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Category Archive: ‘Market Conditions’

Trump Tax Plan and the M.I.D.

Hat tip to SWM for sending in this clarification regarding the point at which the M.I.D. is an advantage.

http://www.seattletimes.com/business/real-estate/trump-tax-proposal-would-make-mortgage-deduction-useless-for-most-homeowners/

U.S. Treasury Secretary Steven Mnuchin has taken pains to stress that the Trump administration isn’t out to kill Americans’ beloved mortgage-interest tax deduction — but a side effect of the plan could turn it into a perk for only the wealthy.

President Donald Trump has proposed rewriting the tax code to raise the standard federal deduction to a level where about 25 million home­owners would no longer take advantage of the century-old break.

A married couple would need a home-loan balance of about $608,000 — almost triple the mortgage on a median-priced U.S. home — before using it would make sense, according to a new analysis by property-data provider Trulia. That would be up from about $322,000 today.

Without the incentives, along with a proposed end to local property-tax deductions, home sales may be hurt in cities where prices are rising quickly and buyers are stretching to afford their purchases, from Denver and Portland to Boston and Washington, D.C. Reduced demand would weigh on values, causing price declines nationwide, according to the National Association of Realtors, which opposes the change.

The proposal “is a backdoor way of rendering the mortgage-interest deduction close to worthless,” said Mark Zandi, chief economist for Moody’s Analytics.

Prices may fall 10 percent on average nationwide, taking into account the lack of deduction for state and local property taxes, according to a preliminary estimate prepared by a consultant for the National Association of Realtors. Zandi, of Moody’s, said the proposed deduction changes would reduce prices by about 4?percent nationally, including the property-tax impact, with bigger decreases in pricier parts of the country.

Economists have been critical of the mortgage-interest deduction because it disproportionately benefits people with more expensive properties, including many who would have purchased even without the break. It also inflates home prices because buyers often overestimate their tax savings when they’re budgeting for a purchase, said Dennis Ventry, a professor at University of California, Davis, School of Law who has studied the program’s history.

Trump’s plan might boost homeownership rates over time because a drop in prices would improve affordability and the standard deduction would give buyers more money to spend on a house, Ventry said.

The real-estate industry is lining up against the proposal, including the powerful National Association of Realtors, which spent $10.2 million lobbying Congress in the first quarter, more than any other organization except the U.S. Chamber of Commerce, according to the Center for Responsive Politics.

Trump’s plan also targets tax deductions for state and local taxes paid — a provision that would hurt homeowners in states where property taxes are high.

“One of the big reasons for homeownership is the ability to deduct property taxes,” said Coldwell Banker Realtor Kevin Cascone, who’s based in Westfield, New Jersey. “If that’s eliminated, what’s the difference between renting and buying?”

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Posted by on May 18, 2017 in Jim's Take on the Market, Local Government, Market Conditions | 3 comments

NSDCC Months of Inventory

Market conditions are favorable throughout the NSDCC.  Here are stats on the individual areas:

Area
Zip Code
ACT
PEND
SOLDS – April
Months of Inv. (A/S)
Cardiff
92007
19
11
9
2.1
Carlsbad NW
92008
38
37
18
2.1
Carlsbad SE
92009
75
78
52
1.4
Carlsbad NE
92010
15
33
11
1.4
Carlsbad SW
92011
27
25
26
1.0
Del Mar
92014
69
19
15
4.6
Encinitas
92024
95
56
40
2.4
La Jolla
92037
180
44
29
6.2
RSF
67+91
246
49
27
9.1
Solana Bch
92075
24
16
12
2.0
Carmel Vly
92130
85
82
30
2.8
All Above
All
873
450
269
3.25

It used to be that 6 months of inventory was considered normal. Can we say the new normal is more like 3.0?  Areas that are performing very well are 2.0?  Those on fire are 1.0?

Posted by on May 16, 2017 in Frenzy, Jim's Take on the Market, Market Conditions, North County Coastal | 0 comments

60% Looking to Downsize

I don’t know about the relevance of the others above, but the 60.6% of Americans looking to downsize is a nice idea – and probably where the conversation about market conditions begins.

Does anyone HAVE to downsize?

Not really – the worst cases are the seniors in a two-story home who can no longer handle the stairs, but they can always install an elevator or camp out permanently in the living room.

I think we are going to have a limited supply of homes for sale until those thinking of downsizing really NEED to move.  If they are flush, they will most likely stay put.

It will be those who need to tap their equity to stay alive that will finally cut loose of the long-time family homestead, and leave town.

This might be where the virtual-reality headsets could pay off.  Downsizers could take a convenient virtual tour of all the cheaper areas around the Southwest to see if anything is tempting!

Posted by on May 9, 2017 in Boomers, Jim's Take on the Market, Market Conditions | 1 comment

NSDCC Inventory, First Third of Year

So our NSDCC market is cooking….is the amount of inventory to blame?

One-third of 2017 is complete – let’s compare it to recent years:

New Listings Between January-April

Year
New Listings, Jan – Apr
New Listings in April only
2013
1,822
534
2014
1,746
511
2015
1,747
471
2016
1,906
512
2017
1,695
456

Prices are at all-time highs, and FEWER people want to sell??

How can you explain it?  What is different now?

Is it His Orangeness?  The change in president is a notable difference between 2017 and the previous years, but there hasn’t been any specific orders directed at the real estate business, and mortgage rates have stayed about the same.  He could be causing more people to hunker down, but you would think that people would be just as likely to flee!

Potential home sellers know by now what’s in store with Trump.  Not much, if anything, will get done that impacts the real estate selling business.

So what is it?  Why aren’t more people selling at these prices?

It’s because they have nowhere to go that is any better.  The baby-boomers who own most of the coastal real estate have successfully bought one or more personal residences to get to this one, and it will do – it is their trophy property.  Selling a rental property via a 1031 exchange just to avoid taxation isn’t worth the hassle – and how do you do any better than NSDCC?

There are approximately 300,000 people in our market, hopefully we will have at least 1,600 houses to sell during the first four months of every year.

It is the 10% to 20% on the fringe that make the difference.

Some years there are a few extra people who decide to list their house. In 2016 we had 7% more houses listed than the 5-year average. A surge like that can result in more sales, or cause buyers to wait-and-see – it depends on price.

Baby boomers are young enough that they can still manage to live in their long-time residences, but this really should be the peak of the low-inventory era.  Don’t we have to see more boomer-owned properties coming to market as they shuffle off to the retirement home, or the Big McMansion in the sky?

Keep an eye on the fringe – the extra 10% to 20% surges in inventory is where we will see a notable change first!  Until then, expect more of the same!

Posted by on May 8, 2017 in Inventory, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 3 comments

San Diego HUD Low-Income

The rich, and everyone else. Thanks daytrip:

http://www.ocregister.com/2017/05/03/84000-a-year-now-qualifies-as-low-income-in-high-cost-orange-county/

A family of four with an annual income of $84,450 or less now qualifies as low income in Orange County.  A single person living alone qualifies as low income if he or she earns $58,450 or less a year.

Orange County has the fifth-highest income threshold in the nation, according to new income limits released last month by the U.S. Department of Housing and Urban Development.

Government and private agencies use HUD’s income calculations to determine eligibility for a wide variety of assistance programs, ranging from rent subsidy vouchers and public housing to mortgage assistance. While low-income families qualify for some programs, others are limited to households earning far less, with limits as low as $31,300 for a family of four.

Record-high rents and home prices are driving up Southern California income limits. Orange County apartment rents, for example, increased 20 percent over the past seven years, while the median sale price of an Orange County house has jumped 40 percent.

“When you tell somebody that’s making $70,000 that they’re low income, they go, ‘What? That’s low income?’ Unfortunately, that’s what comes from living in a high-cost county,” said Cesar Covarrubias, executive director of the Kennedy Commission, an Irvine-based affordable housing advocacy group. “That makes it difficult for working families at all levels.”

Even a six-figure salary doesn’t cut the mustard in San Francisco, Marin and San Mateo counties. A family of four there earning $105,350 or less now is considered low income, HUD figures show.

Orange County income limits for a family of four exceed Philadelphia’s ($66,550), Seattle’s ($72,000), Los Angeles County’s ($72,100), San Diego’s ($72,750) and Boston’s ($78,150).

Posted by on May 4, 2017 in Jim's Take on the Market, Market Conditions | 2 comments

Pending-Sales Index Down in SD

Something price could fix…..

California pending home sales downshift for third straight month in March

LOS ANGELES – Even with a strong performance in March closed escrow sales, a shortage of available homes and robust price growth that’s eating away at affordability stifled pending home sales for the third straight month, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Following seasonal factors, REALTORS® responding to C.A.R.’s March Market Pulse Survey saw elevated market activity, with an increase in floor calls, presentations, and open house traffic for the third month in a row.

Pending home sales data:

• Based on signed contracts, statewide pending home sales decreased for the third straight month in March on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 4.5 percent from 112.5 in March 2016 to 107.4 in March 2017. On a monthly basis, California pending home sales dipped 2.9 percent from the February index of 110.6.

• March’s pending sales decline is the greatest so far this year, portending sales activity in the usually busy spring homebuying season will be dampened, primarily due to demand outstripping the supply of active listings, which was 12 percent lower than in March a year ago.

• At the regional level, Southern California remains the bright spot in the state, which led both in closed escrow sales in March and the smallest decrease (-1.3 percent) in March non-seasonally adjusted pending sales. In fact, Los Angeles and Riverside counties were the only two areas of Southern California that saw an increase in pending sales from a year ago, at 1.6 percent and 3.1 percent, respectively. Pending sales fell 3.6 percent from March 2016 in Orange County, 5.6 percent in San Diego County, and 8.0 percent in San Bernardino County.

http://www.car.org/aboutus/mediacenter/newsreleases/2017releases/mar2017pendingsales

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Posted by on Apr 29, 2017 in Jim's Take on the Market, Market Conditions, Sales and Price Check | 21 comments

Seattle!

Yesterday it was Seattle that had the highest increase in their Case-Shiller Index, rising 12.2% Y-o-Y.  You know that frenzy fever is high when the quotes barely make sense:

LINK

Andrea Conway’s home selling story has become the norm for Seattleites. She bought her Ballard home for a little under $500,000 around Easter 2014 and just sold it for more than $750,000

From the time they listed to the time they sold, the Conways, who are moving to California, had multiple offers and closed within a week. Realtors say that is very common right now for Seattle sellers. The buyers paid in all cash.

“Sellers are putting houses on the market, and it’s just normal for things to sell above list price and in some cases well above list price,” John L. Scott Realtor Carl Shaw said. “In a lot of cases, you’re seeing anywhere from four-to-eight, up to 15 or 20 offers on houses.”

The Conways say they may move back to Seattle in a few years, but right now they have decided to leave the city.

“We love it. We love the Seattle vibe, but the real estate market is so hot right now that we’re not comfortable, and we really can’t afford to put our money in this market right now,” Conway said.

She has this advice for buyers.

“Be prepared to spend considerably more than the asking price, especially if it’s in one of the hot neighborhoods like Ballard, or Fremont, or Wallingford, or West Seattle,” Conway said.

Shaw told us that buyers should be prepared to have as much cash ready as possible or have complete loan approvals.

Shaw has been doing this for 28 years and says the only other time when he saw this hot of a job and housing market was in 2006.

“In that market (2006) we had a ton of inventory, we had builders with a ton of inventory, and the difference now is that we have really strong job growth and next to no inventory,” Shaw added.

Next to no inventory is a tough reality for buyers, but for the Conways it is a blessing.

“We’re thankful, and we’ll see what the next adventure holds for us,” Conway said with a smile.

Posted by on Apr 26, 2017 in Frenzy, Jim's Take on the Market, Market Conditions | 10 comments

Burbank!

http://www.cnbc.com/2017/04/24/spring-housing-strongest-sellers-market-ever.html

Spring homebuyers are pounding the pavement at a furious pace, but the pickings are getting ever slimmer.

Even as more homes come on the market for this traditionally popular sales season, they’re flying off fast, with bidding wars par for the course. Home prices have now surpassed their last peak, and at the entry level, where demand is highest, sellers are firmly in the driver’s seat.

“I’ve been selling real estate for 25 years and this is the strongest seller’s market I have ever seen in my entire real estate career,” said David Fogg, a real estate agent with Keller Williams in Burbank, California. “A lot of our sellers are optimistically pricing their homes in today’s market, and I have to say in most cases we’re getting the home sold anyway.

Fogg listed a three-bedroom, two-bathroom, 1,240-square-foot home in Burbank for $789,000 and had three offers before the first open house Sunday. In the Los Angeles-area market, that is considered an entry-level home. The open house drew more than 100 potential buyers, most of them already weary of the competition.

“It’s very tough. Most of the listings are intentionally listed a little low to get a lot of attention, and it’s not uncommon to get 12 to 16 offers on one property,” said Jilbert Mosessian, who has been renting in the neighborhood but wants to buy. “In three properties recently, we did our best, we went considerably over the listing price, and we were told that there were still five people above us and they were only going to deal with them.”

Mosessian said he will have to try another neighborhood and cut his expectations.

Posted by on Apr 24, 2017 in Frenzy, Jim's Take on the Market, Market Conditions | 1 comment