Home & Design: What’s In and What’s Out

IN

• A reduced carbon footprint: How your home and you impact the earth matters to more buyers who want a home that lets them save energy and lessen their contribution to global warming.
• Outdoor living: Massive fireplaces, outdoor kitchens, and under-patio heating to extend the season are not just for the Sun Belt anymore.
• Fully concealed appliances: That wood-printed cover for the fridge is not enough any longer; now appliances are hidden behind hinged doors.
• Floating homes: Not your father’s houseboat, these nonmobile homes are basically ranch houses sitting on stationary barges in a lake or river.
• Home elevators: Even builders of mid-priced homes are adding this essential for boomers wanting to age in place.
• Pet showers: Clean pets mean clean homes, and who wants to mess up the bathtub when this feature can be a part of the garage or mudroom?
• Freestanding bathtubs: These oversized soaker tubs, or “bath thrones,” have supplanted whirlpool baths as the must-have bathroom centerpiece.
• Bathroom suites: Whether it’s multiple flat-screen TVs or a mini fridge and cappuccino maker, you’ll soon have a whole home inside this one room.
• Ceiling Beams: Beams were in, then they were out - and everyone painted their beams white.  Well, they’re back in, so paint them a warm shade of brown or cover them with a wood veneer.

OUT

• Living rooms: The incredible shrinking parlor has ceased to exist in some homes.
• Voluminous ceiling heights: The absurd look and wasted space of 20-foot ceilings in 12- by 10-foot rooms is finally dawning on buyers. Tiny balconies Room for only one chair is worthless; balconies must now function for entertaining too.
• McMansions: Could it be that “small is beautiful” finally is gaining traction?

Source: Realtor Magazine

Last-Minute Home Owner Tax Primer

As April 15 approaches, here’s what home owners need to know about the deductibility of mortgage interest and property taxes.

Taxpayers may deduct on Schedule A of Form 1040 mortgage interest on the purchase or home equity debt on two residences, their primary home and another dwelling, including a boat or a mobile home. These dwellings must have sleeping, cooking, and toilet facilities to qualify for a loan interest deduction. Interest paid on vacant land isn’t deductible.

Real estate taxes are deductible on all properties owned by the taxpayer — not just the first two. The deduction must be taken in the year the taxes are paid. Taxes placed in escrow are deductible when they are paid to the taxing authority, not when the money is put in escrow. Penalties and interest on late tax payments aren’t deductible.

Also, in order to deduct taxes and interest, the taxpayer must itemize instead of taking the standard deduction.

Source: Houston Chronicle, Shannon Buggs (03/27/08)

Bankhead Theatre -April 2008

DATE	TIME	PERFORMANCE	VENUE
Thu, Apr 3, 2008	11:00AM	PGA Wine Country Championship	The Course at Wente Vineyards
Fri, Apr 4, 2008	8:00PM	The Music Man	Bankhead Theater
Sat, Apr 5, 2008	8:00PM	The Music Man	Bankhead Theater
Sun, Apr 6, 2008	2:00PM	The Music Man	Bankhead Theater
Wed, Apr 9, 2008	8:00PM	An American Salute	Bankhead Theater
Fri, Apr 11, 2008	8:00PM	The Music Man	Bankhead Theater
Sat, Apr 12, 2008	8:00PM	The Music Man	Bankhead Theater
Sun, Apr 13, 2008	2:00PM	The Music Man	Bankhead Theater
Fri, Apr 18, 2008	8:00PM	The Music Man	Bankhead Theater
Sat, Apr 19, 2008	8:00PM	The Music Man	Bankhead Theater
Sun, Apr 20, 2008	2:00PM	The Music Man	Bankhead Theater
Tue, Apr 22, 2008	5:30PM	Bankhead Theater Public Tour	Bankhead Theater
Thu, Apr 24, 2008	8:00PM	Luna Negra Dance Theatre	Bankhead Theater
Fri, Apr 25, 2008	8:00PM	Chopin and Saint-Saens	Bankhead Theater
Sat, Apr 26, 2008	8:00PM	Binelli-Ferman-Isaac Trio	Bankhead Theater
Sun, Apr 27, 2008	2:00PM	Fred Garbo Inflatable Theater	Bankhead Theater

Write-offs to Remember

Deductions in the Loan Process Write-offs are the government’s way of rewarding taxpayers when they’ve done something the government likes. And to judge by the write-offs, the government likes it when people borrow money to buy a house. There are write-offs aplenty, many of which people often forget. Make sure your clients take advantage of every break the IRS will give. Here are a few they tend to forget: Points: According to the IRS, origination fees charged as points must be paid for the use of money, (for example, to obtain a lower interest rate) in order to be tax deductible. Origination fees that constitute a “service fee” are not tax deductible. The question must be asked, “Does the fee apply to the use of money, or is it a service charge?” Discount points are paid to secure a lower interest rate. IRS Publication 936 lists a general rule that states, “You generally cannot deduct the full amount of points in the year paid. Because they are prepaid interest, you generally must deduct them over the life (term) of the mortgage.” However, there are conditions which, if met, make discount points tax deductible in the year they are paid. (For more details on points and deductions, see http://www.irs.gov/publications/p936/ar02.html#d0e942.) Pre-payment penalties: Unforeseen circumstances often cause borrowers to pull out of their mortgages sooner than expected. Fortunately, pre-payment penalties are tax deductible, which helps ease the pain. Pro-rated real estate taxes: Even if the seller sent the tax collector the check, chances are the buyer paid a pro-rated portion of the taxes for the year at closing. Be sure they know to deduct their fair share. Pro-rated mortgage interest: Depending on when in the month the home sale closes, buyers pay either a hefty or a tiny amount of pro-rated mortgage interest for that month. Big or small, they can write that off. The Final Closing/Settlement Statement will show just how much they’re due. Home construction loan interest: As long as the construction period doesn’t last more than two years before they make the new place their “principal residence,” they can write off the interest for that construction loan. It pays to pay attention—all these write-offs can add up to some serious savings when tax time comes around. Thanks to Don McGlinchy for this article

Why Now is a Smart Time to Buy

Now is a great time to buy a home, say the financial gurus at the Wall Street Journal.

The Journal calls it a buyers market and offers these suggestions for first-timers getting their feet wet. While their advice is solid, it’s not revolutionary, but some potential customers might find it reassuring.

Remember this is a place to live not a stock market investment, they say. Lenders want buyers to spend no more than 28 percent of their gross monthly income on mortgage payments, real estate taxes, and home insurance. Buyers shouldn’t count on stretching further because lenders won’t approve their loans.

• Cash is king. Having enough money in the bank to pay closing costs that are typically an additional 2 percent to 3 percent of the price of the home is necessary.

• Location. Location, location. As any good real estate professional knows, homes in good school districts where the crime is low are much more likely to hold or increase their value.

• Compare. Besides just looking at the comps, buyers should examine what it would cost to rent a similar house in the same area and they might consider what it would cost to buy land and build a comparable home.

• Think long haul. It will probably take at least six or seven years of living in the house to be able to sell and come out ahead.

Source: The Wall Street Journal, Shelly Banjo (03/11/08)

What are Propositions 60 and 90?

Propositions 60 and 90 are constitutional amendments passed by California voters that provides property tax relief for persons aged 55 and over. It allows these persons, under certain conditions, to transfer a property’s factored base year value from an existing residence to a replacement residence.

Typically the property tax of a newly purchased or constructed residence is based on its current market value upon change of ownership. However, the provisions of Propositions 60 and 90 may result in substantial tax savings since it allows the property tax of the original (sold) property to be transferred to the newly purchased or constructed home if eligibility requirements are met.

What are the eligibility requirements for Propositions 60/90?

1.  
   1. You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.
   2. The replacement property must be your principal residence and must be eligible for the homeowners’ exemption or disabled veterans’ exemption.
   3. The replacement property must be of equal or lesser “current market value” than the original property. The “equal or lesser” test is applied to the entire replacement property, even if the owner of the original property purchases only a partial interest in the replacement property. Owners of two qualifying original properties may not combine the values of those properties in order to qualify for a Proposition 60 base-year value transfer to a replacement property of greater value than the more valuable of the two original properties.
   4. The replacement property must be purchased or built within two years (before or after) of the sale of the original property.
   5. To receive retroactive relief from the date of transfer, you must file your claim within three years following the purchase date or new construction completion date of the replacement property.
   6. Your original property must have been eligible for the homeowners’ or disabled veterans’ exemption either at the time it was sold or within two years of the purchase or construction of the replacement property
   7. The original property must be subject to reappraisal at its current fair market value at the time of sale, unless the buyer(s) of your original property also qualify the property as a replacement property for a base year value transfer due to disaster relief or a base year value transfer for a severely and permanently disabled person. Therefore, most transfers between parents and children will not qualify.

This is a one-time only benefit. Once you have filed and received this tax relief, neither you nor your spouse who resides with you can ever file again, even upon your spouse’s death or if the two of you divorce. The only exception is that if you become disabled after receiving this tax relief for age, you may transfer the base year value a second time because of the disability, which involves a different claim form.

For details,  visit http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm

Home Sales to Hold Steady

Daily Real Estate News  |  March 6, 2008 NAR:
The volume of existing-home sales is expected to remain stable through late spring, with a gradual recovery during the second half of the year as the mortgage situation improves in high-cost areas, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.

Lawrence Yun, NAR chief economist, says many buyers have been waiting for higher mortgage loan limits.

“The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions,” he says. “Therefore, a notable rise in home sales can be anticipated in the second half of the year.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, held at a stable level of 85.9, unchanged from December, but was 19.6 percent below the January 2007 reading of 106.8.

“This additional sign of a stabilizing market is encouraging, and our members are telling us there’s been a pickup in shopping activity,” Yun says. “Our hope is that the increased traffic of buyers looking at homes will translate soon into more contract offers.

Market Forecast

Existing-home sales are forecast to remain flat around an annual level of 4.9 million in the first half of the year before improving to a 5.8-million pace in the second half. With a weak first half, total sales for 2008 are projected at 5.38 million, but are then seen to rise 3.5 percent to 5.6 million in 2009. The aggregate existing-home price is projected to decline 1.2 percent to a median of $216,300 this year, and then increase 3.5 percent to $223,800 in 2009.

A pattern of disparate price performance continues around the country with a roughly even split between up and down markets. Recently released data for the fourth quarter shows strong price gains in markets such as the Kennewick-Richland-Pasco area of Washington; Topeka, Kan.; and Atlantic City, N.J.

At the same time, many areas that have lost jobs are showing price declines.

“Significant price declines in some local markets have sharply and quickly improved local affordability conditions, and are inducing buyers to return to the marketplace,” Yun says. NAR’s housing affordability index is forecast to rise 14 percentage points to 127 in 2008.

New-home sales should decline 23.7 percent to 590,000 this year before rising 7.2 percent to 633,000 in 2009. Housing starts, including multifamily units, will probably fall 25.1 percent to 1.01 million this year, and then continue to slip another 2.7 percent to 987,000 in 2009.

“As builders sharply cut back production, vacant new-home inventory has consistently declined over the past year-and-a-half,” Yun said. “That will permit a quicker return to balanced market conditions in many local areas.” The median new-home price is likely to fall 6.1 percent to $232,200 this year, and then rise 5.1 percent in 2009.

A Look Across the Region

Across the United States, the PHSI in the:

• West: jumped 13 percent in January to 93.8, but remains 12.7 percent below a year ago.

• Midwest: rose 0.6 percent to 85.2, but is 13.3 percent lower than January 2007.

• Northeast: declined 4.1 percent in January to 69.6 and is 28 percent below a year ago.

• South: fell 6.1 percent in January to 89.5 and is 23.8 percent below January 2007.

Other Market Indicators

The 30-year fixed-rate mortgage, which has moved erratically in recent weeks, is expected to hover around 5.8 percent most of the year, and then rise to an average of 6.3 percent in 2009.

Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.4 percent in 2009. The unemployment rate is projected to average 5.4 percent in 2008 and 5.5 percent next year.

Inflation, as measured by the Consumer Price Index, will probably be 3.2 percent this year and 1.5 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.4 percent in 2008 and 3.1 percent next year.

Source: — REALTOR® magazine online

For more economic news and research reports, visit NAR’s Research division at REALTOR.org.

FHA Releases New Mortgage Limits for California Counties

FHA Max Limits Include 14 CA Counties* FHA Press Release *WASHINGTON – Tens of thousands of California families could be eligible this year to purchase or refinance their homes using affordable, government-backed mortgages, thanks to the economic growth package signed into law by President Bush. The Economic Stimulus Act of 2008 will allow HUD’s Federal Housing Administration (FHA) to temporarily increase its loan limits and insure larger mortgages at a more affordable price in high cost areas of the country.“The Bush Administration is expanding the pool of eligible borrowers, enabling more American families to qualify for safe, affordable FHA-insured mortgage loans. These temporarily higher loan limits are a shot in the arm for communities trying to sustain property values, bringing much-needed liquidity to the mortgage market, while helping many current homeowners who desperately need to refinance,” said HUD Secretary Alphonso Jackson at a forum on how to prevent foreclosure at the Operation Hope Center in Los Angeles and a Hope Now Alliance event in Anaheim.Beginning tomorrow, HUD will offer temporary FHA loan limits that will range from $271,050 to $729,750. Overall, the change in loan limits will help provide economic stability to America ’s communities and give nearly 240,000 additional homeowners and homebuyers a safer, more affordable mortgage alternative. The maximum amount of $729,750 will only be applicable to extremely high-cost metropolitan areas such as:Los Angeles County , San Francisco County , Orange County , and Santa Barbara County . Previously, FHA’s loan limits in these very high-cost areas were capped at $362,790.The Economic Stimulus Act of 2008 permits FHA to insure loans on amounts up to 125 percent of the area median house price, when that amount is between the national minimum ($271,050) and maximum ($729,750). The new minimum and maximum loan limits are based on 65 percent and 175 percent of the conforming loan limits for Government-Sponsored Enterprises in 2008, which is $417,000. The FHA used a combination of existing government data sets and available commercial information to determine the median sales price for each area. The change in loan limits are applicable to all FHA-insured mortgage loans endorsed after HUD publishes the increased loan limits tomorrow, and it lasts until December 31, 2008 .By increasing loan limits nationwide, FHA will provide much needed liquidity and stability to housing markets across the country. Already, as conventional sources of mortgage credit have been contracting, FHA has been filling the void. From September to December 2007, FHA facilitated more than $38 billion of much-needed mortgage activity in the housing market, more than $15 billion of which was through FHASecure, FHA’s refinancing product. By focusing on 30-year fixed rate mortgages, FHA helps homeowners avoid and escape the risks associated exotic subprime mortgage products, which have resulted in rising default and foreclosure rates.“This is not an easy crisis to address, and there is no silver-bullet, but I know that we can help hundreds of thousands of people keep their homes, and we can calm the waters,” said Jackson .In January 2009, FHA’s maximum loan limit will return to $362,790, unless the U.S. Congress approves bipartisan legislation to permanently increase loan limits as part of the FHA Modernization bill, which is still awaiting final approval on Capitol Hill.“In January 2009 the loan limits will return to their previous setting,”Jackson said. “That is why we need to permanently raise the loan limits to an acceptable level that more accurately reflect housing prices nationwide. We also need to make the minimum down payment more flexible and create a fairer insurance premium structure. This will allow more families to use FHA.”FHA loan limits are based on the county in which the property is located. However, for properties located in metropolitan or micropolitan statistical areas, the limit is set at that of the county with the highest limit within the metropolitan or micropolitan area.The new temporary FHA loan limits for California are attached below.The full text of the Secretary’s remarks can be found on the HUD website.-###-HUD is the nation’s housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS.The Department also promotes economic and community development, and enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at<http://listener.bliemail.com/forwarder.aspx?ID=a7ce4bbc-f4e6-439c-b9c3-12c87f0c7c0b|http%3a%2f%2frs6.net%2ftn.jsp%3fe%3d001GPnSaxHALMI9V0m-SS_aDrDc9GjPPLxF764nDn3D98O3HU8HasMH4X4vcljEJJroGI2weVOCxAFTcXuMM7YBwg%3d%3d> www.hud.gov and<http://listener.bliemail.com/forwarder.aspx?ID=a7ce4bbc-f4e6-439c-b9c3-12c87f0c7c0b|http%3a%2f%2frs6.net%2ftn.jsp%3fe%3d001GPnSaxHALMLfalvNA5G0OJQdZAhCv-yTc2_iTBJOIL8MsnNYM0rnG9zRKsZKhdvV6JXfosypIhVdeASJRLMIaZLaujeErR2a> espanol.hud.gov. For more information about FHA products, pleasevisit<http://listener.bliemail.com/forwarder.aspx?ID=a7ce4bbc-f4e6-439c-b9c3-12c87f0c7c0b|http%3a%2f%2frs6.net%2ftn.jsp%3fe%3d001GPnSaxHALMLY6P5Am8cR-6cv87njBipB2zQ3VIQJyrQo7OTydYfIj5xjYdLT_9otCmzUR6qNTQ3NBvoPHuTrAg%3d%3d> www.fha.gov.

TEMPORARY CONFORMING LOAN LIMITS RELEASED FOR HIGH COST AREAS

Washington, DC – The Office of Federal Housing Enterprise Oversight (OFHEO) today released the maximum conforming loan limits that will be in effect through year-end as a result of The Economic Stimulus Act of 2008. That legislation permits Fannie Mae and Freddie Mac to raise their conforming loan limits in certain high-cost areas. The new jumbo limits are a function of median home prices as estimated by the U.S. Department of Housing and Urban Development (HUD).The maximum for temporary jumbo conforming loan limits, which apply to loans originated in the period between July 1, 2007 and December 31, 2008, are as high as $729,750 for one-unit homes in the continental United States . Two, three and four-unit homes have higher limits as well. Alaska , Hawaii , Guam and the Virgin Islands also have higher maximum limits. There are two data sources reflecting the new maximum limits. The first, on OFHEO’s Web site, available at www.ofheo.gov/media/hpi/AREA_LIST.pdf, reports only those counties and Metropolitan Statistical Areas (MSAs) that are affected by the new loan limits. Data for all areas are available on the HUD Web site at https://entp.hud.gov/idapp/html/hicostlook.cfm.Seventy-one Metropolitan and Micropolitan Statistical Areas are affected including 245 counties and cities not in counties. In addition, there are 21 counties outside of Metropolitan or Micropolitan areas that show increases, plus Guam and four municipalities in the Marianas Islands . The newly increased limits range from $417,500 in Greeley , Colorado to the highest of $793,750 in Honolulu , Hawaii

. In support of HUD’s calculation of county median home prices, OFHEO provided HUD rural house price indexes for 48 states. HUD used these indexes, which reflect price changes for homes outside of Metropolitan Statistical Areas, to estimate median prices in counties for which sales price data were sparse. OFHEO has made these indexes available at: /hpi_download.aspx.
 

New Conforming Loan Limits are here!

New California Loan Limits:

County	Median price	FHA limit	Conforming loan limit
Alameda County	$995,000	$729,750	$729,750
Alpine County	$438,000	$547,500	$547,500
Amador County	$355,000	$443,750	$443,750
Butte County	$320,000	$400,000	$417,000
Calaveras County	$370,000	$462,500	$462,500
Colusa County	$318,000	$397,500	$417,000
Contra Costa County	$995,000	$729,750	$729,750
Del Norte County	$249,000	$311,250	$417,000
El Dorado County	$464,000	$580,000	$580,000
Fresno County	$305,000	$381,250	$417,000
Glenn County	$230,000	$287,500	$417,000
Humboldt County	$315,000	$393,750	$417,000
Imperial County	$260,000	$325,000	$417,000
Inyo County	$350,000	$437,500	$437,500
Kern County	$295,000	$368,750	$417,000
Kings County	$260,000	$325,000	$417,000
Lake County	$321,000	$401,250	$417,000
Lassen County	$200,000	$271,050	$417,000
Los Angeles County	$710,000	$729,750	$729,750
Madera County	$340,000	$425,000	$425,000
Marin County	$995,000	$729,750	$729,750
Mariposa County	$330,000	$412,500	$417,000
Mendocino County	$410,000	$512,500	$512,500
Merced County	$378,000	$472,500	$472,500
Modoc County	$125,000	$271,050	$417,000
Mono County	$370,000	$462,500	$462,500
Monterey County	$599,000	$729,750	$729,750
Napa County	$615,000	$729,750	$729,750
Nevada County	$450,000	$562,500	$562,500
Orange County	$710,000	$729,750	$729,750
Placer County	$464,000	$580,000	$580,000
Plumas County	$328,000	$410,000	$417,000
Riverside County	$400,000	$500,000	$500,000
Sacramento County	$464,000	$580,000	$580,000
San Benito County	$790,000	$729,750	$729,750
San Bernardino County	$400,000	$500,000	$500,000
San Diego County	$558,000	$697,500	$697,500
San Francisco County	$995,000	$729,750	$729,750
San Joaquin County	$391,000	$488,750	$488,750
San Luis Obispo County	$550,000	$687,500	$687,500
San Mateo County	$995,000	$729,750	$729,750
Santa Barbara County	$615,000	$729,750	$729,750
Santa Clara County	$790,000	$729,750	$729,750
Santa Cruz County	$719,000	$729,750	$729,750
Shasta County	$339,000	$423,750	$423,750
Sierra County	$228,000	$285,000	$417,000
Siskiyou County	$235,000	$293,750	$417,000
Solano County	$446,000	$557,500	$557,500
Sonoma County	$530,000	$662,500	$662,500
Stanislaus County	$339,000	$423,750	$423,750
Sutter County	$340,000	$425,000	$425,000
Tehama County	$250,000	$312,500	$417,000
Trinity County	$200,000	$271,050	$417,000
Tulare County	$260,000	$325,000	$417,000
Tuolumne County	$350,000	$437,500	$437,500
Ventura County	$599,000	$729,750	$729,750
Yolo County	$464,000	$580,000	$580,000
Yuba County	$340,000	$425,000	$425,000

Source: Department of Housing and Urban Development