Buying and Selling Off-Peak Season

Buying and Selling “Off-Season”

There are many variables that determine what is considered the peak buying and selling season in real estate. It varies by geographical region and is affected as well by the economy. Generally speaking, for home sellers, many real estate experts have traditionally considered the “peak season” to be around late January to early May. Reasons varied from buyers wanting to close late spring or early summer when school ends, moving during good weather, and not wanting to interfere with summer breaks and vacations. The negative impact on buyers during this peak time can be more competition resulting in higher prices and lower inventory.

Times have changed and there ARE benefits to buying and selling “off-season”. Many of today’s buyers AREN’T shopping around school schedules, many are single first-time buyer’s, couples with grown children that are ready to downsize, job relocations, as well as investors in income property. Today’s buyers are savvy and use the Internet to preview listings year round, which means real estate can be very active outside the peak months. A serious buyer is always looking. With fewer houses on the market in the fall and winter, sellers have less competition. Also, selling in fall or winter could allow the seller to take advantage of the coming new spring inventory for buying a new home.

Additional off-season benefits for buyers and sellers can be a faster turnaround for services such as lenders, appraisers, settlement attorneys and inspectors. In many areas, the weather is better and scheduling is easier for showings, as fewer buyers are coming through.

Once summer ends, many sellers whose listings have stayed on the market will be more desperate for offers. They may have purchased a home contingent on selling their old home. If you are a buyer and are having difficulty finding the right house, ask your agent to look at listings that were recently taken off the market and request a showing if the owner is still motivated to sell.

To attract serious buyers, it is important to price your home to sell. Consider adding a home warranty to add value to your listing and give potential buyers confidence. Staging a home with the colors of the fall and winter season can create a warm and welcoming feel. Keep it simple, clean and uncluttered. When selling a home, you need to make the best first impression, no matter what the season!

How The Stock Market Effects Mortgage Rates

Although inflation expectations are the primary factor that influence the direction of mortgage rates on a day-to-day basis the stock market can also have an impact.

To understand how this relationship works it's first important to understand how mortgage rates are determined. Mortgage rates are entirely determined by the price of mortgage-backed bonds (MBS's). MBS's are bonds that are issued by Fannie Mae & Freddie Mac that are backed by the interest paid by mortgage holders. Like the stock market there is an exchange where MBS's are traded.

There is an inverse relationship between the price of MBS's and mortgage rates. When the price of MBS's increase mortgage rates drop and vice versa. 

So, to understand how the stock market can influence mortgage rates we have to understand how they impact the price of bonds. Stocks and bonds compete for the same investment dollar. In other words, an investor with money to invest has to make a decision to invest their money in either the stock market or in the bond market (it should be noted that there are other investment options but these two classes are the primary vehicles for investment capital). 

For an investor stocks are generally thought to provide higher returns over time but also come with greater volatility. Conversely, bonds tend to have lower returns over time but have less volatility. Because bonds tend to provide low volatility with modest returns the bond market can often act as a "safe-haven" for investors who sell their stock positions.

Therefore, in general, when the stock market goes down it is a sign that investors are selling stocks and shifting their capital into bonds. This boosts bond prices and drives mortgage rates down. Conversely, when the stock market rallies it is a sign that investors are selling bond positions in order to shift capital into the stock market. The greater supply of bonds on the market drives prices lower and pushes mortgage rates higher.

It's important to understand that there are a myriad of factors that impact mortgage rates on a day-to-day basis. Inflation expectations & technical trading patterns are two of the primary factors that we monitor. However, in the absence of new information on these two topics it's not uncommon for mortgage rates to be impacted by the stock market in the aforementioned manner.



Information by Even 

Waiting To Buy Can Be Costly

With interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today’s market have become very steep, according to the inaugural Opportunity Cost Report released recently by realtor.com®, a leading provider of online real estate services operated by News Corp subsidiary Move, Inc.

The proprietary report examines a wide range of factors, including the long-term financial impact of owning versus renting a home, the likely monetary gain renters forego in waiting to buy and the financial benefits of homeownership by market.

“Current market conditions give buyers the opportunity to build substantial wealth in the long-term, compared with renters and later buyers, in advance of the projected increase in mortgage rates and continuing price appreciation,” says Jonathan Smoke, chief economist for realtor.com®. “The problem is inventory is low, which has many would-be home buyers –especially first timers – standing on the sidelines and missing out on potentially material financial gains.”

Nationally, the estimated wealth an average buyer would accumulate over a 30-year period based on today’s dollars totals $217,726. Although some markets are more buyer-friendly than others, national data shows homeowners see significant financial benefits as compared to lifetime renters. In 88 percent of MSAs, buying a home produces a financial benefit of at least $100,000 over 30 years.

Ten markets offer an especially considerable upside to owning, with estimated 30-year financial gains above $500,000, and opportunity costs of waiting three years as high as $200,000. These MSAs, in California and other Western states, are relatively expensive markets with strong housing demand and limited supply. The potential long-term wealth in these areas is the greatest nationwide, and likewise, the long-term financial penalty for delaying ownership is substantial, due to price appreciation, escalating rents, and higher mortgage rates on the horizon.

“This analysis looks solely at the financial reasons to buy a home, based on assumptions about rising mortgage rates and changes in home values,” Smoke says. “It’s important to remember that a home purchase decision is deeply personal. Potential buyers need to consider factors such as upcoming life events, job security and potential relocation, in addition to financial benefits, because they too can have a significant impact on ownership.”

Reprinted with permission from RISMedia. ©2015. All rights reserved.

1031 Exchange of Debt Scenario

The below 1031 Exchange scenario regarding debt replacement is a frequent topic for taxpayers:

Taxpayer: “The rules say that I must have equal or greater debt on my replacement property.”
IPX1031^®: “Well, not necessarily. You have to replace the VALUE of the debt that you have on the relinquished property that you are selling.”
Taxpayer: “What the heck does that mean?!”

Taxpayers are under the misconception that the IRS mandates that they should or must have equal or greater debt on their 1031 Exchange replacement property (property they are purchasing). In reality, the IRS indicates that you have to replace the VALUE of the debt that you had on the relinquished property. However, the debt does not have to be replaced with debt. Let’s look at an example.

Let’s assume that the Taxpayer sells a single family rental at the beach for $1,000,000. That property is comprised of both equity and debt. In this example, the Taxpayer has $600,000 of equity and a $400,000 loan from AnyBank.

If the Taxpayer sells her property, does a 1031 Exchange and wants to defer all of her taxes, she will have to roll all of her net equity (a little less than $600,000 after closing costs, etc.) into the replacement property AND she will have replace the VALUE of her $400,000 loan.

In replacing the VALUE of the debt, the IRS is not concerned how the Taxpayer replaces that $400,000 loan that she had from AnyBank. In fact, the Taxpayer has a number of options, including:

• Traditional Financing (another loan from a lender)
• Cash
• Seller-Financing (the seller of the replacement property finances the purchase using a Carryback Note)
• Private Money

And any combination of the abovementioned options would be suitable. For example, the Taxpayer could go back to AnyBank and get a $100,000 loan, bring in $100,000 of fresh cash, have a Carryback Note between her and the Seller of the replacementproperty for $100,000, and have a Private Money loan in the amount of $100,000. When all of those are added together, the Taxpayer has successfully replaced the VALUE of the $400,000 debt that she had on the relinquished property that she sold.

Issues such as “replacing debt” can be confusing. At IPX1031^®, we pride ourselves on being the industry leader in expertise, service and security. We aim to be your complete information resource and look forward to helping you and/or your clients maximize qualifying investments through a 1031 Exchange strategy. For more information about debt replacement, our company, our complimentary 1031 Exchange webinars, or to initiate an exchange, visit our website at www.ipx1031.com or email or call today.

Provided by James Callejas  VP IPX Investment Property Exchange Services,Inc

Hidden costs of Going To College

Hidden Costs of Going to College Colleges provide helpful breakdowns of expected fees such as tuition, room and board, and books. But there are other expenses parents and students will want to include in their budget before the school year begins. Keep these three often overlooked costs in mind: Nearly half of students keep a car on campus, so make sure parking fees, gas and insurance costs don't sneak up on you. Joining a fraternity or sorority can be costly, so find out who to contact about scholarship programs or payment plans for Greek-life members. Popular sporting events are expensive at powerhouse schools, but it's still possible to score other sports ticket bargains. For full story and video, then check out this article from Kiplinger for even more details about hidden college costs. *If you are unable to view the video on your mobile or tablet device, please enjoy it on your desktop. Video featured with permission. All Contents ©2015 The Kiplinger Washington Editors. Kiplinger.com.

How Much Income Do You Need to Buy a Home

See how much income you'd need to afford a home in most California cities

By Phillip Reese - preese@sacbee.com

California median home prices have risen by $120,000 in the last three years, once again putting them out of reach of most households in the state.

The median sales price for homes in California - the middle-priced home in a ranked list - was $393,000 in January 2015, according to real estate tracking firm Zillow.com.

A household would need to make about $78,000 a year to reasonably afford a home at that price, assuming a 20 percent down payment. Almost two thirds of the state's households make less than $78,000, according to the U.S. Census Bureau.

The household income needed to afford a median-priced home ranges from $27,000 in the farming town of Tulare to $442,000 in the Silicon Valley town of Palo Alto.

This graphic shows the amount of income a household would need to buy the median-priced home in each California city with more than 30,000 residents.
To see a map with all the cities in California go to  lhttp://www.sacbee.com/site-services/databases/article13255952.html

For more details from across the country go to link below: 

 Update 1: Click a city on the map to see a detailed breakdown of income needed to buy a median-priced home based on down payment amount. Homes with less than 20 percent down payment include estimated mortgage insurance payments. Update 2: Graphic now includes all cities with more than 30,000 residents.

Home price data source: Zillow

Assumptions: Buyer pays 20 percent down payment. Interest rate of 4 percent on a 30-year mortgage. Annual property taxes and insurance equal 1.2% of home price. Household pays no more than 29 percent of annual gross income on housing payments. Fixed text above graphic at 3 PM on 3/12 to note that almost two-thirds of California households earn less than $78,000 annually.

Hat tip to HSH.com for the idea. Check out their calculations for the nation's largest metro areas.

Read more here: http://www.sacbee.com/site-services/databases/article13255952.html#storylink=cpy

Market Update

SUMMER OF LOVE CONTINUES IN GREATER SACRAMENTO REAL ESTATE

New pending sales 26 percent higher than July 2014

August 11, 2015

The summer of love for home sales in Greater Sacramento appears to be endless with five straight months of extraordinary new open escrow and closed sales figures, rocking the entire region beyond any forecaster’s expectations.

The highest number of new pending sales (open escrows) - 3,065 - were recorded in July, which is the highest number since May of 2012, when the median sales price was at $195,000 and near the recession bottom. July’s pending sales were 26 percent higher than the same month in 2014 which at that time was regarded as very strong by historical standards. Inventory at month-end left 5,572 homes available for sale. This number was 7 percent below July of 2014 and reflected 1.8 months of remaining supply based upon the rapid rate of open escrows even though the average median is now above $330,000. This information was provided by Trendgraphix Inc., a Sacramento-based reporting company, and reported by Lyon Real Estate.

“Buyers just keep coming out of the woodwork,” says Pat Shea, president of Lyon Real Estate. “Boomerang buyers recovering from previous distress sales, new buyers from a solid job market, spillover buyers from unaffordable, San Francisco to San Jose communities, as well as locals who are thrilled with exceptional move-up values are all contributing to what for now appears to be an insatiable demand for Sacramento housing.”

“The move-up and upper-end have just exploded in the past three months,” says Shea. He noted that the $350,000 to $750,000 price point saw a 25 percent increase in closed sales and a 28 percent increase in pending sales compared to this time last year. Above $750,000 the market enjoyed a 23 percent increase in pending sales and an extraordinary 42 percent increase in closed sales over the same period.

“CBS News, Realtor.com, Housing Wire and Forbes, among others, have recently included the Greater Sacramento Region among the hottest housing markets in the country,” continued Shea. “Amazing home values, low interest rates, a solid job market and an unprecedented cycle of re-development are drawing everyone’s attention. Even better is the news that prices are actually stable, with the median floating between $325,000 and $335,000 over the past four months.”

About Lyon Real Estate

Lyon Real Estate is ranked the number one brokerage in annual home sales in the greater Sacramento region and has served the area for more than 65 years. In 2014, the company closed 7,553 transactions worth a total of $2.61 billion in sales volume. Lyon Real Estate has 961 agents in 17 offices located throughout the region. The company is a member of the Leading Real Estate Companies of the World® (LRE), the largest network of premier locally-branded firms, as well as LRE’s Luxury Portfolio International program. In addition to its real estate services, Lyon Real Estate offers RELO Direct, a global relocation program. For more information about Lyon Real Estate, click to www.GoLyon.com and follow us on Facebook/Lyon.

About TrendGraphix, Inc.

TrendGraphix, Inc. is a real estate reporting company based in Sacramento that uses local Multiple Listing Service (MLS) data to provide highly-visual market statistical graphs to real estate brokers, agents, and MLS/Realtor associations across the country. TrendGraphix’s programs are currently used by tens of thousands of agents in more than 100 brokerages in 18 states. For more information about TrendGraphix, visit www.trendgraphix.com

Renting to Buying Tools Help Take You From

New tools to help potential homebuyers find programs that could potentially save them thousands of dollars.  Why rent if you can buy?  I have a client who has rented for the last 6 years paying $1400 per month that amounts to $100,800.00.  Why not put that money into your own home.  There are some great government programs out there available for first time buyers (in some cases the definition of a first time buyer is someone who has not owned a home in the past 3 years) that help with down payment assistance programs.  Here is a web-sit that can help you find those programs in your area   http://www.calhfa.ca.gov/homebuyer/programs/calplus.htm   go to Loans and then to CalPlusFHA Program

Impacts of World Events on Home Loan Rates

World Events Impact U.S. Markets and Home Loan Rates   The flutter of economic activity around the world has certainly caused a whirlwind of market and home loan rate movement this summer. It's a Small World After All Greece was the word on investors' minds ... or Grexit (Greece's potential exit from the European Union). The people of Greece voted "no" to further austerity measures, leaving the Prime Minister scrambling to come up with a plan to keep banks open, get bills paid and instill hope for the future. Despite Greek sentiment, an 85-billion Euro bailout proposal by Eurozone leaders required higher taxes, reduced spending and pension cuts, among other things. And if that weren't enough, the Chinese Stock market was in turmoil for weeks. Finally, oil prices plummeted due to increased oil production in the U.S. and abroad, stockpiles of oil in China and Iran's intent to increase exports. So what does all of this have to do with home loan rates? Simply put: When investors get nervous about the economy, they move dollars into less risky investments, (temporary financial safe havens, if you will). Often, this less risky investment is a type of Bond called Mortgage Backed Securities (MBS), which are tied to home loan rates. When MBS prices rise, home loan rates improve and move lower. On the flipside, once economic uncertainty lessens, dollars are then often moved back to riskier investments, like Stocks. This seesaw trading pattern has been especially volatile this summer with all the uncertainty overseas. The Bottom Line Even though market volatility has heated up this summer, home loan rates remain attractive compared to historical rates. If you have any questions about the housing market and home loans, please don't hesitate to contact me. Article from U Magazine

Upgrade Your Garage

Upgrade Your Garage With These Gear Essentials It is easy to clutter your garage with miscellaneous items, but if you streamline the space by getting rid of what you don't need and investing in some helpful gear, your garage can become an organized and practical space that makes your household more efficient. Deck out your garage with this essential gear and add some functionality to your home:
Purchase a Workbench
A garage is incomplete without a proper workbench. A sturdy workbench will not only store tools, but also creates space to complete those do-it-yourself projects. Most come with built-in-drawers and are equipped with a light to tackle projects after the kids have gone to bed. There are many options available, ranging from the sophisticated to simple.
Install Lighting
To take full advantage of your space, your garage must come equipped with plenty of lighting in order to allow you to work at convenient times in your busy schedule. Poor lighting hurts the quality of the work you are trying to accomplish and if a project requires small parts you don't want to spend your time searching for tiny items on your hands and knees. If you prefer not to install a mounted light on your ceiling, invest in a portable light, a less-expensive option to create the lighting you need.
Buy a Tool Chest
A garage with tools on the floor and scattered across different surfaces isn't the best for productivity. This haphazard approach leads to buying multiples of the same tool because you keep losing them in the clutter. A tool chest will keep items organized and save time whether you are working on a small repair or a long-term DIY project.

Purchase Spare Tires
How many times have you realized you have a flat tire and need an immediate replacement? For convenience, always keep a set of spare tires in your garage. Order a reliable tire brand from Tire Buyer to ensure your backup set of tires is of the highest quality. With a little preparation, a flat tire will no longer have to be a major setback in your day.
Add Garage Storage
Is your rake and broom in one corner and your bike on the ground? A functional garage needs proper storage options, like a peg board affixed to the wall. This storage option will accommodate your small tools, larger items and any miscellaneous tools unable to fit in drawers. If you prefer not to splurge on this expense, at least add sturdy hooks on the wall to store a garden hose, lawn equipment or other tools. With items hung up out of the way, your garage will appear clean and neat.
Invest in Proper Safety Gear
If you like home improvement projects, keep appropriate safety gear in your garage. Invest in protective goggles, gloves and masks to protect your face. Keep a small first aid kit handy for minor emergencies.
Upgrade Your Flooring

To give your garage a polished looked, consider adding an upgraded finish to your floors. Coat the cement with epoxy or tile - this will give your garage an instant face-lift and make it look more appealing.

Written by Realty Times Staff

Tax Benefits for Home Owners

Don't Miss These Homeowner Tax Benefits One of the most useful yet widely misunderstood benefits of homeownership is tax deductions. Tax deductions are a welcome gift from the government, but if you're renting, they benefit your landlord, not you.
Property tax deduction: Any money you paid during the year you purchase and in the years afterward to local state, county and city property tax assessors is tax deductible.
Mortgage interest deduction: Your mortgage interest on both first and second liens is tax deductible. Any points you paid to obtain a lower interest rate are deductible. Private mortgage insurance payments are also deductible.
Closing costs: Some fees to the mortgage lender are deductible. Ask your tax professional for guidance. You can deduct some moving expenses, such as items for home offices. Save your Hud-1 form and show it to your tax professional.
Home office deductions: If your home is your principle place of business, and you meet other IRS guidelines for home businesses, you can take a deduction on workspace dedicated to your business and no other purpose. You can also depreciate that portion of your home over 39 years. All improvements to the workspace are tax deductible. In addition, your security expenses, phones, internet costs, computers, insurance, and utilities can be deducted or depreciated according to IRS allowances. Percentages and limits apply, so talk to your tax professional.
Energy Star: If you purchased an energy efficient system or appliance for your home and it meets government Energy Star standards, you may deduct a portion of your expenses. Save your receipts.
Property sales deductions: If you purchased a home today, occupied it as a primary residence, and sold it in two years, you could be eligible for some capital gains exclusions up to $250,000 if you're single, or $500,000 if you're married. You can even live in the home two years, rent it out for three years, and still enjoy the capital gains exclusion.
There may be many other deductions out there for you to take advantage of that are associated with your home, so save all receipts throughout the year for repairs, parts, purchases, remodeling, etc. Some allowances and special circumstances apply, so before taking this exclusion, be sure to talk to your tax professional.
Save your tax records up to seven years, because you have to be able to support the deductions you take with documentation such as receipts, credit card statements, cancelled checks, and online banking. Make sure you take deductions and depreciation only for legitimate items.

Remember all the benefits you could be getting in deductions, your landlord is currently enjoying while billing all costs associated with managing the home to you. Wouldn't you rather do that yourself?

Written by Blanche Evans