TOP TEN REASONS TO BE OPTIMISTIC ABOUT THE HOUSING MARKET

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Be sure to contact your favorite Comet Realty agent to achieve your real estate goals and contribute to an overall economic recovery: 

Mike Copeland, 805-441-9021

Therese Cron, 805-878-1684

Shannon Fitzpatrick, 805-801-5436

Keith Hoffmann, 805-801-6498

Kristin Lachemann, 805-801-4653

Erik Slayter, 805-476-3663

Tim Townley, 805-440-8735

Hayley Townley, 805-440-9194

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The Ripple Effect of Real Estate!

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Be sure to contact your favorite Comet Realty agent to achieve your real estate goals and contribute to the ripple effect: 

Mike Copeland, 805-441-9021

Therese Cron, 805-878-1684

Shannon Fitzpatrick, 805-801-5436

Keith Hoffmann, 805-801-6498

Kristin Lachemann, 805-801-4653

Erik Slayter, 805-476-3663

Tim Townley, 805-440-8735

Hayley Townley, 805-440-9194

Owning A Home Is Still The Dream

Friendly. Professional. Local.

Be sure to contact your favorite Comet Realty agent to achieve your real estate goals: 

Mike Copeland, 805-441-9021

Therese Cron, 805-878-1684

Shannon Fitzpatrick, 805-801-5436

Keith Hoffmann, 805-801-6498

Kristin Lachemann, 805-801-4653

Erik Slayter, 805-476-3663

Tim Townley, 805-440-8735

Hayley Townley, 805-440-9194

Shifting Desires of Home Buyers

Comet Realty is at your service. 

Friendly. Professional. Local. 

805.546.9925, Info@CometRealty.com

California Love!

California Median Home Prices - Summer 2012

Six Must Haves for Mortgage Approval

Interest rates are hovering around historical lows, and low interest rates increase affordability, making it easier for buyers to qualify. Yet stories of buyers waiting months to gain loan approval and home purchase transactions not closing on time due to lender's strict underwriting are all too common.

Some buyers are turned down for illogical reasons. For instance, if you have investments -- even if they're performing well -- an underwriter might deny the mortgage because your portfolio doesn't fall into the underwriter's risk assessment model.

One couple was turned down because the husband had worked at his current job for less than a year -- even though he was making more money at the new job than he was before.

These buyers were well-qualified. The wife had worked several years for one employer and was able to qualify for the loan on her own. So, the transaction closed, although two months late. 

Generally, it's more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.

You could run into underwriting problems if you're self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won't lend to buyers who have more than three or four residential properties.

If you're buying a new home before selling your current home, you'll need to have 30 percent equity in your current home. This needs to be verified by the lender's appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month's rent to verify rental income if needed to qualify.

HOUSE HUNTING TIP: As soon as you're serious about buying a home, find the best mortgage broker or loan agent you can to assist you. Don't make your selection based on interest rates alone. A good track record counts for a lot.

Closing the deal should be your primary goal. If you have to pay 0.25 percent more to assure your transaction closes on time and that you're not turned down at the last minute, it's worth it.

Be candid with your loan professional about anything in your financial picture that might impact loan qualification. A good loan agent or broker will be able to assess your financial situation and anticipate what you'll need to do to satisfy the underwriter.

Be aware that appraisal issues can impact your loan approval. For example, if a previous owner added square footage without a building permit, the additional square footage probably won't be included as livable square feet.

If the appraisal comes in for less than the purchase price, the lender might not lend you enough to close the deal. Include an appraisal contingency in your contract.

There are more jumbo financing options available now. Adjustable-rate mortgages that are fixed for 10 years and then revert to an adjustable have a starting rate about 0.25 percent less than a 30-year fixed jumbo. A five-year fixed starts about 0.5 percent to 0.75 percent lower, but is riskier.

THE CLOSING: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement account counts toward this.

Dian Hymer is a real estate broker with more than 30 years' experience and is a nationally syndicated real estate columnist and author.

Top 10 Tax Tips for Sellers According to IRS

If you are thinking of selling, the first thing you should do is call Comet Realty to find out how they can market and sell your property! 

The second thing you should do is look at this list that the IRS has published for sellers. (http://www.irs.gov/newsroom/content/0,,id=104608,00.html.)

Here are the IRS's top 10 tax tips for home sellers (taken from their website August 2011):

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.


2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).


3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.


4. If you can exclude all of the gain, you do not need to report the sale on your tax return.


5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.


6. You cannot deduct a loss from the sale of your main home.


7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.


8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.


9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.


10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

And the hottest tip of them all: Call Comet Realty for a wonderful experience in selling or buying real estate on the Central Coast. All of our agents are standing by ready to assist you ... 805-546-9925. 

Pending Home Sales Turnaround

Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.

Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said. “Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn.; Indianapolis; Minneapolis; Houston; and Seattle.”

Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”

Is this the time to invest in Real Estate?

The secret to investing is to buy low and sell high!  There I've given you all the #1 tip in Real Estate investing!  The tricky part is finding out exactly when low is the lowest, and when high is the highest.  It is easy to see when the bottom is a couple of years after we have hit it--but that like all hind sight it does not help us right now.


What does help us is watching trends, and reviewing historical data.  Real Estate has been a cyclical market in the past, and most likely will be in the future.  The latest news from "the experts" is that we will be hitting the bottom sometime in 2011, with stable prices through 2015.  


The chart below gives you some idea of what "the experts" expect for the next 5 years.  

 

So according to this, it looks like it is time to break the piggy bank, and invest in some new property!  Give us a shout and lets find your property while it is sliding along the bottom!

Confidence in Value of Homeownership Persists...

Confidence in Value of Homeownership Persists through bust, survey shows. 

By Alejandro Lazo, Los Angeles Times, April 12, 2011

The real estate bust appears to have done little to alter Americans' confidence in the investment value of homeownership. 

A robust 81% of adults said buying a home is the best long-term investment a person can make, according to a national survey by the Pew Research Center in Washington.

"Owning a home is really a part of the American dream, and that is just part of the American psyche and something that people aspire to," said Kim Parker, associate director for the center and one of the study's authors. 

The study's results were unexpected, given the deep plunge in home prices and the fallout from the mortgage crisis, she said. Homeownership topped the list of long-term financial goals for Americans, according to the study; respondents rated homeownership, as well as living comfortably in retirement, more important than sending children to college or leaving offspring an inheritance. 

The public's faith in real estate has been bruised since the last time a comparable survey asked people about the wisdom of investing in real estate. A total of 37% of respondents said they "strongly agree" that homeownership is the best investment a person can make while 44% said they "somewhat agree." The same question was asked by a CBS News/New York Times survey in 1991, and at that time 49% "strongly agreed" and 35% "somewhat agreed." 

"The study results are surprising in that so many households still believe that homeownership is a good investment, even after the plunge in home values that has occurred over the past couple of years," said Celia Chen, a housing economist for Moody’s Economy.com. "The preference for homeownership has deep roots in the history of this nation, and apparently even a severe correction in house prices can shake American's belief in homeownership only slightly."

The telephone survey was comprised of a nationally representative sample of 2,142

adults conducted from March 15 to March 29 by Princeton Survey Research Associates International. Interviews were done in English and Spanish. The margin of sampling error for the data is plus or minus 2.7%. 

While home prices have entered a renewed decline after showing some improvements last year, many economists believe that the worst of the housing crisis is probably over. That sentiment could help to explain the resiliency in Americans' optimism. 

"People may have the feeling that the worst is behind us," Parker said. Though other investments such as stocks tend to produce a better return, the housing market has generally avoided the wild swings that the stock market has over time, potentially helping to explain real estate's lasting allure, Parker added. 

Homeowners in the survey were more positive about the financial wisdom of owning a home than were renters. But even among renters, the desire for homeownership remains strong, according to the survey's findings. Just 24% of renters surveyed said they rent out of choice and 81% said they would like to buy.

The decline in values has struck a wide swath of Americans. About half, or 47%, of

homeowners said their property is now worth less than when the recession began,

and 31% said the value of their home has not improved. Just 17% said their home is worth more than before the recession. 

Of those who said their properties have lost value, 86% said they expect it to take at least three years for values to recover, 42% said at least six years and 10% said they expect a recovery in 10 years or more.

Despite those sentiments, 82% of homeowners who indicated their home is worth less than before the recession said homeownership is the best long-term investment a person can make.

California Home Sales Rose in January 2011

California home sales rose in January, marking three consecutive monthly increases and posting their highest level since May 2010, according to data compiled from California Association of Realtors (C.A.R.). 

“With lower home prices and rates edging up from their historic lows of late last year, prospective home buyers should consider the opportunities in today’s market,” said C.A.R. President Beth L. Peerce.

California home sales rose 5.1 percent in January compared with December, to a revised pace of 520,080 units.  Sales also increased 2.5 percent in year-over-year comparisons, marking the first year-over-year sales increase since May 2010.  The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the January pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

Call Comet Realty to find out how you can take advantage of opportunites in investing in real estate on the Central Coast. 805.546.9925