Friday, November 27, 2009

There is a differance - Income Property -vs- your home

While it is nice to have growth in value of your home... That does not build wealth for you and your security if you have just one home for your family to live in. You need separate income property. And a Savings account at a bank. And a bit of investment money in something like a business investment or with a stock broker.

This article is on point...

Nov. 22, 2009
View of home as investment needs to change, expert says

Kajal and Vishal Dharod paid $559,000 in 2006 for a new four-bedroom house built in Rancho Cucamonga, Calif. Today, it's worth about $360,000.

"We don't know how we can come back from a loss like that," said Kajal Dharod, 29, a first-time homeowner with a $4,200-a-month mortgage. "Buying the house was a mistake."

American homeownership, once considered a path to wealth, is now leading to disillusionment.
"We always talk about homeownership as being the American dream, but during the last decade, people forgot it's shelter and started thinking of it as a fast way to make or lose money," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies in Cambridge, Mass. "The quicker we move back to seeing real estate as a place to live, a place to put down roots, the quicker the housing recovery will strengthen."
Home-price growth in the next decade probably will average about 3.5% a year, based on …

and it concludes with
"After every major bust, there is a rethinking of that asset class," Carson said. "I think people will change their views about real estate and begin to look at it as a long-term investment that provides shelter, rather than a way to make a quick buck."

Dah! Real Estate for a Quick Flip has always been a very risky thing. Long Term Investment in income producing real estate is for the person that is looking for long term security.

As long as the business leaders in US Corporations look to just make enough to get a stock bonus to pay off we as a country will continue to fail. As long as real estate buyers look to buying a single family home for a quick profit we will have a messed up financial situation.

I believe in Long Term Investment in income producing real estate. If you do as well then please call me and lets get you in while this is a buyers market.


Thursday, November 26, 2009

Thanksgiving thoughts

Something to be Thankful for. Balance.

Balance is a good thing. Today in the Los Angeles Times - Page B2 -
"Fannie Mae to tighten mortgage lending rules" Minimum 620 credit score and no more than 45% income to debt.

Followed by this story "Interest rates drop, matching record low" where the review how rates are now matching a record low of 24 years at 5.06%. But very few are applying.

If the system was not cranked wide open by too loose money we would not have had the blowout. Now the scarcity of banks willing to lend and the prevalence of regulators to be arbitrary and capricious leaves the lenders scared to actually extend credit.

So all you borrowers be prepared for slow responses. Prepare for delays. Be aware that the lenders are chicken for good reason. Sure it may be staffing reductions. But the reality is... If you do persevere you can take away some really terrific loan rates once you get approved!

Let me know if you need an introduction to a loan broker. I have two good guys that I can introduce you to.


Monday, November 09, 2009

"TIME IS MORE VALUABLE THAN MONEY. YOU CAN GET MORE MONEY, BUT YOU CANNOT GET MORE TIME." Jim Rohn. And while this is certainly true, home buyers and folks receiving unemployment benefits both got the word that a bit more money and time is coming their way.

Just on Friday, President Obama signed into law a bill that extends unemployment benefits and the First Time Home Buyers tax credit, which is also being expanded to include benefits for homebuyers who aren't on the first time around buying a home. If purchasing a home is in the cards for you or anyone you know, you can get all the details of the homebuyer's tax credit in this week's Mortgage Market Guide View article below. But first, here are a few additional highlights from last week...including important job market news.

Last week's official Jobs Report showed that there were 190,000 jobs lost in October, higher than the 175,000 job losses that were widely expected. In addition the Unemployment Rate rose to 10.2%, quite a bit higher than the 9.9% expected, and the highest Unemployment level since 1983.

However if I think back to that time we had the growth of the personal computer and a few other technological changes to the world we lived in. Back then in 1983 a Cell phone was plugged into your car or as big as a lunch box. It was a rare business person who owned a personal computer of any type.

We may not be able to get back time but we are back to a time of High Unemployment. What will be the driving force of the work force of our next faze?

Movies are digital and FX is all in a computer. Technology is building remote controlled planes to drop remote controlled bombs. Pilots are so bored that they overshoot their destination by an Hour.

Banks and their regulators are being duplicitous and difficult to fathom. The Government is giving them money fast. Telling them that this money is so you can loan. Then the other department of the government is looking over their books with a fine tooth comb to make sure that they only make loans of the highest caliber that will surely not default.

So how do we Real Estate Agents sell anything if the loans are not going to be approved and funded?

What we need now is strong sources of Employment. Strong borrowers. And Strong Banks willing to make the loans. This we can all see as the three legs of the support for our marketplaces.

It is the Holiday shopping season next. Here is to hoping the numbers are good for us all.

Homebuyer Tax Credit Extended and Expanded!
Last week, a new Homebuyers Tax Credit bill was signed into law. The bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy. And even if you aren't looking to purchase - pass on this article to anyone you think might be in the market to do so. This is information that might benefit them greatly, and I'll be happy to be of service.

Here is a brief overview of the Homebuyers Tax Credit - and its benefits - based on the new bill.

Tax Credit for First-Time Homebuyers
FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Tax Credit for Current Homeowners
The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.
What's So Great About a "Tax Credit"?
The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax deduction", or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!
Higher Income Caps
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.
Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

If you are looking to buy in Mar Vista or Santa Monica or Venice or Palms... Please give me a call and get you this Homebuyer Tax Credit!


Monday, November 02, 2009

How healthy do you feel the economy is today?

Last week the Commerce Department reported the Gross Domestic Product (GDP) for the 3rd Quarter. As you can see from the chart, GDP rose by 3.5% for the first gain in a year and the strongest reading in two years.

While most media outlets were giddy about the news and started the hype that the recession is behind us, it's important to remember that there's more to the economic data than just the headlines.

The temporary "Cash for Clunkers" program has now expired, but was a big part of last quarter's GDP gain. If we remove it from the total, the reading would have been a more modest 1.9%. But there is even more to the rise in the latest GDP number that is just temporary...

Also bolstering the economy has been the $8,000 first-time homebuyer tax credit - which is set to expire at the end of this month. Many home buyers have been taking advantage of this program - and wisely so.

New Home Sales were reported last week, showing a 7.5-month supply of inventory. While that number is slightly worse than last month's 7.3 reading, it's still a big improvement from where we were in January. Back in January, inventory levels reached a high of 12.4-month supply! The improvement in housing inventories has been due in large part to the $8,000 First Time Homebuyer Tax Credit, which is set to expire on November 30.

There is a real possibility of an extension of this program through a proposed Bill, but it is not yet a certainty. The extension Bill still must be reconciled between the House and Senate, and then voted on for final approval. Under the current extension proposal, sales with signed purchase agreements by April 30th that close before June 30th, 2010 would qualify for the credit.

Another bit of news was the UCLA Anderson Forecast: "Recession likely ended this quarter"
In that report there is this line...
"Credit-impaired lower-income consumers can't spend the way they used to, and wealth-impaired affluent consumers won't,"

The Anderson Report further says that this Qtr marks the end of the recession.

Well now we all feel better knowing that this is the low point. Right? There are signs of activity. Some very good things. Maybe this is the low point and we are bout to begin the long slog back to normalcy.

Not the wild growth of the recent past but healthy productivity!

IMHO Keith