The monthly cost of owning a home is more affordable now than in the past 15 years, and is less expensive than renting in numerous cities, according to The Wall Street Journal’s third-quarter survey.
Low home prices mixed with low mortgage rates—hovering at 4 percent or even lower—are creating an appealing buyer’s market, analysts say. For example, buyers today have a 77 percent increase in their borrowing power compared to 1991, Dan Green, a loan officer with Waterstone Mortgage in Cincinnati, told The Wall Street Journal. To illustrate: He says that in 1991 a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage, whereas today the home owner taking advantage of current low rates can get a $350,000 loan for that mortgage payment amount.
In the 28 cities that The Wall Street Journal tracked, it found monthly mortgage payments on the median-priced home—including taxes and insurance—to be lower than the average rent levels in 12 of the metro areas.
Atlanta was found to be the city where owning was more favorable to renting by the most. For example, the monthly rent on the median-priced home there was $539 during the third quarter (with a 20 percent down payment) compared to the average asking rent which averaged $840, according to data provided by Marcus & Millichap.
Nationwide, apartment rents are expected to rise by about 4 percent this year, which may make the owning vs. renting picture tilt even higher, according to some analysts.
Despite the appealing housing picture for home buyers, some buyers continue to stay on the sidelines, unable to sell their current home, qualify for mortgages due to the tightening of credit, or keep a steady job, housing expert say.
Source: “Stronger Lure for Prospective Home Buyers,” The Wall Street Journal (Nov. 26, 2011)
Housing Inventories Shrink to Four-Year Lows
The number of homes listed for sale in October reached its lowest level in more than four years, according to MLS data compiled by Realtor.com.
About 2.12 million homes were listed for sale nationwide last month, which is down by 3.5 percent from September. And at year-over-year levels, that number is down by 21 percent.
Inventories are declining due to banks taking longer to process foreclosures and sellers taking their home off the market after seeing their properties linger or getting low-ball offers from buyers, according to Zelman & Associates.
In October, housing inventories declined the most in:
•Portland, Ore.: -6.9 percent•Seattle: -5.3% •Dallas: -5.2%Source: “Housing Inventories Fall to New Four-Year Low in October,” The Wall Street Journal (Nov. 21, 2011)
About 2.12 million homes were listed for sale nationwide last month, which is down by 3.5 percent from September. And at year-over-year levels, that number is down by 21 percent.
Inventories are declining due to banks taking longer to process foreclosures and sellers taking their home off the market after seeing their properties linger or getting low-ball offers from buyers, according to Zelman & Associates.
In October, housing inventories declined the most in:
•Portland, Ore.: -6.9 percent•Seattle: -5.3% •Dallas: -5.2%Source: “Housing Inventories Fall to New Four-Year Low in October,” The Wall Street Journal (Nov. 21, 2011)
Prop. 60 & 90 Santa Clara County
Are you over 55 and thinking about selling your home and moving into something smaller, but worried about the tax implications when you relocate? If so, you aren’t alone. As the baby boomers find themselves approaching retirement age and becoming empty nesters, their housing needs are changing along with their lifestyles – but inflation and taxes just seem to keep going up, up, up. Fortunately some relief, in the form of Prop 60, is available.
What is Prop 60?
Proposition 60 is a constitutional amendment, approved by California voters, that provides property tax relief under certain circumstances. Essentially, what Prop 60 does is allow qualifying property owners to replace their primary residence with a new home of equal or lesser value and maintain their same tax base. Why, you might wonder, would anyone want to do that? Wouldn’t my property taxes be less on a home of lesser value? Not necessarily. With Prop 60, what is transferred is the Proposition 13 or “base year value” of the old home, which can be substantially less than the current market value of either home.
How can I qualify for Prop 60?
Both the original home and the new home must be located in the same county.
Both the original and replacement properties must be your primary residence.
Both properties must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.
The seller or spouse residing in the home must be at least 55 years old when the original property is sold.
The replacement home must be of equal or lesser value than the current market value of the original home. There is a little wiggle room within this rule, depending on when the new property is purchased. For the purchase of a home (or completion of new construction) that occurs 1 to 2 years after the sale of the original home, the “equal or lesser” rule can change slightly. If the replacement home is purchased or moved into within one year you can purchase up to 105% of the value of the original home. If within two years you can go up to 110% of the value.
Purchase or completion of construction of the replacement property must be completed within two years of the sale of the original property, or you lose out.
Application for tax relief must be filed within 3 years of the purchase (or completion of construction) of the new home.
This is a once in a lifetime benefit. Neither spouse can file again.
How do I file for Proposition 60 tax relief?
Contact your county assessor’s office. The assessor will determine if the transaction qualifies and provide you with claim forms. Or have the title company handling your sale do it for you, my title company Chicago Title will take care of everything.
I’ve heard something about Proposition 90. What is that?
Proposition 90 is an amendment that permits the property owner to carry the benefits of Prop 60 throughout California. Each county in California has the option to accept tax base transfers from other counties, allowing qualifying homeowners more flexibility when planning a move. Counties are not required to participate, and currently there are only 7 counties in California that accept Prop 90. These counties include Los Angeles, Orange, Ventura, San Diego, Alameda, San Mateo and Santa Clara. This number is subject to change, as counties have the option to repeal their participation.
Prop 60 and Prop 90 are great extensions of Proposition 13, which was the initial break offered to the taxpaying public. If you think either might be something that will work for you, please consult your tax advisor or your county assessor for details.
What is Prop 60?
Proposition 60 is a constitutional amendment, approved by California voters, that provides property tax relief under certain circumstances. Essentially, what Prop 60 does is allow qualifying property owners to replace their primary residence with a new home of equal or lesser value and maintain their same tax base. Why, you might wonder, would anyone want to do that? Wouldn’t my property taxes be less on a home of lesser value? Not necessarily. With Prop 60, what is transferred is the Proposition 13 or “base year value” of the old home, which can be substantially less than the current market value of either home.
How can I qualify for Prop 60?
Both the original home and the new home must be located in the same county.
Both the original and replacement properties must be your primary residence.
Both properties must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.
The seller or spouse residing in the home must be at least 55 years old when the original property is sold.
The replacement home must be of equal or lesser value than the current market value of the original home. There is a little wiggle room within this rule, depending on when the new property is purchased. For the purchase of a home (or completion of new construction) that occurs 1 to 2 years after the sale of the original home, the “equal or lesser” rule can change slightly. If the replacement home is purchased or moved into within one year you can purchase up to 105% of the value of the original home. If within two years you can go up to 110% of the value.
Purchase or completion of construction of the replacement property must be completed within two years of the sale of the original property, or you lose out.
Application for tax relief must be filed within 3 years of the purchase (or completion of construction) of the new home.
This is a once in a lifetime benefit. Neither spouse can file again.
How do I file for Proposition 60 tax relief?
Contact your county assessor’s office. The assessor will determine if the transaction qualifies and provide you with claim forms. Or have the title company handling your sale do it for you, my title company Chicago Title will take care of everything.
I’ve heard something about Proposition 90. What is that?
Proposition 90 is an amendment that permits the property owner to carry the benefits of Prop 60 throughout California. Each county in California has the option to accept tax base transfers from other counties, allowing qualifying homeowners more flexibility when planning a move. Counties are not required to participate, and currently there are only 7 counties in California that accept Prop 90. These counties include Los Angeles, Orange, Ventura, San Diego, Alameda, San Mateo and Santa Clara. This number is subject to change, as counties have the option to repeal their participation.
Prop 60 and Prop 90 are great extensions of Proposition 13, which was the initial break offered to the taxpaying public. If you think either might be something that will work for you, please consult your tax advisor or your county assessor for details.
Fed Focuses on Lifting Ailing Housing Market
The Federal Reserve on Wednesday issued a new call about the importance of fixing the housing market, which could then have a trickle effect in strengthening the rest of the economy.
The Fed will consider buying more mortgage-backed securities to help, said Ben Bernanke, the Fed chairman. Such a move could send borrowing costs even lower.
"The housing sector is a very important sector," Bernanke said at a news conference. "Problems in that sector are a big reason why our economy's not recovering more quickly." The Fed is holding a two-day policy meeting — which ends Thursday — to weigh options.
Economists believe that if more people were buying homes then it could lead to a boost in consumer purchases for other sectors, from furniture to appliances. They note that the housing market has led the economy out of recessions in the past, since it creates jobs and more spending on goods and services.
The housing market continues to be bogged down by a high rate of foreclosures, which is dropping other home values. About 7.5 million homes are either in foreclosure or delinquent on their mortgage.
Source: “Fed Focus: Housing Could be Key to Stronger U.S. Rebound,” Reuters News (Nov. 3, 2011)
The Fed will consider buying more mortgage-backed securities to help, said Ben Bernanke, the Fed chairman. Such a move could send borrowing costs even lower.
"The housing sector is a very important sector," Bernanke said at a news conference. "Problems in that sector are a big reason why our economy's not recovering more quickly." The Fed is holding a two-day policy meeting — which ends Thursday — to weigh options.
Economists believe that if more people were buying homes then it could lead to a boost in consumer purchases for other sectors, from furniture to appliances. They note that the housing market has led the economy out of recessions in the past, since it creates jobs and more spending on goods and services.
The housing market continues to be bogged down by a high rate of foreclosures, which is dropping other home values. About 7.5 million homes are either in foreclosure or delinquent on their mortgage.
Source: “Fed Focus: Housing Could be Key to Stronger U.S. Rebound,” Reuters News (Nov. 3, 2011)
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