The (Not Just) First-Time Homebuyer Tax Credit, Expanded & Explained
By Gino Blefari
President and CEO, Intero Real Estate Services
After much speculation by the general populace (and the real estate industry) and much consternation by Congress, the much-anticipated extension of the First-Time Homebuyer Tax Credit has been passed.
Passed, not to mention greatly expanded.
Whether you’re in favor of or opposed to the credit, it’s now been made available to a host of Americans not included in the initial offering, so how can you take advantage of it? Let’s break it down, shall we?
The original tax credit, which was a part of the economic stimulus package put into effect in February 2009, was made available to first-time homebuyers (people who hadn’t owned a home for three or more years) and applied to home purchases that closed on or before November 30, 2009. With the passage of the expansion bill into law, that credit has been extended to purchases made by May 1, 2010 and that are closed prior to July 1, 2010 (that means escrow is closed, all papers signed and keys are in-hand on or before June 30th).
For first-time homebuyers, the credit amount, as it was in the original plan, remains at 10% of the purchase price, up to a maximum credit of $8,000. Originally, to be eligible for the credit, single (not married) purchasers could have an adjusted gross income (AGI) of no more than $75,000/year; married couples with an AGI of $150,000 or less were eligible. Under the new plan, singles with an AGI of up to $125,000 and married couples with an AGI of up to $225,000 are eligible.
For those of you who had previously been ineligible to claim the credit at all because you already owned a home, there may be good news for you. Under the new plan, homeowners who have lived in their homes for 5 consecutive years of the past 8 years are eligible to receive a credit toward a new home purchase. Meant to give a boost to “move-up” buyers, this credit amount can be 10% of the purchase price, up to $6,500. The income caps referenced above are the same.
If you’re a member of the Armed Services and were/will be deployed outside the United States for at least 90 days between December 31, 2008 - May 1, 2010, you may claim the credit until May 1, 2011 (with settlement all wrapped up before July 1, 2011).
One peculiarity of which it’s important to take note: even if you purchase a new home in 2010, you can claim the credit on your 2009 tax return. If you file for an extension of time to file your income taxes, or if you amend your already-filed 2009 tax return, you may include the tax credit (this would put the cash in your pocket much sooner than if you were to claim the credit on your 2010 tax return). Be sure, however, to take heed of the income limitations, as they apply to the year in which you claim the credit.
Finally, it’s important that you understand that if the purchase price of the home exceeds $800,000, no tax credit may be claimed, regardless of your income levels. The credit only applies to primary residences. Investment properties or vacation homes don’t qualify.
Whether the expansion and extension of this credit is the shot in the arm that the US Economy needs remains to be seen, but it’s here, it’s ready and, if you’re planning on purchasing a new home, you should most certainly take advantage of it. Talk to your Intero agent or consult your financial advisor to discuss how this affects YOU.
Thursday, November 12, 2009
Friday, November 6, 2009
CONGRESS PASSES HOMEBUYER TAX CREDIT
Here's the latest intelligence from Real Estate Economy Watch.
Special Report
CONGRESS PASSES HOMEBUYER TAX CREDIT
--------------------------------------------------------------------------------
The House of Representatives voted overwhelmingly this afternoon to pass legislation containing an extension and expansion of the homebuyer tax credit, completing Congressional action and sending the tax credit to President Obama for his signature, possibly as early as tomorrow.
The $8,000 homebuyer tax credit for first-time buyers, due to expire in 25 days, will be extended through April 30 of next year and buyers will have an additional two months, until the end of June, to close. First-time buyers who are in process of making a purchase will no longer need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. The new legislation increases the income limit for couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.
For the first time, the new legislation makes buyers who already own a home eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five of the prior eight years. The legislation limits eligibility for the existing homeowner credit to homes worth $800,000 or less.
Read the full story at http://www.realestateeconomywatch.com/
Special Report
CONGRESS PASSES HOMEBUYER TAX CREDIT
--------------------------------------------------------------------------------
The House of Representatives voted overwhelmingly this afternoon to pass legislation containing an extension and expansion of the homebuyer tax credit, completing Congressional action and sending the tax credit to President Obama for his signature, possibly as early as tomorrow.
The $8,000 homebuyer tax credit for first-time buyers, due to expire in 25 days, will be extended through April 30 of next year and buyers will have an additional two months, until the end of June, to close. First-time buyers who are in process of making a purchase will no longer need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. The new legislation increases the income limit for couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.
For the first time, the new legislation makes buyers who already own a home eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five of the prior eight years. The legislation limits eligibility for the existing homeowner credit to homes worth $800,000 or less.
Read the full story at http://www.realestateeconomywatch.com/
Wednesday, September 23, 2009
Home Maintenance Tips
It's Fall: Time to Prepare Your Home for Winter
Fall maintenance is important because it helps make homes more energy efficient during the winter months, and will safeguard homes against potential seasonal 'disasters' such as leaking roofs or home fires caused by neglected chimneys. Here are ten tips to a safer, warmer winter.
TIP #1 -- Check the heating system. Check the filter, pilot light and burners in a system fueled by gas or oil. Fireplaces, boilers, water heaters, space heaters and wood burning stoves should also be serviced every year. Have the specialist inspecting your unit show you how to change the filter and then you should change it at least once every 2 months. Clean ducts in the heating system. Clean and vacuum dust from vents, baseboard heaters and cold air returns. Dust build-up in ducts is a major cause of indoor pollutants. Ducts should be professionally cleaned about every three years.
TIP #2 -- Have the chimney inspected by a qualified chimney professional. Chimneys should be checked and cleaned, if necessary, on an annual basis. If you are using a wood stove this season, be sure that the stovepipe was installed correctly according to the manufacturer's recommendations and local codes. If there is any doubt, a building inspector or fire official can determine whether the system is properly installed. If you have a chimney that will not be used, consider having it sealed shut.
TIP #3 -- Test fire alarms, smoke detectors and carbon monoxide detectors, and vacuum out the dust. Batteries should be checked every six months to ensure that they're working.
TIP #4 -- Remove excess leaves and damaged branches from trees surrounding the house. Dead branches have the potential to break and fall, ruining roofs, decks, or vehicles and the possibly causing injuries to people.
TIP #5 -- Maintain gutters. Remove all debris that can slow or impede the ability of water to drain effectively from the roof. Trapped water can be destructive not only to the gutters themselves but to the adjoining roof as well. Make sure gutter water drains away from your home.
TIP #6 -- Inspect the roof. Look for damaged or loose shingles, gaps in the flashing at joints with siding, vents and flues, as well as damaged mortar around the chimney.
TIP #7 -- Inspect exterior walls, doors and windows. Check walls and window sills for damage such as cracks, gaps, loose or crumbling mortar, along with splitting and decaying wood. Caulk exterior joints around windows and doors, which helps keep the home weather tight and lower heating bills. Check windows and doors to make sure locks work properly and that they are in good condition. Clean tracks and lubricate hinges. Repair or replace any cracked windows.
TIP #8 -- Maintain steps and handrails. Repair broken steps and secure loose banisters and handrails. Broken steps can cause a dangerous fall. Similarly, a person slipping will grab a handrail for support.
TIP #9 -- Inspect the attic and basement or crawlspace. Insulate voids in the attic - the entire attic floor above a living space should be insulated with at least six inches of insulation, except around electrical fixtures such as recessed lights that aren't rated for contact with insulation. Damp basements and crawl spaces can become mold and mildew problems. Watch for leaks from your water heater, plumbing system and seeping rain water from the roof. Locate and maintain a clear access to your main water shut off valve. If you have a sump pump, test, clean and lubricate it.
TIP #10 -- Shut down sprinkler systems and outside faucets. Homeowners can shut down outside faucets, however weatherizing the underground sprinkler system is best performed by industry professionals who will flush the system before the cold sets in, preventing cracked pipes.
Excerpted from http://rentonwa.gov/
Fall maintenance is important because it helps make homes more energy efficient during the winter months, and will safeguard homes against potential seasonal 'disasters' such as leaking roofs or home fires caused by neglected chimneys. Here are ten tips to a safer, warmer winter.
TIP #1 -- Check the heating system. Check the filter, pilot light and burners in a system fueled by gas or oil. Fireplaces, boilers, water heaters, space heaters and wood burning stoves should also be serviced every year. Have the specialist inspecting your unit show you how to change the filter and then you should change it at least once every 2 months. Clean ducts in the heating system. Clean and vacuum dust from vents, baseboard heaters and cold air returns. Dust build-up in ducts is a major cause of indoor pollutants. Ducts should be professionally cleaned about every three years.
TIP #2 -- Have the chimney inspected by a qualified chimney professional. Chimneys should be checked and cleaned, if necessary, on an annual basis. If you are using a wood stove this season, be sure that the stovepipe was installed correctly according to the manufacturer's recommendations and local codes. If there is any doubt, a building inspector or fire official can determine whether the system is properly installed. If you have a chimney that will not be used, consider having it sealed shut.
TIP #3 -- Test fire alarms, smoke detectors and carbon monoxide detectors, and vacuum out the dust. Batteries should be checked every six months to ensure that they're working.
TIP #4 -- Remove excess leaves and damaged branches from trees surrounding the house. Dead branches have the potential to break and fall, ruining roofs, decks, or vehicles and the possibly causing injuries to people.
TIP #5 -- Maintain gutters. Remove all debris that can slow or impede the ability of water to drain effectively from the roof. Trapped water can be destructive not only to the gutters themselves but to the adjoining roof as well. Make sure gutter water drains away from your home.
TIP #6 -- Inspect the roof. Look for damaged or loose shingles, gaps in the flashing at joints with siding, vents and flues, as well as damaged mortar around the chimney.
TIP #7 -- Inspect exterior walls, doors and windows. Check walls and window sills for damage such as cracks, gaps, loose or crumbling mortar, along with splitting and decaying wood. Caulk exterior joints around windows and doors, which helps keep the home weather tight and lower heating bills. Check windows and doors to make sure locks work properly and that they are in good condition. Clean tracks and lubricate hinges. Repair or replace any cracked windows.
TIP #8 -- Maintain steps and handrails. Repair broken steps and secure loose banisters and handrails. Broken steps can cause a dangerous fall. Similarly, a person slipping will grab a handrail for support.
TIP #9 -- Inspect the attic and basement or crawlspace. Insulate voids in the attic - the entire attic floor above a living space should be insulated with at least six inches of insulation, except around electrical fixtures such as recessed lights that aren't rated for contact with insulation. Damp basements and crawl spaces can become mold and mildew problems. Watch for leaks from your water heater, plumbing system and seeping rain water from the roof. Locate and maintain a clear access to your main water shut off valve. If you have a sump pump, test, clean and lubricate it.
TIP #10 -- Shut down sprinkler systems and outside faucets. Homeowners can shut down outside faucets, however weatherizing the underground sprinkler system is best performed by industry professionals who will flush the system before the cold sets in, preventing cracked pipes.
Excerpted from http://rentonwa.gov/
Tuesday, September 8, 2009
Building Your House: Inspirational Story
An elderly carpenter was ready to retire. He told his employer-contractor of his plans to leave the house building business to live a more leisurely life with his wife and enjoy his extended family. He would miss the paycheck each week, but he wanted to retire. They could get by.
The contractor was sorry to see his good worker go and asked if he could build just one more house as a personal favor. The carpenter said yes, but over time it was easy to see that his heart was not in his work. He resorted to shoddy workmanship and used inferior materials. It was an unfortunate way to end a dedicated career.
When the carpenter finished his work, his employer came to inspect the house. Then he handed the front door key to the carpenter and said, “This is your house… my gift to you.”
The carpenter was shocked!
What a shame! If he had only known he was building his own house, he would have done it all so differently.
So it is with us. We build our lives, a day at a time, often putting less than our best into the building. Then, with a shock, we realize we have to live in the house we have built. If we could do it over, we would do it much differently.
But, you cannot go back. You are the carpenter, and every day you hammer a nail, place a board, or erect a wall. Someone once said, “life is a do it yourself project.” Your attitude and the choices you make today, help build the “house” you will live in tomorrow. Therefore, Build Wisely.
The contractor was sorry to see his good worker go and asked if he could build just one more house as a personal favor. The carpenter said yes, but over time it was easy to see that his heart was not in his work. He resorted to shoddy workmanship and used inferior materials. It was an unfortunate way to end a dedicated career.
When the carpenter finished his work, his employer came to inspect the house. Then he handed the front door key to the carpenter and said, “This is your house… my gift to you.”
The carpenter was shocked!
What a shame! If he had only known he was building his own house, he would have done it all so differently.
So it is with us. We build our lives, a day at a time, often putting less than our best into the building. Then, with a shock, we realize we have to live in the house we have built. If we could do it over, we would do it much differently.
But, you cannot go back. You are the carpenter, and every day you hammer a nail, place a board, or erect a wall. Someone once said, “life is a do it yourself project.” Your attitude and the choices you make today, help build the “house” you will live in tomorrow. Therefore, Build Wisely.
Monday, September 7, 2009
Wednesday, September 2, 2009
Mortgage Market Commentary
Rates were GREAT yesterday and yet have IMPROVED today!!
If you’re an honest, law-biding citizen, should you care if the IRS starts comparing mortgage payments and income? What about if you’re a roofer who makes half his income in cash? If Jane Doe claims she makes $2,000 per month on her taxes, yet her mortgage payment is $3,500, should that be a reason for Ms. Doe to be investigated? In yet another story yesterday, it appears that the IRS “will study whether it should make greater use of data on mortgage-interest payments provided to it by banks.” The IRS currently uses such data to send notices to non-filers who it believes should have filed a return. The data could also be used to target for audits individuals who don't file tax returns, or who report less income than they paid in mortgage interest. Of course, if you’re a struggling borrower that is using money out of your savings account, or from Mom & Dad, to make the mortgage payment, you don’t need two guys with badges showing up at your office….
Wells Fargo was in the rumor mill yesterday, not for anything mortgage-related but rather on if and when it is going to pay back the government TARP money. The rumors prompted its CEO to make a statement that Wells will not be selling more stock to pay back its TARP monies but rather use its earnings. Wells, in addition to Citi and Bank of America, have not paid back any TARP money yet. Although $25 or $26 billion is a big chunk of change, Wells has been having its best results in its history and has had made money by cutting its dividend. Let’s hope that they keep buying mortgages!
Yesterday was one of those days when it was better to own fixed-income securities than to own stocks. As it turned out, there were rumors swirling about Wells Fargo (see above), and this caused the herd to shuffle into the proverbial “flight to quality”. Besides, many think that the stock market has gotten a little ahead of itself in recent weeks, and took some profits by selling. Regardless, bonds did well, and rates came down. But as I have said, few are complaining about rates – they are too busy wondering if guidelines will ever loosen up.
What moved rates yesterday? Construction Spending was -0.2% in July, and year-over-year spending is down 10.5%. The Institute for Supply Management’s Factory Index increased to 52.9 in August, better than expected. We also had the National Association of Realtors report that Pending Home Sales were up 3.2%, more than forecast, and once again attributed to lower rates, less expensive houses, and the tax credit (which expires around Thanksgiving). So go figure: better news across the board should have moved the stock market higher and bonds lower, but the reverse happened.
Today we have Factory Orders and the FOMC Minutes, although we have already seen mortgage applications. U.S. mortgage applications were down last week a little over 2%, with purchase apps declining for the first time since early July. Purchase loan applications dipped 1%, and applications to refinance fell about 3%. We also had the ADP employment numbers, which don’t include government jobs, which showed that job losses in the U.S. private sector fell to their lowest monthly level in nearly a year. “Only” 298,000 jobs were cut in August. After this tidbit we find the 10-yr at 3.36% and mortgage securities about unchanged.
Make it a great day!!!
If you’re an honest, law-biding citizen, should you care if the IRS starts comparing mortgage payments and income? What about if you’re a roofer who makes half his income in cash? If Jane Doe claims she makes $2,000 per month on her taxes, yet her mortgage payment is $3,500, should that be a reason for Ms. Doe to be investigated? In yet another story yesterday, it appears that the IRS “will study whether it should make greater use of data on mortgage-interest payments provided to it by banks.” The IRS currently uses such data to send notices to non-filers who it believes should have filed a return. The data could also be used to target for audits individuals who don't file tax returns, or who report less income than they paid in mortgage interest. Of course, if you’re a struggling borrower that is using money out of your savings account, or from Mom & Dad, to make the mortgage payment, you don’t need two guys with badges showing up at your office….
Wells Fargo was in the rumor mill yesterday, not for anything mortgage-related but rather on if and when it is going to pay back the government TARP money. The rumors prompted its CEO to make a statement that Wells will not be selling more stock to pay back its TARP monies but rather use its earnings. Wells, in addition to Citi and Bank of America, have not paid back any TARP money yet. Although $25 or $26 billion is a big chunk of change, Wells has been having its best results in its history and has had made money by cutting its dividend. Let’s hope that they keep buying mortgages!
Yesterday was one of those days when it was better to own fixed-income securities than to own stocks. As it turned out, there were rumors swirling about Wells Fargo (see above), and this caused the herd to shuffle into the proverbial “flight to quality”. Besides, many think that the stock market has gotten a little ahead of itself in recent weeks, and took some profits by selling. Regardless, bonds did well, and rates came down. But as I have said, few are complaining about rates – they are too busy wondering if guidelines will ever loosen up.
What moved rates yesterday? Construction Spending was -0.2% in July, and year-over-year spending is down 10.5%. The Institute for Supply Management’s Factory Index increased to 52.9 in August, better than expected. We also had the National Association of Realtors report that Pending Home Sales were up 3.2%, more than forecast, and once again attributed to lower rates, less expensive houses, and the tax credit (which expires around Thanksgiving). So go figure: better news across the board should have moved the stock market higher and bonds lower, but the reverse happened.
Today we have Factory Orders and the FOMC Minutes, although we have already seen mortgage applications. U.S. mortgage applications were down last week a little over 2%, with purchase apps declining for the first time since early July. Purchase loan applications dipped 1%, and applications to refinance fell about 3%. We also had the ADP employment numbers, which don’t include government jobs, which showed that job losses in the U.S. private sector fell to their lowest monthly level in nearly a year. “Only” 298,000 jobs were cut in August. After this tidbit we find the 10-yr at 3.36% and mortgage securities about unchanged.
Make it a great day!!!
Cost Segregation – Save Taxes and Increase Your Cash Flow
Cost Segregation – Save Taxes and Increase Your Cash Flow
What is Cost Segregation?
Cost segregation is the IRS sanctioned process by which real property components are re-classified as personal property. Re-classifying real property to personal property creates larger depreciation deductions because personal property is depreciated over much shorter periods (5, 7 or 15 years) than real property (27.5 years for residential or 39 years for commercial). And, creating larger tax deductions reduces current taxable income and allows the taxpayer increased cash flow.
Does the IRS approve of Cost Segregation?
Cost segregation studies are accepted and approved by the IRS. There are various IRS rulings, regulations and court cases which provide the basis for cost segregation studies.
For more detailed information, see the below link to the IRS Cost Segregation Audit Techniques Guide revised in March of 2008.
http://www.irs.gov/businesses/article/0,,id=134180,00.html
Who Can Utilize Cost Segregation and When Can It be Implemented?
Any taxpayer can use cost segregation for buildings acquired in prior tax years; when constructing a building; buying an existing one; or, in certain circumstances, years after disposing of one.
A taxpayer that uses cost segregation for a previously acquired structure must file IRS Form 3115, Change in Accounting Method.
How is a cost segregation study prepared?
Typically, the taxpayer engages an accountant and an engineer to analyze the components of the building structure to determine which components can be re-classified as personal property and re-allocated shorter depreciation periods. These professionals analyze architectural drawings, mechanical and electrical plans, and other blueprints to identify and segregate the structural and general building elements including electrical and mechanical components from those linked to personal property.
The following is an estimate of the range of building costs eligible for re-classification through a cost segregation study to personal property resulting in accelerated depreciation.
Apartment Buildings 21-36%
Auto Dealerships 26-39%
Banks 26-38%
Hotel 26-41%
Manufacturing Facilities 26-39%
Medical/Dental Facilities 25-40%
Office Buildings 22-37%
Restaurants 30-45%
Shopping Centers 21-37%
Warehouses 18-31%
What are the benefits of Cost Segregation?
The primary benefit is greater depreciation deductions and increased cash flow.
For example, if a taxpayer acquires a small residential apartment complex for $1.5 million and thereafter obtains a cost segregation study, which re-classifies 35% of the property as 5 year personal property, the taxpayer’s depreciation deductions increase from $54,545 each year to $140,454 each year – an increase of 157%.1
There are, however, other significant benefits:
If a building component needs replacement at some point after the cost segregation, the taxpayer may take, as a deductible loss, the value of the component at the time of replacement.
If real property is reclassified as 5-, 7- or 15-year personal property, it may qualify for bonus depreciation. Bonus depreciation allows an owner to depreciate 50% of the asset immediately.
Cost Segregation and tax deferred exchanges
If a taxpayer obtains a cost segregation study and thereafter exchanges the property, he must remember to be cognizant of the new real and personal property allocation to ensure that any replacement property acquired has the same proportion of real and personal property.
What is the cost to prepare a Cost Segregation Study?
Fees for a cost segregation study are based on the size and type of building and the anticipated time required to complete the study and thus can vary substantially from project to project.
I use OREXCO and refer all my investors to check with them and their tax adviser before making a purchase or exchange. OREXCO’s choice of vendor for cost segregation studies, Tax Strategies Group, LLC, will provide clients with a free analysis to determine whether the taxpayer will benefit from a study. Tax Strategies’ estimate includes the projected increase in depreciation, showing the net present value to the client. Clients should expect to receive benefits between five and ten times the cost of the Study. Tax Strategies’ free estimate allows taxpayers to examine and weigh the benefits of its services without risk or expense. Likewise, Tax Strategies’ studies are backed by a policy of insurance issued through Lloyd’s syndicates providing for payment of taxes or fines imposed as a result of a finding that the study is defective or unsupported.
Tax Strategies Group, LLC may be contacted at (877) 394-3300 and info@tax4cash.com. Further information about Tax Strategies Group, LLC can be obtained at their website, www.tax4cash.com.
OREXCO gratefully acknowledges the participation of Jim Davis, Esq. of Tax Strategies Group, LLC in the preparation of this article.
What is Cost Segregation?
Cost segregation is the IRS sanctioned process by which real property components are re-classified as personal property. Re-classifying real property to personal property creates larger depreciation deductions because personal property is depreciated over much shorter periods (5, 7 or 15 years) than real property (27.5 years for residential or 39 years for commercial). And, creating larger tax deductions reduces current taxable income and allows the taxpayer increased cash flow.
Does the IRS approve of Cost Segregation?
Cost segregation studies are accepted and approved by the IRS. There are various IRS rulings, regulations and court cases which provide the basis for cost segregation studies.
For more detailed information, see the below link to the IRS Cost Segregation Audit Techniques Guide revised in March of 2008.
http://www.irs.gov/businesses/article/0,,id=134180,00.html
Who Can Utilize Cost Segregation and When Can It be Implemented?
Any taxpayer can use cost segregation for buildings acquired in prior tax years; when constructing a building; buying an existing one; or, in certain circumstances, years after disposing of one.
A taxpayer that uses cost segregation for a previously acquired structure must file IRS Form 3115, Change in Accounting Method.
How is a cost segregation study prepared?
Typically, the taxpayer engages an accountant and an engineer to analyze the components of the building structure to determine which components can be re-classified as personal property and re-allocated shorter depreciation periods. These professionals analyze architectural drawings, mechanical and electrical plans, and other blueprints to identify and segregate the structural and general building elements including electrical and mechanical components from those linked to personal property.
The following is an estimate of the range of building costs eligible for re-classification through a cost segregation study to personal property resulting in accelerated depreciation.
Apartment Buildings 21-36%
Auto Dealerships 26-39%
Banks 26-38%
Hotel 26-41%
Manufacturing Facilities 26-39%
Medical/Dental Facilities 25-40%
Office Buildings 22-37%
Restaurants 30-45%
Shopping Centers 21-37%
Warehouses 18-31%
What are the benefits of Cost Segregation?
The primary benefit is greater depreciation deductions and increased cash flow.
For example, if a taxpayer acquires a small residential apartment complex for $1.5 million and thereafter obtains a cost segregation study, which re-classifies 35% of the property as 5 year personal property, the taxpayer’s depreciation deductions increase from $54,545 each year to $140,454 each year – an increase of 157%.1
There are, however, other significant benefits:
If a building component needs replacement at some point after the cost segregation, the taxpayer may take, as a deductible loss, the value of the component at the time of replacement.
If real property is reclassified as 5-, 7- or 15-year personal property, it may qualify for bonus depreciation. Bonus depreciation allows an owner to depreciate 50% of the asset immediately.
Cost Segregation and tax deferred exchanges
If a taxpayer obtains a cost segregation study and thereafter exchanges the property, he must remember to be cognizant of the new real and personal property allocation to ensure that any replacement property acquired has the same proportion of real and personal property.
What is the cost to prepare a Cost Segregation Study?
Fees for a cost segregation study are based on the size and type of building and the anticipated time required to complete the study and thus can vary substantially from project to project.
I use OREXCO and refer all my investors to check with them and their tax adviser before making a purchase or exchange. OREXCO’s choice of vendor for cost segregation studies, Tax Strategies Group, LLC, will provide clients with a free analysis to determine whether the taxpayer will benefit from a study. Tax Strategies’ estimate includes the projected increase in depreciation, showing the net present value to the client. Clients should expect to receive benefits between five and ten times the cost of the Study. Tax Strategies’ free estimate allows taxpayers to examine and weigh the benefits of its services without risk or expense. Likewise, Tax Strategies’ studies are backed by a policy of insurance issued through Lloyd’s syndicates providing for payment of taxes or fines imposed as a result of a finding that the study is defective or unsupported.
Tax Strategies Group, LLC may be contacted at (877) 394-3300 and info@tax4cash.com. Further information about Tax Strategies Group, LLC can be obtained at their website, www.tax4cash.com.
OREXCO gratefully acknowledges the participation of Jim Davis, Esq. of Tax Strategies Group, LLC in the preparation of this article.
Tuesday, September 1, 2009
Would you want your child to go into real estate?
By:Rick Soukoulis
Chairman and CEO
Intero Mortgage
Kind of an interesting question, isn’t it?
It reminds me of that Willie Nelson song, “Mothers, don’t let your babies grow up to be cowboys…”
So what is it? Do you or don’t you want your kids to follow your foot paths into real estate?
First, let’s look at the choices. Your child could be a Realtor, a mortgage broker, a bank lending officer , an appraiser, or a title or escrow officer.
The first thing is that yes, it can be a very lucrative field. This is especially true for Realtors and mortgage brokers.
It’s not unusual, at least in a good year, for a Realtor or mortgage loan officer to make $100,000-200,000 in a year.
The obvious downside is volatility. I know one person who was an account executive for the sub-prime mortgage arm of Lehman Brothers. She was making about $300,000 a year during the good times, but she’s now working as a bookkeeper at a plumbing supply company.
If your kids do go into real estate, teach them early to set aside money during the good times to help them ride out the bad times.
Along with the lack of predictability of income, there is one huge positive: It’s the ability to help people. This is especially true for Realtors who work so hard to help people find their piece of the American Dream.
Being a Realtor was once considered almost a hobby. The cliché was that bored housewives did it to have something to do. I don’t know if that was really the case, but today’s Realtor is highly trained and extremely professional.
A final benefit to being a Realtor or being in the mortgage business is that these careers present all sorts of interesting investment opportunities. If your son or daughter goes into these or related fields, they will learn about good buildings for sale way before an ad shows up in the Sunday paper.
So along with the potential for good compensation, there is the chance to make good money through smart investing.
All in all, would I want my kids to go into real estate?
The answer is, quite simply, yes. And I’d be proud of them for doing so.
Chairman and CEO
Intero Mortgage
Kind of an interesting question, isn’t it?
It reminds me of that Willie Nelson song, “Mothers, don’t let your babies grow up to be cowboys…”
So what is it? Do you or don’t you want your kids to follow your foot paths into real estate?
First, let’s look at the choices. Your child could be a Realtor, a mortgage broker, a bank lending officer , an appraiser, or a title or escrow officer.
The first thing is that yes, it can be a very lucrative field. This is especially true for Realtors and mortgage brokers.
It’s not unusual, at least in a good year, for a Realtor or mortgage loan officer to make $100,000-200,000 in a year.
The obvious downside is volatility. I know one person who was an account executive for the sub-prime mortgage arm of Lehman Brothers. She was making about $300,000 a year during the good times, but she’s now working as a bookkeeper at a plumbing supply company.
If your kids do go into real estate, teach them early to set aside money during the good times to help them ride out the bad times.
Along with the lack of predictability of income, there is one huge positive: It’s the ability to help people. This is especially true for Realtors who work so hard to help people find their piece of the American Dream.
Being a Realtor was once considered almost a hobby. The cliché was that bored housewives did it to have something to do. I don’t know if that was really the case, but today’s Realtor is highly trained and extremely professional.
A final benefit to being a Realtor or being in the mortgage business is that these careers present all sorts of interesting investment opportunities. If your son or daughter goes into these or related fields, they will learn about good buildings for sale way before an ad shows up in the Sunday paper.
So along with the potential for good compensation, there is the chance to make good money through smart investing.
All in all, would I want my kids to go into real estate?
The answer is, quite simply, yes. And I’d be proud of them for doing so.
Friday, August 28, 2009
Sales of million-dollar homes up to highest level since last fall
via:dbusinessnews.com
Sales of million-dollar homes in Santa Clara County increased again in July to their highest level since last fall as the county’s luxury housing market continued to show encouraging signs of recovery.
A total of 226 luxury properties changed hands in July, up from 215 in June and 148 sales in May. Sales still trailed last July’s total of 251, but the year-over-year gap has been narrowing each month this year. The $1.29 million median sale price last month was down just 2 percent from June and 6 percent from July 2008.
* The most expensive sale in Santa Clara County in July was an four-bedroom, 5,081-square-foot home in Monte Sereno that sold for $4.25 million;
* San Jose boasted the most million-dollar sales in July with 50, followed by Palo Alto with 40, and Los Altos with 36;
* It took an average of just 53 days to sell a million-dollar home in the county, the same as June and up from just 36 days a year ago;
* Homes sold for an average of 94 percent of their asking price, up from 93 percent the previous month but down from 98 percent a year ago.
The improvement in Santa Clara County’s luxury market echoes the Bay Area’s overall housing market picture. DataQuick, the La Jolla-based research firm, announced earlier this month that sales in the Bay Area in July jumped to their highest level in four years, “as deals above $500,000 continue to accelerate,” the firm said in a statement. The median price paid for a home in the Bay Area also increased month-to-month for the fourth month in a row.
Sales of million-dollar homes in Santa Clara County increased again in July to their highest level since last fall as the county’s luxury housing market continued to show encouraging signs of recovery.
A total of 226 luxury properties changed hands in July, up from 215 in June and 148 sales in May. Sales still trailed last July’s total of 251, but the year-over-year gap has been narrowing each month this year. The $1.29 million median sale price last month was down just 2 percent from June and 6 percent from July 2008.
* The most expensive sale in Santa Clara County in July was an four-bedroom, 5,081-square-foot home in Monte Sereno that sold for $4.25 million;
* San Jose boasted the most million-dollar sales in July with 50, followed by Palo Alto with 40, and Los Altos with 36;
* It took an average of just 53 days to sell a million-dollar home in the county, the same as June and up from just 36 days a year ago;
* Homes sold for an average of 94 percent of their asking price, up from 93 percent the previous month but down from 98 percent a year ago.
The improvement in Santa Clara County’s luxury market echoes the Bay Area’s overall housing market picture. DataQuick, the La Jolla-based research firm, announced earlier this month that sales in the Bay Area in July jumped to their highest level in four years, “as deals above $500,000 continue to accelerate,” the firm said in a statement. The median price paid for a home in the Bay Area also increased month-to-month for the fourth month in a row.
Thursday, August 27, 2009
Mortgage fraud bill proposed by Santa Clara County prosecutors close to becoming law
By Mark Gomez
mgomez@mercurynews.com
Posted: 08/26/2009 04:55:52 PM PDT
Updated: 08/27/2009 03:13:47 AM PDT
Santa Clara County prosecutors are hoping they will soon have a new tool that allows them to put crooked mortgage brokers out of business more efficiently.
Prosecutors are awaiting a signature from Gov. Arnold Schwarzenegger on a bill that will make it easier to obtain financial documents of mortgage brokers and lenders to determine if fraud has been committed. The legislation, SB 239, sailed through the Legislature with unanimous votes in both houses and could be approved by the governor in the next few weeks.
The legislation was originally drafted earlier this year by a Santa Clara County prosecutor as a way to better handle the growing number of complaints about mortgage fraud.
"We found it increasingly difficult to handle all of the complaints," prosecutor Mike Fitzsimmons said. "We were barely keeping our head above water. Not only us, but prosecutors all across the state."
Under current law, prosecutors must obtain search warrants to get financial records from brokers and lenders, a process that can be "time-consuming and expensive," according to Fitzsimmons.
Under the proposed law, prosecutors will need only a court order to obtain those records, Fitzsimmons said.
"This will be a much more efficient way for us to evaluate cases," he said
The Santa Clara County District Attorney's real estate fraud unit began receiving more and more complaints about crooked mortgage brokers about three years ago. In doing research
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for the legislation, Fitzsimmons found a report that indicated reports of mortgage fraud rose more than 1,400 percent from 2000 to 2008.
SB239, authored by Sen. Fran Pavley, D-Santa Monica, and sponsored by the California District Attorneys Association, will create a provision to existing mortgage fraud law that will classify the crime as a felony or misdemeanor. Currently, mortgage fraud has only misdemeanor status in California, and prosecutors are forced to pursue serious cases under other statutes, such as grand theft.
To get the measure through the Senate and Assembly, prosecutors had to assure legislators that the law would not send more people to prison, Fitzsimmons said. The legislation is intended to help prosecutors obtain financial documents from lenders and brokers
"We're not going to be putting a demand on prison beds," Fitzsimmons said. "Defendants usually don't get prison. They get county jail time unless there are multiple counts or they are a repeat offender."
If the bill reaches the governor's desk by Friday as expected, he will have 12 days to make a decision.
Other states that have recently adopted dedicated felony mortgage fraud statutes with similar wording include Georgia, Arizona, Nevada, North Carolina and Florida.
In one of the larger mortgage broker scams prosecuted by the Santa Clara County District Attorney's Office, a San Jose couple received hefty prison sentences in May for running a scheme that involved lying to five banks about borrowers' ability to repay $8 million in subprime loans and lying to borrowers about the terms of the loans.
Prosecutors accused Esperanza Valverde and Herman Covarrubias, who operated Summit Mortgage One of Milpitas, of obtaining loans for 22 clients by supplying lenders with false tax returns, W-2 statements, pay stubs and employment verification letters. They both received prison sentences of about 20 years.
"Mortgage fraud is one of the linchpins in the demise of the California real estate market and the related crises in the financial sectors," Santa Clara County District Attorney Dolores Carr said in a statement. "It is critical that something is done to assist law enforcement in handling the flood of mortgage fraud offenses that we continue to receive."
In typical cases of mortgage fraud, crooked brokers falsify loan documents by inflating a client's income by as much as 250 percent, manufacture bogus bank statements that show tens of thousands of dollars for deposits, and falsify employer information, Fitzsimmons said.
"Frequently we come across cases in which mortgage brokers have borrowers sign blank applications and fill them in later as they see fit in order to grease the skids and facilitate getting their commissions and fees," Fitzsimmons said. "It's only a year or two when mortgages adjust and everything hits the fan when a borrower comes to us."
Contact Mark Gomez at 408-920-5869.
mgomez@mercurynews.com
Posted: 08/26/2009 04:55:52 PM PDT
Updated: 08/27/2009 03:13:47 AM PDT
Santa Clara County prosecutors are hoping they will soon have a new tool that allows them to put crooked mortgage brokers out of business more efficiently.
Prosecutors are awaiting a signature from Gov. Arnold Schwarzenegger on a bill that will make it easier to obtain financial documents of mortgage brokers and lenders to determine if fraud has been committed. The legislation, SB 239, sailed through the Legislature with unanimous votes in both houses and could be approved by the governor in the next few weeks.
The legislation was originally drafted earlier this year by a Santa Clara County prosecutor as a way to better handle the growing number of complaints about mortgage fraud.
"We found it increasingly difficult to handle all of the complaints," prosecutor Mike Fitzsimmons said. "We were barely keeping our head above water. Not only us, but prosecutors all across the state."
Under current law, prosecutors must obtain search warrants to get financial records from brokers and lenders, a process that can be "time-consuming and expensive," according to Fitzsimmons.
Under the proposed law, prosecutors will need only a court order to obtain those records, Fitzsimmons said.
"This will be a much more efficient way for us to evaluate cases," he said
The Santa Clara County District Attorney's real estate fraud unit began receiving more and more complaints about crooked mortgage brokers about three years ago. In doing research
Advertisement
for the legislation, Fitzsimmons found a report that indicated reports of mortgage fraud rose more than 1,400 percent from 2000 to 2008.
SB239, authored by Sen. Fran Pavley, D-Santa Monica, and sponsored by the California District Attorneys Association, will create a provision to existing mortgage fraud law that will classify the crime as a felony or misdemeanor. Currently, mortgage fraud has only misdemeanor status in California, and prosecutors are forced to pursue serious cases under other statutes, such as grand theft.
To get the measure through the Senate and Assembly, prosecutors had to assure legislators that the law would not send more people to prison, Fitzsimmons said. The legislation is intended to help prosecutors obtain financial documents from lenders and brokers
"We're not going to be putting a demand on prison beds," Fitzsimmons said. "Defendants usually don't get prison. They get county jail time unless there are multiple counts or they are a repeat offender."
If the bill reaches the governor's desk by Friday as expected, he will have 12 days to make a decision.
Other states that have recently adopted dedicated felony mortgage fraud statutes with similar wording include Georgia, Arizona, Nevada, North Carolina and Florida.
In one of the larger mortgage broker scams prosecuted by the Santa Clara County District Attorney's Office, a San Jose couple received hefty prison sentences in May for running a scheme that involved lying to five banks about borrowers' ability to repay $8 million in subprime loans and lying to borrowers about the terms of the loans.
Prosecutors accused Esperanza Valverde and Herman Covarrubias, who operated Summit Mortgage One of Milpitas, of obtaining loans for 22 clients by supplying lenders with false tax returns, W-2 statements, pay stubs and employment verification letters. They both received prison sentences of about 20 years.
"Mortgage fraud is one of the linchpins in the demise of the California real estate market and the related crises in the financial sectors," Santa Clara County District Attorney Dolores Carr said in a statement. "It is critical that something is done to assist law enforcement in handling the flood of mortgage fraud offenses that we continue to receive."
In typical cases of mortgage fraud, crooked brokers falsify loan documents by inflating a client's income by as much as 250 percent, manufacture bogus bank statements that show tens of thousands of dollars for deposits, and falsify employer information, Fitzsimmons said.
"Frequently we come across cases in which mortgage brokers have borrowers sign blank applications and fill them in later as they see fit in order to grease the skids and facilitate getting their commissions and fees," Fitzsimmons said. "It's only a year or two when mortgages adjust and everything hits the fan when a borrower comes to us."
Contact Mark Gomez at 408-920-5869.
Wednesday, August 26, 2009
Propositions offer big savings on property taxes
Propositions offer big savings on property taxes
Written by Cres McFall
Wednesday, 26 August 2009
With the first installment for fiscal year 2009-2010 property taxes officially due Sept. 10, assessing your assessment is a good idea – particularly, if a review can save you money. Following are some tax exemptions you might have overlooked.
• Homeowner’s exemption. It is likely that you filed a request for a homeowner’s exemption when you purchased your principal residence. If you didn’t, you may be eligible for an exemption of up to $7,000 off your assessed value. This exemption would reduce your annual property tax bill by approximately $70.
• Proposition 8, decrease in market value. If you purchased your home during a heated market, its current value may be less than the purchase price. Assessments under Proposition 13 are based on the purchase price plus an annual 2 percent increase, unless the county assessor grants a reduced valuation under Proposition 8.
You must apply for the reduced valuation. If granted, be aware the reduction is temporary and prompts an annual reappraisal. If the market value later exceeds the Proposition 13-factored base-year value, the previous assessed value may be restored.
• Proposition 58, transfer of title between parents and children. Real estate transferred from parent to child or child to parent may be excluded from reassessment if a claim is filed within three years after the date of the transfer. Normally, a transfer triggers a reassessment to the current market value of the property.
There is no dollar limit on the original owner’s principal residence. On nonprincipal residential property, there is a $1 million limit (taxable value). Proposition 193 allows exemptions on grandparent-to-grandchild transfers if parents are deceased.
• Proposition 60, moving to another home within Santa Clara County. This proposition allows homeowners 55 years of age and older to transfer the Proposition 13 base-year value of their principal residence to a newly purchased residence in the same county, provided certain conditions are met:
1. The new purchase or new construction must be completed within two years, before or after, the sale of the original residence.
2. The replacement property must be equal to or lesser in value than the original residence, equal or lesser in value defined as 100 percent of the market value of the original property as of the sale date if the replacement dwelling is purchased before the original property is sold; 105 percent of the market value of the original property as of its sale date if the replacement dwelling is purchased within one year after the original property is sold; or, 110 percent if the replacement dwelling is purchased between one and two years after the original property is sold.
3. Special rules apply to multi-unit dwellings and mobile homes.
4. An application must be filed within three years of the date the replacement property is purchased or newly constructed.
• Proposition 90, moving to another county. This allows a homeowner to transfer the base-year value of the principal residence in one county to a newly purchased residence in another county. Provisions are the same as those under Proposition 60, except that a nonrefundable processing fee of $60 is required.
Five other counties have Proposition 90 transfers: San Mateo, Los Angeles, Orange, San Diego and Ventura.
For more information, visit www.sccassessor.org.
Written by Cres McFall
Wednesday, 26 August 2009
With the first installment for fiscal year 2009-2010 property taxes officially due Sept. 10, assessing your assessment is a good idea – particularly, if a review can save you money. Following are some tax exemptions you might have overlooked.
• Homeowner’s exemption. It is likely that you filed a request for a homeowner’s exemption when you purchased your principal residence. If you didn’t, you may be eligible for an exemption of up to $7,000 off your assessed value. This exemption would reduce your annual property tax bill by approximately $70.
• Proposition 8, decrease in market value. If you purchased your home during a heated market, its current value may be less than the purchase price. Assessments under Proposition 13 are based on the purchase price plus an annual 2 percent increase, unless the county assessor grants a reduced valuation under Proposition 8.
You must apply for the reduced valuation. If granted, be aware the reduction is temporary and prompts an annual reappraisal. If the market value later exceeds the Proposition 13-factored base-year value, the previous assessed value may be restored.
• Proposition 58, transfer of title between parents and children. Real estate transferred from parent to child or child to parent may be excluded from reassessment if a claim is filed within three years after the date of the transfer. Normally, a transfer triggers a reassessment to the current market value of the property.
There is no dollar limit on the original owner’s principal residence. On nonprincipal residential property, there is a $1 million limit (taxable value). Proposition 193 allows exemptions on grandparent-to-grandchild transfers if parents are deceased.
• Proposition 60, moving to another home within Santa Clara County. This proposition allows homeowners 55 years of age and older to transfer the Proposition 13 base-year value of their principal residence to a newly purchased residence in the same county, provided certain conditions are met:
1. The new purchase or new construction must be completed within two years, before or after, the sale of the original residence.
2. The replacement property must be equal to or lesser in value than the original residence, equal or lesser in value defined as 100 percent of the market value of the original property as of the sale date if the replacement dwelling is purchased before the original property is sold; 105 percent of the market value of the original property as of its sale date if the replacement dwelling is purchased within one year after the original property is sold; or, 110 percent if the replacement dwelling is purchased between one and two years after the original property is sold.
3. Special rules apply to multi-unit dwellings and mobile homes.
4. An application must be filed within three years of the date the replacement property is purchased or newly constructed.
• Proposition 90, moving to another county. This allows a homeowner to transfer the base-year value of the principal residence in one county to a newly purchased residence in another county. Provisions are the same as those under Proposition 60, except that a nonrefundable processing fee of $60 is required.
Five other counties have Proposition 90 transfers: San Mateo, Los Angeles, Orange, San Diego and Ventura.
For more information, visit www.sccassessor.org.
Monday, August 24, 2009
Home Maintenance Tip -
Conserve Water and Reduce Pocketbook Pressure!
You may love the forceful flow of water at your faucets, showerheads and toilets, but did you know that installing low-flow aerators could cut your annual water consumption by more than half? You can also conserve water and save money on your water bill just by adopting a few new habits:
-While waiting for water to warm up, catch excess water in a bowl or bucket and use for houseplants or pets
-Only run the dishwasher when it is fully loaded
-Instead of using the in-sink garbage disposal, compost your food scraps
-Simply cutting your shower by 2 minutes will save 1,000 gallons a year!
-Turn off the water while you brush your teeth, shave, and while you lather up when washing your hands.
You may love the forceful flow of water at your faucets, showerheads and toilets, but did you know that installing low-flow aerators could cut your annual water consumption by more than half? You can also conserve water and save money on your water bill just by adopting a few new habits:
-While waiting for water to warm up, catch excess water in a bowl or bucket and use for houseplants or pets
-Only run the dishwasher when it is fully loaded
-Instead of using the in-sink garbage disposal, compost your food scraps
-Simply cutting your shower by 2 minutes will save 1,000 gallons a year!
-Turn off the water while you brush your teeth, shave, and while you lather up when washing your hands.
Saturday, August 15, 2009
Wednesday, August 12, 2009
Mortgage news
Bonds have not been able to hold on to their gain this morning. There are two big events coming up this afternoon. At 1 o'clock Eastern Time, the results of the $23 Billion auction of 10-year Notes will be released. Then at 2:15, the Fed will issue its Policy Statement after its two-day Fed Meeting.
The news from the Fed will be both multi-faceted and potentially market moving. Any hints of inflation and hikes could cause the market to swing in one direction. However, news of Bond purchases could cause an opposite reaction.
The news from the Fed will be both multi-faceted and potentially market moving. Any hints of inflation and hikes could cause the market to swing in one direction. However, news of Bond purchases could cause an opposite reaction.
Thursday, August 6, 2009
Online home search: Make sure you get the complete picture
Online home search: Make sure you get the complete picture
By Gino Blefari
President and CEO
Intero Real Estate Services
There are lots of places to search for properties online. National sites, local sites, broker sites, agent sites.
After a while they all start to look the same.
But they are not the same.
In fact, there are important differences you probably didn’t know about.
Let me explain.
The electronic life of a property listing begins the moment an agent enters it into the Multiple Listing Service (MLS). There are thousands of MLS’s nationwide, and they serve as central regional databases that all REALTORS use to share information on properties. They are as close to a complete picture of what’s on the market as you can get.
In the past, REALTORS shared this information only amongst themselves. But in 2000, the National Association of REALTORS formalized something called IDX (Internet data exchange). IDX allows brokers and agents to show each other’s listings on their own websites.
So, for example, if you visit broker A’s website, you will see broker A’s listings, but also the listings from brokers B through Z. This is good for brokers – who get to market their listings more widely – but also good for consumers, who get a full picture of homes for sale in their market.
Everybody wins.
Now consider some of the most popular home search sites on the Internet – those run by media companies or start-ups, not real estate brokerage companies like Intero. These sites look good, but what you may not know is that many of them show you just a slice of the listings. Because they are not members of the MLS, they cannot participate in IDX.
And you, the consumer, see an incomplete picture.
Think about it: If you were shopping for digital cameras online, it might be OK to miss a few models. But homes? Not seeing all your options is a big deal.
So next time you go online to look for homes, make sure you’re on a site that gives you a complete picture.
By Gino Blefari
President and CEO
Intero Real Estate Services
There are lots of places to search for properties online. National sites, local sites, broker sites, agent sites.
After a while they all start to look the same.
But they are not the same.
In fact, there are important differences you probably didn’t know about.
Let me explain.
The electronic life of a property listing begins the moment an agent enters it into the Multiple Listing Service (MLS). There are thousands of MLS’s nationwide, and they serve as central regional databases that all REALTORS use to share information on properties. They are as close to a complete picture of what’s on the market as you can get.
In the past, REALTORS shared this information only amongst themselves. But in 2000, the National Association of REALTORS formalized something called IDX (Internet data exchange). IDX allows brokers and agents to show each other’s listings on their own websites.
So, for example, if you visit broker A’s website, you will see broker A’s listings, but also the listings from brokers B through Z. This is good for brokers – who get to market their listings more widely – but also good for consumers, who get a full picture of homes for sale in their market.
Everybody wins.
Now consider some of the most popular home search sites on the Internet – those run by media companies or start-ups, not real estate brokerage companies like Intero. These sites look good, but what you may not know is that many of them show you just a slice of the listings. Because they are not members of the MLS, they cannot participate in IDX.
And you, the consumer, see an incomplete picture.
Think about it: If you were shopping for digital cameras online, it might be OK to miss a few models. But homes? Not seeing all your options is a big deal.
So next time you go online to look for homes, make sure you’re on a site that gives you a complete picture.
Monday, August 3, 2009
Finding – or imagining – a market bottom
The Intero Insider: Finding – or imagining – a market bottom
By Gino Blefari
President and CEO, Intero Real Estate Services
There’s an increasing amount of talk – both locally and in the national media – that we may have reached the bottom of the real estate market’s downturn.
Stories about properties selling quickly are becoming more common, as are instances of bank-owned properties selling with dozens of offers.
Moreover, in the past week, the National Association of Realtors reported that existing home sales saw an increase of 3.6% in June. Also, the Commerce Department reported that sales rose 11% in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000. The last time sales rose so significantly was in December 2000.
The average person may take all of this to mean that we have indeed reached the bottom – or even that it has already passed.
But if you follow the market as closely as we do here at Intero, you come to a different, and less clear-cut, conclusion.
As I reported a few weeks ago, there are promising signs at the market’s lower end. But to get a better sense for whether or not the market as a whole will see an upward trend soon, one needs to look at the foreclosure pipeline - the number of properties making their way through the lengthy foreclosure process.
According to ForeclosureRadar, a company that tracks California foreclosure data, Notices of Default – the first step in the foreclosure process – increased 11.8% in June to 45,691, the second highest monthly total on record and a 10% year-over-year increase from June 2008. Perhaps because of recent government restrictions on foreclosures, these properties are clogged in the pipeline. Yet it seems like there are more to come – to put NAR’s optimistic existing home sales report for June (as mentioned earlier) into perspective, last month we saw an increase in home sales nationwide, yet in California in June alone the total number of new home sales was less than 80% of the total Notices of Default issued. So this tells us to expect a flood of new foreclosures hitting the market as bank-owned for sale listings several months from now and ongoing.
To compound matters, Notices of Trustee Sale – the second step in the foreclosure process, when the property owner is notified that the lender, or trustee, will attempt to sell the property at auction – decreased by a surprising 28.9% in June. Which tells us that this drop in the available supply of homes has created what seems to be a false sense of market recovery.
A third factor, from an article in the Wall Street Journal in May of 2009 - Mortgage Modifying Fails to Halt Defaults cited the Fitch Ratings Report which stated, that although thousands of home owners have been saved from foreclosure through loan modifications, anywhere from 25%-60% of these homeowners, have or will re-default and re-enter the foreclosure process in the coming months.
These three statistics tell a deeper market story: Yes, things may be improving, but it is also clear that there is a way to go before foreclosures stop flooding the market and placing downward pressure on prices.
So, like me, keep an eye on what’s happening now in the market – but also on what’s to come.
By Gino Blefari
President and CEO, Intero Real Estate Services
There’s an increasing amount of talk – both locally and in the national media – that we may have reached the bottom of the real estate market’s downturn.
Stories about properties selling quickly are becoming more common, as are instances of bank-owned properties selling with dozens of offers.
Moreover, in the past week, the National Association of Realtors reported that existing home sales saw an increase of 3.6% in June. Also, the Commerce Department reported that sales rose 11% in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000. The last time sales rose so significantly was in December 2000.
The average person may take all of this to mean that we have indeed reached the bottom – or even that it has already passed.
But if you follow the market as closely as we do here at Intero, you come to a different, and less clear-cut, conclusion.
As I reported a few weeks ago, there are promising signs at the market’s lower end. But to get a better sense for whether or not the market as a whole will see an upward trend soon, one needs to look at the foreclosure pipeline - the number of properties making their way through the lengthy foreclosure process.
According to ForeclosureRadar, a company that tracks California foreclosure data, Notices of Default – the first step in the foreclosure process – increased 11.8% in June to 45,691, the second highest monthly total on record and a 10% year-over-year increase from June 2008. Perhaps because of recent government restrictions on foreclosures, these properties are clogged in the pipeline. Yet it seems like there are more to come – to put NAR’s optimistic existing home sales report for June (as mentioned earlier) into perspective, last month we saw an increase in home sales nationwide, yet in California in June alone the total number of new home sales was less than 80% of the total Notices of Default issued. So this tells us to expect a flood of new foreclosures hitting the market as bank-owned for sale listings several months from now and ongoing.
To compound matters, Notices of Trustee Sale – the second step in the foreclosure process, when the property owner is notified that the lender, or trustee, will attempt to sell the property at auction – decreased by a surprising 28.9% in June. Which tells us that this drop in the available supply of homes has created what seems to be a false sense of market recovery.
A third factor, from an article in the Wall Street Journal in May of 2009 - Mortgage Modifying Fails to Halt Defaults cited the Fitch Ratings Report which stated, that although thousands of home owners have been saved from foreclosure through loan modifications, anywhere from 25%-60% of these homeowners, have or will re-default and re-enter the foreclosure process in the coming months.
These three statistics tell a deeper market story: Yes, things may be improving, but it is also clear that there is a way to go before foreclosures stop flooding the market and placing downward pressure on prices.
So, like me, keep an eye on what’s happening now in the market – but also on what’s to come.
Thursday, July 30, 2009
Mortgage That Matters
Toxic Assets and Real Estate
BY: Rick Soukoulis
Chairman and CEO
Intero Mortgage
President Obama has proposed a bold plan to form private-public partnerships to buy the toxic assets off the books of the nations’ books.
This could be a huge boon for the real estate lending industry.
Let me explain.
First, what are these so-called toxic assets. They are obscure financial instruments the common man has only herd of. Derivatives, CMO’s Credit Default Swaps, sub-prime mortgaged backed securities, and on and on and on. A derivative, at its heart, is simply a mirror image of a security, kind of like the real thing but not quite the real thing.
In any case, most of these assets have dropped enormously in value. The banks are afraid to mark them down to their fire-sale value, as that big a hit to capital could leave them in a severely impaired situation.
So they keep them on the books, and as long as they’re there, they’re afraid to really start lending again.
Through a variety of accounting games, they can avoid taking the real mark down, so while they avoid taking a huge loss, they’re also uncertain enough about just how toxic these are that they don't want to go too far out on the lending limb.
The great thing about the Obama plan is that it gets private institutional money involved, an the assumption is that there will be a true market in these assets, and not just prices based on s fire-sale.
As these assets are moved off the balance sheets of our banks and into the hands of private investors, the banks will start lending again, and that will play a very big role in the economic recovery.
While it’s much harder these days to get a mortgage loan, it’s still very possible.
But if you apply for s loan to buy an apartment building or build an office building, it will be almost impossible. Construction loans are almost impossible to get, and subdivision builders, especially the smaller ones, just can't find financing.
I could go on end on about the areas that have been impacted by banks with toxic assets. All of these areas will again feel the free flow of cash and new loans.
It will be a part of regaining our economic health and getting people back to work.
But as Jay Leno said, if you’re going to be selling these things, don’t you think you could call them something other than toxic assets?
Rick Soukoulis
Chairman and CEO
Intero Mortgage
408.578.8700
BY: Rick Soukoulis
Chairman and CEO
Intero Mortgage
President Obama has proposed a bold plan to form private-public partnerships to buy the toxic assets off the books of the nations’ books.
This could be a huge boon for the real estate lending industry.
Let me explain.
First, what are these so-called toxic assets. They are obscure financial instruments the common man has only herd of. Derivatives, CMO’s Credit Default Swaps, sub-prime mortgaged backed securities, and on and on and on. A derivative, at its heart, is simply a mirror image of a security, kind of like the real thing but not quite the real thing.
In any case, most of these assets have dropped enormously in value. The banks are afraid to mark them down to their fire-sale value, as that big a hit to capital could leave them in a severely impaired situation.
So they keep them on the books, and as long as they’re there, they’re afraid to really start lending again.
Through a variety of accounting games, they can avoid taking the real mark down, so while they avoid taking a huge loss, they’re also uncertain enough about just how toxic these are that they don't want to go too far out on the lending limb.
The great thing about the Obama plan is that it gets private institutional money involved, an the assumption is that there will be a true market in these assets, and not just prices based on s fire-sale.
As these assets are moved off the balance sheets of our banks and into the hands of private investors, the banks will start lending again, and that will play a very big role in the economic recovery.
While it’s much harder these days to get a mortgage loan, it’s still very possible.
But if you apply for s loan to buy an apartment building or build an office building, it will be almost impossible. Construction loans are almost impossible to get, and subdivision builders, especially the smaller ones, just can't find financing.
I could go on end on about the areas that have been impacted by banks with toxic assets. All of these areas will again feel the free flow of cash and new loans.
It will be a part of regaining our economic health and getting people back to work.
But as Jay Leno said, if you’re going to be selling these things, don’t you think you could call them something other than toxic assets?
Rick Soukoulis
Chairman and CEO
Intero Mortgage
408.578.8700
Tuesday, July 28, 2009
Tuesday Market Update
Today's Commentary
Updated on Jul 28 2009 11:34AM EST
Tuesday’s bond market has opened in positive ground following early stock weakness and a weaker than expected consumer confidence reading. The stock markets are showing losses with the Dow down 34 points and the Nasdaq down 6 points. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.
The Conference Board gave us today’s important data with the release of their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment about their personal financial situations, giving us an idea of consumer willingness to spend. It showed a reading of 46.6 that fell short of forecasts by a couple of points. This is good news for bonds and mortgage rates because a less optimistic consumer is less likely to make a large purchase in the near future, limiting economic growth.
Tomorrow brings us two reports that may influence mortgage rates. The first will come from the Commerce Department when they post June’s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a decline in news orders of 0.5% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates tomorrow morning. If it reveals a much larger than expected decline, mortgage rates should drop. It should be noted that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move mortgage rates much.
The Federal Reserve will release its Beige Book report at 2:00 PM ET tomorrow afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates tomorrow afternoon as a result of this report, but the possibly does exist.
Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. The two most important are tomorrow’s 5-year and Thursday’s 7-year Note sales. The last auctions of the 5-year and 7-year securities were met with very good demand from investors, leading to bond strength following the sales. But there is a record amount of debt being sold this week, so we need to proceed with caution over the next few days. Results of the sales will be posted 1:00 PM ET each day. If investor interest is strong again in Wednesday and Thursday’s sales, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates during afternoon trading those days.
Updated on Jul 28 2009 11:34AM EST
Tuesday’s bond market has opened in positive ground following early stock weakness and a weaker than expected consumer confidence reading. The stock markets are showing losses with the Dow down 34 points and the Nasdaq down 6 points. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.
The Conference Board gave us today’s important data with the release of their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment about their personal financial situations, giving us an idea of consumer willingness to spend. It showed a reading of 46.6 that fell short of forecasts by a couple of points. This is good news for bonds and mortgage rates because a less optimistic consumer is less likely to make a large purchase in the near future, limiting economic growth.
Tomorrow brings us two reports that may influence mortgage rates. The first will come from the Commerce Department when they post June’s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a decline in news orders of 0.5% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates tomorrow morning. If it reveals a much larger than expected decline, mortgage rates should drop. It should be noted that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move mortgage rates much.
The Federal Reserve will release its Beige Book report at 2:00 PM ET tomorrow afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates tomorrow afternoon as a result of this report, but the possibly does exist.
Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. The two most important are tomorrow’s 5-year and Thursday’s 7-year Note sales. The last auctions of the 5-year and 7-year securities were met with very good demand from investors, leading to bond strength following the sales. But there is a record amount of debt being sold this week, so we need to proceed with caution over the next few days. Results of the sales will be posted 1:00 PM ET each day. If investor interest is strong again in Wednesday and Thursday’s sales, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates during afternoon trading those days.
Tuesday, July 21, 2009
Mountain View Ranked 4th best city by Forbes
**Mountain View has been ranked by Forbes Magazine as the FOURTH best city (population under 100,000) to live in and the BEST in the Bay Area –Source: Mountain View VOICE, May 22, 2009
Mountain View offers a plethora of activities to enjoy. Some of the “Goings-On” include an abundance of concerts to choose from at the outdoor Shoreline Amphitheater, dance and theater productions at the beautiful Center for Performing Arts and many other cultural attractions.
After dining at one of the many diverse restaurants located within walking distance of each other, enjoy a walk or hike in one of the 32 well-groomed parks. This city has developed a reputation for being one of the finest recreation destinations in the Bay Area. Shoreline Park is a 750-acre area that is home to a wildlife sanctuary, with many trails and an 18-hole championship golf course.
Sundays are a special treat to Mt. View residents with the ever popular Farmer’s Market located next to the CalTrain and Light Rail station. Afterward stroll down Castro Street and enjoy coffee from one of the several coffeehouses, window shop specialty shops and bookstores.
Mountain View topped the list in terms of venture capital activity and enjoys a strong and diversified local economy. Companies such as Google, Intuit, Microsoft, Symantec and start-ups such as Ooyala, are just a few headquartered here, Residents commute an average of 20 minutes to work which is considered low for the Bay Area.
The neighborhoods are vibrant and designed to fit every lifestyle with quality public schools, and a centrally located library.
Mountain View offers a plethora of activities to enjoy. Some of the “Goings-On” include an abundance of concerts to choose from at the outdoor Shoreline Amphitheater, dance and theater productions at the beautiful Center for Performing Arts and many other cultural attractions.
After dining at one of the many diverse restaurants located within walking distance of each other, enjoy a walk or hike in one of the 32 well-groomed parks. This city has developed a reputation for being one of the finest recreation destinations in the Bay Area. Shoreline Park is a 750-acre area that is home to a wildlife sanctuary, with many trails and an 18-hole championship golf course.
Sundays are a special treat to Mt. View residents with the ever popular Farmer’s Market located next to the CalTrain and Light Rail station. Afterward stroll down Castro Street and enjoy coffee from one of the several coffeehouses, window shop specialty shops and bookstores.
Mountain View topped the list in terms of venture capital activity and enjoys a strong and diversified local economy. Companies such as Google, Intuit, Microsoft, Symantec and start-ups such as Ooyala, are just a few headquartered here, Residents commute an average of 20 minutes to work which is considered low for the Bay Area.
The neighborhoods are vibrant and designed to fit every lifestyle with quality public schools, and a centrally located library.
Tuesday, July 14, 2009
Tuesday Mortgage Update
Mortgage Bonds are down this morning, due largely to a hotter than expected wholesale inflation reading in the Producer Price Index (or PPI). Even excluding volatile food and fuel prices, Core PPI rose quite a bit more than anticipated. Tomorrow's Consumer Price Index will give us a better idea of the threat of inflation.
In other news, Goldman Sachs reported blowout earnings as expected. Retail Sales were also released today, rising slightly higher than expectations. Overall, department stores and restaurants still showed weak results, signaling that consumers remain hesitant to spend discretionary dollars.
Currently, Bonds are up from their worst levels earlier this morning and are clinging to support at the 50-Day Moving Average. There is no urgency for locking rates for now, but be prepared to lock as the market is very dicey right now and can change quickly.
Have a great day!
In other news, Goldman Sachs reported blowout earnings as expected. Retail Sales were also released today, rising slightly higher than expectations. Overall, department stores and restaurants still showed weak results, signaling that consumers remain hesitant to spend discretionary dollars.
Currently, Bonds are up from their worst levels earlier this morning and are clinging to support at the 50-Day Moving Average. There is no urgency for locking rates for now, but be prepared to lock as the market is very dicey right now and can change quickly.
Have a great day!
Monday, July 6, 2009
Market Monday
The financial markets are back in full swing today after the long holiday weekend. Bonds continue to remain just beneath a tough resistance level, while Stocks are getting off to a sluggish start due to concerns for the overall global economic recovery.
In other news, the ISM Services Index, which gauges the health of the non-manufacturing or service industry, came in better than expectations. Overall, the report indicates continued contraction, but at a slower pace.
Many traders and investors may be taking the next few days off as an extension of the holiday weekend, which can increase volatility. There is no urgency to lock in rates. We will watch how Bonds and Stocks continue to react to important technical factors and the news of the day. The direction could change quickly. ~ as usual~
Enjoy your day!
In other news, the ISM Services Index, which gauges the health of the non-manufacturing or service industry, came in better than expectations. Overall, the report indicates continued contraction, but at a slower pace.
Many traders and investors may be taking the next few days off as an extension of the holiday weekend, which can increase volatility. There is no urgency to lock in rates. We will watch how Bonds and Stocks continue to react to important technical factors and the news of the day. The direction could change quickly. ~ as usual~
Enjoy your day!
Tuesday, June 23, 2009
Econimic news
From the WSJ By Frederic Miskin
When the Federal Open Market Committee meets this Tuesday and Wednesday, the Federal Reserve will face a serious dilemma. Since the last committee meeting six weeks ago, the 10-year U.S. Treasury yield has risen by around 70 basis points (0.70%), with the result that the interest rate on 30-year mortgages has risen by a similar amount. The rise in long-term interest rates is particularly worrisome, because it has the potential to choke off economic recovery and lead to further deterioration in the housing market. That would put an already weakened financial system under stress.
Does the situation call for the Fed to expand its purchases of Treasury bonds to lower long-term interest rates? To answer this question, we need to look at why long-term interest rates have risen. Here, there is good news and bad news. One cause of the rise in long-term rates is the more positive economic news of the past couple of months, particularly in financial markets. The bad news is that long-term interest rates are higher because of concerns about the deteriorating fiscal situation, with massive budget deficits expected for the indefinite future. To fund these budget deficits, the Treasury has to sell large quantities of bonds both now and in the future, causing bond prices to fall and interest rates to rise.
The increased supply of Treasury debt puts pressure on the Fed to buy it up. Although an expansion of Treasury bond purchases by the Fed would have the benefit of lowering long-term interest rates temporarily to stimulate the economy, in the current environment it could be dangerous for two reasons. First, it might suggest that the Fed is willing to monetize Treasury debt. The Fed does not, and should not, want to make it easy for the Treasury to sell its debt and thereby be an enabler of fiscal irresponsibility. Second, if the Fed loses its credibility to resist pressures to monetize the debt it could cause inflation expectations to shift upward, thereby leading to a serious problem down the road. The Fed is boxed in. The slack in the economy that is likely to persist for a very long time suggests the need for stimulative monetary policy to lower long-term interest rates through the purchase of Treasuries. The fiscal situation argues against this policy action, because it would weaken the Fed's inflation-fighting credibility. How can the Fed get out of the box and pursue the expansionary monetary policy that is needed right now? The answer is that the Obama administration and Congress have to get serious about long-run fiscal sustainability. Large budget deficits naturally occur during severe recessions when tax revenue undergoes a substantial decline. In addition, fiscal stimulus to promote economic recovery when the economy is in a severe recession is a sensible prescription. However, the failure to take steps to get future budgets under control is a recipe for disaster. Not only does it make it difficult for the Fed to take the actions needed to promote economic recovery, but it may even make the fiscal stimulus package less effective. After all, if you know that the government is issuing a lot of debt that has to be paid back someday you can expect to pay much higher taxes in the future. With the prospect of higher taxes, you will be less likely to spend today. How can the Obama administration and Congress help the Fed do its job and help the fiscal stimulus package work? It needs to address exploding spending on entitlements -- Social Security and particularly Medicare -- which are causing future deficit projections to be so bleak. One possibility is to establish a nonpartisan commission on entitlement reform, along the lines of the National Commission on Social Security in the early 1980s. It produced recommendations that for a time helped put Social Security on a more solid footing. Another is taxing health-care benefits as part of any package to reform health care. Taxing health-care benefits would not only generate large amounts of revenue. It would also increase the incentive for people to lower the costs of their health care. There are surely many other ways to promote more fiscal responsibility. The Fed can assist this process. It could indicate that implementing measures that would promote fiscal sustainability will be rewarded with Federal Reserve actions to bring long-term Treasury rates down. Deals like this have been successfully made in the past. In the current extremely difficult economic environment, we surely need such a deal now.
Wall Street is concerned that the Federal Reserve's plan to jump-start growth by buying assets and keeping interest rates low could lead to an inflationary bubble. Treasury bond yields are increasing, which has fostered a rise in long-term interest rates; and the jump could make borrowing costs more expensive for both homeowners and buyers and hurt the economic recovery. When central bank officials convene this week for their policy making session, they may use their post-meeting statement to squash speculation that they're gearing up to raise interest rates this year. In light of that, investors and analysts say it is critical for the Fed to spell out how it will cut its balance sheet and keep inflation from ballooning.
When the Federal Open Market Committee meets this Tuesday and Wednesday, the Federal Reserve will face a serious dilemma. Since the last committee meeting six weeks ago, the 10-year U.S. Treasury yield has risen by around 70 basis points (0.70%), with the result that the interest rate on 30-year mortgages has risen by a similar amount. The rise in long-term interest rates is particularly worrisome, because it has the potential to choke off economic recovery and lead to further deterioration in the housing market. That would put an already weakened financial system under stress.
Does the situation call for the Fed to expand its purchases of Treasury bonds to lower long-term interest rates? To answer this question, we need to look at why long-term interest rates have risen. Here, there is good news and bad news. One cause of the rise in long-term rates is the more positive economic news of the past couple of months, particularly in financial markets. The bad news is that long-term interest rates are higher because of concerns about the deteriorating fiscal situation, with massive budget deficits expected for the indefinite future. To fund these budget deficits, the Treasury has to sell large quantities of bonds both now and in the future, causing bond prices to fall and interest rates to rise.
The increased supply of Treasury debt puts pressure on the Fed to buy it up. Although an expansion of Treasury bond purchases by the Fed would have the benefit of lowering long-term interest rates temporarily to stimulate the economy, in the current environment it could be dangerous for two reasons. First, it might suggest that the Fed is willing to monetize Treasury debt. The Fed does not, and should not, want to make it easy for the Treasury to sell its debt and thereby be an enabler of fiscal irresponsibility. Second, if the Fed loses its credibility to resist pressures to monetize the debt it could cause inflation expectations to shift upward, thereby leading to a serious problem down the road. The Fed is boxed in. The slack in the economy that is likely to persist for a very long time suggests the need for stimulative monetary policy to lower long-term interest rates through the purchase of Treasuries. The fiscal situation argues against this policy action, because it would weaken the Fed's inflation-fighting credibility. How can the Fed get out of the box and pursue the expansionary monetary policy that is needed right now? The answer is that the Obama administration and Congress have to get serious about long-run fiscal sustainability. Large budget deficits naturally occur during severe recessions when tax revenue undergoes a substantial decline. In addition, fiscal stimulus to promote economic recovery when the economy is in a severe recession is a sensible prescription. However, the failure to take steps to get future budgets under control is a recipe for disaster. Not only does it make it difficult for the Fed to take the actions needed to promote economic recovery, but it may even make the fiscal stimulus package less effective. After all, if you know that the government is issuing a lot of debt that has to be paid back someday you can expect to pay much higher taxes in the future. With the prospect of higher taxes, you will be less likely to spend today. How can the Obama administration and Congress help the Fed do its job and help the fiscal stimulus package work? It needs to address exploding spending on entitlements -- Social Security and particularly Medicare -- which are causing future deficit projections to be so bleak. One possibility is to establish a nonpartisan commission on entitlement reform, along the lines of the National Commission on Social Security in the early 1980s. It produced recommendations that for a time helped put Social Security on a more solid footing. Another is taxing health-care benefits as part of any package to reform health care. Taxing health-care benefits would not only generate large amounts of revenue. It would also increase the incentive for people to lower the costs of their health care. There are surely many other ways to promote more fiscal responsibility. The Fed can assist this process. It could indicate that implementing measures that would promote fiscal sustainability will be rewarded with Federal Reserve actions to bring long-term Treasury rates down. Deals like this have been successfully made in the past. In the current extremely difficult economic environment, we surely need such a deal now.
Wall Street is concerned that the Federal Reserve's plan to jump-start growth by buying assets and keeping interest rates low could lead to an inflationary bubble. Treasury bond yields are increasing, which has fostered a rise in long-term interest rates; and the jump could make borrowing costs more expensive for both homeowners and buyers and hurt the economic recovery. When central bank officials convene this week for their policy making session, they may use their post-meeting statement to squash speculation that they're gearing up to raise interest rates this year. In light of that, investors and analysts say it is critical for the Fed to spell out how it will cut its balance sheet and keep inflation from ballooning.
Friday, June 12, 2009
Mountain View has been ranked by Forbes Magazine
**Mountain View has been ranked by Forbes Magazine as the FOURTH best city (population under 100,000) to live in and the BEST in the Bay Area –Source: Mountain View VOICE, May 22, 2009
Something for everyone!
Mountain View offers a plethora of activities to enjoy. Some of the “Goings-On” include an abundance of concerts to choose from at the outdoor Shoreline Amphitheater, dance and theater productions at the beautiful Center for Performing Arts and many other cultural attractions.
After dining at one of the many diverse restaurants located within walking distance of each other, enjoy a walk or hike in one of the 32 well-groomed parks. This city has developed a reputation for being one of the finest recreation destinations in the Bay Area. Shoreline Park is a 750-acre area that is home to a wildlife sanctuary, with many trails and an 18-hole championship golf course.
Sundays are a special treat to Mt. View residents with the ever popular Farmer’s Market located next to the CalTrain and Light Rail station. Afterwards stroll down Castro Street and enjoy coffee from one of the several coffeehouses, window shop specialty shops and bookstores.
Mountain View topped the list in terms of venture capital activity and enjoys a strong and diversified local economy. Companies such as Google, Intuit, Microsoft, Symantec and start-ups such as Ooyala, are just a few headquartered here, Residents commute an average of 20 minutes to work which is considered low for the Bay Area.
Our neighborhoods are vibrant and designed to fit every lifestyle with quality public schools, and a centrally located library.
I take pride in being a Mountain View resident. If you would like more information about this great city please feel free me at 408-205-5302 or visit my website at www.markjongsma.com
Something for everyone!
Mountain View offers a plethora of activities to enjoy. Some of the “Goings-On” include an abundance of concerts to choose from at the outdoor Shoreline Amphitheater, dance and theater productions at the beautiful Center for Performing Arts and many other cultural attractions.
After dining at one of the many diverse restaurants located within walking distance of each other, enjoy a walk or hike in one of the 32 well-groomed parks. This city has developed a reputation for being one of the finest recreation destinations in the Bay Area. Shoreline Park is a 750-acre area that is home to a wildlife sanctuary, with many trails and an 18-hole championship golf course.
Sundays are a special treat to Mt. View residents with the ever popular Farmer’s Market located next to the CalTrain and Light Rail station. Afterwards stroll down Castro Street and enjoy coffee from one of the several coffeehouses, window shop specialty shops and bookstores.
Mountain View topped the list in terms of venture capital activity and enjoys a strong and diversified local economy. Companies such as Google, Intuit, Microsoft, Symantec and start-ups such as Ooyala, are just a few headquartered here, Residents commute an average of 20 minutes to work which is considered low for the Bay Area.
Our neighborhoods are vibrant and designed to fit every lifestyle with quality public schools, and a centrally located library.
I take pride in being a Mountain View resident. If you would like more information about this great city please feel free me at 408-205-5302 or visit my website at www.markjongsma.com
Thursday, June 11, 2009
Mortgage Update
The volatility continues as Mortgage Bonds opened lower this morning, but then erased their losses. Since May 21, the 4.5% coupon has shed 556 basis points, pushing home loan rates to the highest level since the Federal Reserve announced its Mortgage Backed Security purchase plan back in November.
Fears of future inflation and added supply have been the culprits behind the recent sell-off.
In other news, Retail Sales were inline with estimates and marked the biggest rebound for Retail Sales in 4 months. Also, while Initial Jobless Claims were below estimates, continuing claims rose to 6.82 million, which is another new record.
A day that we are not getting an "alert to lock."
Bonds look to be trying to improve this morning. I will let you know if this changes.
Fears of future inflation and added supply have been the culprits behind the recent sell-off.
In other news, Retail Sales were inline with estimates and marked the biggest rebound for Retail Sales in 4 months. Also, while Initial Jobless Claims were below estimates, continuing claims rose to 6.82 million, which is another new record.
A day that we are not getting an "alert to lock."
Bonds look to be trying to improve this morning. I will let you know if this changes.
Wednesday, June 10, 2009
Mortgage News
Mortgage Bonds finally mustered up some nice gains yesterday, but those gains were erased in early trading this morning.
In the news, US exports fell to the lowest level in almost 3 years, as the US Balance of Trade widened in April for the second month. However, US exports should improve a bit in May after the US Dollar recently sank against foreign currencies, which makes US goods cheaper and more attractive to buy.
Currently, Mortgage Bonds are trading in a very wide range. Bonds just took a dropped 31 bps. We have an alert to lock rates this AM.
If anything changes, I will let you know.
Have a great day!
In the news, US exports fell to the lowest level in almost 3 years, as the US Balance of Trade widened in April for the second month. However, US exports should improve a bit in May after the US Dollar recently sank against foreign currencies, which makes US goods cheaper and more attractive to buy.
Currently, Mortgage Bonds are trading in a very wide range. Bonds just took a dropped 31 bps. We have an alert to lock rates this AM.
If anything changes, I will let you know.
Have a great day!
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