Get In Line. Ventura County Real Estate Doing’s for Week Ending Nov 15, 2008
November 16th, 2008 Categories: Weekly Real Estate Activity In Ventura County
On the National level the elephant has started to move.
There has been movement on the mortgage side of things. Unfortunately 85% of the people needing help are already out of their homes. The remaining 10-15% will have difficulties jumping through all of the hoops but a small number will prevail. Which is good. At least some people have been helped.
In a previous article http://www.venturacountyretalk.com/2008/08/31/ it it was noted that banks were in the cross hairs of the Federal Reserve.
It took longer than expected but this past week the Federal Reserve used a public forum to chastise banks.
In no uncertain words banks were told by the Reserve and Treasury to make loans. Paraphrasing, Mr. Paulson reminded banks that their business is to make loans. So make them.
This sounds good but the bank industry will take its time and loans will still be difficult to get because of the stringent requirements now in place. If they become too stringent then banks face another rebuke from the Reserve and the next slap will be felt and action will take place. We shall see.
The Federal Reserve has been injecting money into the system and wants interest rates lower and they have stepped up to the plate to get the job done.
Banks have not passed anything to the consumer sector yet. That is about to change.
With the activity the Federal Reserve has taken over the last 5 months, mortgage rates should be closer to 5-5 1/4 %; instead up until a few weeks ago they were kept artificially high at 6 to 6 1/4%. Within the last week they have dipped to 5 3/4% and they should go lower.
Interest on credit cards should also start downward; likewise with auto loans and other consumer credit. Again we shall see.
The horse has been let out of the corral. Other sectors are now seeking government money so do not be surprise to see additional monies being given to many companies. If done correctly Government should end up with quite a profit within the next 5-10 years.
That doesn’t mean a reduction in our taxes which will be going up shortly but Government will have lots of money from the profits it will receive. Oops….Government is not suppose to make a profit.
From my readings it appears that an additional 220 banks have asked for help; the cities of Chicago, New York and Atlanta are asking for government help; the State of California has asked for help; the auto industry is asking for help; American Express has just been helped; there have been stories of various cities hinting that they are going to declare bankruptcy and the list grows every day.
At some point someone has to step back and say enough is enough. Simply printing money and helping everyone that is in trouble at some point is going to bite us all in the rear end.
I better find my place in line.
Compounding the situation is the consumer.
They are slimming down their expenses and are particular in what they are purchasing.
Expect retail stores (which have suffered a significant down side over the last several months) to expand on discounts to attract buyers.
With Christmas around the corner, retailers will pull out all the stops to attract buyers. Unfortunately this effort will not meet retailer expectation.
The exception to date is the much maligned WalMart. They appear to have their act together and sales have been up.
Unfortunately the Barney Frank and associates that caused this financial crisis now are heading the committees that are legislating policy to resolve the crisis. I suspect these folks will go unscathed and their actions will be but a footnote buried in some appendix.
On the National level, 3rd Quarter, 2008 OFHEO data has yet to be released but it appears that the rest of the country is holding it own.
The Urban Land Institute in its “Emerging Trends” suggest consideration of investing in land and multi-family properties. It was noted that developers are selling land for cents on the dollar and because of (1) downsizing and (2-my add) the mortgage mess, people are renting and multiple family dwelling may be a good investment at this time.
As a caveat I would suggest that any investment in multi-family properties be in locations that would minimize driving for employment. People are minimizing expenses and it would bode well for the investor to purchase good locations that allow for minimal driving.
Side bar: Recently I read of a new technology which will be changing computers and storage. It is called a memristor and its claim to fame is that it can remember electrical states even when the component that it is in is off.
I see all sort of application for this technology in areas of making things paperless and wireless. In the article when-luxury-items-become-necessities/ addressed were a list of items that may become necessities in the future home.
In my minds eye I see memristor as an application that make these listed items become in-house use faster than originally thought. Keep an eye on this.
Side Bar: Internal Revenue Service and Mortgage Interest: A possible audit area is how taxpayers treat mortgage interest especially after refinancing their home. RED FLAG … be aware.
Refinancing what is called acquistion debt for real estate is not a problem. However, equity debt which is secured by the taxpayers home can be a major problem. Equity debt derives from pulling money out of your home and using the funds for something other than real estate.
When taxpayers receive their 1099 at the end of the year the bank shows the interest paid. It is up to the taxpayer to stipulate if the refinancing was used for real estate (then a 100% deduction) or if the interest has to be apportioned (part for real estate is deductible).
The IRS has been looking at mortgage interest for a number of years and possibly in the next tax season, taxpayers will receive a correspondence letter from the IRS asking what they did with their refinancing funds.
Should any of the funds have been used for something other than real estate, there can be an adjustment to prior years, coupled with a fine and interest for the additional tax the IRS says that is due.
It can be complicated but the Government needs money and this is an excellent source for additional funds.
Conforming Mortgage Side bar: Fannie Mae and Freddie Mac high cost area conforming loans for the period of January 1, 2009 through December 31, 2009 are listed below by County (CA).
Ventura County Real Estate
Ventura County real estate continues to be slow.
- Listing continue to decrease;
- number of sales continue to decrease;
- days on the market continue its decrease;
- there was a slight up tick in sales noting perhaps that sales prices will now start upward.
- And there was an increase in the variance between list price and actual sales price but this was due to one property in the Santa Rosa Valley area.
Your comments are welcomed.
