On this date in history...
Great fire of London occurred in 1666.
1st US lighthouse was built in Boston in 1716.
Women's Right's Convention met in NYC in 1853.
Carnation processed its 1st can of evaporated milk in 1899.
William McKinley, the 25th US President was shot by anarchist Leon Czolgosz at the New York Buffalo Pan-American Exposition in New York in 1901. He died 8 days later on September 14th.
The Harlem Globetrotters were organized 1927.
All Jews over the age of 6 in German territories ordered to wear a star in 1941.
WINS NYC began playing rock n roll with Alan Freed Show in 1954.
Mortgages & Closings
The Federal Reserve issued its economic update yesterday. It reported that credit problems in the U.S. have impacted housing, but haven’t hurt the general economy. I don't see how this can be so. Now, granted, the only reason that I can see for them to report this is because they are not wishing to reduce the rate again at the Sept. 18th meeting as many have anticipated.
Additionally, look at all the layoffs in the mortgage industry. Just yesterday & today, there were over 3000 layoffs announced and this doesn't include all of the previous ones mentioned, including the firms that have either closed or been disbanned. Add on top of that all of the mortgage brokers out there that are either being laid off and can't even procur a loan for a client.
A mortgage broker that I deal with has said to me that loan programs are being eliminated daily. Additionally, it was noted in an AP news story that a third of home loans failed to close in August. According to the article it was noted that three years ago only 4% of loans failed to close.
By the way, this information was obtained from a survey of 1700 mortgage brokers. "The survey also found that nearly half of borrowers with adjustable rate mortgages were not able to refinance their loans." It was also noted that 2.5 million ARM mortgages are set to adjust to higher rates this year and a great deal of these loans will most likely be foreclosed on.
On another note, even though the house & senate want to try to ease the present crisis, there does not appear to be any agreeement on how to do this. You may have also read about banking regulators and The Fed urging loan service companies to work with defaulting borrowers, but these are only suggestions and nothing is mandatory.
So, yes, they say that the mortgage and housing debacle are not making an impact on the general economy. Maybe this is so from the current statistics that they are utilizing, but wait until the next ones are recorded. This has stretched way beyond just the industry itself. It is affecting people across the board.
There was an article in yesterday's USA Today about the majority of calls to company helplines are about finances and foreclosure. Also, it was stated that how this will definitely affect productivity, etc. So, let's get realistic. This is a widespread epidemic of sorts.
Til next time...Marc It Sold!
Showing posts with label interest. Show all posts
Showing posts with label interest. Show all posts
Thursday, September 6, 2007
Tuesday, September 4, 2007
Mortgages - Imagine That!!
On this date in history...
English astronomer Edmund Halley sees his namesake comet in 1682.
Robert Fulton began operating his steamboat in 1807.
General Robert E. Lee invaded the North with 50,000 Confederate troops in 1862.
George Eastman patented thefirst roll-film camera and registered the name "Kodak" in 1888.
1st transcontinental TV broadcast by President Harry S. Truman addressing the opening of Japanese Peace Treaty Conference in 1951.
Mark Spitz became the first athlete to win seven Olympic gold medals in the 1972 Summer Olympics in Munich, Germany.
Palestinians hijack KLM DC-9 to Cyprus in 1976.
Today is Newpaper Carrier Day - Barney Flaherty became the 1st newsboy (10 years old for the NY Sun) in 1933.
Mortgages
There are definitely mortgages to be had out there and some very good ones at that. You just won't be able to find the easy no documentation, low down payment & stated income mortgages of the past.
The reasoning is quite obvious. Goodness knows we've heard the news. And this is all understandably so. People need to properly qualify for mortgages. This is a major part of the breakdown of the mortgage industry. In the recent past, people with borderline credit were afforded mortgages. Some of these were low down payments; some ARM's in which they were only able to qualify at the initial rate not the fully indexed rate. This should have been common sense all along, but 20/20 hindsight does not prove anything. Hopefully, the lesson will be learned from this and we will not see a repeat of such.
Don't get me wrong, I am all for helping someone achieve homeownership. I consider that the crux of my job. I get such a thrill out of helping people achieve this goal - the supposed American Dream. But I can not in all good consciousness afford someone this fully knowing that they will probably have an issue repaying this debt and putting them in a position of possibly losing their investment, savings & home. The thought of that is abhorrent to me.
But there are some very good loan products out there. Yes, most of these are for people with good credit. But then this might be a wake up call for someone with marginal credit to try to work on improving that. This can be done, but let me warn you about credit counseling services. Firstly, the use of these usually ruins your credit to begin with. Secondly, what they are doing, you should be able to do yourself.
It's called discipline.
Til next time...Marc It Sold!
English astronomer Edmund Halley sees his namesake comet in 1682.
Robert Fulton began operating his steamboat in 1807.
General Robert E. Lee invaded the North with 50,000 Confederate troops in 1862.
George Eastman patented thefirst roll-film camera and registered the name "Kodak" in 1888.
1st transcontinental TV broadcast by President Harry S. Truman addressing the opening of Japanese Peace Treaty Conference in 1951.
Mark Spitz became the first athlete to win seven Olympic gold medals in the 1972 Summer Olympics in Munich, Germany.
Palestinians hijack KLM DC-9 to Cyprus in 1976.
Today is Newpaper Carrier Day - Barney Flaherty became the 1st newsboy (10 years old for the NY Sun) in 1933.
Mortgages
There are definitely mortgages to be had out there and some very good ones at that. You just won't be able to find the easy no documentation, low down payment & stated income mortgages of the past.
The reasoning is quite obvious. Goodness knows we've heard the news. And this is all understandably so. People need to properly qualify for mortgages. This is a major part of the breakdown of the mortgage industry. In the recent past, people with borderline credit were afforded mortgages. Some of these were low down payments; some ARM's in which they were only able to qualify at the initial rate not the fully indexed rate. This should have been common sense all along, but 20/20 hindsight does not prove anything. Hopefully, the lesson will be learned from this and we will not see a repeat of such.
Don't get me wrong, I am all for helping someone achieve homeownership. I consider that the crux of my job. I get such a thrill out of helping people achieve this goal - the supposed American Dream. But I can not in all good consciousness afford someone this fully knowing that they will probably have an issue repaying this debt and putting them in a position of possibly losing their investment, savings & home. The thought of that is abhorrent to me.
But there are some very good loan products out there. Yes, most of these are for people with good credit. But then this might be a wake up call for someone with marginal credit to try to work on improving that. This can be done, but let me warn you about credit counseling services. Firstly, the use of these usually ruins your credit to begin with. Secondly, what they are doing, you should be able to do yourself.
It's called discipline.
Til next time...Marc It Sold!
Saturday, September 1, 2007
The Mortgage Debacle, The Market & The Fallout!
Today on this date in history...
First federal tax was levied on tobacco in 1862.
Emma M. Nutt Day, she was the first woman telephone operator in 1878.
Labor Day was declared a U S national holiday by Congress in 1894.
World World II began when German troops invade Poland in 1939 at 5:30AM.
Lead in paint is declared illegal in 1977.
The Mortgage Debacle, The Market & The Fallout!
Several things have been in the news. Yesterday, I touched briefly on the possible expanded role of the FHA in helping people to be able to refinance before they lose their home to foreclosure. I think that this is a necessary step by the government to help people and especially our economy, but my concern comes down to part of the criteria.
To qualify, homeowners would have to prove they paid their loan on time before it reset to a higher rate and must have at least 3 percent equity in the home. That is fine and also the fact that Pres. Bush is asking Congress to raise the present loan limits. But part of the criteria for one of these loans is that to compensate for the added risk, the borrowers would have to pay higher premiums on the loans and also some of the closing costs. Right then and there you are going to eliminate a lot of people who might be in dire need of help. They are already tapped to the limit. If they can't afford their present loan, how might they afford one with a higher interest rate & possibly having to come up with some of the closing costs, nevermind 3% if they do not have enough equity.
I agree that help is needed, but have to be concerned about the repercussions of this. There was an article in USA today in which Peter Wallison of the American Enterprise Institute said, “If you’re going to help someone to refinance, you’re going to bail out the person who financed him in the first place.... This will only cause the problem to arise again.” Yes, this may be true and is a concern, but that all depends on how the government handles the whole situation.
Another major group of foreclosures is coming from the investor group. We've all heard about the investors trying to grab a piece of the pie/cake. Unfortunately, this cake didn't rise as anticipated. The numbers are quite large in comparison. Nevada leads the pack of investor defaults followed by Arizona, Florida & California. Yes, all four of these states have been in the news quite a bit due to the change in real estate market conditions. They all have had incredible growth, but with that growth also comes some fallout as we are seeing now.
It was recently noted that even though Florida has shown a year over year price decline of almost 1%; the overall 5 year stats show a price gain of over 95%. Granted, this bodes well for most of us. The people that are obviously being negatively affected at this point are the sellers, especially those who've purchased within the past two years; those with ARM's that are being adjusted to higher rated; those with 100% financing, which I've always tried to dissaude people from getting involved in; and, especially investors.
Now, there is another group of people that are feeling the brunt of all this, and that's renters. According to another article that I've recently read, rents are projected to rise about 4 percent this year and next. This is being affected on many levels. Many previous owners that are finding themselves in foreclosure are turning into renters again. Additionally, more renters are also renewing their leases because they can no longer qualify for mortgages.
The only good part of this, is that some landlords are renting for less than their present mortgage on their investment properties, basically looking to just cut their loses. These people are avoiding foreclosure by doing such and because they have the present ability to afford it as well.
Anyway, till next time...Marc It Sold!
First federal tax was levied on tobacco in 1862.
Emma M. Nutt Day, she was the first woman telephone operator in 1878.
Labor Day was declared a U S national holiday by Congress in 1894.
World World II began when German troops invade Poland in 1939 at 5:30AM.
Lead in paint is declared illegal in 1977.
The Mortgage Debacle, The Market & The Fallout!
Several things have been in the news. Yesterday, I touched briefly on the possible expanded role of the FHA in helping people to be able to refinance before they lose their home to foreclosure. I think that this is a necessary step by the government to help people and especially our economy, but my concern comes down to part of the criteria.
To qualify, homeowners would have to prove they paid their loan on time before it reset to a higher rate and must have at least 3 percent equity in the home. That is fine and also the fact that Pres. Bush is asking Congress to raise the present loan limits. But part of the criteria for one of these loans is that to compensate for the added risk, the borrowers would have to pay higher premiums on the loans and also some of the closing costs. Right then and there you are going to eliminate a lot of people who might be in dire need of help. They are already tapped to the limit. If they can't afford their present loan, how might they afford one with a higher interest rate & possibly having to come up with some of the closing costs, nevermind 3% if they do not have enough equity.
I agree that help is needed, but have to be concerned about the repercussions of this. There was an article in USA today in which Peter Wallison of the American Enterprise Institute said, “If you’re going to help someone to refinance, you’re going to bail out the person who financed him in the first place.... This will only cause the problem to arise again.” Yes, this may be true and is a concern, but that all depends on how the government handles the whole situation.
Another major group of foreclosures is coming from the investor group. We've all heard about the investors trying to grab a piece of the pie/cake. Unfortunately, this cake didn't rise as anticipated. The numbers are quite large in comparison. Nevada leads the pack of investor defaults followed by Arizona, Florida & California. Yes, all four of these states have been in the news quite a bit due to the change in real estate market conditions. They all have had incredible growth, but with that growth also comes some fallout as we are seeing now.
It was recently noted that even though Florida has shown a year over year price decline of almost 1%; the overall 5 year stats show a price gain of over 95%. Granted, this bodes well for most of us. The people that are obviously being negatively affected at this point are the sellers, especially those who've purchased within the past two years; those with ARM's that are being adjusted to higher rated; those with 100% financing, which I've always tried to dissaude people from getting involved in; and, especially investors.
Now, there is another group of people that are feeling the brunt of all this, and that's renters. According to another article that I've recently read, rents are projected to rise about 4 percent this year and next. This is being affected on many levels. Many previous owners that are finding themselves in foreclosure are turning into renters again. Additionally, more renters are also renewing their leases because they can no longer qualify for mortgages.
The only good part of this, is that some landlords are renting for less than their present mortgage on their investment properties, basically looking to just cut their loses. These people are avoiding foreclosure by doing such and because they have the present ability to afford it as well.
Anyway, till next time...Marc It Sold!
Friday, August 31, 2007
Mortgage & More!
Today in history....
US Naval Observatory was authorized by an act of Congress in 1842.
1st US men's single tennis championships 1881 in Newport, RI.
1st major earthquake recorded in eastern US, at Charleston SC, 110 die in 1886.
FDR signs an act prohibiting export of US arms to belligerents in 1935.
US National Guard assembles in 1940.
1st microwave TV station operated in Lufkin, Tx in 1955.
1st sun-powered automobile demonstrated, Chicago, Ill in 1955.
Malayasia (formerly Malaya) gains independence from Britain in 1957.
Former Teamsters' president Jimmy Hoffa reported missing in 1975.
Emily & William Harris plead guilty to 1974 kidnapping of Patty Hearst in 1978.
Mortgages
With the advent of the subprime market and more stringent controls in the mortgage industry, it was only a matter of time before more government-backed loans would be making a return. We are now seeing more FHA & VA loans. These loans went out of favor during the past several years because sellers had their choice of offers and didn't have to accept an FHA loan (which usually cost the seller more in closing costs) than a conventional loan.
As of tomorrow, Sept. 1, the VA will allow military veterans access to loans that exceed the present $417,000 loan limit thanks to Ginnie Mae, the Government National Mortgage Association. This will allow veterans to purchase homes in higher-cost areas, such as California, where the median home price is $568,000.
Now, FHA, another HUD agency which insures mortgages for low-income borrowers, may be allowed to guarantee mortgages for homeowners in default who are refinanced into lower-rate loans as well as also increase its limit to $417K if proposed legislation is passed.
Here's a link to a great article, U.S. faces deep economic downturn but recession unlikely, says Nobel laureate, Joseph Stiglitz . The long and short of it is that we are spending more than we are making and that holds true for us as well as our country. Joseph Stiglitz, a Nobel economics laureate, was quoted in this article stating that "... if it is not carefully managed, the fiscal consolidation will further depress the economy.”
Til next time... Marc It Sold!
US Naval Observatory was authorized by an act of Congress in 1842.
1st US men's single tennis championships 1881 in Newport, RI.
1st major earthquake recorded in eastern US, at Charleston SC, 110 die in 1886.
FDR signs an act prohibiting export of US arms to belligerents in 1935.
US National Guard assembles in 1940.
1st microwave TV station operated in Lufkin, Tx in 1955.
1st sun-powered automobile demonstrated, Chicago, Ill in 1955.
Malayasia (formerly Malaya) gains independence from Britain in 1957.
Former Teamsters' president Jimmy Hoffa reported missing in 1975.
Emily & William Harris plead guilty to 1974 kidnapping of Patty Hearst in 1978.
Mortgages
With the advent of the subprime market and more stringent controls in the mortgage industry, it was only a matter of time before more government-backed loans would be making a return. We are now seeing more FHA & VA loans. These loans went out of favor during the past several years because sellers had their choice of offers and didn't have to accept an FHA loan (which usually cost the seller more in closing costs) than a conventional loan.
As of tomorrow, Sept. 1, the VA will allow military veterans access to loans that exceed the present $417,000 loan limit thanks to Ginnie Mae, the Government National Mortgage Association. This will allow veterans to purchase homes in higher-cost areas, such as California, where the median home price is $568,000.
Now, FHA, another HUD agency which insures mortgages for low-income borrowers, may be allowed to guarantee mortgages for homeowners in default who are refinanced into lower-rate loans as well as also increase its limit to $417K if proposed legislation is passed.
Here's a link to a great article, U.S. faces deep economic downturn but recession unlikely, says Nobel laureate, Joseph Stiglitz . The long and short of it is that we are spending more than we are making and that holds true for us as well as our country. Joseph Stiglitz, a Nobel economics laureate, was quoted in this article stating that "... if it is not carefully managed, the fiscal consolidation will further depress the economy.”
Til next time... Marc It Sold!
Tuesday, August 7, 2007
Market Update
OK, I know that I haven’t blogged lately, but can’t believe that it’s already been one month. My goodness, how time flies. But, finally, I’ve noted what is hopefully a good note.
As many of you are well aware, I like numbers & have been tracking the number of available homes listed in the Greater Orlando regional MLS. In mid June, I noted that the number of available properties slipped slightly one week, but then again continued to rise each week afterwards.
Well, this week, it again went down some. Maybe not a lot, but more so than I’ve seen in the past. It may not seem like a large number, but the number of available homes decreased by approximately 250. I can only hope that we are finally turning the tide.
OK, so this doesn’t mean that this period in real estate is over and everything is back to where we were over the past several years. But, it is still a good sign if this slide continues. I think that it might.
I’ve also noted that the calls for showing instructions have gone up over the past week. Granted, I feel that the properties that I have listed are priced well. But, I’ve noted a perceptible increase in the number of calls to see properties.
This in combination with the fact the fed has kept the rate steady & also that mortgage rates have slightly dipped over the past week all seem to be positive signs to our local real estate markets recovery.
Until next time – Marc It Sold!
As many of you are well aware, I like numbers & have been tracking the number of available homes listed in the Greater Orlando regional MLS. In mid June, I noted that the number of available properties slipped slightly one week, but then again continued to rise each week afterwards.
Well, this week, it again went down some. Maybe not a lot, but more so than I’ve seen in the past. It may not seem like a large number, but the number of available homes decreased by approximately 250. I can only hope that we are finally turning the tide.
OK, so this doesn’t mean that this period in real estate is over and everything is back to where we were over the past several years. But, it is still a good sign if this slide continues. I think that it might.
I’ve also noted that the calls for showing instructions have gone up over the past week. Granted, I feel that the properties that I have listed are priced well. But, I’ve noted a perceptible increase in the number of calls to see properties.
This in combination with the fact the fed has kept the rate steady & also that mortgage rates have slightly dipped over the past week all seem to be positive signs to our local real estate markets recovery.
Until next time – Marc It Sold!
Thursday, July 5, 2007
Buying and Selling in Today’s Market – Is It Right For Me?
We are all aware of what’s going on in today’s real estate marketplace. There is no way that you can escape the news. It’s all over on the radio, television and in print. So where do you stand?
Firstly, the situation is not going to change anytime soon. There are too many factors that have contributed to our present market. One of the greatest, that most people are not aware of, is that of the mortgage lending business. This has greatly contributed the our present set of circumstances.
A little history. A long time ago when someone took out a mortgage, they generally had a relationship with their lender, who more often than not was their banker. The banker knew of their ability to repay a loan and lent money on this criteria. The banker also kept and serviced that loan for the life of that particular mortgage.
Well, the industry changed greatly in the past twenty years. Now, the originating lenders take the mortgages that they’ve made and then bundle them up and sell them to investors. Thus, giving the original lender money to go back out and sell more mortgages. This is great in that it brings more available money back into the marketplace. The downside is that the original lender no longer has the risk of carrying that loan. So, therefore, criteria became quite lax for procuring loans.
This is why we are seeing so much trouble with the subprime market. Too many loans were made to people who could marginally afford a home. With interest rates rising so has many adjustable rate mortgages and this further pushed many more people into that group. They couldn’t afford the higher payments and especially with the addition or higher insurance rates & property taxes.
Because so many of these loans were heading towards default, that it why we are seeing a collapse in the subprime market. It used to be that you could find a loan for someone with credit scores of less than 580. Now, that the subprime market is drying up, it is difficult to find a loan for someone with a FICO score under 620.
This fueled a lot of the buying and selling that we saw over the past several years. This, in addition to the fact, that a lot of people as they saw the prices of real estate moving up so quickly wanted to get in on the action also. Unfortunately, a lot of these people should not have. Many used their available funds or even home equities in their primary residences to purchase second homes or rental properties. When they could no longer afford these properties, they tried to sell them, but found that they couldn’t at a profit.
Many also used the increased value of their homes as a sort of spending account. Since incomes were not increasing relative to the value of their property, they would take money out, utilizing home equities, and use this money to buy cars, trips, etc.
But, this had to stop and it did! We were finding more homes languishing on the market. The builders were still building at an expanded pace. Therefore, even more homes on the market. The statistics show that most of these builders made profits last year, but that is now changing. Many, if not most, have seen losses this year. Many builders have stopped building speculation homes.
The combination of all of the things that I’ve just written about has contributed to the glut of properties available for sale. And yes, has driven down the price of homes. If you purchased a home within the last two years, you will find it quite difficult to sell it now at a profit and in most cases breaking even, if you are lucky.
Yes, there are many more factors that have also contributed to our state of affairs, but this is to just give you a general overview. So, now to the title of this blog.
It is definitely a buyer’s market and will remain so for quite some time. Right now in the two counties that make up the majority of the Greater Orlando area, there are over 20K single-family homes, condos, townhomes & villas for sale. This, when in what might be considered a normal market, when there was much less than 1/3 of that number of available properties for sale.
Buyers have a wide selection of properties to look at & choose from. Never has it been greater & especially when you note that the builders are offering such great bargains. Some even $100K and more off of the selling price. Others offering discounts, closing incentives & even a Harley-Davidson in addition. I’ve recently seen a home that was almost 2000sf with a starting price of approximately $250K. And this home wasn’t in the boonies or even near to such, it was right in the metro area.
Now, to the sellers. Unfortunately, there are many that just have to sell. They have to move whether it be for a job transfer, familial reasons, health, etc. These people have no choice. What I’ve stated over and over for these people is that you have to show Price & Value. Your home has to be in tip-top shape. People do not want homes that they have to do work on. There are too many others out there & they will just go to the next one. People are not going to overpay for a property. And this is where it also comes in – sellers have to be realistic in their expectations and pricing. 2005 is a long time ago and has nothing to do with our present real estate market.
Some may read this and think that I am a pessimist. I am not by any means, or at least try not to be. I consider myself a realistic optimist. We are still selling homes, but granted, they are selling at levels that we saw in the late 1990’s and early 2000’s. There is over a 16-month supply of available homes on the market.
Real Estate is a great investment, but it has always been meant as a long-term investment. Not, the short-term one it was considered in the recent past. It is no longer the cash cow that we saw through the past several years. There is no real estate bubble that we are going to see burst. But at the same time, you are not going to see lenders utilizing the line-up & sign-up routine of the past for mortgages. The criteria for such has been tightened.
One of the things that quite concerns me is what is going to happen when Wall Street feels the effects of the subprime market. Are we going to be asked to bail them out as we have with property insurance companies, etc? I hope not, they took on the risk & that is where it should stay. It’s not the public’s responsibility to bail out all of these companies. We, as individuals, cannot afford that.
Just remember – Price & Value. If you can show that, you can sell your home.
Until next time – Marc It Sold!
Firstly, the situation is not going to change anytime soon. There are too many factors that have contributed to our present market. One of the greatest, that most people are not aware of, is that of the mortgage lending business. This has greatly contributed the our present set of circumstances.
A little history. A long time ago when someone took out a mortgage, they generally had a relationship with their lender, who more often than not was their banker. The banker knew of their ability to repay a loan and lent money on this criteria. The banker also kept and serviced that loan for the life of that particular mortgage.
Well, the industry changed greatly in the past twenty years. Now, the originating lenders take the mortgages that they’ve made and then bundle them up and sell them to investors. Thus, giving the original lender money to go back out and sell more mortgages. This is great in that it brings more available money back into the marketplace. The downside is that the original lender no longer has the risk of carrying that loan. So, therefore, criteria became quite lax for procuring loans.
This is why we are seeing so much trouble with the subprime market. Too many loans were made to people who could marginally afford a home. With interest rates rising so has many adjustable rate mortgages and this further pushed many more people into that group. They couldn’t afford the higher payments and especially with the addition or higher insurance rates & property taxes.
Because so many of these loans were heading towards default, that it why we are seeing a collapse in the subprime market. It used to be that you could find a loan for someone with credit scores of less than 580. Now, that the subprime market is drying up, it is difficult to find a loan for someone with a FICO score under 620.
This fueled a lot of the buying and selling that we saw over the past several years. This, in addition to the fact, that a lot of people as they saw the prices of real estate moving up so quickly wanted to get in on the action also. Unfortunately, a lot of these people should not have. Many used their available funds or even home equities in their primary residences to purchase second homes or rental properties. When they could no longer afford these properties, they tried to sell them, but found that they couldn’t at a profit.
Many also used the increased value of their homes as a sort of spending account. Since incomes were not increasing relative to the value of their property, they would take money out, utilizing home equities, and use this money to buy cars, trips, etc.
But, this had to stop and it did! We were finding more homes languishing on the market. The builders were still building at an expanded pace. Therefore, even more homes on the market. The statistics show that most of these builders made profits last year, but that is now changing. Many, if not most, have seen losses this year. Many builders have stopped building speculation homes.
The combination of all of the things that I’ve just written about has contributed to the glut of properties available for sale. And yes, has driven down the price of homes. If you purchased a home within the last two years, you will find it quite difficult to sell it now at a profit and in most cases breaking even, if you are lucky.
Yes, there are many more factors that have also contributed to our state of affairs, but this is to just give you a general overview. So, now to the title of this blog.
It is definitely a buyer’s market and will remain so for quite some time. Right now in the two counties that make up the majority of the Greater Orlando area, there are over 20K single-family homes, condos, townhomes & villas for sale. This, when in what might be considered a normal market, when there was much less than 1/3 of that number of available properties for sale.
Buyers have a wide selection of properties to look at & choose from. Never has it been greater & especially when you note that the builders are offering such great bargains. Some even $100K and more off of the selling price. Others offering discounts, closing incentives & even a Harley-Davidson in addition. I’ve recently seen a home that was almost 2000sf with a starting price of approximately $250K. And this home wasn’t in the boonies or even near to such, it was right in the metro area.
Now, to the sellers. Unfortunately, there are many that just have to sell. They have to move whether it be for a job transfer, familial reasons, health, etc. These people have no choice. What I’ve stated over and over for these people is that you have to show Price & Value. Your home has to be in tip-top shape. People do not want homes that they have to do work on. There are too many others out there & they will just go to the next one. People are not going to overpay for a property. And this is where it also comes in – sellers have to be realistic in their expectations and pricing. 2005 is a long time ago and has nothing to do with our present real estate market.
Some may read this and think that I am a pessimist. I am not by any means, or at least try not to be. I consider myself a realistic optimist. We are still selling homes, but granted, they are selling at levels that we saw in the late 1990’s and early 2000’s. There is over a 16-month supply of available homes on the market.
Real Estate is a great investment, but it has always been meant as a long-term investment. Not, the short-term one it was considered in the recent past. It is no longer the cash cow that we saw through the past several years. There is no real estate bubble that we are going to see burst. But at the same time, you are not going to see lenders utilizing the line-up & sign-up routine of the past for mortgages. The criteria for such has been tightened.
One of the things that quite concerns me is what is going to happen when Wall Street feels the effects of the subprime market. Are we going to be asked to bail them out as we have with property insurance companies, etc? I hope not, they took on the risk & that is where it should stay. It’s not the public’s responsibility to bail out all of these companies. We, as individuals, cannot afford that.
Just remember – Price & Value. If you can show that, you can sell your home.
Until next time – Marc It Sold!
Friday, June 22, 2007
Beach Blog
There are a couple of things that I’ve been noticing about the real estate market that I wish to relay to you. But, before I get to that there are some miscellaneous meanderings that I wish to write about.
The many of you that know me, are aware of the fact that I try not to be a braggart. Yes, we all tend to do it at some time or another in our life. This is only human nature. I try to make it a point to not do so for the simple fact that I do not wish to put others ill at ease. So with that said…
Here I am where it all started – that is my blogging. I’m on a vacation of sorts in Ft. Lauderdale. Actually right now, I’m sitting on the veranda of the Atlantic Hotel, right across from the beach, drinking a Pina Colada. Yummy, it is!!
It always amazes me at what life throws at us. Or, maybe, I should say at what paths our lives take us. I’ve said this before, and must reiterate that I consider myself a very lucky and fortunate person. Yes, I’ve had my ups and downs just like the rest of us. I doubt if there is anyone that can say otherwise about themselves. The degrees to which vary and we may not be able to see that from our standpoint, but that is just it – it’s from our standpoint and perspective.
I’ve been planning on coming down to Fort Lauderdale for many weeks. This week before I came down I took my little girl, Nicci (Chihuahua) to the vet. Unfortunately, she came home with me, but I had to bury her. To say that this has upset me is an understatement. But, I have to remember that she had almost 14 good years and she was such a good girl & companion. She was my baby!
But getting back to what I was saying earlier, things occur & sometimes you have to wonder. Maybe there’s a connection and maybe there isn’t, but since that fateful day with Nicci, my phone has basically been ringing off of the hook with buyers & sellers.
The reason that I mention this is because there were a couple of items in the newspaper today that I will get to shortly. Additionally, I was talking with an associate of mine & she said the same thing about the buyers all of a sudden coming out of the woodwork.
Now, don’t get me wrong, the market is going to take quite a while to readjust itself. There is no doubt about this. But this obviously bodes well with somewhat a shift in the climate.
I received an email today from ORRA, the local realtor association, stating that the median price homes in the local market went up in May. Thirty year mortgages dropped slightly this week from an eleven month high of last week. But they are still under 7%. The Florida legislature has finalized what they are planning to do with property taxes & I think that the governor is signing such. There was also an Associated Press article stating that “The U. S. economy should expand modestly in coming months as a healthy job market continues to trump weakness in housing prices…”
Again, I must reiterate, it will take quite a while for the market to even out, but it does seem as if there are finally some changes in sight. We can only hope so.
Until next time – Marc It Sold!
The many of you that know me, are aware of the fact that I try not to be a braggart. Yes, we all tend to do it at some time or another in our life. This is only human nature. I try to make it a point to not do so for the simple fact that I do not wish to put others ill at ease. So with that said…
Here I am where it all started – that is my blogging. I’m on a vacation of sorts in Ft. Lauderdale. Actually right now, I’m sitting on the veranda of the Atlantic Hotel, right across from the beach, drinking a Pina Colada. Yummy, it is!!
It always amazes me at what life throws at us. Or, maybe, I should say at what paths our lives take us. I’ve said this before, and must reiterate that I consider myself a very lucky and fortunate person. Yes, I’ve had my ups and downs just like the rest of us. I doubt if there is anyone that can say otherwise about themselves. The degrees to which vary and we may not be able to see that from our standpoint, but that is just it – it’s from our standpoint and perspective.
I’ve been planning on coming down to Fort Lauderdale for many weeks. This week before I came down I took my little girl, Nicci (Chihuahua) to the vet. Unfortunately, she came home with me, but I had to bury her. To say that this has upset me is an understatement. But, I have to remember that she had almost 14 good years and she was such a good girl & companion. She was my baby!
But getting back to what I was saying earlier, things occur & sometimes you have to wonder. Maybe there’s a connection and maybe there isn’t, but since that fateful day with Nicci, my phone has basically been ringing off of the hook with buyers & sellers.
The reason that I mention this is because there were a couple of items in the newspaper today that I will get to shortly. Additionally, I was talking with an associate of mine & she said the same thing about the buyers all of a sudden coming out of the woodwork.
Now, don’t get me wrong, the market is going to take quite a while to readjust itself. There is no doubt about this. But this obviously bodes well with somewhat a shift in the climate.
I received an email today from ORRA, the local realtor association, stating that the median price homes in the local market went up in May. Thirty year mortgages dropped slightly this week from an eleven month high of last week. But they are still under 7%. The Florida legislature has finalized what they are planning to do with property taxes & I think that the governor is signing such. There was also an Associated Press article stating that “The U. S. economy should expand modestly in coming months as a healthy job market continues to trump weakness in housing prices…”
Again, I must reiterate, it will take quite a while for the market to even out, but it does seem as if there are finally some changes in sight. We can only hope so.
Until next time – Marc It Sold!
Friday, April 13, 2007
Real Estate is Still a Good Investment – REALLY!!
I feel that real estate has & will always be a good investment. Historically, this has pretty much always held to be true. Granted, there are many out there & especially some who were trying to be investors and bought at the wrong time, to say the least, that might feel differently.
I think for the majority of us, our real estate purchases have done very well for us. Especially, in the past several years where we have seen so many either refinancing and cashing out or taking home-equity loans on their property. But now that the market is changing we are hearing a lot of grumbling. I think a lot of people are getting very scared.
Too many have been relying on their property’s wealth. Take this for example, in Florida 16% of new car purchasing in 2006 was paid with home equity loans. That is astounding. Mind you, California was at 30% while the national average is 7%.
Wages have not appeared to have kept pace with inflation. With the increased wealth in our homes & relatively low interest rates, etc; people were making up for this shortfall by refinancing their homes & taking cash out. Now with housing slowdown, taking equity out of your home is not as readily available.
But, Real Estate will still remain to be a great investment in the long-term. It that is what has to be remembered. Yes, some have done great in the short term, but real estate has pretty much always been a long-term investment.
Thank goodness we are in a great industry!
Until next time – Marc It Sold!
I think for the majority of us, our real estate purchases have done very well for us. Especially, in the past several years where we have seen so many either refinancing and cashing out or taking home-equity loans on their property. But now that the market is changing we are hearing a lot of grumbling. I think a lot of people are getting very scared.
Too many have been relying on their property’s wealth. Take this for example, in Florida 16% of new car purchasing in 2006 was paid with home equity loans. That is astounding. Mind you, California was at 30% while the national average is 7%.
Wages have not appeared to have kept pace with inflation. With the increased wealth in our homes & relatively low interest rates, etc; people were making up for this shortfall by refinancing their homes & taking cash out. Now with housing slowdown, taking equity out of your home is not as readily available.
But, Real Estate will still remain to be a great investment in the long-term. It that is what has to be remembered. Yes, some have done great in the short term, but real estate has pretty much always been a long-term investment.
Thank goodness we are in a great industry!
Until next time – Marc It Sold!
Friday, March 30, 2007
Where are the Buyers?
I’m sure that many are asking the same question. I continually keep on hearing that the buyers are waiting for the market to settle down. Buyers are waiting for that killer deal. Buyers are waiting....
OK, so we’ve had a reality lesson for sellers. It’s time for a reality check for buyers. In the Central Florida area, as I am sure with many parts of the country, the real estate housing market has settled down. Yes, there is a great deal of inventory out there, but homes are being sold. Granted, not at as fast a clip as the past few years. But let’s get realistic, that was an anomaly. I doubt if we will see anything like that for a very long time to come.
Sellers seem to be somewhat more realistic in that they are pricing their homes accordingly. I don’t know what so many have in their minds that the market still needs to adjust. It did that last year and that was really finalized by the end of the year. Prices aren’t dropping. They shouldn’t. There are some great values out there. You can actually purchase a home now and walk in their with some equity. Not like what we saw in ’05. This is the way a normal market is supposed to operate.
Prices are not going to go down lower & the interest rates have remained quite low also. This is a great time to purchase a home. There is generally price and value built into these homes. If there isn’t, then move on to the next property. There are enough out there to choose from.
I know some are now blaming the sub-prime market, but then again, these are people that are just always looking for something to blame. Yes, the sub-prime market took a hit. Well, heck, they shouldn’t have issued so many risky, really risky loans. But, there is money out there for people with ‘B/C’ credit. It can be found.
Hello folks, the market has bottomed out. It’s as simple as that. It has turned the corner. I’m not just saying this because I would like some buyers. The stats prove this out as do some of the articles finally being put into print.
I just sold a couple of homes within 45 days in this market. No, they were not underpriced. But, we were able to show Price & Value & everyone walked away from the tables feeling like a winner.
Til next time – Marc It Sold!
OK, so we’ve had a reality lesson for sellers. It’s time for a reality check for buyers. In the Central Florida area, as I am sure with many parts of the country, the real estate housing market has settled down. Yes, there is a great deal of inventory out there, but homes are being sold. Granted, not at as fast a clip as the past few years. But let’s get realistic, that was an anomaly. I doubt if we will see anything like that for a very long time to come.
Sellers seem to be somewhat more realistic in that they are pricing their homes accordingly. I don’t know what so many have in their minds that the market still needs to adjust. It did that last year and that was really finalized by the end of the year. Prices aren’t dropping. They shouldn’t. There are some great values out there. You can actually purchase a home now and walk in their with some equity. Not like what we saw in ’05. This is the way a normal market is supposed to operate.
Prices are not going to go down lower & the interest rates have remained quite low also. This is a great time to purchase a home. There is generally price and value built into these homes. If there isn’t, then move on to the next property. There are enough out there to choose from.
I know some are now blaming the sub-prime market, but then again, these are people that are just always looking for something to blame. Yes, the sub-prime market took a hit. Well, heck, they shouldn’t have issued so many risky, really risky loans. But, there is money out there for people with ‘B/C’ credit. It can be found.
Hello folks, the market has bottomed out. It’s as simple as that. It has turned the corner. I’m not just saying this because I would like some buyers. The stats prove this out as do some of the articles finally being put into print.
I just sold a couple of homes within 45 days in this market. No, they were not underpriced. But, we were able to show Price & Value & everyone walked away from the tables feeling like a winner.
Til next time – Marc It Sold!
Monday, January 8, 2007
WOW - 2007 - con't
This started as just a comment, but has obviously ended up as much more. Just give me an inch...
Anyway, thanks for all the comments. In regard to the appreciation that Jennifer commented in from the last post, I agree with her. The reason for my stating a higher rate is because this has been typically true in the Greater Orlando market.
Orlando is a destination city & has continually bucked the national trend. Generally, while the nation has normally seen a 6-8% appreciation level, we in Orlando have encountered a typically 10-13% rate.
To make this a little clearer, Orlando was definitely behind in regard to the national median housing price. For many reasons in the past several years this has quickly been adjusted. Unfortunately, we are still mostly a service-oriented area. I won't get on my soapbox here about this rise continually locking more and more people out of purchasing homes.
The powers that be are definitely making efforts to try to change our being a more service-oriented industry market. They are doing so by alluring some high-tech companies to the area and obviously this includes much higher wages.
Another reason for our quick gain, is that many people move to this area from more expensive areas & have been willing to pay more for real estate.
In regard to the median housing price, the Greater Orlando area's median is $250K. Even though this figure see-sawed through 2006, it is still higher than 2005. Maybe not by much, but still more. Many markets cannot say this, unfortunately.
According to FAR (Florida Association of Realtors), "In Sarasota-Bradenton, for example, the median price went to $277,900 from $340,700 during the year-over-year period ended in October." WOW!
Until next time - Marc It Sold!
Anyway, thanks for all the comments. In regard to the appreciation that Jennifer commented in from the last post, I agree with her. The reason for my stating a higher rate is because this has been typically true in the Greater Orlando market.
Orlando is a destination city & has continually bucked the national trend. Generally, while the nation has normally seen a 6-8% appreciation level, we in Orlando have encountered a typically 10-13% rate.
To make this a little clearer, Orlando was definitely behind in regard to the national median housing price. For many reasons in the past several years this has quickly been adjusted. Unfortunately, we are still mostly a service-oriented area. I won't get on my soapbox here about this rise continually locking more and more people out of purchasing homes.
The powers that be are definitely making efforts to try to change our being a more service-oriented industry market. They are doing so by alluring some high-tech companies to the area and obviously this includes much higher wages.
Another reason for our quick gain, is that many people move to this area from more expensive areas & have been willing to pay more for real estate.
In regard to the median housing price, the Greater Orlando area's median is $250K. Even though this figure see-sawed through 2006, it is still higher than 2005. Maybe not by much, but still more. Many markets cannot say this, unfortunately.
According to FAR (Florida Association of Realtors), "In Sarasota-Bradenton, for example, the median price went to $277,900 from $340,700 during the year-over-year period ended in October." WOW!
Until next time - Marc It Sold!
Thursday, January 4, 2007
WOW! – 2007 – What Will This Year Bring Us In Real Estate?
Most of my posts are geared towards the consumer, but the thoughts that are coming to my mind make this agent-oriented.
Well, let’s start out with the fact that the market has ‘corrected’ itself in many locales, but surely in the Orlando area. We are still in a very healthy market. Inventory is on a downward trend and will hopefully continue so. Rates are still very good in the low 6’s. I’ve even noted in my personal business that what is usually a very slow week (the week between Christmas & New Year’s) has turned into a quite busy one. Three buyers have contacted me and I’m in negotiations already, one being on a property that I’ve listed. My office tells me that they have noted that it’s picking up as well.
Many realtors® may disagree that this is a healthy and rebounding market, but I have to beg to differ. I know several realtors® that have had a better year in 2006 than previously. And no, these are not neophytes. Most are seasoned veterans. A lot of people forgot (or especially the newbies who didn’t know) how to work in what many of us consider a ‘normal’ market. Too much was being taken for granted as business was just there for the picking.
It’s a simple fact of back to basics. The business will come to you, but you have to farm & prospect. It’s not just going to fall in your lap like in 2005. I know that I’ve written that clients need to remember that the summer of 2005 is over, but many Realtors® need a wake-up call. The only way a realtor can last in this business is to be adaptable. You need to be able to adapt to a changing market. You need to be able to adapt the changing times. Your prospecting and farming need to be adapted to today, not yesterday’s style.
I’m seeing, as I sure a lot of you have, that there are still wholly overpriced listings being placed on the market. What I’m also seeing, & this really makes me laugh, is a listing with a price reduction. Yes, I know there are many out there that like to disguise this as a ‘price improvement.’ Please, we all know what this is and so does the seller & buyer, so why the sugar-coating. It just looks like you’re trying to disguise something & that doesn’t work in the long run in real estate. People aren’t stupid. They have so much more access to available information. Call it what it is. Believe it or not, you will look better in the consumer’s eyes.
Sorry for the digression, I was mentioning about listings with price reductions. But what I’ve seen while looking further at many of these (more than I would expect to see), is that the property had an increase in price from the original pricing. Do they not know how to properly price properties? I think this is so basic or at least it should be to be a realtor.
I think that we will see a consistent and steady change in 2007. We will probably see appreciation in the neighborhood of 7-13% depending on your market. This is quite normal as most of you should be well aware.
I think that buyers are finally getting over being wary of the marketplace, even though the media did a great job in scaring the crap out of some people. Interest rates are expected to be historically low. PMI is now fully deductible on your 2007 income taxes for households making less than $100K. Existing home sales are expected to increase, while new home sales are expected to slide.
Miami-based Lennar Corp., one of the nation's largest homebuilders, said it expects a fourth-quarter loss, its first decline in at least a decade, as it reevaluates how much its inventory is worth, etc.
Right now builders are giving away the farm, but they have to get rid of inventory. Otherwise, they are going to be paying a boatload of interest on those completed homes for sale. Many are reevaluating their positions. We’ve all read about this.
This all bodes well for the existing home sale market & us in general as realtors®.
I’m looking forward to a great 2007 as you should as well. You need to have a positive attitude in this business, otherwise you are only being self-defeating.
I love what I do & I love Real Estate!
Until Next Time – Marc It Sold!®
Well, let’s start out with the fact that the market has ‘corrected’ itself in many locales, but surely in the Orlando area. We are still in a very healthy market. Inventory is on a downward trend and will hopefully continue so. Rates are still very good in the low 6’s. I’ve even noted in my personal business that what is usually a very slow week (the week between Christmas & New Year’s) has turned into a quite busy one. Three buyers have contacted me and I’m in negotiations already, one being on a property that I’ve listed. My office tells me that they have noted that it’s picking up as well.
Many realtors® may disagree that this is a healthy and rebounding market, but I have to beg to differ. I know several realtors® that have had a better year in 2006 than previously. And no, these are not neophytes. Most are seasoned veterans. A lot of people forgot (or especially the newbies who didn’t know) how to work in what many of us consider a ‘normal’ market. Too much was being taken for granted as business was just there for the picking.
It’s a simple fact of back to basics. The business will come to you, but you have to farm & prospect. It’s not just going to fall in your lap like in 2005. I know that I’ve written that clients need to remember that the summer of 2005 is over, but many Realtors® need a wake-up call. The only way a realtor can last in this business is to be adaptable. You need to be able to adapt to a changing market. You need to be able to adapt the changing times. Your prospecting and farming need to be adapted to today, not yesterday’s style.
I’m seeing, as I sure a lot of you have, that there are still wholly overpriced listings being placed on the market. What I’m also seeing, & this really makes me laugh, is a listing with a price reduction. Yes, I know there are many out there that like to disguise this as a ‘price improvement.’ Please, we all know what this is and so does the seller & buyer, so why the sugar-coating. It just looks like you’re trying to disguise something & that doesn’t work in the long run in real estate. People aren’t stupid. They have so much more access to available information. Call it what it is. Believe it or not, you will look better in the consumer’s eyes.
Sorry for the digression, I was mentioning about listings with price reductions. But what I’ve seen while looking further at many of these (more than I would expect to see), is that the property had an increase in price from the original pricing. Do they not know how to properly price properties? I think this is so basic or at least it should be to be a realtor.
I think that we will see a consistent and steady change in 2007. We will probably see appreciation in the neighborhood of 7-13% depending on your market. This is quite normal as most of you should be well aware.
I think that buyers are finally getting over being wary of the marketplace, even though the media did a great job in scaring the crap out of some people. Interest rates are expected to be historically low. PMI is now fully deductible on your 2007 income taxes for households making less than $100K. Existing home sales are expected to increase, while new home sales are expected to slide.
Miami-based Lennar Corp., one of the nation's largest homebuilders, said it expects a fourth-quarter loss, its first decline in at least a decade, as it reevaluates how much its inventory is worth, etc.
Right now builders are giving away the farm, but they have to get rid of inventory. Otherwise, they are going to be paying a boatload of interest on those completed homes for sale. Many are reevaluating their positions. We’ve all read about this.
This all bodes well for the existing home sale market & us in general as realtors®.
I’m looking forward to a great 2007 as you should as well. You need to have a positive attitude in this business, otherwise you are only being self-defeating.
I love what I do & I love Real Estate!
Until Next Time – Marc It Sold!®
Monday, October 30, 2006
Deducting Interest When You Are Not on Title
The following is an interesting article entitled, "Housing Counsel: Deducting Interest When You Are Not on Title," written by Benny L. Kass & published on Realty Times. I did not know that it was possible to deduct the interest on your taxes if you were not on the title. But read the follow case in point to understand the parameters of which this may occur.
Question: I want to buy a condominium unit for my son. Although he makes a decent living, his credit is not good. Accordingly, the lender has advised that title must be in my name only. My son will live in the property and make all of the mortgage payments.
Can he deduct the mortgage interest on his tax returns?
Answer: The answer is a qualified yes. There are certain rules which you must follow since if the IRS ever challenges the deduction, the burden will be on your son to prove that he is eligible to take the deductions.
We must first look to the regulations which have been promulgated by the IRS.
Regulation 1.163-1(b) reads as follows:
Interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness.
In August of 2003, the United States Tax Court addressed this situation and denied the interest deduction. The petitioner bought a house for his mother and although the mortgage loan was not in his name, he made the monthly loan payments. He argued to the Tax Court that he was obligated to repay his mother and “that his failure to repay would result, upon his mother’s death, in a corresponding reduction in his testamentary share of his mother’s estate.”
But the tax court rejected this argument. Based on the facts which were presented in evidence, the Court determined that the petitioner was neither “directly liable on the note securing the mortgage on his mother’s house, nor (was) he a legal or equitable owner of the property.” (Montoya v IRS, decided August 5, 2003.)
What exactly is required to be an “equitable owner”? Our legal dictionaries define this as ownership by one who does not have legal title.
Let’s look at this example. I own property A; I am the legal title holder to the property. I enter into a contract to sell the property to you. Based on that contract, even though you have not yet taken title, you have certain rights. These rights are based on the legal principles called “equity” -- namely that the courts will do what is fair under the circumstances, rather than strictly interpreting the letter of the law.
Obviously, each case has to be decided on the specific facts presented to the Court. In the Montoya case, the Tax Court determined that the son just did not have enough evidence to prove that he had some kind of ownership in his mother’s property.
Several years earlier, this same Tax Court did allow a couple to deduct the mortgage interest even though they were not on title to the property. In Uslu v IRS, the following facts were presented to the Court.
Uslu had filed for Chapter 7 Bankruptcy relief and was not eligible to obtain a mortgage loan. His brother bought the house, in which the only occupants were Uslu and his wife. The loan was in the brother’s name only, but Uslu made all of the mortgage payments. He also made all of the repairs and improvements to the property. The brother signed a Quit Claim Deed conveying the property to Uslu, although this Deed was never recorded on the land records.
The Tax Court found that Uslu’s mortgage payments “constituted payments on an indebtedness” and thus could be deducted for income tax purposes.
According to the Court:
The Court is satisfied, from all of the evidence presented, that petitioners (Uslu) have continuously treated the ... property as if they were the owners, and that they exclusively, held the benefits and burdens of ownership thereof. On this record, the Court holds that petitioners established equitable and beneficial ownership of the (property), and they were liable to (the brother) in respect of the mortgage indebtedness.
How do you meet the burden? Here are some suggestions:
1. Your son must continuously live in the property. To prove this, his driver’s license, voter registration and utility bills should be in his name at the property address;
2. You and your son should enter into a written agreement, spelling out that he is fully obligated to make the mortgage payments on a timely basis, and that you reserve the right to evict him should be go into default; the agreement should specifically state that you recognize that your son has an equitable interest in the property;
3. Your son must be responsible for all maintenance and upkeep of the property, and
4. You should prepare and sign a Quit Claim Deed, in recordable form, conveying the property to your son. This will not be recorded, but will be further evidence of your decision that this property is, in reality if not legally, owned by your son.
There obviously are no guarantees, but if you follow the guidelines spelled out in the Uslu case, you have a good chance of prevailing should the IRS challenge your son’s deductions.
Until next time - MARC IT SOLD!
Question: I want to buy a condominium unit for my son. Although he makes a decent living, his credit is not good. Accordingly, the lender has advised that title must be in my name only. My son will live in the property and make all of the mortgage payments.
Can he deduct the mortgage interest on his tax returns?
Answer: The answer is a qualified yes. There are certain rules which you must follow since if the IRS ever challenges the deduction, the burden will be on your son to prove that he is eligible to take the deductions.
We must first look to the regulations which have been promulgated by the IRS.
Regulation 1.163-1(b) reads as follows:
Interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness.
In August of 2003, the United States Tax Court addressed this situation and denied the interest deduction. The petitioner bought a house for his mother and although the mortgage loan was not in his name, he made the monthly loan payments. He argued to the Tax Court that he was obligated to repay his mother and “that his failure to repay would result, upon his mother’s death, in a corresponding reduction in his testamentary share of his mother’s estate.”
But the tax court rejected this argument. Based on the facts which were presented in evidence, the Court determined that the petitioner was neither “directly liable on the note securing the mortgage on his mother’s house, nor (was) he a legal or equitable owner of the property.” (Montoya v IRS, decided August 5, 2003.)
What exactly is required to be an “equitable owner”? Our legal dictionaries define this as ownership by one who does not have legal title.
Let’s look at this example. I own property A; I am the legal title holder to the property. I enter into a contract to sell the property to you. Based on that contract, even though you have not yet taken title, you have certain rights. These rights are based on the legal principles called “equity” -- namely that the courts will do what is fair under the circumstances, rather than strictly interpreting the letter of the law.
Obviously, each case has to be decided on the specific facts presented to the Court. In the Montoya case, the Tax Court determined that the son just did not have enough evidence to prove that he had some kind of ownership in his mother’s property.
Several years earlier, this same Tax Court did allow a couple to deduct the mortgage interest even though they were not on title to the property. In Uslu v IRS, the following facts were presented to the Court.
Uslu had filed for Chapter 7 Bankruptcy relief and was not eligible to obtain a mortgage loan. His brother bought the house, in which the only occupants were Uslu and his wife. The loan was in the brother’s name only, but Uslu made all of the mortgage payments. He also made all of the repairs and improvements to the property. The brother signed a Quit Claim Deed conveying the property to Uslu, although this Deed was never recorded on the land records.
The Tax Court found that Uslu’s mortgage payments “constituted payments on an indebtedness” and thus could be deducted for income tax purposes.
According to the Court:
The Court is satisfied, from all of the evidence presented, that petitioners (Uslu) have continuously treated the ... property as if they were the owners, and that they exclusively, held the benefits and burdens of ownership thereof. On this record, the Court holds that petitioners established equitable and beneficial ownership of the (property), and they were liable to (the brother) in respect of the mortgage indebtedness.
How do you meet the burden? Here are some suggestions:
1. Your son must continuously live in the property. To prove this, his driver’s license, voter registration and utility bills should be in his name at the property address;
2. You and your son should enter into a written agreement, spelling out that he is fully obligated to make the mortgage payments on a timely basis, and that you reserve the right to evict him should be go into default; the agreement should specifically state that you recognize that your son has an equitable interest in the property;
3. Your son must be responsible for all maintenance and upkeep of the property, and
4. You should prepare and sign a Quit Claim Deed, in recordable form, conveying the property to your son. This will not be recorded, but will be further evidence of your decision that this property is, in reality if not legally, owned by your son.
There obviously are no guarantees, but if you follow the guidelines spelled out in the Uslu case, you have a good chance of prevailing should the IRS challenge your son’s deductions.
Until next time - MARC IT SOLD!
Thursday, August 3, 2006
Market Trends
My original intention with this blog, was to include more tips on caring for your home & to tell you more about me. But it seems that the slant has been more towards market trends. To some this may be boring & I apologize for that. But it is very important to us. Real Estate has become a much published topic. We read about it in the newspapers & on the net. We hear about it on the evening news. We've seen it & it's effect in our daily lives.
Granted, a lot of what I've written is my educated opinion, obviously derived from my experience; sources that I've read; and, speaking with other real estate professionals. I've mentioned before that I really like numbers. They don't tell the whole picture, but do give us a great insight into what is happening. This is why I've tried to back up my opinions with facts & numbers, so it doesn't seem as if I'm just spouting off at the mouth. Goodness, knows I can do that also.
But the reason that I've written more about the market trends, is that this effects us all and is very important. With all that we've seen & heard in the real estate market, I think that it is something that needs to be addressed. We've all seen the doom & gloom articles & editorials and a lot of what I've read is pure bunk. My intentions are to try to give you a balanced account of the state of real estate. Yes, I do have my prejudices & biases, but I do try to keep those to a minimum when writing an opinion.
Sometimes, it is difficult for me to decide what to write about. There has been so much in the news that is of great concern. So, today, I am going to discuss the annual housing report released by the Harvard Joint Center for Housing Studies - "The State of the Nation's Housing 2006." http://www.jchs.harvard.edu/publications/markets/son2006/index.htm
The report overall is positive on the housing market - that "the housing sector continues to benefit from solid job & household growth, recovering rental markets, & strong home price appreciation," and as long as these remain in place, "the current slowdown should be moderate."
Households are expected to accelerate from about 12.6 million over the past years, to 14.6 million over the next ten which combined with projected income gains and a "rising tide of wealth" should "lift housing production and investment to new highs."
However, affordability will also intensify, as the economy is generating many low-wage jobs and land use restrictions are driving up housing costs. Incomes are rising much faster in the top ranges than in the bottom ranges for homebuyers. The number of households paying more than half of their income for housing has shot up & will continue to increase.
We've seen & heard about affordable rental housing disappearing. Just look at all of the condo conversions that we've seen around.
The report also goes into financing in that we've seen a shift from fixed-rate mortgages to adjustable-rate mortgages & other products. In just 2 years, the interest-only loan shot from relative obscurity to 20% of the dollar value of all loans & 37% of all adjustable rate loans in 2005. Payment option loans accounted for nearly 10% in 2005.
As bad as that sounds, the report says that only 3% of owners had equity less than 5% in their homes & 87% had a 20% or higher equity in 2004.
Housing gains are continuing even while home sales are softening. Driving housing will be the baby boomers who will boost markets for senior housing & second home.
Until next time when I plan to discuss the rising insurance rates & condo associations - Marc It Sold!
Granted, a lot of what I've written is my educated opinion, obviously derived from my experience; sources that I've read; and, speaking with other real estate professionals. I've mentioned before that I really like numbers. They don't tell the whole picture, but do give us a great insight into what is happening. This is why I've tried to back up my opinions with facts & numbers, so it doesn't seem as if I'm just spouting off at the mouth. Goodness, knows I can do that also.
But the reason that I've written more about the market trends, is that this effects us all and is very important. With all that we've seen & heard in the real estate market, I think that it is something that needs to be addressed. We've all seen the doom & gloom articles & editorials and a lot of what I've read is pure bunk. My intentions are to try to give you a balanced account of the state of real estate. Yes, I do have my prejudices & biases, but I do try to keep those to a minimum when writing an opinion.
Sometimes, it is difficult for me to decide what to write about. There has been so much in the news that is of great concern. So, today, I am going to discuss the annual housing report released by the Harvard Joint Center for Housing Studies - "The State of the Nation's Housing 2006." http://www.jchs.harvard.edu/publications/markets/son2006/index.htm
The report overall is positive on the housing market - that "the housing sector continues to benefit from solid job & household growth, recovering rental markets, & strong home price appreciation," and as long as these remain in place, "the current slowdown should be moderate."
Households are expected to accelerate from about 12.6 million over the past years, to 14.6 million over the next ten which combined with projected income gains and a "rising tide of wealth" should "lift housing production and investment to new highs."
However, affordability will also intensify, as the economy is generating many low-wage jobs and land use restrictions are driving up housing costs. Incomes are rising much faster in the top ranges than in the bottom ranges for homebuyers. The number of households paying more than half of their income for housing has shot up & will continue to increase.
We've seen & heard about affordable rental housing disappearing. Just look at all of the condo conversions that we've seen around.
The report also goes into financing in that we've seen a shift from fixed-rate mortgages to adjustable-rate mortgages & other products. In just 2 years, the interest-only loan shot from relative obscurity to 20% of the dollar value of all loans & 37% of all adjustable rate loans in 2005. Payment option loans accounted for nearly 10% in 2005.
As bad as that sounds, the report says that only 3% of owners had equity less than 5% in their homes & 87% had a 20% or higher equity in 2004.
Housing gains are continuing even while home sales are softening. Driving housing will be the baby boomers who will boost markets for senior housing & second home.
Until next time when I plan to discuss the rising insurance rates & condo associations - Marc It Sold!
Sunday, July 16, 2006
Is the Market Insane?
Wanted to Blog, but wasn't sure what to write & then I spoke with a friend & she was under the impression that the "Market is Insane!" I won't deny that I was taken aback by this. But from what we talked about, it seems that quite a few people think this.
Now, I know from talking with quite a few realtors that the impression is that buyers are waiting for prices to come down. I won't deny that I still see homes that are priced for the type of market that we saw last year. But, in general, it seems that people realize that they have to price their homes well to sell. With an inventory of over 15K available homes for sale in just Orange & Seminole county, sellers better price their homes well & possibly offer incentives if they wish their homes to sell.
But, now let's look at the other side of the coin. We are still selling near the same level of homes as was being sold last year. Many do not realize this, but that was a phenomenal year. We sold more homes than in previous recorded history. In fact, in March of this year, ORRA (Orlando Regional Realtor Association) noted that 2878 homes were sold & this compares to 2529 homes in March 2005.
This reverts back to what I've been saying in that we have a very healthy market in the Greater Orlando area. In fact, we've sold more homes in the first five months of 2006 than we did in 2005.
So, homes are selling. Even with the increase in interest rates. Homes that show well & are priced well - will sell, as long as they are marketed properly. I've said this before & even have read it recently, but we are in what most of us consider a 'normal' housing market. Granted, the median price has risen to its highest level at $252,990 (May 2006) with an average sales price of $311,119.
Homes are presently taking 74 days on the market & this will lengthen with time. Historically, we've seen worse & not all that long ago.
It just proves to me that people need to be educated to the facts. As with anything else, this does put things into their proper perspective.
I, myself, have always believed in education. That is why I've gone on and received my GRI (Graduate Realtor Institute) & still continue to read & try to improve myself. I also believe at the same time, that it is my job to educate you, the consumer. I believe that if I did not do so, I would be doing you a disservice. I am the Real Estate Professional. This is why you ask me for advice & hire me for my services. And, I wish to thank everyone for that!
Until next time - Marc It Sold!
Now, I know from talking with quite a few realtors that the impression is that buyers are waiting for prices to come down. I won't deny that I still see homes that are priced for the type of market that we saw last year. But, in general, it seems that people realize that they have to price their homes well to sell. With an inventory of over 15K available homes for sale in just Orange & Seminole county, sellers better price their homes well & possibly offer incentives if they wish their homes to sell.
But, now let's look at the other side of the coin. We are still selling near the same level of homes as was being sold last year. Many do not realize this, but that was a phenomenal year. We sold more homes than in previous recorded history. In fact, in March of this year, ORRA (Orlando Regional Realtor Association) noted that 2878 homes were sold & this compares to 2529 homes in March 2005.
This reverts back to what I've been saying in that we have a very healthy market in the Greater Orlando area. In fact, we've sold more homes in the first five months of 2006 than we did in 2005.
So, homes are selling. Even with the increase in interest rates. Homes that show well & are priced well - will sell, as long as they are marketed properly. I've said this before & even have read it recently, but we are in what most of us consider a 'normal' housing market. Granted, the median price has risen to its highest level at $252,990 (May 2006) with an average sales price of $311,119.
Homes are presently taking 74 days on the market & this will lengthen with time. Historically, we've seen worse & not all that long ago.
It just proves to me that people need to be educated to the facts. As with anything else, this does put things into their proper perspective.
I, myself, have always believed in education. That is why I've gone on and received my GRI (Graduate Realtor Institute) & still continue to read & try to improve myself. I also believe at the same time, that it is my job to educate you, the consumer. I believe that if I did not do so, I would be doing you a disservice. I am the Real Estate Professional. This is why you ask me for advice & hire me for my services. And, I wish to thank everyone for that!
Until next time - Marc It Sold!
Wednesday, July 5, 2006
Rates, FSBO's, Pre-foreclosure
It's been a while. There are several things that I wish to mention today. Firstly, I wish to apologize because we are still working on the links on our website. That problem will be remedied in the near future.
The Fed made another increase, as was expected. Of course, there are the concerns for inflation. Mortgage interests have been climbing. Presently, they are hovering around 7%. Yes, this is higher than we've been experiencing in the past several years. But, when you reflect upon it, you realize that this is not so bad. Eight years ago we were at this level and even 1% higher the previous year. And, who can forget the 80's. My Goodness!! So, when you put it into perspective, it's really a different story.
Now, granted, housing costs have risen substantially in that same period of time. Have wages increased as much? We know the answer there. Now, I'm not going to get on my soapbox. But, we continually each day lock more and more people out of the housing market. Condos are costing in the 100K's; a nice relatively reasonable 3/2 single-family home will run approximately the mid 200's.
Enough of that, but it is something that we do have to keep in mind. We should never forget, because that only leads to possibly losing the lesson.
Real Estate has returned to what it was normally. The market is very healthy. We are very lucky in the Greater Orlando area, because we are a destination city. We are also the #2 city in the nation for Conventions, even knocking Chicago out of that position.
But, there is a lot of competition out there. There are over 19,000 MLS listings available. This is going to be a difficult time for For Sale By Owners, unless they are willing to wait, what I would think would be, quite a while.
I’ve even noticed what seems to be more homes going into pre-foreclosure. The summer of ’05 is no longer. I’m not saying this for doom & gloom. But this is reality. In regard to pre-foreclosures, people should speak to their lenders before it is way too late. And by too late, I mean, when they are already starting the papers. It takes several months before a homeowner is served with a pre-foreclosure notice. If you are late with your payments, there are some lenders that will allow you to tack those onto the end of your loan period. Granted, this will definitely cost you, but what will losing your home cost you?
There are also other ways, but you must speak with your lender. You have to understand that the lender does not really wish to own your property. They are not making money on it. They make money from the payments that you send in each month. Anyway, enough for now.
Call me & I’ll be more than happy to discuss this and any other topics with you.
Until next time….Marc It Sold!
The Fed made another increase, as was expected. Of course, there are the concerns for inflation. Mortgage interests have been climbing. Presently, they are hovering around 7%. Yes, this is higher than we've been experiencing in the past several years. But, when you reflect upon it, you realize that this is not so bad. Eight years ago we were at this level and even 1% higher the previous year. And, who can forget the 80's. My Goodness!! So, when you put it into perspective, it's really a different story.
Now, granted, housing costs have risen substantially in that same period of time. Have wages increased as much? We know the answer there. Now, I'm not going to get on my soapbox. But, we continually each day lock more and more people out of the housing market. Condos are costing in the 100K's; a nice relatively reasonable 3/2 single-family home will run approximately the mid 200's.
Enough of that, but it is something that we do have to keep in mind. We should never forget, because that only leads to possibly losing the lesson.
Real Estate has returned to what it was normally. The market is very healthy. We are very lucky in the Greater Orlando area, because we are a destination city. We are also the #2 city in the nation for Conventions, even knocking Chicago out of that position.
But, there is a lot of competition out there. There are over 19,000 MLS listings available. This is going to be a difficult time for For Sale By Owners, unless they are willing to wait, what I would think would be, quite a while.
I’ve even noticed what seems to be more homes going into pre-foreclosure. The summer of ’05 is no longer. I’m not saying this for doom & gloom. But this is reality. In regard to pre-foreclosures, people should speak to their lenders before it is way too late. And by too late, I mean, when they are already starting the papers. It takes several months before a homeowner is served with a pre-foreclosure notice. If you are late with your payments, there are some lenders that will allow you to tack those onto the end of your loan period. Granted, this will definitely cost you, but what will losing your home cost you?
There are also other ways, but you must speak with your lender. You have to understand that the lender does not really wish to own your property. They are not making money on it. They make money from the payments that you send in each month. Anyway, enough for now.
Call me & I’ll be more than happy to discuss this and any other topics with you.
Until next time….Marc It Sold!
Sunday, May 28, 2006
Greater Orlando Real Estate Market - Original Post Date on May 28, 2006
It's amazing! You go on vacation and even though you may prepare for such work wise - you inevitably come back to more work than you thought. Do not get me wrong, I am not complaining. It's just almost laughable to me and unfortunately because of such I have not been able to post here.
So, let's talk about the Real Estate Market as it is today. And that right there is the point - today! The market has changed and is always evolving, sometimes more quickly than others. Yet, we have to be prepared for this, especially myself as a realtor. But so do you, so that you can understand the market and how it affects you - the consumer.
To say the least, we are in a buyers market and anyone who thinks differently is just deluding themselves. There are more listings available in Orange & Seminole counties (which makes up probably the majority of the Greater Orlando area) than has been in a very long time. As of right now, there are 9527 single family homes listed on the local MLS for sale as well as 3223 condominiums, townhomes & villas for sale. That is a lot of homes and approximately 6 months worth of inventory. I've been tracking the available homes for sale for many months and have found that except for one week, there has been an additional 250+ more homes available for sale than the previous week. This takes into consideration homes that have gone under contract and so forth. A little over a month ago, there was just 10K homes for sale, now we are at over 12K. So what is happening and how does this affect you?
Because there is so much involved, I will not be able to answer this question in just one post, but let's get started. Firstly, I must mention that I am not a doomsayer, and many of you who know me, know that I consider myself a Realistic Optimist. So with that said...
The market is in what some call a correction right now. We've been very lucky for the past couple of years with the increases that we have seen in what for some of us is our most valuable asset. That’s been great for most of us. The reality of it is that through most years we will only see about a 6% or so increase in the value of our homes. This year I expect us to be basically flat. That is not a problem, but there are many factors that lead to this. Right now we are seeing interest rates creep up. The fed is, or at least should be, concerned about inflation. And it will be interesting in how they handle their next meeting. Will the rates go up? They have increased them for the past 16 consecutive meetings. They have to be concerned about increasing it again and possibly fueling inflation. Even with this occurring, it has only been recently that the mortgage rates have been consistently creeping up themselves.
Lenders, of course, have become more conservative & rightly so. The creative financing that has been going on has been incredible and personally somewhat ridiculous. Interest only loans with a balloon payment – oh lordy? Here you are hedging a bet in that the value of your home will go up to create equity, because you are surely not creating any by only paying the interest and still have the full principal left to pay. Unfortunately for many, as the interest rates increase so do their payments & they may not be able to afford this additional expense. And more unfortunately, what we are going to see in the future (& not too distant at that) are foreclosures on a lot of these loans.
Then we also have investors, or I should really say and forgive me for saying this, but wannabe investors. These people saw the increases that were happening in the market and decided that if others can do it so can they. Unfortunately, many got into the market too late and now are finding themselves with a house payment for a home that is most likely vacant & they can’t move it because they are not only competing against the builder/developer but also other investors & homeowners. I read an article recently that mentioned already starting to see these loans going into foreclosure.
I could keep on writing forever about this & will expound on this topic more so in the near future. As always, please don’t forget that your comments and questions are quite welcome.
Till next time – Marc It Sold!
So, let's talk about the Real Estate Market as it is today. And that right there is the point - today! The market has changed and is always evolving, sometimes more quickly than others. Yet, we have to be prepared for this, especially myself as a realtor. But so do you, so that you can understand the market and how it affects you - the consumer.
To say the least, we are in a buyers market and anyone who thinks differently is just deluding themselves. There are more listings available in Orange & Seminole counties (which makes up probably the majority of the Greater Orlando area) than has been in a very long time. As of right now, there are 9527 single family homes listed on the local MLS for sale as well as 3223 condominiums, townhomes & villas for sale. That is a lot of homes and approximately 6 months worth of inventory. I've been tracking the available homes for sale for many months and have found that except for one week, there has been an additional 250+ more homes available for sale than the previous week. This takes into consideration homes that have gone under contract and so forth. A little over a month ago, there was just 10K homes for sale, now we are at over 12K. So what is happening and how does this affect you?
Because there is so much involved, I will not be able to answer this question in just one post, but let's get started. Firstly, I must mention that I am not a doomsayer, and many of you who know me, know that I consider myself a Realistic Optimist. So with that said...
The market is in what some call a correction right now. We've been very lucky for the past couple of years with the increases that we have seen in what for some of us is our most valuable asset. That’s been great for most of us. The reality of it is that through most years we will only see about a 6% or so increase in the value of our homes. This year I expect us to be basically flat. That is not a problem, but there are many factors that lead to this. Right now we are seeing interest rates creep up. The fed is, or at least should be, concerned about inflation. And it will be interesting in how they handle their next meeting. Will the rates go up? They have increased them for the past 16 consecutive meetings. They have to be concerned about increasing it again and possibly fueling inflation. Even with this occurring, it has only been recently that the mortgage rates have been consistently creeping up themselves.
Lenders, of course, have become more conservative & rightly so. The creative financing that has been going on has been incredible and personally somewhat ridiculous. Interest only loans with a balloon payment – oh lordy? Here you are hedging a bet in that the value of your home will go up to create equity, because you are surely not creating any by only paying the interest and still have the full principal left to pay. Unfortunately for many, as the interest rates increase so do their payments & they may not be able to afford this additional expense. And more unfortunately, what we are going to see in the future (& not too distant at that) are foreclosures on a lot of these loans.
Then we also have investors, or I should really say and forgive me for saying this, but wannabe investors. These people saw the increases that were happening in the market and decided that if others can do it so can they. Unfortunately, many got into the market too late and now are finding themselves with a house payment for a home that is most likely vacant & they can’t move it because they are not only competing against the builder/developer but also other investors & homeowners. I read an article recently that mentioned already starting to see these loans going into foreclosure.
I could keep on writing forever about this & will expound on this topic more so in the near future. As always, please don’t forget that your comments and questions are quite welcome.
Till next time – Marc It Sold!
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