Nice to see some markets in Florida starting to come back up again.
Here is the link to the original story:
Editor’s note: Data from Realtor.com’s first-quarter real estate trend data report. The report analyzes data for 146 U.S. metros and includes single-family homes, condos, townhomes and co-ops.
The spring homebuying season continues its brush with optimism with median list prices of homes for sale nationwide up 5.56 percent over the last year, according to Realtor.com data updated through March 2012. The jump to $189,900 brings the national median list price close to what it was two years ago.
Continuing a distressed-market turnaround trend, the Phoenix-Mesa, Ariz., metro took the No. 1 position on the list with a 23.5 percent jump from a year ago, to $179,000. The Miami metro made No. 2 on the list with a 22.27 percent list-price increase from a year ago, to $269,000. Both Phoenix and Miami were among the top 10 metros for year-over-year reductions in for-sale inventory, ranking No. 3 and No. 5, respectively.
Florida showed especially strong in median list-price growth in the last year, with five of the top 10 metros located in the Sunshine State. In addition to Miami, Punta Gorda made the list at No. 4 (17.5 percent), along with Daytona Beach (No. 8 at 15.47 percent), West Palm Beach-Boca Raton (No. 9 at 15.38 percent) and Naples (No. 10 at 15.38 percent).
Although they didn’t make the top 10 list, strong growth in median list prices in other Realtor.com-tracked Florida and Arizona metros like Fort Myers-Cape Coral (up 15.31 percent), the West-Ariz. rural statistical area (up 13.64 percent) and Fort Lauderdale (up 8.39 percent) suggest a bottom has formed in these hard-hit housing markets.
However, Realtor.com analysts noted that the large shadow inventory of potential foreclosures in these states could undermine this optimism and keep prices low as supply floods the market.
The Phoenix metro area has had a particularly notable shift in fortunes. In March 2011, it was No. 4 in the top 10 metros Realtor.com tracks for year-over-year median list-price declines. The median list price was down 14.2 percent from March 2010. List prices are a leading indicator, and may reflect optimism about a market that doesn’t always translate into actual sale prices.
The current median existing-home price in the Phoenix metro area is $124,500, less than half of the metro’s peak list price of $267,000, seen in the summer of 2006 at the height of the housing boom.
America’s Greatest Main Streets
Greenville has made tremendous strides over the last few decades, successfully turning its Main Street area into a lively and pedestrian-friendly destination (case in point: four lanes of traffic were reduced to two lanes with free parking). Its streets are lined with coffee shops, pubs, and antique shops. And each year, from spring until mid-fall, the city hosts Main Street Fridays, a series of live music performances, featuring everything from jazz to oldies to soul.
Worth a Stop: Stop by the Upcountry History Museum to browse its collection of historical artifacts related to South Carolina’s “Upcountry” region, including the “Focus Gallery,” all curated by community groups and local organizations.
You may believe that selling your home is impossible in today’s market. You may feel powerless to the process. What could YOU possibly do to turn this housing market around? There is no doubt that today’s real estate market is extremely difficult to navigate. However, we want you to know that thousands of homes sold yesterday, thousands will sell today and thousands will sell each and every day from now until the end of the year.
It is totally within your power to guarantee that your house will sell even in the current market.
“How?”, you ask. Let’s look at the simplicity of the famous Serenity Prayer and apply it to selling a home in today’s real estate market.
“Grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.”
Accept the things you cannot change
The two main reasons that the housing prices have softened:
-the current economy
-the inventory of distressed properties (foreclosures and short sales)
As an individual homeowner, there is no way for you to impact either of those two situations. The best think-tanks in the country are struggling to discover solutions.
Have the courage to change the things you can
There is not a vacuum of buyers in the market. There is a vacuum of homes a buyer in today’s market will purchase. Let us explain: could you sell your home today for $1? … $1,000 … $10,000? Of course you could. There are plenty of buyers in the market for a home they consider priced correctly. You have to decide what the correct price is for your home if you truly want to sell. If you want your house sold, you must list it at a price a buyer will pay for it. Not a buyer from 2006 but today’s buyer who has plenty of homes from which to choose.
It will take courage to sit with a real estate professional and honestly decipher the true value of your home. If you want to sell, you must have that courage.
The wisdom to know the difference
We all realize that the economic situation will take some time to correct. If we want to wait for prices to return to 2006 levels, we will probably have to wait for 5-7 years.
Look at the reason you decided to sell in the first place and decide whether the extra money you would get from the sale is worth that wait. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
This is where your wisdom must kick in. You already know the answers to the questions we just asked. You have the power to take back control of the situation by pricing your home to guarantee it sells. The time has come for you and your family to move on and start living the life you desire. That is what is truly important.
Courtesy of KCM Blog
Last week’s posting (Creating Wealth Through Homeownership – The Proof) concentrated on how homeowners, on average, accumulate more wealth than renters. The gist of the posting was that, in an environment where most do not save, homeownership creates a “forced piggybank” for owners through amortization of their mortgages and prepayment of principal. This conclusion comes from ongoing research being conducted by Beracha and Johnson.[i]
Additional evidence indicating that homeownership is really a savings vehicle is provided when Beracha and Johnson’s Buy vs. Rent model[ii] is employed to estimate the probability that renting is the superior economic decision and leads to greater wealth.[iii] In particular, Beracha and Johnson balance the benefits of ownership against the costs of homeownership and compare wealth accumulation through home equity against wealth accumulation through investments created by a comparable renter.[iv] The model assumes an eight year holding period.[v]
Through thousands of Monte Carlo simulations (an advanced statistical technique where past outcomes are used to predict future results), Beracha and Johnson are able to derive the probability that renting will outperform homeownership in terms of wealth accumulation for each of the 30 plus years of the study. When the probability for a given year is 50%, there is no clear winner between ownership and renting. When the probability is greater than 50%, renting wins. When the probability is less than 50%, ownership wins. The results are presented in the graph below:
(Article courtesy of KCM Blog)
The top line in RED depicts the probability that renting will outperform ownership in wealth accumulation assuming that renters reinvest rent savings (difference between rent payments and mortgage payments). Clearly, over the vast majority of the study period and under this very strict assumption of reinvestment of rent savings, renting provides the greater probability of wealth accumulation.
The bottom line in BLUE, however, depicts a different and perhaps more realistic outcome. In particular, when renters are not forced to save and reinvest their rent savings and are instead allowed to spend on consumption, ownership becomes the probability winner in all of the wealth accumulation races.
Evidence is continuing to mount that renting is a better path to wealth accumulation in a strict “horserace” between buying and renting where renters are forced to reinvest any rent savings. Therefore, for those that have the discipline to monastically reinvest rent savings, renting is probably the better path to wealth accumulation. However, in perhaps a more realistic setting where renters can spend on consumption (beer, cookies, education, healthcare, etc.), ownership is the clear winner in wealth accumulation. Said another way, homeownership is a self-imposed savings plan on the part of those that choose to own.
[i] Eli Beracha and Ken H. Johnson, 2012, Beer and Cookies Impact on Homeowners’ Wealth Accumulation, ongoing research.
[ii] Eli Beracha and Ken H. Johnson, 2012, Lessons from Over 30 Years of Buy Versus Rent Decisions: Is the American Dream Always Wise? Forthcoming in Real Estate Economics.
[iii] The model results simply need to be inverted in order to interpret the results as to when buying leads to greater wealth accumulation.
[iv] See Beracha and Johnson (2012) for exacting details of their Buy vs. Rent model.
[v] The holding period can be varied with little change to the results. This issue will be addressed in future postings.
Q: We bought a house this year! We put $33,000 down and the bank financed $28,000. Can I write this off on my 2011 taxes? How much of it?
A: First things first: Congratulations! You’ve become a homeowner, and seem to have done so using an enviable financial arrangement. But now that you own a home, you might need to shift the way you think and look at some things, including your taxes and other financial matters.
Owning a home is one of those landmarks that signify financial adulthood. And one of the things that responsible financial adults do is get professional help when the situation requires it. Taxes are one of those areas that often do warrant calling the pros in.
I’m not just shilling for the tax prep industry here, either: The ultimate aim of using a tax professional is to make sure you get every deduction, credit and other tax advantage for which you qualify, without jacking up your chances at triggering the universally dreaded Internal Revenue Service audit by claiming dubious deductions.
Your mortgage debt is fairly small, as was your home’s purchase price, though I don’t know whether they are large or small in the context of your overall financial picture (i.e., income, assets, investments, etc.).
The fact that you saved or somehow came up with such a sizable chunk of change to put down makes me hesitate to assume that your finances are as simple as your mortgage balance might otherwise lead me to believe.
So, it might be the case that you can easily handle your own taxes — in fact, it’s even possible that your real estate-related deductions won’t even outweigh the standard deductions, so that filing a simple form without even itemizing your deductions is actually the financially advantageous move.
Whether that’s the case cannot be determined in a vacuum — you may have other financial and tax issues going on. But with software and tax preparation services as inexpensive as they are, starting at under $20 for simple returns, I think it behooves you to get some professional advice and ensure you get the deductions you need.
Hiring a tax preparer might be a worthwhile investment to make, even if just this year, so he or she can brief you on what records you should keep and strategies you should do moving forward, like home repair and improvement receipts, or documentation of your use of an area of the home as a home office.
Now, let’s talk more substantively about the deductions that are available to you, in the event you do decide to itemize your taxes (IRS Publication 530 offers a more nuanced view into Tax Information for Homeowners):
1. Mortgage interest deduction. Assuming this home is your personal residence, 100 percent of the mortgage interest you owe and pay before Dec. 31, 2011, is deductible on your 2011 taxes. In January, your mortgage lender will send you a form documenting the precise amount of interest you paid, although most lenders also now make this form immediately available to borrowers online.
Chances are good that you paid some amount of advance interest on your home loan at closing — expect to see that on your statement from your lender, but you should also be able to find it on the HUD-1 settlement statement you received from your escrow agent at closing.
2. Property tax deductions. Again, assuming that this is the home you live in most of the time, you should be able to deduct 100 percent of the property taxes you’ve paid to your state and/or local taxing agency this year.
3. Closing-cost deductions. Discount points and origination fees paid to your mortgage lender and/or broker at closing are frequently deductible, but there are rules around this, which tax software and/or professionals can help you make sure you meet. Note that, according to Internal Revenue Service Publication 530, “You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home.”
There are various home improvements (especially those that increase your home’s energy efficiency), state and local tax credits for buying a foreclosure, and other tax advantages that might be available to you.
My advice is to work with an experienced, local tax preparer or, at the very least, use reputable tax preparation software to ensure that you get the maximum tax advantages available to you as a result of your new role as a homeowner.
Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
By Tara-Nicholle Nelson, Thursday, January 5, 2012.
CORRECTION: The original version of this article contained an error, and the article has been updated with a correction. The Internal Revenue Service reports, in Publication 530, “You cannot deduct transfer taxes and charges on the sale of a personal home.”
Article Courtesy of Inman news
Playing by the 5-year rule
By Tom Kelly, Wednesday, January 11, 2012.
The lackluster housing market has many investors looking for bargain properties, sometimes in bunches. Buyers are getting more creative about funding their purchases, rethinking the role of real estate not only for their portfolios but also for their residences.
In a recent example, an older couple sold their home and purchased two Arizona golf-course condominiums with the proceeds — one for their primary residence and another as a rental — and still put some money in their pocket. What made the deal interesting was that they had purchased the original home six years ago via a tax-deferred exchange.
While investors had turned rental properties into principal residences for years, the timing for claiming the $500,000 principal residence exemption ($250,000 for a single person) on a home acquired via an exchange wasn’t clarified until late 2004.
Before then, taxpayers were left to guess how long they had to hold an investment property before deeming it a primary residence — or when it was safe to sell it and pocket any gain.