It is no secret. 2010 was a hard year for home values. While you cannot
protect yourself against market corrections, you can take small steps to help
increase your home's value and make it more marketable. The following tips
are meant to inspire and motivate you to treat your home like the investment it
was meant to be.
1. Make Repairs: Homes require regular maintenance and repairs are a
necessary component of home ownership. Procrastination gets you nowhere
when it comes to home value. Stay on top of repairs as they are needed. And
be sure to address large projects before placing your home on the market. For
example, roofs are expensive to replace or repair. Many buyers will pass up
your otherwise wonderful home when faced with roof issues.
2. Curb Appeal: Curb appeal is about first impressions. It is also about
neighborhood values. Drive down a street lined with manicured lawns and well maintained
homes and the values are sure to reflect the care their owners take.
On the other hand, streets with overgrown trees, junky yards, and chipped and
faded paint are fighting an uphill battle in the values game.
3. Community Involvement: The classic quote from Chinese philosopher
Lao-tzu says, "A journey of 1,000 miles begins with a single step." This is
especially true for improving the health and wealth of a community. Change
starts with yourself. By becoming an active member of your community, you
can inspire the change you desire. Family, friends, and neighbors will follow
your lead of civic duty. How can you get involved? Run for city council, join the
PTA, volunteer, and help organize fund raisers and events that inspire
community togetherness.
4. Updated Kitchen: Kitchens are a real selling point. Outdated cabinets,
counters, and appliances will stick out like a sore thumb to buyers. Be sure,
however, that you research your comparables before beginning a remodel. You
do not want to price yourself out of the running. This means if you love granite
and travertine, but other homes in your area are selling with laminate, you will
probably not be able to ask for a drastically higher price that covers the price of
the granite.
5. Updated Bath: Bathrooms also hold much of a home's value. New lowflush
toilets cost as little as $100. And tubs and showers can be easily replaced
or resurfaced. Be sure, above all else, that your bathrooms are clean for
showings.
6. Energy Savers: Buyers are looking for homes that are energy efficient.
Low-flush toilets, solar panels, water filtration systems, and insulated windows
are all inexpensive fixes for energy zappers.
Consider these simple tips and decide for yourself what may help your home retain its value.
Friday, March 25, 2011
Wednesday, February 16, 2011
What the New Budget Proposal Means for Home Buyers
Written By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
The Obama Administration's new budget proposal came out last week. The one loud message I took away for would-be home buyers? Loans are cheaper today than they're likely to be in the future.
That means if you're thinking of buying a home this year or in the near future, now is the time to get going.
A lot of the proposed changes have to do with the future of Fannie Mae and Freddic Mac – the two mortgage finance giants that are backed by the government to keep a steady flow of funds available for the nation's home buyers. While their fate is still being worked out, there are some related changes that could go into effect this fall that would impact home buyers. They are:
1. The maximum size of mortgages backed by Fannie and Freddie will be smaller come October. Currently, the limit in high-cost areas like San Francisco is $729,750 for a single-family home. That amount will drop 14% to $635,500 when the current limits expire. What this means is that a substantial number of homes in San Francisco county, for example, (10%, according to the California Association of Realtors) will become ineligible for financing backed by the two finance companies.
2. Bigger down payments are on the horizon. We discussed some of the other measures on the table a few weeks back that are outside of any Fannie/Freddie discussions. But now, in the government's attempts to shrink Fannie and Freddie, some new proposals for the mortgages backed by these companies would mean that borrowers would face a requirement of 10% down with mortgage insurance – up from 5%. Not a lot of details are available about any of these proposals as of today, but we're expected to know more by April.
3. Fees, fees fees. The Federal Housing Administration in November could begin raising annual mortgage insurance premium fees by 0.25% for all borrowers, according to the proposals. Basically, that means an extra $250 per $100,000 of loan per year.
As I've noted before, this is the year of big changes in housing regulation – many of which are aimed at protecting consumers and the American public from another collapse in mortgage finance. However, the consequence is looking more and more like higher costs to borrowers. So if you're going to buy, you might want to speed up your decisions before a lot of these things start to take effect.
President & CEO
Intero Real Estate Services, Inc.
The Obama Administration's new budget proposal came out last week. The one loud message I took away for would-be home buyers? Loans are cheaper today than they're likely to be in the future.
That means if you're thinking of buying a home this year or in the near future, now is the time to get going.
A lot of the proposed changes have to do with the future of Fannie Mae and Freddic Mac – the two mortgage finance giants that are backed by the government to keep a steady flow of funds available for the nation's home buyers. While their fate is still being worked out, there are some related changes that could go into effect this fall that would impact home buyers. They are:
1. The maximum size of mortgages backed by Fannie and Freddie will be smaller come October. Currently, the limit in high-cost areas like San Francisco is $729,750 for a single-family home. That amount will drop 14% to $635,500 when the current limits expire. What this means is that a substantial number of homes in San Francisco county, for example, (10%, according to the California Association of Realtors) will become ineligible for financing backed by the two finance companies.
2. Bigger down payments are on the horizon. We discussed some of the other measures on the table a few weeks back that are outside of any Fannie/Freddie discussions. But now, in the government's attempts to shrink Fannie and Freddie, some new proposals for the mortgages backed by these companies would mean that borrowers would face a requirement of 10% down with mortgage insurance – up from 5%. Not a lot of details are available about any of these proposals as of today, but we're expected to know more by April.
3. Fees, fees fees. The Federal Housing Administration in November could begin raising annual mortgage insurance premium fees by 0.25% for all borrowers, according to the proposals. Basically, that means an extra $250 per $100,000 of loan per year.
As I've noted before, this is the year of big changes in housing regulation – many of which are aimed at protecting consumers and the American public from another collapse in mortgage finance. However, the consequence is looking more and more like higher costs to borrowers. So if you're going to buy, you might want to speed up your decisions before a lot of these things start to take effect.
Tuesday, October 12, 2010
The Homeowner Tax Credit– What It Is and Where It Is Headed
The Taxpayer Relief Act was a huge break for sellers of real estate back in 1997. Basically, Congress changed the tax laws so that a homeowner could exempt $250,000 in gains from the sale of the owner’s primary residence. This had outstanding tax benefits for sellers over the last ten years as properties seemed to exponentially increase in value and homeowners routinely sold homes for a profit. In fact, prior to the Taxpayer Relief Act of 1997, homeowners had little incentive to move out of their home into a smaller place because it would cost them too much money in capital gains tax.
However, the President and Congress have recently began hinting that they might roll back or repeal some of the tax benefits within The Taxpayer Relief Act of 1997. This talk stays somewhat under the radar because, presently, people are not routinely selling their homes for a profit. But my question is: “What happens when the market ticks up and this benefit is repealed or rolled back?” How will that affect our business?
The Taxpayer Relief Act
The rules are pretty simple and any good realtor should know them well. Essentially, a homeowner can sell a “primary residence” and keep the first $250,000 of profit tax free. If the homeowners are married and filing a joint tax return, the couple can keep the first $500,000 of profit tax free.
In order to be deemed a “primary residence” the home must 1) have been lived in by the seller for at least two of the last five years, 2) the seller and his/her spouse must not have collected this tax benefit within the last two years on a different home sale, and 3) the property must be residential (commercial properties are not eligible for this tax exemption). The seller need not have lived in the home for two consecutive years. Also, as long as a seller has not sold a “primary home” and taken this tax benefit within the last two years, the tax exemption can be claimed over and over again.
The rules were made more lenient in 2004 for sellers who have been deployed by the military, have had a major change in health, have been forced to move for work, or can demonstrate insurmountable hardship. In these special circumstances, the sellers do not have to show that they lived in the primary residence for two of the last five years. However, they still cannot collect the benefit if they already have done so on a different sale within the last two years.
The Proposed Change
Most business attorneys are aware that the current capital gains tax that individuals and businesses pay on “personal property” sales will rise in 2011 because of a “sunset provision” that was placed in the Tax Increase Prevention and Reconciliation Act of 2006. This means that the Act terminates on its own on January 1, 2011, and without an additional act of Congress, individuals and businesses will have to pay higher taxes on profits that they earn for selling certain assets next year. Generally, real estate sales are not included in this capital gains tax increase. However, as the debate has heated up about whether to save the current “personal property” capital gains tax rate, the President and many in Congress have taken a firm stand that they want “fairness” in tax paying. This has lead to a discussion about revisiting the capital gains tax structure, including a tax increase on the profits that individuals earn when they sell their real estate holdings.
In his 2008 debates with Hilary Clinton, then Senator Obama proposed changing the entire capital gains tax structure back to where it was prior to The Taxpayer Relief Act of 1997. This would have numerous affects. Most notably, the homeowner tax benefit would be rolled back and virtually eliminated. Prior to 1997, sellers were only entitled to a $125,000 capital gains credit – and that was only if the seller was 55 years old or older at the time of sale.
Some on Capitol Hill have recently argued that the homeowner tax credit should be reduced from a $250,000 credit for one seller and a $500,000 credit for married sellers to a blanket $125,000 credit regardless of whether the couple files jointly or separately. The White House has not taken an official stand since Mr. Obama became President. However, some notable leaders in Congress, including Chairman of the House Financial Services Committee Barney Frank and Senate Majority Whip Richard Durbin (both voted against the Taxpayer Relief Act of 1997), have recently suggested that the homeowner tax credit of 1997 should be on the table along with all other capital gains.
By Chris Moles
Brokerage Counsel
Intero Real Estate, Inc.
However, the President and Congress have recently began hinting that they might roll back or repeal some of the tax benefits within The Taxpayer Relief Act of 1997. This talk stays somewhat under the radar because, presently, people are not routinely selling their homes for a profit. But my question is: “What happens when the market ticks up and this benefit is repealed or rolled back?” How will that affect our business?
The Taxpayer Relief Act
The rules are pretty simple and any good realtor should know them well. Essentially, a homeowner can sell a “primary residence” and keep the first $250,000 of profit tax free. If the homeowners are married and filing a joint tax return, the couple can keep the first $500,000 of profit tax free.
In order to be deemed a “primary residence” the home must 1) have been lived in by the seller for at least two of the last five years, 2) the seller and his/her spouse must not have collected this tax benefit within the last two years on a different home sale, and 3) the property must be residential (commercial properties are not eligible for this tax exemption). The seller need not have lived in the home for two consecutive years. Also, as long as a seller has not sold a “primary home” and taken this tax benefit within the last two years, the tax exemption can be claimed over and over again.
The rules were made more lenient in 2004 for sellers who have been deployed by the military, have had a major change in health, have been forced to move for work, or can demonstrate insurmountable hardship. In these special circumstances, the sellers do not have to show that they lived in the primary residence for two of the last five years. However, they still cannot collect the benefit if they already have done so on a different sale within the last two years.
The Proposed Change
Most business attorneys are aware that the current capital gains tax that individuals and businesses pay on “personal property” sales will rise in 2011 because of a “sunset provision” that was placed in the Tax Increase Prevention and Reconciliation Act of 2006. This means that the Act terminates on its own on January 1, 2011, and without an additional act of Congress, individuals and businesses will have to pay higher taxes on profits that they earn for selling certain assets next year. Generally, real estate sales are not included in this capital gains tax increase. However, as the debate has heated up about whether to save the current “personal property” capital gains tax rate, the President and many in Congress have taken a firm stand that they want “fairness” in tax paying. This has lead to a discussion about revisiting the capital gains tax structure, including a tax increase on the profits that individuals earn when they sell their real estate holdings.
In his 2008 debates with Hilary Clinton, then Senator Obama proposed changing the entire capital gains tax structure back to where it was prior to The Taxpayer Relief Act of 1997. This would have numerous affects. Most notably, the homeowner tax benefit would be rolled back and virtually eliminated. Prior to 1997, sellers were only entitled to a $125,000 capital gains credit – and that was only if the seller was 55 years old or older at the time of sale.
Some on Capitol Hill have recently argued that the homeowner tax credit should be reduced from a $250,000 credit for one seller and a $500,000 credit for married sellers to a blanket $125,000 credit regardless of whether the couple files jointly or separately. The White House has not taken an official stand since Mr. Obama became President. However, some notable leaders in Congress, including Chairman of the House Financial Services Committee Barney Frank and Senate Majority Whip Richard Durbin (both voted against the Taxpayer Relief Act of 1997), have recently suggested that the homeowner tax credit of 1997 should be on the table along with all other capital gains.
By Chris Moles
Brokerage Counsel
Intero Real Estate, Inc.
Wednesday, September 8, 2010
Google Says Hello to Real Estate
Google is an economic force to be reckoned with here in the Bay Area – and especially in Silicon Valley. The Internet pioneer employs more than 20,000 people, and they would seem to be among the happiest employees on earth.
The company’s latest news to hit the streets: it has jumped into real estate.
This news, however, is probably not what you’d expect. Google did not release an all-encompassing super-powered Internet search experience for home listings. Rather, the Mountain View-based giant is creating an $86-million Low-Income Housing Tax Credit (LIHTC) fund that will subsidize the construction and operation of 480 affordable rental units in seven communities in the West and Midwest for seniors and low-income families.
Google must have realized that there is no shortage of ways to help in the real estate arena offline. The fund apparently is not the first effort – Google recently invested in two other low-income housing projects for seniors in the San Francisco Bay Area and Los Angeles County.
So far, none of the projects have been in Google’s backyard in Mountain View, but it’s not really Google picking and choosing where the money goes. For that, they rely on the fund manager.
It’s nice to see philanthropic efforts by major U.S. corporations hit home like this. Affordable housing indeed is a problem in many areas and may get worse if the economy continues to disappoint.
Google’s investment comes at a time when many developers of low-income housing projects face huge financial hurdles and lack of funds. It is unusual for a technology company to fund projects like this. This move shows how the investor base for affordable housing is expanding beyond traditional means like banks.
It will be really interesting to see whether other large companies follow suit. As I mentioned, there are certainly a lot of projects needing funding and affordable housing is a social issue that is easy to get behind.
By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
The company’s latest news to hit the streets: it has jumped into real estate.
This news, however, is probably not what you’d expect. Google did not release an all-encompassing super-powered Internet search experience for home listings. Rather, the Mountain View-based giant is creating an $86-million Low-Income Housing Tax Credit (LIHTC) fund that will subsidize the construction and operation of 480 affordable rental units in seven communities in the West and Midwest for seniors and low-income families.
Google must have realized that there is no shortage of ways to help in the real estate arena offline. The fund apparently is not the first effort – Google recently invested in two other low-income housing projects for seniors in the San Francisco Bay Area and Los Angeles County.
So far, none of the projects have been in Google’s backyard in Mountain View, but it’s not really Google picking and choosing where the money goes. For that, they rely on the fund manager.
It’s nice to see philanthropic efforts by major U.S. corporations hit home like this. Affordable housing indeed is a problem in many areas and may get worse if the economy continues to disappoint.
Google’s investment comes at a time when many developers of low-income housing projects face huge financial hurdles and lack of funds. It is unusual for a technology company to fund projects like this. This move shows how the investor base for affordable housing is expanding beyond traditional means like banks.
It will be really interesting to see whether other large companies follow suit. As I mentioned, there are certainly a lot of projects needing funding and affordable housing is a social issue that is easy to get behind.
By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
Tuesday, May 11, 2010
Wednesday, April 7, 2010
Thursday, March 25, 2010
BELIEVE
If there’s one thing I’ve seen over and over again, it’s the cycle where housing soars, corrects, and then soars again.
In its low periods, like today, many, many people think real estate values will never come back. And certainly they’ll never go up again like they did in the past.
I don’t know about other parts of the country, but this is California where the American Dream thrives. I am eternally optimistic about California housing values, and most optimistic about values in the Bay Area.
So, I’ve collected some quotes from the past where people say real estate is dead. Reading them might allay some peoples’ concerns and put things into perspective. Enjoy:
“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.” (Time, Dec. 1, 1947)
“Houses cost too much for the mass market. Today’s average price is around $8,000—out of reach for two-thirds of all buyers.” (Science Digest, April, 1948)
“If you bought your house since the War…you have made your deal at the top of the market… The days when you couldn’t lose on a home purchase are no longer with us.” (House Beautiful, Nov. 2, 1948)
“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs $28,000.” (Business Week, Sept. 4, 1969)
“Be suspicious of the ‘common wisdom’ that tells you to ‘Buy now…because continuing inflation will force home prices and rents higher and higher.’” (NEA Journal, Dec. 1970)
“The median price of a home today is approaching $50,000….Housing experts predict that in the future price rises won’t be that great.” (Nations Business, June, 1977)
“The era of easy profits in real estate may be drawing to a close.” (Money, Jan. 1981)
“In California… for example, it is not unusual to find families of average means buying $100,000 houses…. I’m confident prices have passed their peak.” (John Wesley English, The Coming Real Estate Crash, 1980)
“The golden-age of risk-free run-ups in home prices is gone.” (Money, March 1985)
“If you’re looking to buy, be careful. Rising home values are not a sure thing anymore.” (Miami Herald, Oct. 25, 1985)
“Most economists agree… [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s.” (Money, 1986)
“We’re starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot.” (Los Angeles Times, Jan. 31, 1993)
“A home is where the bad investment is.” (San Francisco Examiner, November 17, 1996)
Things look grim right now, but go back and look at the dates on all these quotes? Anyone who followed the advice of these people would have missed out on one of the great real estate booms of all time.
What if you paid attention to the advice in quote #7? You’d have missed out on all that growth in the 1980’s.
What about quote #12? If you followed that advice, you’d have missed out on all the great years up until last year.
I could go on and on. If you’re a patient person, it’s been almost impossible not to get rich on California housing.
It happened before and it will happen again.
Don’t bet against California housing.
In the long run, it’s always been a great investment.
BY: Rick Soukoulis
Chairman and CEO
The Loan Source
408.578.8700
rsoukoulis@Interomortgage.com
In its low periods, like today, many, many people think real estate values will never come back. And certainly they’ll never go up again like they did in the past.
I don’t know about other parts of the country, but this is California where the American Dream thrives. I am eternally optimistic about California housing values, and most optimistic about values in the Bay Area.
So, I’ve collected some quotes from the past where people say real estate is dead. Reading them might allay some peoples’ concerns and put things into perspective. Enjoy:
“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.” (Time, Dec. 1, 1947)
“Houses cost too much for the mass market. Today’s average price is around $8,000—out of reach for two-thirds of all buyers.” (Science Digest, April, 1948)
“If you bought your house since the War…you have made your deal at the top of the market… The days when you couldn’t lose on a home purchase are no longer with us.” (House Beautiful, Nov. 2, 1948)
“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs $28,000.” (Business Week, Sept. 4, 1969)
“Be suspicious of the ‘common wisdom’ that tells you to ‘Buy now…because continuing inflation will force home prices and rents higher and higher.’” (NEA Journal, Dec. 1970)
“The median price of a home today is approaching $50,000….Housing experts predict that in the future price rises won’t be that great.” (Nations Business, June, 1977)
“The era of easy profits in real estate may be drawing to a close.” (Money, Jan. 1981)
“In California… for example, it is not unusual to find families of average means buying $100,000 houses…. I’m confident prices have passed their peak.” (John Wesley English, The Coming Real Estate Crash, 1980)
“The golden-age of risk-free run-ups in home prices is gone.” (Money, March 1985)
“If you’re looking to buy, be careful. Rising home values are not a sure thing anymore.” (Miami Herald, Oct. 25, 1985)
“Most economists agree… [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s.” (Money, 1986)
“We’re starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot.” (Los Angeles Times, Jan. 31, 1993)
“A home is where the bad investment is.” (San Francisco Examiner, November 17, 1996)
Things look grim right now, but go back and look at the dates on all these quotes? Anyone who followed the advice of these people would have missed out on one of the great real estate booms of all time.
What if you paid attention to the advice in quote #7? You’d have missed out on all that growth in the 1980’s.
What about quote #12? If you followed that advice, you’d have missed out on all the great years up until last year.
I could go on and on. If you’re a patient person, it’s been almost impossible not to get rich on California housing.
It happened before and it will happen again.
Don’t bet against California housing.
In the long run, it’s always been a great investment.
BY: Rick Soukoulis
Chairman and CEO
The Loan Source
408.578.8700
rsoukoulis@Interomortgage.com
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