarter of 2009. Ventura County is slightly ahead of this time line by about 3 months.
Your comments are welcomed
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A Lazy Sunday Afternoon At The Ball Game……
July 6th, 2008 Categories: Its' Show Time
Picture below is the game between Saticoy and Goleta Little League Teams played on July 6, 2008 at the Santa Paula Little League Field, Santa Paula, CA.
The final score of the game was: Saticoy 13; Goleta 9.
The crowd was just great. Everyone settled in for a fun day.
Whew…….the pitches got close at times. In this case it the batter fought off an inside pitch for a foul ball.
There were some injuries. Here the center fielder attempted a diving catch and hit his head on the ground……all went well. He continued in the game. Oh….he did not make the catch but held the runner to a single.
My grandson at the plate. He went 3 for 4, all singles, had 2 runs batted in. Played center, pitched and played 2nd base.
Trying for an action shot. Looking between breaks in a chain link fence is not the best way to get an action shot.
In between innings. Pitcher warming up. This was a great sunny day with a nice breeze to make it all the more enjoyable.
And if you like airplanes as I do it was great to watch the small aircraft coming in for landings. All of this was seen from the stands. Action on the field and action in the air.
Just a great way to spend a lazy Sunday afternoon with family and friends watching the next group of big leaguers having fun.
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