Jan. 29: Pending Home Sales rise; CA real estate tax info for older owners

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. See more

 

NAR Pending Home Sales Index Up 0.1% In December to a reading of 106.8 in December.   An index of 100 is equal to the average level of contract activity during 2001, which the NAR considers a “normal,” or balanced, market for the current U.S. population.  Lawrence Yun, the NAR’s chief economist, said “Warmer than average weather and more favorable inventory conditions compared to other parts of the country encouraged more households in the Northeast to make the decision to buy last month,” he said. “Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job creating areas. With homebuilding still grossly inadequate, steady price appreciation and tight supply conditions aren’t going away any time soon.”

 

What potential homeowners need:

 

For the longest time now, we have all been told, multiple times that home prices versus rent and price to median wage ratios all favor owning a home. But those are just statistics not human connectivity that helps fuel consumers.

 

Realistically, real people need to have hope, access to funds, and excitement. They need a knowledgeable, trustworthy person to help educate thus overcome their fears, appeal to their need to realize their family and household plans.

 

The headline topics this year may focus wages, production or lack of, foreign affairs, and economic increases or decreases, but these are not the only factors at play What would happen of builders added for-sale new communities that cost buyers less while banks and investors invested in the lots? It would promote both attainability and availability.

 

HUD says things are looking up:

 

According to HUD, in the third quarter of 2015, homeowners’ equity was up $361 billion (3.0%) from the second quarter of 2015, for a total of nearly $12.4 trillion–the highest level since the fourth quarter of 2006.

 

Also in the third quarter, CoreLogic estimated that 4.1 million homes, or 8.1% of residential properties with a mortgage, were in negative equity. This compares to 4.3 million, or 8.7%, that were reported in negative equity in the second quarter and 5.2 million, or 10.4% one year ago.

 

Ah progress, nice to hear. The current housing programs are helping struggling homeowners. More than 2.5 million homeowner assistance actions have taken place through the Making Home Affordable Program, including nearly 1.6 million permanent modifications through the Home Affordable Modification Program (HAMP), while the Federal Housing Administration (FHA) has offered more than 3.0 million loss mitigation and early delinquency interventions through November.

 

Do your lending partners offer these programs and, if so, is there a skilled understanding of these programs that could help a potential buyer? There are a lot of great programs out there and not all of them are impossible to qualify for.

 

 

 Tax Break for over 55:

 

In the late 1980s, California voters approved a pair of propositions (60 & 90) that give homeowners older than 55 a property tax break when they sell their primary residence and buy a replacement one that costs the same or less. It was intended to help empty nesters downsize without facing a property tax increase.

 

A bill sponsored by the California Association of Realtors would have extended that break, with a modification, to seniors buying a more expensive home. The bill, by state Sen. Jim Beall, D-San Jose, passed the Senate Governance and Finance Committee 7-0, but failed to make it out of the Appropriations Committee.

 

Under Proposition 60, homeowners who are older than 55 or permanently disabled can sell their primary residence and transfer its assessed value to a replacement home in the same county of equal or lesser value.

 

Proposition 90 allows them transfer their assessed value to a replacement home of equal or lesser value in a different county, but only if that county accepts incoming transfers, only 10 counties currently accept transfers.

 

There are a couple of exceptions as well. Seniors who sell their home before buying a replacement can spend up to 5 percent more on the new home if they buy it within a year, or up to 10 percent more if they buy within two years. Once you have used this transfer, neither you nor your spouse can get it again, unless one of you becomes disabled, in which case you can transfer again because of the disability.

 

Last year, 4,402 California homeowners filed Prop. 60 claims and 2,207 filed Prop. 90 claims, according to the state Board of Equalization.

 

One example reasoning for those in favor of the bill was that proposed change would create an opportunity allowing empty-nesters to sell their big homes which would increase the supply of existing single-family homes available to young families.

 

An argument raised by the opposition to the bill believe the current system works as it was designed. People on fixed incomes who don’t want to incur more tax or debt could move into a less expensive home. Expanding it to cover seniors buying more expensive homes would defeat the purpose of downsizing and spending less.

 

The association says it will reintroduce the measure in the Assembly.

 

Yes, the end of football season is nearing, complete with unusual tales of toughness (Rated PG). It is a story about Coach Woody Hayes and a turtle.

 

 

Rob

 

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