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Home Sales Going going....UP!

by Ashlie DuCros

U.S. Economy: Home Sales Surge, Goods Orders Climb (Update1)

By Courtney Schlisserman and Bob Willis

April 23 (Bloomberg) -- Sales of new homes surged 27 percent in March and orders for most durable goods climbed, indicating the U.S. economy sped up heading into the second quarter.

The gain in new-home sales was the biggest in 47 years as buyers rushed to qualify for a government tax credit and the weather improved, a Commerce Department report showed. Bookings for goods meant to last at least three years, excluding cars and aircraft, climbed 2.8 percent.

Stocks rose and Treasuries slid as the reports pointed to pickups in housing, business investment and exports that may benefit companies from builders such as Pulte Group Inc. to makers of capital goods including Eaton Corp. The outlook for the rest of the year hinges on job gains that will spur consumer spending, which makes up 70 percent of the economy.

“The pieces are falling into place for a strong recovery,” said Gus Faucher, director of macroeconomics at Moody’s Economy.com in West Chester, Pennsylvania. “We’ve got strong business investment and we’re going to have some investment in residential” real estate.

Stocks advanced, extending the Dow Jones Industrial Average’s longest weekly winning streak in six years. The Dow climbed 0.6 percent to 11,204.28 at the 4 p.m. close in New York, completing an eighth straight weekly gain. The 10-year Treasury note fell, pushing up the yield to 3.81 percent from 3.77 percent late yesterday.

Sales of new houses increased to an annual pace of 411,000, exceeding the highest forecast of economists surveyed by Bloomberg News. Last month’s purchase rate was the highest since July and followed a record-low 324,000 in February that was higher than previously estimated.

Exceeds Forecasts

Economists forecast purchases would rise to a 325,000 annual rate in March, according to the median estimate of 77 economists surveyed. Projections ranged from 300,000 to 362,000.

Demand may remain elevated through this month as Americans take advantage of a tax credit worth as much as $8,000 before it ends at the end of next week.

“We’ll probably see another jump in April and then we’ll get some payback in May and June,” said Jim O’Sullivan, global chief economist at MF Global Ltd. in New York. “Through the volatility, the trend in home sales is probably more up than down.”

Builder shares rallied, led by Pulte of Bloomfield Hills, Michigan, Miami-based Lennar Corp. and Standard Pacific Corp., which is based in Irvine, California.

Broad-based Gain

Sales increased in all four U.S. regions last month, led by a 44 percent jump in the South. The median price of a new home increased 4.3 percent in March from a year earlier to $214,000.

The Obama administration extended an incentive for first- time homebuyers in November and expanded it to include some current owners. The deadline for signing contracts is the end of this month, and the transactions must be completed by June 30.

Sales of previously owned homes, which account for about 90 percent of the housing market, are tabulated at contract closings, meaning demand may remain elevated through June. Purchases of new houses reflect contract signings, indicating the credit’s maximum influence on that market will be seen through April.

A report yesterday from the National Association of Realtors showed sales of existing homes jumped to a 5.35 million rate in March, the first increase in four months.

Durable Goods

The gain in orders for durable goods excluding transportation equipment last month was the biggest since the recession began in December 2007, another Commerce Department today showed.

Total orders unexpectedly dropped 1.3 percent, depressed by a 67 percent plunge in demand for commercial aircraft.

Eaton, the Cleveland-based maker of engine valves and transmissions, is among companies profiting from growth in demand for car and truck parts. This week it posted first- quarter profit that exceeded analysts’ estimates and raised its 2010 earnings forecast.

“The expanding world economy drove growth in most of our markets,” Chief Executive Officer Sandy Cutler said in a statement. “In general we are seeing the strongest growth in Asia and Brazil, while many U.S. markets are starting to accelerate and Europe is recovering more modestly.”

Business investment in equipment and software climbed at a 19 percent annual rate in the fourth quarter, the biggest gain in 11 years.

Global Recovery

Factories are ramping up output as improving economies from Brazil to China and India boost overseas sales and rising U.S. demand prompts companies to update equipment and replenish stockpiles after last year’s record drawdown.

Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, increased 4 percent. Shipments of those items, used in calculating gross domestic product, increased 2.2 percent.

Economists at Morgan Stanley in New York raised their forecast for economic growth in the first three months of the year to a 3.4 percent annual pace after the reports on goods orders from a prior estimate of three percent.

The U.S. economy, the world’s largest, expanded at a 5.6 percent pace in last three months of the year as companies stepped up efforts to stabilize inventories. It was the strongest rate of growth in six years.

To contact the reporters on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net; Bob Willis in Washington at bwillis@bloomberg.net

Last Updated: April 23, 2010 16:40 EDT

See if you quailify for the new tax credit! up to $10,000!

by Ashlie DuCros
Homebuyer Tax Credit Chart 2010
To help stimulate home sales, both the federal and state governments are offering tax credits for Californians purchasing their piece of the American dream.  Federal law offers up to $8,000 for first-time homebuyers and $6,500 for long-time residents.  California law offers up to $10,000 for first-time homebuyers or buyers of properties that have never been occupied.  Here’s a handy summary of the two tax credit laws:

 


  HOMEBUYER TAX CREDIT

FEDERAL

CALIFORNIA

Amount of Tax Credit

10% of purchase price not to exceed $8,000 for first-time homebuyers or $6,500 for long-term residents.

5% of purchase price, not to exceed $10,000 for first-time homebuyers or buyers of properties that have never been occupied. (See also Maximum Credit for All Taxpayers.)

Date of Purchase Taxpayer must enter into a written binding contract by April 30, 2010, and close escrow by June 30, 2010.  Taxpayer must enter into an enforceable contract by December 31, 2010, and close escrow between May 1, 2010 and July 31, 2011, inclusive.

Principal Residence

Yes. Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121).

Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes (Cal. Tax & Rev. Code § 218).

Type of Property

House, condominium, townhome, manufactured home, apartment cooperative, houseboat, housetrailer, or other type of property located in the U.S.

Single-family residence, whether detached or attached, condominium, co-op, manufactured home, mobilehome, or house boat. A home constructed by the taxpayer is not eligible because the home has not been "purchased".

 Eligibility 1. First-Time Homebuyer: Up to $8,000 if buyer (and buyer’s spouse if any) has not owned a principal residence for the three-year period before date of purchase; OR

2. Long-Time Resident: Up to $6,500 if buyer (and buyer’s spouse if any) has owned and used existing home as a principal residence for 5 of the last 8 years.
1. First-Time Homebuyer: Up to $10,000 if the buyer (and buyer’s spouse/RDP if any, according to FTB) has not owned a principal residence for the three-year period before date of purchase; OR

2. Never-Occupied Property: Up to $10,000 for a principal residence if the property has never been previously occupied as certified by the seller.

Income Restriction

Yes. Tax credit begins to phase out for modified adjusted gross income (MAGI) over $125,000 (or $225,000 for joint filers). No tax credit at all for MAGI over $145,000 (or $245,000 for joint filers).

No

Maximum Purchase Price $800,000. N/A

Tax Credit

Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check.

No

Repayment

No repayment required if the buyer owns and occupies the property for at least 36 months after purchase.

No repayment required if the buyer owns and occupies the property for at least two years immediately following the purchase.

Multiple Buyers
(not married to each other)

Tax credit may be allocated between eligible taxpayers in any reasonable manner. See IRS Notice 2009-12 at www.irs.gov/pub/irs-drop/n-09-12.pdf.

Tax credit must be allocated between eligible taxpayers based on their percentage of ownership.

Maximum Credit for All Taxpayers

N/A

$100 million for first-time homebuyers and $100 million for never-occupied properties, both on a first-come-first-served basis.

Reservations of Credit N/A Yes. Buyer may reserve credit before close of escrow for a property that has never been occupied by submitting a certification signed by buyer and seller stating they have entered into an enforceable contract between May 1, 2010 and December 31, 2010, inclusive.

When to Claim

Full tax credit may be claimed on 2009 or 2010 tax returns.

1/3 of total tax credit may be claimed each year for 3 successive years (e.g. $3,333 for 2010, $3,333 for 2011, and $3,333 for 2012).

Tax Agency

Internal Revenue Service (IRS).

Franchise Tax Board (FTB).

How to File

First-Time Homebuyer Credit and Repayment of the Credit (IRS Form 5405) to be filed with tax returns

Submit application to the FTB to obtain Certificate of Allocation. The FTB may prescribe additional rules and procedures to carry out this law.

Other Restrictions

Cannot be an acquisition from related persons as defined; cannot be an acquisition by gift or inheritance; and buyer cannot be a non resident alien.

Cannot be an acquisition from related persons as defined; buyer or spouse must be 18 years old; buyer cannot be another taxpayer’s dependent; credit is allowed for only one qualified principal residence; credit is disallowed if taxpayer received 2009 new home tax credit; and credit allowed cannot be a business credit under Cal. Tax & Rev. Code § 17039.2.

Legal Authority

26 U.S.C. section 36.

Cal. Rev. & Tax Code section 17059.1 (as added by Assembly Bill 183).

Date of Enactment

November 6, 2009 (as revised).

March 25, 2010.

More Information

IRS Web site at http://www.irs.gov/newsroom/article/0,,id=
204671,00.html
.

FTB Web site at http://www.ftb.ca.gov/
individuals/ New_Home_Credit.shtml
.

This chart is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.'s legal products and services, please visit car.org.

Readers who require specific advice should consult an attorney.  C.A.R. members requiring legal assistance may contact C.A.R.'s Member Legal Hotline at (213) 739-8282, Monday through Friday, 9 a.m. - 6 p.m. and Saturday,10 a.m. - 2p.m.  C.A.R. members who are broker-owners, office managers, or Designated REALTORS® may contact the Member Legal Hotline at (213) 739-8350 to receive expedited service. Members may also fax or e-mail inquiries to the Member Legal Hotline at (213) 480-7724 or legal_hotline@car.org

Good timing could reap double tax credits

by Ashlie DuCros

 

Good timing could reap double tax credits

 Kathleen Pender

Some home buyers in California could get a federal tax credit worth up to $8,000 plus a new state credit worth up to $10,000 if they time their purchase just right over the next three months. But double-dipping will be tricky and won't come without risks.

 

One couple who lucked out are Sibel Demirmen and Scott Henry of San Francisco, who are purchasing a home, their first, in San Rafael's Terra Linda neighborhood.

 

They were planning to close escrow on April 30, and knew they qualified for an $8,000 federal home-buyer tax credit.

 

To get the federal credit, buyers must - among other things - close before May 1 or enter into a binding contract before May 1 and close before July 1.

 

Last weekend, they learned that if they could delay their close until after April 30, they could also qualify for the new California home-buyer tax credit, which was signed into law last week. The state credit is worth up to $10,000, spread over three years.

 

The seller agreed, and on Monday they signed an addendum to their contract postponing the closing until May 4.

 

"I was elated. I was ecstatic. I was thrilled," says Demirmen, a singer, music teacher and mother of two.

 

Although the prospect of double-dipping will excite many house hunters, "I don't think a ton of buyers will get both and benefit from both credits," says Renee Rodda, editor of Spidell's California Taxletter.

 

To get both, buyers must meet two sets of strict criteria. Timing it right will be tricky, especially in foreclosure or short sales, which can involve long lead times and many parties.

 

People who have already locked in a rate on a mortgage could lose the rate, or have to pay an additional fee to keep it, if they postpone their closing.

 

Matt Duffy is buying a home with his wife in Santa Rosa in a short sale, in which the purchase price is less than the debt on the home.

 

The seller accepted their offer in January. Last week, they heard that both lenders agreed to the deal as long as it closes by April 26.

 

"We said, 'Cool, we can do that.' We have our mortgage and the federal tax credit," he says.

 

After reading my Sunday column on the state credit, Duffy realized he could get that too if he delayed his close.

 

"As it turns out, we are not going to be able to do that. The second lender is demanding we close by April 26 or somebody has to pay an additional $20,000," he says.

 

"I am of course upset we can't move the date. But we don't want to lose the house. We will still get the federal credit, which is the better of the two credits."

 

The federal credit: The federal credit is 10 percent of the purchase price, up to a maximum credit of $8,000 for first-time home buyers or $6,500 for longtime homeowners who buy a replacement home. Either type of buyer can purchase a new or existing home.

 

Buyers claim the federal credit when they file their tax return (or amend the prior year's return). This credit is refundable: The full amount will be paid out, even if you have zero federal tax liability or the credit is bigger than your federal tax.

 

You cannot get the federal credit if your income is too high or the home was purchased after Nov. 6, 2009, and cost more than $800,000.

 

The state credit: The California credit is the lesser of 5 percent of the purchase price or $10,000. First-time buyers can purchase a new or existing home but repeat buyers can only purchase a new home that has never been occupied.

 

The California credit is spread over three years, up to $3,333 per year. It is not refundable: If you owe less than $3,333 in one (or more) of those years, you lose the difference that year. Even if you owed $3,333 before you owned a house, you might owe less after because of all the new tax deductions.

 

The state credit has no income or purchase-price limits. But here's the rub: Some buyers who fall below the income limits for the federal credit might not owe enough California tax to get the full benefit of the state credit.

 

To get the California credit, you must close escrow between May 1 and either Dec. 31 or whenever the money set aside for the program runs out, whichever comes first. The money is likely to run out long before Dec. 31.

 

Alternatively, you can reserve a state credit for new construction by entering into a binding contract between May 1 and Dec. 31 and closing before Aug. 1, 2011. People who do this won't get the federal credit because they entered a contract after April 30.

 

Getting both: Both credits require you to buy the home as your primary residence. Both define a first-time buyer as someone who has not owned a home in the three years prior to purchase.

 

In short, to get both credits you must be in contract on or before April 30 and close between May 1 and June 30 - and meet all other requirements.

 

Buyers who are already in contract and want to postpone their closing need to get the seller and lender to agree.

 

"Sellers might be flexible because it's still a buyer's market, but they may want something in return," says Richard Redmond, a mortgage broker in Larkspur.

 

"If you have a loan locked in with a close date in April and you want to extend it, you may have to pay a fee or get a higher interest rate," Redmond adds.

 Buyers should consult a well-informed tax person and make sure they understand both credits.

 For more on the state credit, see links.sfgate.com/ZJLF.

 For the federal credit, try links.sfgate.com/ZJLG or links.sfgate.com/ZJLH.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pending home sales show healthy gain!

by Ashlie DuCros

Daily Real Estate News  

Pending Home Sales Show Healthy Gain

Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, says the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he says. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”

Pending home sales by region:

  • Northeast: the index rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009.
  • Midwest: jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago.
  • South: increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009.
  • West: the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.


Source: NAR

April Orange County Homes: Inventory vs. in escrow

by Ashlie DuCros

April 2010: Orange County Stats

Number of homes for sale VS. number of homes in Escrow

 

City

# of Active Homes on Market

# of Homes in Escrow

Yorba Linda

296

197

Brea

72

61

Fullerton

317

297

Anaheim Hills

165

97

Newport Coast

145

40

Irvine

547

516

Placentia

124

80

Orange

355

250

Tustin

168

208

Corona del mar

173

35

Villa Park

42

19

North Tustin

64

34

Short sales getting easier?

by Ashlie DuCros

 Is a Short Sales Boom Coming?


Banks are ramping up short sales thanks to government incentives and the realization that short sales result in lower losses than foreclosures. On average, banks lose 50 percent on a foreclosure, but only 30 percent on a short sale.

Bank of America, the nation’s largest mortgage servicer, has dramatically reduced the time it takes to process short sales. Elizabeth Weintraub, a Sacramento, Calif.-based real estate practitioner who handles many short sales, said, "Bank of America approved [a short sale] in 24 days. That flipped me out."

The hang-up for many short sellers has been second liens, but the new government program gives first lien holders incentives to share and offers second lien holders and investors a $6,000 cash incentive.

Under the new program lenders must tell the seller the minimum they’ll accept. When the seller comes back with a good offer, it must be accepted within 10 days.

Chris Saitta, CEO of Equator, which produces short-sale software, predicts a boom in short sales. “The challenge will be handling all the volume,” he said.

Source: CNNMoney, Les Christie (03/29/2010)

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Ashlie DuCros & Associates
Coldwell Banker Previews Global Luxury
21580 Yorba Linda Blvd.
Yorba Linda CA 92887
714-743-9778
Fax: 714-849-5489