Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.
Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.
Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010.
Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).
California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.
March Market Activity
92037 (La Jolla):
212 active detached homes
32 pending sales / 24 contingent sales (pending short sales)
24 sold homes
9 months of inventory currently on the market
92106 (Point Loma):
70 active detached homes
21 pending sales / 9 contingent sales (pending short sales)
14 sold homes
5 months of inventory currently on the market
92107 (Ocean Beach):
48 active detached homes
20 pending sales / 4 contingent sales (pending short sales)
8 sold homes
6 months of inventory currently on the market
92109 (Mission Beach and Pacific Beach):
100 active detached homes
23 pending sales / 9 contingent sales (pending short sales)
12 sold homes
8 months inventory currently on the market
92118 (Coronado):
114 active detached homes
25 pending sales / 4 contingent sales (pending short sales)
11 sold homes
10 months inventory currently on the market
212 active detached homes
32 pending sales / 24 contingent sales (pending short sales)
24 sold homes
9 months of inventory currently on the market
92106 (Point Loma):
70 active detached homes
21 pending sales / 9 contingent sales (pending short sales)
14 sold homes
5 months of inventory currently on the market
92107 (Ocean Beach):
48 active detached homes
20 pending sales / 4 contingent sales (pending short sales)
8 sold homes
6 months of inventory currently on the market
92109 (Mission Beach and Pacific Beach):
100 active detached homes
23 pending sales / 9 contingent sales (pending short sales)
12 sold homes
8 months inventory currently on the market
92118 (Coronado):
114 active detached homes
25 pending sales / 4 contingent sales (pending short sales)
11 sold homes
10 months inventory currently on the market
Homebuyer Tax Credit legislation
AB 183 will provide $200 million for home buyer tax credits, allocating $100 million for qualified first-time home buyers of existing homes and $100 million for purchasers of new, or previously unoccupied, homes.
The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit.
The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).
The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit.
The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).
Fed to end MBS purchases
Mortgage rates are expected to rise gradually as the Federal Reserve left a key short-term interest rate untouched Tuesday, but said it would wrap up $1.25 trillion in purchases of mortgage-backed securities (MBS) this month.
In a statement, the Federal Open Market Committee said its target for the federal funds overnight rate will remain in the range of zero to 0.25 percent, as inflation is likely to remain "subdued for some time."
In a statement, the Federal Open Market Committee said its target for the federal funds overnight rate will remain in the range of zero to 0.25 percent, as inflation is likely to remain "subdued for some time."
Builder confidence declines two points in March
Builder confidence in the market for newly built, single-family homes declined to 15 in March, two points lower compared with February, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The component gauging home sales expectations for the next six months decreased three points in March to 24, compared with February.
The component gauging traffic of prospective buyers declined two points to 10, according to the report. Regionally, the HMI results were mixed in March with the West, which includes California, posting a one-point gain to 15.
The component gauging traffic of prospective buyers declined two points to 10, according to the report. Regionally, the HMI results were mixed in March with the West, which includes California, posting a one-point gain to 15.
La Jolla Market Update
Sales Activity: Sales activity in La Jolla remains consistently active. There were 34 closed sales during the past month, raising the total number of closings year-to-date from 8 a month ago to 42. The number of homes in escrow increased to 68 from 56 a month ago. Subtracting the number of closed sales the previous month, there were 46 net new escrows opened.
Inventory Levels: The total number of homes listed for sale increased slightly to 325 from 320. The current inventory level is just over a six-month supply, the lowest since June 2009.
Conclusion: La Jolla's supply/demand ratio has continued to improve since we started reporting and continues to inch its way downward. This remains good news for both the buyers and sellers. Buyers still have a variety of homes to consider, and sellers are finding that with competitive pricing, they have the opportunity to sell their homes within a reasonable marketing period.
Inventory Levels: The total number of homes listed for sale increased slightly to 325 from 320. The current inventory level is just over a six-month supply, the lowest since June 2009.
Conclusion: La Jolla's supply/demand ratio has continued to improve since we started reporting and continues to inch its way downward. This remains good news for both the buyers and sellers. Buyers still have a variety of homes to consider, and sellers are finding that with competitive pricing, they have the opportunity to sell their homes within a reasonable marketing period.
Coronado Market Update
Sales Activity: Over the past month, the total number of closed sales in 2010 rose from 4 to 15, an increase of 11 sales. The number of homes in escrow as of February 15, 2010 increased from 18 to 24. When factoring in the 11 properties which closed escrow since January 15, 2010 there were 17 net new escrows opened this past month.
Inventory Levels: The number of homes listed for sale has continued to decrease over the past four months, dipping from 184 to 181. The current listing inventory equates right at a 12-month supply. While down slightly from the previous month, Coronado continues to have the second highest level of inventory when compared to other San Diego luxury home communities.
Conclusion: There continues to be a wide variety of homes that buyers can choose from. Sellers willing to become more competitive with their pricing still have an opportunity to entice the right buyer. Buyers have teh opportunity to purchase a home with the advantage of the competitive environment. This remains a great time to buy luxury real estate.
Inventory Levels: The number of homes listed for sale has continued to decrease over the past four months, dipping from 184 to 181. The current listing inventory equates right at a 12-month supply. While down slightly from the previous month, Coronado continues to have the second highest level of inventory when compared to other San Diego luxury home communities.
Conclusion: There continues to be a wide variety of homes that buyers can choose from. Sellers willing to become more competitive with their pricing still have an opportunity to entice the right buyer. Buyers have teh opportunity to purchase a home with the advantage of the competitive environment. This remains a great time to buy luxury real estate.
Fed holds rates at record lows to foster recovery
The Federal Reserve on Tuesday repeated its pledge to hold interest rates at record lows to foster the economic recovery and ease high unemployment.
But the Fed's assessment of the economy at its meeting Tuesday was a bit more upbeat. It said the job market is stabilizing. That was an improvement from its January statement, when it said the deterioration in the labor market was abating.
It also said business spending on equipment and software has risen significantly, also an upgrade from its last assessment. Still, the Fed cautioned that spending by consumers could be dampened by high unemployment, sluggish wage growth, lower wealth and tight credit. And it noted weakness in the commercial real-estate and home-building markets.
The Fed held its target range for its bank lending rate at zero to 0.25 percent, where it's been since December 2008. In response, commercial banks' prime lending rate, used to peg rates on certain credit cards and consumer loans, has remained about 3.25 percent — its lowest in decades.
Super-low rates benefit borrowers who qualify for loans and are willing to take on more debt. But they hurt savers. Low rates are especially hard on people living on fixed incomes who are earning scant returns on their savings.
But the Fed's assessment of the economy at its meeting Tuesday was a bit more upbeat. It said the job market is stabilizing. That was an improvement from its January statement, when it said the deterioration in the labor market was abating.
It also said business spending on equipment and software has risen significantly, also an upgrade from its last assessment. Still, the Fed cautioned that spending by consumers could be dampened by high unemployment, sluggish wage growth, lower wealth and tight credit. And it noted weakness in the commercial real-estate and home-building markets.
The Fed held its target range for its bank lending rate at zero to 0.25 percent, where it's been since December 2008. In response, commercial banks' prime lending rate, used to peg rates on certain credit cards and consumer loans, has remained about 3.25 percent — its lowest in decades.
Super-low rates benefit borrowers who qualify for loans and are willing to take on more debt. But they hurt savers. Low rates are especially hard on people living on fixed incomes who are earning scant returns on their savings.
Tax exemption for homeowners in distress goes to governor
The California Senate voted 21-15 today to approve legislation that would prevent homeowners who have had a foreclosure, loan modification or short sale from being required to pay state income taxes on the debt forgiven.
The bill, SB32 (8X), by Sen. Lois Wolk (D-Davis) also makes other changes to the state tax law so it will conform with fedeal income tax law. It now goes to Gov. Schwarzenegger, who has 12 days to sign or veto the measure once it reaches his desk.
If signed by the governor, the law will become immediately effective. It is retroactive to include the 2009 tax year and the exemption on state taxation of forgiven mortgage debt would remain in force through 2012.
The bill, SB32 (8X), by Sen. Lois Wolk (D-Davis) also makes other changes to the state tax law so it will conform with fedeal income tax law. It now goes to Gov. Schwarzenegger, who has 12 days to sign or veto the measure once it reaches his desk.
If signed by the governor, the law will become immediately effective. It is retroactive to include the 2009 tax year and the exemption on state taxation of forgiven mortgage debt would remain in force through 2012.
Future Foreclosures Could Hamper Housing
In spite of signs of a recovery, many home buyers are continuing to fall behind on their mortgages.
Some economists see this as an indication that a second major wave of foreclosures is likely, even though the housing market appears to be stabilizing.
This next upsurge in foreclosures could cause more disruption and push prices down farther.
Housing experts say that the recent favorable housing data doesn’t reflect the number of properties that banks have left in limbo — repossessed, but not yet on the market.
Some economists see this as an indication that a second major wave of foreclosures is likely, even though the housing market appears to be stabilizing.
This next upsurge in foreclosures could cause more disruption and push prices down farther.
Housing experts say that the recent favorable housing data doesn’t reflect the number of properties that banks have left in limbo — repossessed, but not yet on the market.
Fewer homes enter foreclosure process in February
The number of homes caught up in some stage of the foreclosure process in February fell 2% from the previous month to 308,524 homes in the state of California.
The steady decline in foreclosure activity is attributed to efforts by banks to keep people in their homes through the Obama administration's $75 billion plan to help troubled borrowers.
California could be particularly vulnerable because of the high concentration of borrowers falling behind on their payments and because there are so many borrowers in the state who are underwater, owing more on their mortgages than their homes are worth.
California ranked fourth in foreclosures among the states -- following Nevada, Florida and Arizona -- with 1 in every 195 housing units receiving a foreclosure filing in February.
The steady decline in foreclosure activity is attributed to efforts by banks to keep people in their homes through the Obama administration's $75 billion plan to help troubled borrowers.
California could be particularly vulnerable because of the high concentration of borrowers falling behind on their payments and because there are so many borrowers in the state who are underwater, owing more on their mortgages than their homes are worth.
California ranked fourth in foreclosures among the states -- following Nevada, Florida and Arizona -- with 1 in every 195 housing units receiving a foreclosure filing in February.
Govt to Pay Homeowners to Sell at a Loss
In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.
This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.
More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.
For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.
Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.
This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.
More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.
For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.
Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.
Buyers Who Wait May Lose a Lot
Potential home buyers who delay have a lot to lose.
First-time home buyer and move-up tax credits worth $8,000 and $6,500, respectively, expire April 30. Buyers who qualify get a dollar-for-dollar reduction in taxes or a cash payment if they don’t pay enough taxes to cover the credit.
Other factors that should spur buyers:
Low mortgage rates. If the Federal Reserve stops buying mortgage-backed securities at the end of March, 30-year rates will almost certainly rise to more than 6 percent.
Rising prices. About 30 percent of markets are already experiencing price increases. For those buyers who decide to wait will realize later on that the neighborhoods they can afford right now will no longer be an option.
First-time home buyer and move-up tax credits worth $8,000 and $6,500, respectively, expire April 30. Buyers who qualify get a dollar-for-dollar reduction in taxes or a cash payment if they don’t pay enough taxes to cover the credit.
Other factors that should spur buyers:
Low mortgage rates. If the Federal Reserve stops buying mortgage-backed securities at the end of March, 30-year rates will almost certainly rise to more than 6 percent.
Rising prices. About 30 percent of markets are already experiencing price increases. For those buyers who decide to wait will realize later on that the neighborhoods they can afford right now will no longer be an option.
Fannie Mae Seeks Another Bailout
Fannie Mae admitted last week that it needs another $15.3 billion from the federal government to stabilize its finances.
Fannie, which is controlled by the federal government, is making financial progress. It reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department, as compared to a loss of $25.2 billion in the same period in 2008.
Fannie’s problems stem from a continuing stream of bad loans, with 5.38 percent of its single-family loans more than 90-days delinquent, up from 2.42 percent in 2009.
Fannie, which is controlled by the federal government, is making financial progress. It reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department, as compared to a loss of $25.2 billion in the same period in 2008.
Fannie’s problems stem from a continuing stream of bad loans, with 5.38 percent of its single-family loans more than 90-days delinquent, up from 2.42 percent in 2009.
Many borrowers in default stay put as lenders delay evictions
Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend.
Buyers can expect several more waves of foreclosures this year, when defaulted homeowners are finally forced to move out from their homes.
Buyers can expect several more waves of foreclosures this year, when defaulted homeowners are finally forced to move out from their homes.
Freddie Mac abandons ship on interest-only loans
Freddie Mac has announced that it will stop buying and securitizing interest-only loans in September because those mortgages have performed so poorly.
What does this mean for buyers? Prepare to pay for your home the traditional way, with principal and interest payments on your mortgage, only after qualifying for the loan by proving your income and credit history.
What does this mean for buyers? Prepare to pay for your home the traditional way, with principal and interest payments on your mortgage, only after qualifying for the loan by proving your income and credit history.
FHFA extends HARP for one year
The Federal Housing Finance Agency (FHFA) this week announced the extension of the Home Affordable Refinance Program (HARP) to June 30, 2011. HARP is a refinancing program administered by Fannie Mae and Freddie Mac and expands access to refinancing for qualified individuals and families whose homes have lost value. The program was originally set to expire June 10, 2010.
In 2009, Fannie Mae and Freddie Mac purchased or guaranteed more than 4 million refinanced mortgages. Homeowners can visit www.MakingHomeAffordable.gov for additional information on the program.
In 2009, Fannie Mae and Freddie Mac purchased or guaranteed more than 4 million refinanced mortgages. Homeowners can visit www.MakingHomeAffordable.gov for additional information on the program.
California new-home production rises in January
Statistics compiled by the Construction Industry Research Board (CIRB) show homebuilders pulled permits for 2,979 total housing units in January, a 49 percent increase compared with January 2008 but an 18 percent decline compared with December 2009.
Permits for single-family homes totaled 1,908, a 50 percent increase compared with the same period a year ago but down 28 percent compared with the previous month. Multifamily permits totaled 1,071, up 45 percent compared with a year ago and 11 percent compared with December.
Ben Bartolotto, research director for CIRB, noted that the monthly decreases from December to January were typical as January is usually one of the weakest months for housing starts. He also noted any enthusiasm for the year-over-year increases seen in January should be tempered with the fact that the numbers for January 2009 posted the lowest annual rate on record.
CIRB is forecasting a modest recovery for 2010, with permits being pulled for 52,000 total units, up slightly from the record-low 36,289 permits pulled in 2009.
Permits for single-family homes totaled 1,908, a 50 percent increase compared with the same period a year ago but down 28 percent compared with the previous month. Multifamily permits totaled 1,071, up 45 percent compared with a year ago and 11 percent compared with December.
Ben Bartolotto, research director for CIRB, noted that the monthly decreases from December to January were typical as January is usually one of the weakest months for housing starts. He also noted any enthusiasm for the year-over-year increases seen in January should be tempered with the fact that the numbers for January 2009 posted the lowest annual rate on record.
CIRB is forecasting a modest recovery for 2010, with permits being pulled for 52,000 total units, up slightly from the record-low 36,289 permits pulled in 2009.
No Meaningful Recovery in Commercial Real Estate Before 2011
Although the economy has been growing lately, fallout from the recent recession continued to negatively impact commercial real estate sectors in the fourth quarter, but there is hope for some improvement next year, according to the latest survey.
Lawrence Yun, NAR chief economist, said commercial real estate almost always lags the economy. “Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions,” he said. “With the job market expected to turn for the better later this year, we’ll see rising demand for office and warehouse space, but that isn’t likely before 2011,” Yun said. “At the same time, improved consumer confidence would help sustain the retail sector and encourage more people to enter the rental market.”
Lawrence Yun, NAR chief economist, said commercial real estate almost always lags the economy. “Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions,” he said. “With the job market expected to turn for the better later this year, we’ll see rising demand for office and warehouse space, but that isn’t likely before 2011,” Yun said. “At the same time, improved consumer confidence would help sustain the retail sector and encourage more people to enter the rental market.”
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