The Case-Shiller November index showed more negativity overall, to the delight of the mainstream media. Calls for the double dip will escalate, and soon the government will think they need to intervene. Hopefully they’ll keep their hands in their pockets, and not ours.
From the C-S press release:
“With these numbers more analysts will be calling for a double-dip in home prices. Let’s take a moment to define a double-dip as seeing the 10- and 20-City Composites set new post-peak lows. The series are now only 4.8% and 3.3% above their April 2009 lows, suggesting that a double-dip could be confirmed before Spring. Certainly eight cities setting new lows, and with the only positive news concentrated in southern California and Washington DC, the data point to weakness in home prices,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “With an annual growth rate of +3.5% in November, Washington DC was the strongest market, but still well below the +7.7% annual rate of growth seen in May 2010. The only city with a gain in November was San Diego, up a scant 0.1%. While San Diego, Los Angeles and San Francisco are still ahead from November 2009, their annual rates are shrinking in recent months.
Here is the San Diego Case-Shiller Index history:
The idea of lower pricing will cause more people to consider looking to buy a home, but what will they think when they see over-priced turkeys (OPTs) everywhere they go? What will home-lookers do when they realize the disconnect between media reports, and the reality on the street? Commit to spending inordinate amounts of time and energy searching for the needle in the haystack, or give up?
When they can buying anything else they need within minutes, it’s hard to imagine them devoting the time to dig for the deals. But will they just pay the price?
Four out of five sales around North SD County Coastal last month were non-distressed. Life goes on for the Big Three; death, divorce, and job transfer:
There is more hub-bub at cnbc about December being full of distressed sales.
NAR had reported that 36% of December sales nationally were REOs and short sales, and the new report from Campbell Surveys said 47%.
How about North San Diego County Coastal?
December Detached Sales and Price-per-SF:
Type
2009
2010
REO
25/$295
18/$320
SS
17/$267
19/$315
Reg.
197/$428
167/$400
Totals
239/$403
204/$385
No change year-over-year in NSDCC – an identical 18% of December sales were distressed.
Overall, the YOY sales were down 15%, and pricing down 4%, but when you look around, or talk to some of these listing agents, you’d think it was 2005 all over again!
Both Centex and Davidson built 4,337 sf floor plans in the LCO, some on the same street – which is an odd coincidence. Here is one of the Centex versions:
Cramer got fired up about the national spike in December sales, but locally the sales were slightly cooler last month than in 2009. Let’s note than in 2009 there was a tax credit in play, but for the higher-end communities I don’t think it had much impact.
Most of Carlsbad, Encinitas, Rancho Bernardo, RP, Carmel Valley, and Scripps Ranch’s numbers look fairly steady, and Rancho Santa Fe was the most interesting. Check the 3-year December trend for your area below:
According to new estimates compiled by the nonpartisan Joint Committee on Taxation — Congress’ top technical resource on all tax law matters — the mortgage interest deduction is not quite as big a hole in the federal budget as previously estimated.
In fact, it’s significantly lower — $88 billion less in revenue losses are now projected over the next three fiscal years — than the committee estimated early in 2010. That’s big money, even in an era of trillion-dollar deficits. Why the sudden reappraisal of the revenue losses caused by millions of homeowners writing off their mortgage interest?
For starters, there’s less mortgage interest being written off than earlier statistical models had anticipated. Home values are down in many parts of the country, and lower purchase prices and far stricter underwriting mean smaller mortgage amounts. Interest rates have hit half-century record lows, and have remained at or near those floors for much longer than anyone had estimated.
Thirty-year mortgages at 4.5% obviously require much less in monthly interest payments than do similar loans at 5.5% and 6%. Millions of homeowners who had been paying even higher rates than that have refinanced in the last year — the combined effect of which has been to reduce the estimated amounts of interest being written off now and for the next couple of years at least.
For example, the tax committee last January predicted that mortgage interest deduction losses to tax revenues for fiscal 2011 would total close to $120 billion. Now the estimate is $93.8 billion.
These are brain-bending big numbers, but the fact is this: It appears that the revenue-loss costs of this jumbo-sized tax benefit for homeowners will be less than anyone expected. In the politically sensitive world of federal budget deficit reform, every lower loss is a better loss — and one that presumably needs less reform.
The committee’s new projections have also turned up some other intriguing and previously unreported facts about key tax benefits for buyers and owners. For example, although the popular first-time home buyer tax credit programs of 2008 and 2009 that stimulated millions of purchases were net revenue drains for the government during fiscal 2010, they are morphing into revenue-raisers — to the tune of $6.5 billion from 2011 through 2013.
There are two factors at work: The first credit, enacted as part of the 2008 emergency economic stimulus legislation, was for a maximum $7,500 or 10% of the house price. But it was more of an interest-free loan than a typical credit. Under the terms of the program, buyers are required to make annual repayment installments of 62/3% of the credit they claimed over the next 15 years — and they’re beginning to do so.
But it’s not just those 2008 buyers who will be paying higher taxes. The two subsequent home buyer credit programs enacted by Congress — $8,000 for first-time purchasers and $6,500 for repeat buyers — did not require repayments. But both programs came with strict rules that experts believe will add to revenue collected by the Internal Revenue Service during the years 2011 through 2013.
For instance, Congress required that credits claimed under the $8,000 and $6,500 legislation be repaid if the owners do not continually use their house as a principal residence for 36 months after the purchase. Say you took the $8,000 credit on your 2009 federal tax filing, but then decided to sell the house or turn it into a rental investment in 2011. You owe the government $8,000 the day you make that move — and the IRS says it has increasingly sophisticated audit programs to detect such transactions and to sniff out frauds and other rule violations requiring paybacks and even penalties.
Bottom line, by the committee’s estimates: Homeowner tax benefits will still represent large contributors to the federal deficit. But for a variety of reasons, those costs should be smaller — and, in theory, slightly less vulnerable to attack — for the years immediately ahead.