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August Real Estate Newsletter!

by Ashlie DuCros

IT’S IMPORTANT TO UNDERSTAND THE HOUSING MARKET REGIONALLY AS OPPOSED TO NATIONALLY...

That is not to say that prices are not poised for a further drop, because they are. There is more on that in the next section. But it does mean that when you try to apprise yourself of what the facts are, in order to make a decision as to whether right now, is a good time for you to sell or buy, you should compare apples to apples. For example, if you have a compelling reason to sell your home, i.e. a job transfer, divorce, a health issue, than now is defi nitely the right time because experts agree, there is more loss on the way before we are done. But if selling is optional, consider your benefits. If you want to sell and capitalize on a move up, then maybe now is good. You need to talk to an expert and gather all the facts. If you are looking to buy, what are your financing needs? Will what you need in a loan program be there in 12 months to make waiting worth while. Is the price drop of 10% worth waiting for over the need for a place to live, especially if you have found the “right house” as a 25% decrease over its high? After all, houses are not meant to be day traded. That was a bad habit that most of the country and certainly Californians partook of for a few years. Read on to see why regional knowledge is good when it comes to real estate.

This is probably the biggest hurdle the real estate industry has to get over in the minds of consumers. Unfortunately a lot of the news out there is the dismal outlook for national housing. Regions such as the mid-west, specific cities such as Detroit, or sub-prime havens such as Riverside and San Bernardino or even Las Vegas and Phoenix, have many more problems than we do here in Orange County and Los Angeles.

EXPERTS SEEM TO AGREE ON HOW MUCH FURTHER PRICES WILL DROP...

The Kiplinger Report thought the drop would be 10% in 2009 saying, “Home prices have a ways more to drop before leveling off late next year, then staying fl at during most of 2010. Difficulties will vary by region. The Inland Empire and Central Valley are sure to have the biggest price drops. Orange County and San Diego prices won’t fall as much. Bargain hunters will spur sales, probably by year end.” We are definitely experiencing that right now. Sales picked up for the first time from May numbers to June. (The latest numbers that are available for a full month.)

Broker and local economist Tom Moon’s predicted price drop for next year, also 10%. Obviously these projections are on top of the already 20% to 25% we’ve seen, depending on the location of the property. So we are looking at a grand total of approximately 35% before we are done. Is there anyone reading this that doesn’t see what impact this will have on the affordability index and how it will spur sales with old fashioned supply and demand. Don’t forget we still have people arriving here that need to buy, we still have a lot of people who were left out of the sub-prime run up and if you read on, you will see that we still have decent economic prospects in Orange County.

Real Estate Economics, a homebuilder consulting firm in Irvine has this to say about the Orange County housing market: “Opportunity/Risk Index currently resides slightly below equilibrium, but the trend is toward equilibrium. Any O/R index above equilibrium represents market opportunity, and any index number below equilibrium represents market risk... Within 12 months, (the O/R) index should reach equilibrium... There is a need for an additional 5.6% drop in housing prices before equilibrium is reached in the Orange County market.

MOST OTHER INDUSTRIES ARE IN GOOD SHAPE, AVOIDING THE DOWNTURN...

Again, The Kiplinger Editors have interesting data on Southern California. It is important to mention because again, they are experts on California and their information is regional, not national. What do they say? Tourism is getting a huge boost because of how strong the Euro is right now. “High tech will benefit from consumer demand for cell phones, games, and software.” Kiplinger believes agriculture will benefi t from foreign consumers buying more food. Entertainment is counting on strong ad dollars for TV this fall. Some areas will lag such as retail shopping centers and state and local governments.

THE NUMBERS ARE ENCOURAGING IF YOU UNDERSTAND THEM...

It is not unusual for any property under $600,000, but especially for a bank owned one to have 6 to 12 offers or more. Orange County had 1,184 bank owned properties in the MLS as of July 11. How many were bought in May? Just about half of them sold with a total of 570. Time needed to sell all foreclosed homes? That was a low number of 44 days. We are nearing the end of loan adjustments for sub-prime loans, which means we are nearing the foreclosure peak and the end all at the same time. Please feel free to call my office at any time and I will let you know current listing counts and the total number of listings that are bank owned. Remember, no one can predict the bottom.

People need to decide based on their own circumstance if it is time for them to act. But what is really happening in the market is a far cry from what you read. Affordability increases every day. Congress has passed the “Homeowner Rescue.” Fannie Mae and Freddie Mac are stable and FHA is a phenomenal opportunity, all made permanent with the new $625,500 loan limits. Expect real estate to be what it has always been: a cornerstone of our local economy, for better or worse. But you can bet on this; there is opportunity here right now that may never be here again. There is no question that investors are eyeing the market very carefully. If you need information, look no further as it is my pleasure to serve you.

This is a buyer’s market so obviously the numbers are encouraging to them, not sellers. But, if you think the market is stagnant, if you think people are sitting around waiting, you would be wrong.

Find Your Dr eam Home Today!

www.AshlieDuCr os.com

Tax Advise from Olmstead and Associtates!

by Ashlie DuCros

 

      September, 2008  

ONE ACCOUNT AT A TIME

ISSUE NO. 1009 - 08  

 

  

 

 

 

 

 

Welcome to the month of SeptemberAdditionally we want to continue  providing you with articles, tips, and tools to keep you informed throughout the year.  For more in depth information and articles please feel free to visit our website at www.olmstedcpa.com .  

 Keeping Good Tax Records  

In a tax emergency, would you be ready? Well-organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax.

Fortunately, you don't have to keep all tax records around forever.  Normally, tax records should be kept for three years, but some documents - such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property - should be kept longer. If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later. If you are in business, there is no particular method of bookkeeping you must use.  However, you must clearly and accurately show your gross income and expenses. The records should substantiate both your income and expenses.  Feel free to contact our firm if you would like more information regarding keeping your tax records.

             

 

 

 

Can you Take a Home Office Deduction? 

If you plan to run your small business out of your home you may be temped to "write-off" many of your household expenses. But how do you know what is deductible and what is not?  The Internal Revenue Services has some advice that may help answer the question:  " Can I take a Home Office Deduction?"

Generally, expenses related to the rent, purchase, maintenance and repair of a personal residence are not deductible.  However, if you use part of your home for business purposes you may be able to take a home office deduction.   Expenses that can be deducted include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, painting, repairs and depreciation.

In order to claim a business deduction, you must use part of your home:

  • Exclusively and regularly as your principal place of business, as a place to meet or deal with patients, clients or customers in the normal course of your business, or in connection with your trade or business where there is a separate structure not attached to the home; or
  • On a regular basis for certain storage use such as inventory or product samples, as rental property, or as a home daycare facility.

In addition, if you work as an employee you can claim this deduction only if the regular and exclusive business use of the home is for the convenience of your employer and the portion of the home is not rented by the employer.

 

"Exclusive use" mean a specific area of the home is used only for trade or business. "Regular use" means the area is used regularly for trade or business.  Incidental or occasional business use is not regular use.

 

Non-business profit-seeking endeavors such as investment activities do not qualify for a home office deduction, nor do not-for-profit activities such as hobbies.

 

Example: An attorney uses the den in his home to write legal briefs or prepare clients' tax returns.  The family also uses the den for recreation.  The den is not used exclusively in the attorney's profession, so a business deduction cannot be claimed. 

 

If you would like more details regarding these deductions, please contact our firm. 

 

 

 

 

 Social Security Launches Online Retirement Calculator    

Here's a tool we've found useful, we thought you might as well.

The Retirement Estimator at www.socialsecurity.gov/estimator is tied to a person's actual Social Security earnings record and eliminates the need to manually key in years of earnings information.

The calculator lets the user compare different retirement options. For example, a person can change retirement dates or expected future earnings.  Individuals also can print out up to three different scenarios at one time, in addition to information about their benefits at age 62 (current age if older), full retirement age and age 70.

Best of all, the Retirement Estimator is secure.  The only thing it provides online is retirement benefit estimates.  It does not show the earnings record information on which the final benefit estimate was calculated, nor doe sit reveal other personal information.

                

Important Lending information!

by Ashlie DuCros
The lending industry in constantly making changes to loan limits, rates, and funding options. Here are some important updates I think you should know about........

The current temporary loan limit for conventional conforming and FHA will expire December 31, 2008. Currently in Orange County that limit is $729,750. On January 1, 2009 the new limit will be $625,500. A big difference!!!!!!!

The minimum down payment on FHA loans will increase soon. Currently you can borrow with as little as 3% down ( and that money can all be gifted ). However, as of October 1, 2008 you will have to be able to put 3.5% down.

And there is the First time homeowners tax credit... which anyone qualifies for if they haven't owned a home in the last 3 years. Please call or email me if you want more information.

Loan rates are low and holding steady right now. I have a few lenders I work with and trust. I am happy to put you in touch with them! Thanks

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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