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The National Housing Market Made A Strong Rebound In 2012, And That Positive Trend Is Expected To Continue In The New Year.
What To Expect In 2013?
Although interest rates have been at historic lows, they have not been the driving force behind this recovery. There’s no single factor driving this market; it’s been a combination of low prices, low inventory, improving consumer confidence and a huge pent-up-demand. That was true throughout 2012 and will continue to be true in 2013. Many consumers now understand what real estate professionals have known for the last year, a number of related factors have combined to create a favorable opportunity for homebuyers and investors to purchase residential properties. The 2013 situation is so unique that those of us who’ve worked in real estate for many years have never seen opportunities like this.
Top 10 Real Estate Predictions For The National Real Estate Market In 2013 Are:
- More homebuyers and sellers come back to the market.
- Home sales will rise by 6-7% and prices rise by 3-4%.
- The inventory of homes for sale will hit a bottom.
- Higher priced homes begin to sell.
- Distressed property numbers continue to fall.
- Shadow inventory continues to fall.
- The number of short sale closings will rise to a peak.
- Record low mortgage rates rise slightly by year-end.
- Lending remains tight.
- Home affordability remains the best in years.
2013 Could Be The Best Year In Real Estate In Many Years
Recovery is fragile and still faces some obstacles. Tight lending, government regulation and the overall economy still have the potential to negatively impact housing. If housing can stay on the road to recovery, it’s possible that it can pull the rest of the economy along with it. We are advocates for the home buying and selling consumer, and real estate professionals. We support reforms aimed at helping troubled homeowners avoid foreclosure and streamlining the short sale process. We need a continuation of mortgage interest deductions, an extension of the Debt Relief Act and more reasonable regulations on mortgage lending
The Fiscal Cliff Agreement left the deductions mostly intact andextended the Debt Relief Act until the end of 2013.
A summary of surveys conducted by national homebuilder PulteGroup, Inc. shows that people are putting family first when making plans for their next move. Whether it’s planning for more children or anticipating relatives to move in, the 2012 survey results reveal that the economy is no match for family priorities.
PulteGroup conducted four surveys in 2012 and focused on myriad topics from retirement to first-time home buyers. The results revealed a variety of trends, highlighting consumer confidence in the economy and housing market:
- More than 60 percent of still-working baby boomers plan to retire in less than 10 years and aren’t delaying retirement plans. Nearly three-quarters say they are financially prepared to retire in 10 years or less.
- Sixty-one percent of renters plan to buy a home within the next two years.
- Top reasons renters have increased their interest in buying a home: They like being able to call themselves homeowners (49 percent) and they view it as a good financial investment (44 percent).
- Renters are buying homes with more space for family/kids (36 percent) while current homeowners ages 18 – 34 want a larger home for their growing families (68 percent).
The surveys also show the importance of family across all generations, and some significant changes in family dynamics that often influence their next new home plans:
- Home buyers do not want to sacrifice family when buying a new home. Only 21 percent of homeowners said moving away from their family would be a trade-off to get their “dream” home.
- Twice as many households as today expect to eventually share their home with their adult children or aging parents. Thirty-one percent anticipate at least one adult child moving back home; and 32 percent anticipate an aging parent living with them.
- Family bonding was cited as the top reason for having adult children move back home (46 percent) and for aging parents (48 percent) to move in.
- Eighty-four percent of homeowners plan for their next home to be the same size or larger.
- About 62 percent of baby boomers want their home in retirement to be within the same state they currently live. This represents a 20 percent increase compared with two years prior.
- Thirty-two percent of Baby Boomers want to live within 20 miles of their children/grandchildren upon retirement.
Mortgage Forgiveness Debt Relief extended
Late Tuesday night, Congress reached a settlement in the “fiscal cliff” negotiations. As a result, the Mortgage Forgiveness Debt Relief Act has been extended for another year. The measure will continue to exempt from taxation mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification (including any principal reduction), or foreclosure.
C.A.R. would like to thank the 26,296 California REALTORS® who sent messages to their members of Congress and made 1,862 calls in response to C.A.R.’s Call-for-Action.
Also under the agreement, so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. The thresholds have been increased and are indexed for inflation so will rise over time. Under the formula, filers gradually lose the value of their total itemized deductions up to a total of a 20 percent reduction.
The reinstitution of these limits has far less impact on the mortgage interest deduction (MID) than a hard dollar deduction cap, percentage deduction cap, or reduction of the amount of MID that can be claimed.
Capital gains rates on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 for married couples.
C.A.R. will continue to provide updates as they become available.
Jasleen Nelson, DRE 00954348
Direct: (619) 415-3611
Toll Free: (877) 769-7373
Fear and uncertainty filled Daniella Baca after she learned that her landlord was facing foreclosure. Those feelings peaked the day the home was sold, when the single mother of two received what seemed like an official letter offering help and then a warning in capital letters: “If you do nothing, you are risking an eviction within 15 to 30 days.”
“It was scary, especially when I saw the (foreclosure) summons even though my name wasn’t on it,” said Baca, 42.
Baca is among the many renters in San Diego County and other areas hit hard by foreclosures who have been targeted with similar panic-inducing fliers. Former homeowners of foreclosures get them, too. What’s more concerning than the doom-and-gloom messages is the erroneous information in the ads, said Steven Kellman, who deals with such issues often at San Diego’s Tenants Legal Center, which he founded. (Kellman also is a member of the U-T San Diego’s Rental Roundtable.)
“They’re filled with misinterpretation,” said Kellman, who said the fliers started popping up about two years ago.
So what are the rights of renters and homeowners living in properties that have been freshly foreclosed upon?
Here are five myths busted:
Myth: The eviction process, also known as unlawful detainer, begins immediately after the foreclosure property has been sold or will be sold at auction.
Fact: Unlawful detainer doesn’t start until your move-out notice expires, Kellman said. If you’re a renter, you’re entitled to at least 90 days in the home or the remainder of your lease, as long as your lease is deemed bona fide as defined by federal law. If you’re the former owner of the home, then you’re entitled to a three-day notice after the foreclosure sale.
Myth: If you pay a company for its post-foreclosure services, they can guarantee you can stay in the home for up to five to nine months.
Fact: There’s nothing in the California law that says that. Again, if you’re a renter, you get a minimum of 90 days, or the remaining time on your lease. It’s three days if you’re the former homeowner.
Myth: You don’t have to pay any rent after a home has been foreclosed upon.
Fact: Neither state nor federal law specifically allow you to stay in a foreclosure property rent-free. But there are banks who are willing to strike deals with homeowners and renters. If you stay in the home for the duration of what’s left on your lease, then the bank steps in as the landlord, and you may have to pay the bank the lease rent. The bank may offer you “cash for keys” to pay you to move, but “one must tread carefully,” Kellman said. “These are filled with conditions.”
Myth: Homeowners and renters who get post-foreclosure solicitations should act on them immediately and start legal processes.
Fact: You should wait until the new owner of the foreclosure contacts you or serves you with papers, Kellman said.
Myth: Any company that produces post-foreclosure paperwork that looks official is licensed to practice law.
Fact: A lot of these companies who say they can negotiate a deal for you with the banks do not have law licenses. How can you find out for sure? The State Bar of California has an attorney look-up site. Does the company claim to be a real estate office? You can look that up as well, at the Department of Real Estate site.
Please note: Giving legal advice, preparing legal papers or responding to legal papers should only be done by an attorney who is licensed to practice law and is experienced on matters relating to foreclosures.
Frank Washburn, whose Chula Vista home was foreclosed upon, never saw the red flags. He admits to being duped by one of these post-foreclosure solicitors. His failure to do his homework, he said, cost him $2,500.
Washburn, 45, remembers a man approaching him at his former home to guarantee him more time at his property until he found another place. After Washburn made an initial payment, he was taken to an office to meet a legal assistant. In total, Washburn paid $2,500 to the initial company but was never given any services. His home was foreclosed upon in August. “They play off your hope,” said Washburn, who did not report the incident to any agencies. “You’re wishing for the best.”
Eventually, Washburn found help with the Tenants Legal Center, a company that helped him strike a deal with the bank. The options were stay in the home another 30 days, which gave Washburn no money, or move out within a week and get $1,000. Washburn, who chose the latter, paid the legal center $1,500 for its services.
So, are post-foreclosure solicitors illegal?
That depends on a number of factors, said Kellman, of the Tenants Legal Center in San Diego.
Such companies are illegal if they’re not registered as a business. One way to verify that is by searching the county’s fictitious business name database. It’s also illegal for companies to offer legal services when they’re not licensed to do so. The same goes for real estate offices that are not registered with the Department of Real Estate. To file a complaint against a company, you can try the Better Business Bureau.
Other options include emailing the San Diego County District Attorney’s Office at REForm@sdcda.org, or calling the San Diego City Attorney’s office at (619) 533-5600.
The Answer To This Is:……….”Buy”.
Mortgage Interest Rates Are At An All-Time Low.
2012 Will Be The Last Year That You May Be Able To Short Sale Your Home, And Have Your Debt Forgiven
After 2012, You Will Owe Your Lender The Deficient Balance Of The Short Sale
Your Lender Will Issue A 1099 For The Deficient Balance
If You Are A Distressed Homeowner, Please Contact Me As Soon As Possible
Let’s Get Your Home Sold Today So You Can Still Have Your Debt Forgiven
Buying a Home Today: Rates, Prices, and Loans
Rarely has housing affordability in California been as high as it is now. The statewide median home price in California is at 2001-2002 levels and mortgage rates hit their lowest level ever in 2011. Yet, the media reports that households are having trouble obtaining loans and the share of first-time buyers in the market is much lower than expected, given such low prices and rates. Which begs the question, is this measure of housing affordability accurate?
Homes Are Very Affordable Now
C.A.R.’s Housing Affordability Index (HAI) has been around since the 1980s, and was intended to be a predictive measure of housing, showing households’ ability to purchase a home at the prevailing market prices, rates, and incomes. The HAI assumes a 20 percent down payment, the median price for a geographic area (e.g. $292,120 for California’s 3rd quarter of this year), and the corresponding monthly payment for principal, interest, taxes and insurance should account for no more than 30 percent of a household’s income.
The latest index reading was 52 for the 3rd quarter, meaning that 52 percent of California households have sufficiently high incomes to afford the median priced home. The HAI is up from all of 2011 when it hovered just above 50, just shy of the historic high of 55 hit in 2009. The current HAI translates into 52 percent of households are able to purchase the median priced home given the underlying assumptions of price, rates, and income. And in the nation, where and for all of 2011 it hovered just above 50, registering close to the historic high of 55 reached in 2009.
Provided You Can Get The Loan
Although this metric shows that affordability may be near record highs, it does not account for underwriting standards implemented by lenders and banks. Today, there are extremely tough standards being placed on mortgage applicants by lending institutions. According to research from the National Association of REALTORS ®, credit scores for approved loans in the last few years have been about 40 points higher than normal. This is hindering the ability for many households, especially first-time buyers, to take advantage of the great affordability of housing at this time. In similar regard, the HAI did not account for the extremely lax lending standards that were the norm for most of 2000s decade, which consequently led to record low affordability at a time when home sales were through the roof. The recent lending environment is overriding the predictive value of the HAI, making it a less dependable indicator as it once was. Although it may be less reflective of current market conditions, the HAI does give a historical perspective and shows how California real estate is relatively cheap investment right now.
For those who can qualify, there is a rare opportunity to capitalize on the discounted price levels and historically low mortgage rates over the next few months. Call me today to see if you qualify!
This Market Snapshot is provided by California Association of REALTORS ®
You can trust my two decades of experience selling homes in San Diego County. My local reputation coupled with my extensive understanding of the real estate market will help you get your home sold quickly at the highest possible price, call me today!