Real Estate news

More than 2.6 million households are at least 60 days delinquent on their mortgage payments, according to the nonprofit coalition Hope Now. While those who are delinquent 60-120 days can make back payments to help them become current, those who are more than two months behind may need to employ other means to catch up.

Beyond the obvious threat of foreclosure, falling behind on a mortgage can be costly:  Lenders charge late fees as well as legal and administrative costs, and the borrower’s credit score will suffer.  Experts say the sooner a delinquent borrower deals with the situation, the better the chances are of making a full economic recovery.

Borrowers who are determined to stay in their home but cannot immediately make back payments need to start by contacting their lender or a credit counselor to discuss available options.  Among them are devising a repayment plan, modifying the loan, doing a short sale, and adding what is owed back into the mortgage balance.

The first step borrowers should take is to assess their financial situation by looking at the amount of money brought in each month versus what is spent.  Many credit and housing counselors have worksheets on their websites to help with this.

Next, borrowers should collect pay stubs, documentation on other income, two years’ worth of tax returns, two months of saving and checking account statements, and mortgage records.  If the borrower has experienced a hardship, such as a layoff, a divorce, or an illness, they should gather evidence of that, such as unemployment insurance receipts, medical bills, a copy of a doctor’s letter to their employer, or a divorce decree.

Finally, borrowers should talk to their lender, servicer, or an adviser.   The federal Dept. of Housing and Urban Development certifies counseling agencies that provide free advice and assistance, and has a list of them on its website.  Counselors can offer alternatives and prepare a budget to see if the homeowner can afford to stay in the house.

Before agreeing to a repayment schedule, it is important homeowners understand how their lender treats partial payments.  Some credit partial payments toward the balance immediately, while others hold the money in a “suspend account” until the full amount is received.  Some will return the check to the borrower, and some will stop accepting payments after the mortgage is seriously delinquent.

If you have equity in your home, we will sell your home and get top dollar in this challenging market, go to County Properties Marketing Homes. If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also and close escrow in 45-60 days or less. Learn more about mortgage relief options and how to take advantage of our FREE REALTOR (R)  CONSULTATION for loan modification and or selling .  or go to www.ShortSaleRealtors4U.com

More questions we can help you, at County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! Want to know what your home is worth? Click here for a free market evaluation !

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net and I’ll be happy to follow up and take great care of them.

Several tax changes will go into effect on Jan. 1, 2012 — some good, some not so good. Here are the most important changes you should know about:

Tax breaks that have been reduced for 2012

Several tax breaks will be reduced, but not eliminated, for 2012.

1. Bonus depreciation: During 2011 taxpayers can deduct in one year 100 percent of the cost of most types of personal property they buy for their businesses and place in service during the year. This amount is scheduled to lower to 50 percent for most types of property placed in service during 2012. However, it is possible that 100 percent bonus depreciation will be extended through 2012.

2. Section 179 expensing: For 2011, the maximum Code Section 179 deduction is $500,000, the highest it has ever been. The maximum Section 179 deduction will be reduced to $139,000 for 2012. Moreover, the 2012 limit will have to be reduced dollar for dollar by any amount by which the cost of Code Section 179 property placed in service during 2012 exceeds $560,000.

3. Employee transportation benefits: For 2011, an employer can provide up to $230 per month in tax-free transportation benefits — this includes transit passes or reimbursement for commuting to work by vanpool. Starting in 2012, the limit will be reduced to $125 per month.

Tax breaks that have been eliminated for 2012

Three widely used tax breaks will be eliminated entirely starting in 2012:

1. State and local sales tax deduction: For 2011, taxpayers can elect to deduct as an itemized deduction on their Schedule A (itemized deductions) state and local sales taxes, instead of state and local income taxes. This deduction is eliminated starting in 2012. This is bad news for taxpayers who live in states with no state income tax.

2. $4,000 education expense deduction: For 2011, taxpayers with modified adjusted gross income of $65,000 or less ($130,000 or less for joint returns) may deduct up to $4,000 of qualified education expenses paid during the year for themselves, their spouses, or their dependents.

Such expenses include tuition and mandatory enrollment fees to attend any accredited public or private institution above the high school level. This deduction is eliminated entirely for 2012.

3. Charitable Contributions: IRA (individual retirement account) owners age 70 1/2 and up can directly transfer up to $100,000, tax free, to eligible charities during 2011. This option, created in 2006, is available for distributions from IRAs regardless of whether the owners itemize their deductions. This provision is eliminated for 2012.

Tax breaks that have been expanded or extended

A couple of tax breaks have been expanded for 2012:

1. Hire a veteran, get a tax credit: If you hire an eligible unemployed veteran for your business during Nov. 22, 2011, through Dec. 31, 2012, you’ll qualify for an expanded work opportunity tax credit. This is a tax credit against income tax of up $5,600 (more for disabled veterans).

2. Reduced Social Security Taxes? During 2011, Social Security taxes are reduced to 10.4 percent up to the annual income ceiling, instead of the normal 12.4 percent. The U.S. Senate passed a two-month extension of the 2 percent reduction, but the House rejected the Senate bill.

However, most people believe that — one way or another — the 2 percent reduction will be extended through the end of 2012.

The information provided needs to be verified with you tax professional, for I am a realtor not a tax professional.

If you have equity in your home, we will sell your home and get top dollar in this challenging market, go to County Properties Marketing Homes. If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also and close escrow in 45-60 days or less. Learn more about mortgage relief options and how to take advantage of our FREE REALTOR (R)  CONSULTATION for loan modification and or selling .  or go to www.ShortSaleRealtors4U.com

More questions we can help you, at County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! Want to know what your home is worth? Click here for a free market evaluation !

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net and I’ll be happy to follow up and take great care of them.

Good Signs for the New Year

By Lawrence Yun, NAR Chief Economist

Here’s a change. Lately most of the dire economic news has been coming out of Europe: talk about the future of the Eurozone, whether or not the EU will hold together as an entity, and even some predictions that the euro may not survive as a currency. Some analysts in the U.S. are suggesting that problems in Europe are contagious and will doom our economy to another recession. But despite those European currency and economic troubles, a possibility of an economic recession in the upcoming year here in the U.S. looks less and less likely.

The key reason is the housing market recovery. After six years of a demoralizing and protracted housing market recession, a light is finally appearing at the end of the tunnel – and it is not a headlight from a freight-train. It is a genuine warm sunny glow. The latest pending home sales index – which reflects contract signings to purchase a home – rose more than 10 percent in October from the previous month and more than 9 percent from one year ago. Because the wide swings in sales related to the homebuyer tax credit are largely over, that year over year increase is a clean jump and not just a rise due to some artificially low comps of the past year. Clearly the data implies something is brewing out there. Yes, there are still cancellation issues related to appraisals, tight underwriting, and other issues. But buyers are evidently recognizing the great opportunity to own real estate and acting accordingly. Let’s examine several of the factors that suggest the worst is over.

First, existing home inventory has been trending downward consistently. The total number of homes listed for sale at the end of October was 3.3 million, down from 4.5 million in the middle of 2008. Remember, there are seasonal swings in the number of listings – with spring/summer months reflecting more home sellers (more listings) and autumn/winter months reflecting fewer sellers (fewer listings), so we still need to make proper seasonal adjustment comparisons. When we look just at the month of October during the past several years, this October registered the lowest inventory since 2005. The same was true for the month of September; September 2011 registered the lowest September inventory since 2005. Again, similar stories are seen for July and August of this year. In short, inventory has been running at six-year lows for several consecutive months. That is important to note, because lower inventory is a signal that price declines are coming to an end. In fact, the government measurement of home prices – from the Federal Housing Finance Agency (FHFA) – has risen in five out of the past six months, and home prices according to the FHFA are up two percent from their low point in March of this year. Other price data, such as that from Case-Shiller and NAR, have been moving both up and down with no consistent direction since 2009. In other words: prices have been roughly stable for the past three years.

Second, rents are rising and rent increases accelerating. The primary rent component of the Consumer Price Index (CPI) is up 2.4 percent from 12 months ago, but has been accelerating at 4.8 percent in the most recent monthly reading on an annualized basis. Rising rents will tip some renters into home buying, while real estate investors will have an added reason to own another property. According to The Economist magazine, the rent metric in the U.S. is such that home values are eight percent below justifiable levels.

Third, jobs are being added to the economy. Since the low point in early 2009, the economy has added 2.5 million net new jobs. Generally more jobs mean more home sales. So far, the extra jobs have not led to higher home sales. But to view it another way, pent up demand for housing has been growing and it is inevitable that home sales will have to tick higher with more jobs.

Fourth, mortgage rates are too low to pass up. While some financially qualified buyers are strategizing about the perfect time to enter the market in term of rates and home prices, these considerations are like picking up nickels and dimes when viewed from a far-off horizon. Consider what has happened in the past 30 years regarding the prices of consumer goods. On a broad basis, consumer prices have risen 160 percent from 1981 to 2011. Rent – and coincidentally gasoline prices – rose 200 percent. Home values rose 220 percent, even after accounting for the price declines during the recent housing downturn years. Medical care costs increased a whopping 400 percent. But even that increase was bested by the increase in college tuition which rose nearly 700 percent (which raises a number of questions about where the tuition monies go). One consumer item that did not rise in cost was the average monthly mortgage payment for those who took out a 30-year fixed-rate mortgage back in 1981.

What will happen over the next 30 years? If the cost of some of the above consumer items rises at a similar pace as in the past 30 years, then gasoline prices will run around $9 per gallon while the $20,000 college tuition of today will reach $140,000 per year. But one item which the consumer will not pay a nickel more is on their monthly mortgage payment. At the current median home price and current mortgage rate, the monthly mortgage payment would be fixed at $698 per month for the next 30 years. At the same time, home values likely will have tripled.

So, as we approach the end of 2011, I am fairly hopeful that our housing recovery is on the right track. Jobs are coming back, people are buying homes, home prices are stabilizing. All in all, not a bad way to end the old year, and start the new. Happy holidays!