The legislation preserves the deductions for mortgage interest and charitable giving, though it lowers the cap on the mortgage deduction from $1 million to $750,000.
Seeking to win over House Republicans from high-tax states, the conference committee legislation caps the state and local tax deduction at $10,000, with filers allowed to deduct property taxes and state and local income and sales taxes.
Those aren’t quite as generous as before, but a happy compromise.
What about the change from owning your home for two out of the last five years to get up to $500,000 tax-free profits? Both the House and the Senate wanted to change the time period to owning five out of the last eight years.
I’m not a lawyer, and could be a little woozy after scrolling 600+ pages, but I think they threw it out altogether! Before I get too excited, can an attorney tell us that ‘No provision’ means nothing was included in the final bill?
If the two-out-of-five-years is still the law, then the realtor spokespeople better be running to the microphone to declare total victory, and assuring everyone that property values won’t be going down 5% to 15% now!
Addressing a real estate conference in flood-ravaged Houston this month, longtime investor Ray Sasser detailed his strategy: buy up to 50 flooded homes at deep discounts, then fix and flip them for a hefty profit.
Sasser first followed that game plan after Tropical Storm Allison flooded the city in 2001. He bought homes for 30 to 40 percent of their pre-storm value, spent another 15 percent on repairs, and sold many a year later – at full value.
The quick recovery surprised him, he said.
“This can’t be true,” he recalled thinking at the time.
The bet that home prices in hard-hit Houston neighborhoods will fully recover after Hurricane Harvey could be riskier, Sasser and local economists said. But a rush of investors eager to snap up flooded homes reflects broader confidence in the resilience of Houston’s unique metropolitan economy.
While the region’s unchecked development has come under fire for exacerbating flooding, it also reflects its core strength: A rare combination of rich job opportunities and low cost of living, driving explosive population growth in America’s energy capital.
The surging demand has sustained home prices through four major floods since 2001 and a historic oil price crash starting in 2014. Though Harvey caused far more damage than previous storms, investors such as Sasser see plenty of opportunity in the region’s estimated 268,000 flooded homes.
Tara Waggoner, the Houston market manager for brokerage and online listings firm Redfin, said the firm’s local agents were getting about four times the number of calls they usually get from investors. They ranged from individuals looking to buy one flooded house to groups of ten or more pooling their money for a home-buying spree, she said.
“You have people with millions of dollars to work with,” she said in an interview days after the storm. “They want to go in, pay cash, get the discount and fix it up to sell.”
Hat tip to Richard for sending this in…..how much more can buyers take?
A house in Sunnyvale just sold for close to $800,000 over its listing price.
Your eyes do not deceive you: The four-bed, two-bath house — less than 2,000 square feet — listed for $1,688,000 and sold for $2,470,000.
“I think it’s the most anything has ever gone for over asking in Sunnyvale — a record for Sunnyvale,” said Dave Clark, the Keller Williams agent who represented the sellers in the deal. “We anticipated it would go for $2 million, or over $2 million. But we had no idea it would ever go for what it went for.”
This kind of over-bidding is known to happen farther north in cities including Palo Alto, Los Altos and Mountain View. But as those places have grown far too expensive for most buyers, future homeowners have migrated south to Sunnyvale, a once modest community that now finds itself among the Bay Area’s real estate hot spots.
Close to tech employment centers, it makes for a convenient commute — and prices there, too, are now pushing the limits of middle-class buyers. The house that sold for $782,000 over asking in Sunnyvale — it’s on Prunelle Court — is about a mile from Apple’s new spaceship campus.
The buyers, who work in tech, had been hunting for a home for a while — but kept getting out-bid, said Mini Kalkat, the Intero agent who represented them: “They lost two before they bid on this one, so we kind of knew what the numbers would be. It’s a crazy market, but there’s a way to maneuver the market.”
The property is one of more than 50 South Bay homes that sold in the last month for at least $200,000 above the listing price. More than half of those deals were made in Sunnyvale. Others were made in Cupertino, Saratoga and West San Jose, according to Alain Pinel agent Mark Wong. He compiles a monthly list of such “over-asking” transactions.
Over-asking sales are at least partly the result of agents’ sleight of hand. It’s become common strategy to list homes under their market value in order to entice Silicon Valley buyers; they are all too willing to fight over the few houses available in this chronically tight market.
We saw this happen in Bressi Ranch when Jenae and Company went on their 100% financing spree. Her victims weren’t deadbeats – instead, they had good credit scores and other assets, and they were just duped into the get-rich-quick scheme. When it didn’t pan out, they dumped everything.
The grim tale of America’s “subprime mortgage crisis” delivers one of those stinging moral slaps that Americans seem to favor in their histories. Poor people were reckless and stupid, banks got greedy. Layer in some Wall Street dark arts, and there you have it: a global financial crisis.
Dark arts notwithstanding, that’s not what really happened, though.
Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.
Analyzing a huge dataset of anonymous credit scores from Equifax, a credit reporting bureau, the economists—Stefania Albanesi of the University of Pittsburgh, the University of Geneva’s Giacomo De Giorgi, and Jaromir Nosal of Boston College—found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.
As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’tafter the 2007 housing collapse. The lowest quartile in the credit score distribution accounted for 70% of foreclosures during the boom years, falling to just 35% during the crisis.
So why were relatively wealthier folks borrowing so much?
Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But as a Federal Reserve Bank of New York report from 2011 reveals (pdf, p.26), an increasing share bought with the aim to “flip” the home a few months or years later for a tidy profit.
As the national drought in home supply dragged into its 21st straight month, competition among buyers drove prices up once again.
And the fiercest competition was in the Bay Area.
A new report from Redfin shows that 73.7 percent of homes sold above the listing price in the San Jose metropolitan area in June. That was the highest percentage in the nation, followed by the San Francisco metropolitan area (70.6 percent, second highest in the U.S.) and the Oakland metropolitan area (69.8 percent, third highest). They were followed by Seattle (62.3 percent) and Tacoma, Wash., (52.6 percent).
“Every record in market speed and competition that was set in May was broken again in June,” the report stated.
The Redfin report comes two days after the Mercury News reported on a rash of over-asking home sales in Sunnyvale and Cupertino. In the last month, more than 50 homes in those two cities sold for at least $200,000 over the asking price. One modest Cupertino house — 1,046 square feet — sold for $660,000 above its listing price.
According to Redfin, San Jose had the nation’s largest decrease in housing inventory, falling 42.2 percent in June from one year earlier. The second largest year-over-year contraction of the home supply was in Rochester, N.Y., where inventory fell 29.7 percent. The third largest shrinkage happened in San Francisco, where inventory fell 26.6 percent.
The onslaught of new-fangled ways to sell homes is getting bogged down in their own zeal – there are so many choices now, which way do you go? You have the sexy off-market package driven by celebrity realtors above, or the typical new-age mobile app at a discount below:
The widget that spends $100 million/year on advertising.
The scarcity of sales should drive more agents out of the business, and the those agents who remain will be increasingly focused on putting their own buyers and sellers together.
We have the listing agents who hold listings off-market in order to find their own buyer, but there are also agents who will do ‘sold before processing’ with an outside agent. This happens quite frequently.
If a listing agent isn’t going to round-trip the commission, and instead let a second agent represent the buyer – why wouldn’t you do what is best for your own client (the seller), and expose it to all agents via the MLS?
An old veteran agent told me that he hoped he would sell his new listing before MLS input, and he did – and an outside agent represented the buyer. The house had been vacant for years so there wasn’t an occupant who held up the showings – all he had to do was install a lockbox, take a few photos with his phone, and spend 15-30 minutes doing the MLS input.
He did input the listing onto the MLS after he found the buyer, so was it the installing of the lockbox and taking a few photos too much of a burden?
Why wouldn’t he do what is best for his seller?
He must either be flat out lazy, or he wanted everyone on the MLS to see that he was the latest to breach his fiduciary duty. It is like a badge of honor!
The realtor business is slowly eroding right before our eyes.
It’s one thing to offer above the list price, but would you waive all contingencies too?
I think a judge would be reluctant to have a buyer lose a deposit. Listing agents who might keep a deposit should do a pre-listing home inspection, and give a copy to anyone making an offer with no contingencies, just in case.
Homes are selling fast in Seattle, spending about 25 days on the market, down from 65 in March 2012. It can be hard to find parking at open houses and some are so crowded that it’s hard to move around to see the home.
Sellers are seeing some of the biggest price gains in almost a decade, and they know they’re in the driver’s seat.
“You put a house on the market you will have 100 people through the open house on the weekend and maybe 15-20 offers,” said Patti Hill, a real estate agent who has worked in the Seattle market for more than 17 years.
To win a home, buyers are putting in aggressive offers.
“Some of them are kind of scary because they’re waiving contingencies that puts earnest money in jeopardy if something happens,” said Hill. It’s common for Seattle buyers to waive inspections and appraisals and go above list price.
When Harris and his partner found their soon-to-be new home, they did everything they could to come up with the winning bid. They waived all contingencies, went above the asking price and had an escalation clause.
“Buyers are totally at the mercy of whatever the sellers wants,” he said. “If you want the house, you do whatever it takes.”
The pair also talked to the listing agent to find out about any special circumstances about the owner and incorporated that into a personalized letter and also offered a 30-day rent-back-to-owner for free.
Their winning bid was $425,000 — $60,000 over the asking price and above their original budget.
"I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in more "
"Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community... more "
by Ann Romanello
"Jim educated us, helped us find the perfect house, and then negotiated us a great deal. I would hate to be sitting across the negotiating table from ... more "
"Jim is thorough and will be brutally honest about the homes he shows you. He provides great service and follows through until the very end and even ... more "
"I highly recommend Jim as a buyer’s agent. Working with Jim, we closed this week on a San Diego condo. Jim prepared a list of comparable sales to ... more "