203 days

203 days…that is the number of days until our politicians let the Mortgage Debt Relief Act expire!

And for upside-down homeowners who have yet to move forward on a short sale…this could spell disaster.

In a short sale, homeowners, and their agents, work with the bank to sell their home for an amount less than their mortgage balance, which allows them to avoid foreclosure. The difference between what they owe and what the bank ‘nets’ on the short sale is commonly referred to as the ‘deficiency’. While the Mortgage Debt Relief Act is in place (until the end of this year), qualifying homeowners can avoid taxes on the forgiven debt (deficiency related to the short sale. This is a huge benefit.

Forgiven debt may be considered income by the IRS and be subject to income tax. For example, if you are upside-down $100,000, the bank may end up with a forgiven deficiency close to $120,000 . If you are in the 20% tax bracket, without the Mortgage Debt Relief Act being in place, you could have a tax liability of $24,000 in the year the deficiency is forgiven!

According to the IRS, “The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.”

The act has set a deadline of Jan. 31, 2013, for the completions of short sales in order to qualify for the tax relief. Since many short sales take an average of four to eight months to complete, you are quickly are running out of time to initiate and complete your short sale.

Don’t leave this potential huge liability in the hands of the politicians!

Call us today to see how we can help you get out from under. All calls and emails are strictly confidential.

Thanks for reading…Steve Jackson

561-.602.1258 (direct)

The story behind the story within the story

Recent housing data reports have been touting the “bottom” in the housing market and have been generally encouraging. However, the large number of residential properties that are "underwater"—meaning the borrower owes more on the mortgage than the property is worth—casts a long, dark shadow on the sustainability of the housing “recovery”….especially here in Palm Beach County.

Data from the most recent CoreLogic report estimates that there are somewhere in the neighborhood of 11 million homes nationwide that are under water; and, an additional 2.5 million homes have mortgages within 5% of the underwater mark. According to the most recent Zillow report, in Palm Beach County, approximately 43% of all homes with a mortgage are underwater and another 5% are within shouting distance of being underwater.

Consider this sobering as well as sad fact: out of the 4.3 million mortgages in the state of Florida, the AVERAGE equity position is 12.8%!

Now, if one were to read only the recent articles in the local papers, it would lead to the opinion that the storm has passed, the worst is over and the home price recovery is underway! Not so fast!

Consider the following: Since the 50-state Robo-signing settlement was ratified, bank have dramatically increased the rate of foreclosure filings here in Palm Beach County…March filings were up 65% over 2011, April filings were up 60% over 2011, and although May figures have not yet been released, that are expected to follow suit.

Florida is what is know as a Judicial foreclosure state…the aspect of that with importance to this story is the fact that foreclosures, from start to finish, average over 2 years here locally. So the foreclosure filings of March and April of this year may well not hit the market until mid 2014! Now some do move along more quickly…and some end up as short sales ( and a miniscule portion make up the missed payments or get a permanent modification). BUT, the continuing and steady flow of distressed properties into the market here will  have the effect of continued downward pressure on values for the foreseeable future.

A secondary factor important to any sustained home value recovery is job creation/retention. But, the weaker-than expected jobs report for May doesn’t bode well for the overall economy, but for housing it is far more foreboding…the numbers are going in the wrong direction. The May 2012 jobs report was a step backward for housing.

“The recent trend is reminiscent of the monthly patterns of the spring slowdown witnessed over the last two years that continued through the summer months. If this pattern recurs, we expect that hopes for a meaningful housing recovery will be delayed once again,” says Fannie Mae’s chief economist Doug Duncan, who also notes that signs of improving consumer sentiment in housing is unsupported by today’s data.

If you are thinking of buying OR selling…lets talk first and I’ll give you the insight and analysis necessary for you to make the best decision.

Thanks for reading…Steve Jackson

561.602.1258 (direct)

Choose your preferred headline of the week…is the market good/bad/better/worse?

Palm Beach County homes sales surge

From the Palm Beach Post: April's single-family home sales in Palm Beach County rose a whopping 67.9 percent from a year ago, a surge that underscores the growing belief that buying a home now is a good bet.

There were 2,186 pending home sales in April, up from 1,302 during the same month last year. Townhouses and condo pending sales are up 39.2 percent, to 2,051 in April from 1,473 a year ago.

Pricing is reflecting the renewed buyer interest in home purchasing. The median sale price of a single-family homes in Palm Beach County is $210,100, up from $199,900 the same time last year and up 6.6 percent from March. The median townhouse and condo price is $88,636, up from $85,000 a year ago.

"Prices are climbing as demand increases and inventory levels decrease," said Bonnie Lazar, 2012 President for the Realtors Association of the Palm Beaches. "Inventory is slightly below normal levels, dropping over 50 percent from the previous year."

April single-family home inventory declined 55.5 percent to 5.7 months from 12.8 months a year ago. It was the same story for townhomes and condos, which fell 53.8 percent to 5.5 months from 11.9 a year ago.

Lazar said that trend should mean continued growth in home sales and median prices.

Florida still leads nation in delinquent loans, Mortgage Brokers say

Also from the Palm Beach Post: Florida still has the dubious distinction of leading the nation in “seriously delinquent” home loans, the Mortgage Brokers Association says today.

Some 17.92 percent of Florida home loans were 90 days or more past due or in foreclosure during the first quarter. Nevada was a distant second with 12.63 percent of its loans seriously delinquent.

Florida carries burden of 30 percent of nation’s shadow inventory

Another recent Palm Beach Post article: The Sunshine State’s shadow inventory of 550,000 homes makes up a third of the nation’s unlisted distressed properties according to a report released this week by the Florida Realtors.

Florida Realtors chief economist John Tuccillo said despite the large volume, the slow leak of homes onto the market, as well as an increase in short sales, shouldn’t crash prices as many have feared.

The report, released Tuesday, defines shadow inventory as homes with mortgages 90 days or more delinquent, homes in the process of foreclosure and homes repossessed by the bank but not yet listed for sale.

Goldman Sachs predicts that homeownership rates will decline into 2014

Goldman Sachs recently released a study looking at the housing market and attempted to analyze a bottom in regards to the homeownership rate. One of their major key figures dragging the rate lower was of course, the shadow inventory and the dismal employment outlook.

 

So…there you have it…clear as pea soup.

But if you’re reading this blog and considering buying OR selling, lets talk about what your best option is given your goals and timeframe.

Thanks for reading…Steve Jackson - 561*602*1258

Does It Pay To Stay?

 

DoesItPayToStay.com

A tough question deserves an honest answer.

And one of the toughest questions homeowners are asking us every day is, “Do I short sell my home or stay and wait until I can get out even?” Either way, to make the best decision, you should have all of the information in front of you...

That's why we created a very specific online calculator to help you ‘crunch the numbers’.

Being able to see the current market value of your home and projecting when your investment will break-even is invaluable to your decision making process. With our calculator you’ll be able to do so (for free) in a matter of minutes!

Take a look at the short video below, or go right to the calculator and find out...does it pay to stay?

DoesItPayToStay.com

 

Should I Short Sale My Palm Beach County Home?|

How Do I Short Sale My Lake Worth Home?

Happy Mothers Day

 

Robert Schiller of the Case-Shiller home price index says, “the world is in a late great depression”!

Yale economist Robert Shiller recently participated in a CNBC interview and gave a chilling analysis of the world economy as well as our housing market…some excerpts below:

The global economy is mired in a "late Great Depression" despite central bank stimulus policies, says Yale economist and author Robert Shiller.
"Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” Shiller tells CNBC.

The Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England have propped up their respective economies via liquidity injections known as quantitative easing, tools designed to spur recovery but dubbed by critics as printing money out of thin air. He says the world is in a “new age of austerity.”

Shiller, designer of the Standard & Poor’s/Case-Shiller house price index, adds it's "really hard to forecast" if the U.S. housing market is finally recovering but does find one bright spot.
"The general presumption is that home prices are going down and that's good – it'll make them more affordable."

"Reuters: NEW YORK – The United States housing market is likely to
remain weak and may take a generation or more to rebound, Yale
economics professor Robert Shiller told Reuters Insider on Tuesday.
 
Mr. Shiller, the co-creator of the Standard & Poor’s/Case-Shiller
home price index, said a weak labor market, high gas prices and
a general sense of unease among consumers was outweighing low
mortgage rates and would likely keep a lid on prices for the
foreseeable future.

“I worry that we might not see a really major turnaround in our
lifetimes,” Mr. Shiller said

He said suburban areas in particular might endure further price declines
as high gas prices increase demand for “walkable cities.”

Cheaper housing prices will encourage many to avoid relying on their homes as the bulk of their investment portfolio and diversify, which is a good thing, Shiller adds. "Fifty years ago, there wasn’t this talk of housing as an investment. It was a zeitgeist of the early 2000s, and it has gradually gone." The housing sector appears to be bouncing along a bottom.

It's going to be rocky for a while," says Gregory Miller, an economist at Suntrust Bank in Atlanta, according to Reuters.

Housing prices will drop by a further 20 percent as the downturn gripping the United States deepens, leading economist Gary Shilling says. Writing in the Christian Science Monitor, Shilling said more and more people are looking to rent as homeownership becomes increasingly rare. “Housing activity remains depressed, with the only life coming from the multifamily component, which is being driven by the zeal for rental apartments as homeownership falls,” he wrote.

“Homeowners are losing their abodes to foreclosures; many can’t meet stringent mortgage lending standards; some worry about homeownership responsibilities in the face of job uncertainty; and many people have no desire to buy an asset that continues to fall in price.

“I am looking for a further 20 percent slide in housing prices.”

As my dedicated blog readers know, you don’t come here for sugar-coated real estate stories. I always try to dig deeper into what is being reported…piece together related analysis…give you a clear and “no spin” picture of our real estate environment.

Feel free to call me directly at 561.602.1258

Thanks for reading…Steve Jackson

Who is buying all of these homes? And what does it mean?

I just finished going over NAR’s 2012 Investment and Vacation Home Buyers Survey,which covered existing- and new-home transactions in 2011. The report showed that investment-home sales surged an extraordinary 64.5 percent to 1.23 million last year from 749,000 in 2010. Vacation-home sales rose 7.0 percent to 502,000 in 2011 from 469,000 in 2010. Owner-occupied purchases fell 15.5 percent to 2.78 million.

A recent CNBC article (excerpted below) notes the risk of what the NAR report exposed:

While nearly half of investment buyers said they were likely to purchase another property within two years, housing and mortgage analyst Mark Hanson calls them a “thin cohort” and worries that they add ever more volatility to the current housing recovery.

“They are fickle and volatile. They will go away on the slightest of conditions changes. They also won’t chase prices higher or buy new homes from builders. Lastly, without the heavy flow of distressed supply, there is no U.S. housing market recovery. Distressed sales ARE the market,” says Hanson.

Remember…investment is all about the numbers. Change anything where the numbers aren’t as attractive — even something as minor as HOA fees — and investor demand dries up. To an investor, a house is not a home: it’s cashflow + equity. These investors analyze a house in exactly the same way they would analyze a bond or a stock.

Even if house prices remain stable, if rent rates drop, that changes the investment equation. Now the investor isn’t interested even if the price remains at $200K, because his cashflow projections are all out of whack.

Any hint of rent regulation, and an investor would have to be a fool, politically connected, or pay such a low price that he’ll still make money under rent control, to even consider buying rental properties.  

Stan Humphries, from Zillow recently said, “some markets have likely seen their bottom (think Washington DC or Phoenix, both of which we forecast to see appreciation in 2012),but nationally, the bottom in home values is some way off. Your cautions all fall in line with exactly what we at Zillow have been observing – high percentages of cash buyers, investors flocking to the market to take advantage of rising rental rates (with rents up 3% nationally during 2011). We’re forecasting the national bottom in home values for 2013, and we expect that most large markets will continue to see depreciation throughout 2012. We introduced a formal forecast in our Q1 reports. (You can see the Zillow report here: http://bit.ly/yRwRj7.

As I always tell my clients…”take every news report you read/see/hear with a grain of salt”. Most agencies who put out the stories have an agenda to promote…and most reporters no longer look into the details of any story they are given.

The recent great housing news…(i.e. sales/prices up), is being driven by a very narrowly motivated segment of buyer: “investors”. If there is any small shift in the tax laws benefiting income properties, rental rates; any reduction of cash-on-cash return or after tax return…you can bet the investors will be back on the sidelines.

Call me directly and lets talk about how all of this (and more) affect/influences your real estate selling or buying goals.

Thanks for reading…Steve Jackson

561.602.1258

Todays real estate headlines in the news…Pick your flavor

 

1) It's safe to sell your home again:

The Realtors' group's chief economist, Lawrence Yun, opted to look on the bright side of the report -- sales were up 5.2% year-over-year. "We have seen nine consecutive months of year-over-year sales increases," he said. "Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year."

2) Housing recovery still sputters:

NEW YORK (CNNMoney) -- The housing market continued to struggle in March, despite low home prices and record low interest rates, an industry report revealed Thursday.

Sales of existing homes fell 2.6% compared with a month earlier, to an annualized rate of 4.48 million homes, the National Association of Realtors said. Gus Faucher, a senior economist at PNC Financial, called the report disappointing. "We were expecting an increase," he said. "We need a turnaround to help the economy recover.

3) No Housing Recovery Until 2020 In 5 Simple Charts

Every day (for the past 3 years) we hear countless fairy tales why housing has bottomed and will improve any minute now. Just consider the latest kneeslapper from that endlessly amusing Larry Yun of the NAR, uttered just today: "pent-up demand could burst forth from the improving economy." Uh, right. Here's the truth - it won't and here is why, in 5 charts (below) directly from Bank of America, so simple even an economist will get it.

• Epic supply backlog
• A secular shift from plunging demand via habitation patterns, as more and more simply opt to live with their parents
• More and more are forced to rent
• Home prices will slide ever more as the American Dream of home ownership is forgotten, leading to even less wealth extraction via home equity loans
• Which all  means there is no hope for a long, long time…not at least until 2020

 

The so called “recovery” is about to get impaled by a tsunami of foreclosures with prices dropping a further 5-10% - recovery will take years with the added bonus that those who have been living rent free are about to direct some of that windfall of "disposable income" to actually paying for shelter…watch how that effects the overall economy!

As always…thanks for reading!

Steve Jackson

561.602.1258

Home Affordable Foreclosure Alternatives (HAFA) for Palm Beach County Residents extended through 2013

The Making Home Affordable (MHA) Program was introduced by the Obama Administration in 2009 in an attempt to stabilize the housing market and help struggling homeowners obtain relief and avoid Foreclosure. The program consisted of several smaller programs including the Home Affordable Modification Program (HAMP), the Home Affordable Refinance Program (HARP and the new HARP 2.0) and the Home Affordable Foreclosure Alternatives Program (HAFA).

HAFA is a government-sponsored initiative assisting all Home Affordable Modification Program (HAMP) eligible homeowners in avoiding foreclosure through a short sale or deed-in-lieu of foreclosure.

The program recently announced updates and changes that will take effect June 1st.

These changes will allow a greater number of distressed homeowners to seek assistance.

The major changes from March's updates to the HAFA program include:

• Extending the deadline for submitting for HAFA eligibility will be extended a full year, from December 31, 2012, to December 31, 2013.
• The removal of occupancy requirements. Previously, HAFA required homeowners to have lived in the property within the last 12 months.
• $3,000 relocation incentives will be limited to properties occupied by an owner or tenant at the time of the short sale.
• Mortgage payments will be allowed to exceed 31% of the homeowner's gross monthly income. This update will allow a homeowner to stay current on their mortgage and still qualify, minimizing the overall impact to their credit.
• Secondary lienholders may receive up to a maximum of $8,500, up from $6,000 previously.
• And one of the most dramatic changes: The Credit Bureau Reporting will be Account Status Code 13 (paid or closed account/zero balance) or 65 (account paid in full/a foreclosure was started), as applicable.

With these updates, a homeowner can be current on their mortgage, qualify for HAFA, continue to make their payments, and execute a short sale with minimum impact on their credit!

If you are upside down on your home…call me today. My direct line is 561.602.1258

Thanks For Reading…Steve Jackson