Sales volume rebounded for December, increasing 21.5% to 1,313 single family home sales. This is nearly an identical rebound from the 21.4% drop from October to November (1,375 sales down to 1,081 sales). This marks an increase in sales after four months of consecutive decline. Equity sale dominate the market, accounting for 87.5% of all sales (1,145 units). The remainder of sales comprised of 80 Short Sales (6.1%) and REO sales (6.7%). For the month, REO sales increased 26.4%, short sales decreased 1.6% and conventional sales decreased 1.4%.
Of the 1,313 sales this month, 202 used cash financing, 661 used conventional (mortgage‐backed) financing, 318 used FHA (Federal Housing Administration), 100 used VA (Veteran’s Affairs) and 32 used Other* types of financing. The average DOM (days on market) for homes sold this month was 41, while the Median DOM was 26. These numbers represent the days between the initial listing of the home as “active” and the day it goes “pending.” Breaking down the Days On Market, there were 709 listings that sold between 1 – 30 days, 287 listings that sold between 31 – 60 days, 160 between 61 – 90 days, 81 between 91 – 120 days and 76 sold after being on the market for over 120 days. See comparison of sales volume for 2013 and 2014 below.
The month‐to‐month median sales price increased 1.1% from $265,000 to $268,000. The current level is 7.2% above the $250,000 median sales price of December 2013. The current figure is up 67.5% from the January 2012 low of $160,000. When compared to the all‐time high ($392,750/Aug. ’08), the current figure is down 31.7%.n
Active Listing Inventory in Sacramento County decreased for the month, down 19.2% to 2,427 (from 3,002 listings). Compared year‐to‐year, the current number is up (32.2%) from the 2,836 units of December 2013. Following this drop, the current months of inventory decreased 35.7 % to 1.8 months.
You have done the hard part in the home-buying process and chosen a lender and a real estate agent to work with. You have also gone out and found the home of your dreams! Best of all, your team has done a great job of negotiating the best deal for you.
Now, as a buyer, all you have to do is sit back and wait for your loan to close … right? Wrong!!
Getting a home loan these days is a very interactive process. I am always amazed by how many clients I work with who come to me unaware of all the pitfalls they face during the loan process. To help avoid any surprises while waiting for final approval, I provide my clients with a short list of “do’s and don’ts” to follow.
Let’s start with the “do’s” …
Do keep the process moving by responding to your loan officers’ requests for documentation as soon as possible.
Do make decisions as soon as is reasonably possible.
Do convey questions or concerns you
Do continue to make all of your rent or mortgage payments on time.
Do stay current on all other existing accounts.
Do continue to work your normal work schedule with no unplanned time off.
Do continue to use your credit as normal.
Do be prepared to explain any large deposits in your bank accounts.
Do enjoy purchasing your home but remain objective throughout the process to help make decisions that are best for you.
After you have been preapproved for your mortgage you will want to refrain from the following…
Do not make any major purchases (car, boat, jewelry, furniture, appliances, etc.).
Do not apply for any new credit (even if it says you are preapproved or “xxx days same as cash”).
Do not pay off charges or collections (unless directed by your loan officer to do so).
Do not make any changes to your credit profile.
Do not change bank accounts.
Do not make unusual deposits into your bank accounts or move money around from one account to another.
Follow these simple rules and you will help to make your loan closing as smooth and hassle-free as possible! Good luck!
Update on the current status of the mortgage debt cancellation tax relief provision that expired at the end of 2013. As soon as the last one-year extension was passed on New Years’ Day 2013, NAR began working on another extension of this critical tax provision. With NAR’s encouragement, champions of this provision introduced bi-partisan bills in both the House and Senate (H.R. 2994/S. 1187), to extend the provision for one or two years. Unfortunately, the current prospect of these bills being enacted in the short term is not particularly high. We are facing four big hurdles.
1. The Chairmen of both of Congress’s tax committees (Senate Finance and House Ways and Means) have committed to passing comprehensive tax reform legislation before the end of 2014. As part of reform, they have both indicated that they plan to go through the long list of expiring items, including mortgage debt cancellation, and cull those that are not worthy of permanence and make all the “worthy” ones a permanent part of the tax law. However, tax reform is unlikely to be completed in the coming months. If Congress were to extend the expiring provisions now, it might appear that they were giving up on tax reform. This is not a signal they wish to send.
2. There are over 50 such expiring tax provisions (often referred to as “extenders”). Congress rarely passes single tax provisions by themselves. The rules in both the House (and especially the Senate) could allow for added amendments that would turn a simple bill with wide support into a politically divisive bill.
3. The extension of the tax relief “costs” money to the Treasury. The Joint Committee on Taxation estimates that a one-year extension of the mortgage debt cancellation relief would cost $3.7 billion. Some Members of Congress will insist that amount be offset by raising taxes elsewhere or cuts in spending – an ongoing debate in Congress.
4. The Chairman of the Senate Finance Committee, Senator Max Baucus of Montana, has been nominated by President Obama to serve as the next United States Ambassador to China. His departure from the Senate will turn the chairmanship over to Senator Ron Wyden of Oregon. As with any change in committee leadership, there will be an adjustment period.
In sum, NAR tried to have the extension passed by year-end but it was not possible. Because of the factors listed above, NAR has so far decided not to issue Member-wide Call for Action at this time, but has instead focused on working with Congressional leadership and the bill sponsors to find additional support for moving this legislation now that Congress has returned to Washington. Our lobbyists are in daily meetings with Members of Congress, pressing for an extension and providing the most up to date data on short sales and foreclosures to continue to highlight this as a top priority.
What can you do? First, you can contact your Representative and Senators to urge them to act on these bills. If you are in distressed situation, urge them to do so as well. The more Members hear from constituents, the better.
NAR cautions REALTORS® against giving clients tax advice, as every situation is different, but at this point our best estimate is that Congress will pass some extension of this law, probably late in 2014, and make it retroactive. There is precedent for Congress doing this, but no guarantee.
NAR cautions REALTORS® against giving clients tax advice, as every situation is different, but at this point our best estimate is that Congress will pass some extension of this law in 2014 and make it retroactive. There is precedent for Congress doing this, but no guarantee.
The City of Elk Grove is urging residents to voluntarily cut back water
consumption by 20 percent, joining numerous local agencies in a regional water conservation
Last night, the Elk Grove City Council unanimously adopted a resolution establishing support for
water conservation and conservation education.
“The state of California is facing a very critical situation, and the City of Elk Grove will do its part
to temper water usage and urge residents to conserve,” said Mayor Gary Davis. “Elk Grove is
committed to fostering an environment where the city, residents and business owners unite to
demonstrate good stewardship of our most precious resources. The City of Elk Grove is
committed to educating the community about the critical importance of water conservation
during this unprecedented drought.”
The 20 percent reduction can be achieved through increased water conservation at City
facilities, enhanced public information in collaboration with local agencies, and increased
enforcement of the City’s water conservation ordinances. Residents can help achieve the 20
percent savings by making small changes in everyday household routines. Household water
conservation tips and watering schedules are available on the Elk Grove Water District and
Sacramento County Water Agency websites.
In 2013, Northern California had its third consecutive year of below average rainfall and driest
year ever recorded. This has resulted in record low water levels at critical water storage sites,
including Folsom Lake. The City of Elk Grove is not a water purveyor. The Elk Grove Water
District and Sacramento County Water Agency serve the Elk Grove area and have both passed
voluntary conservation measures.
For more information about water conservation, contact the Elk Grove Water District at 685‐
3556 or Sacramento County Water Agency at 874‐6851.
The California Association of REALTORS® announced yesterday it received a letter from the California Franchise Tax Board (FTB), obtained by Board of Equalization (BOE) member George Runner, clarifying that California families who lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale.
Last month, in a letter to California Senator Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so called “cancellation of debt” income to the underwater home seller for federal income tax purposes. Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB. Now with the FTB’s clarification, underwater home sellers are also assured that they are not subject to state income tax liability, rescuing tens of thousands distressed home sellers from California tax liability for debt written off by lenders in short sales.
“We are pleased with the recent clarifications issued by the IRS and California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California,” said C.A.R. President Kevin Brown. “We would like to thank Senator Boxer and BOE member Runner for their leadership in obtaining this guidance from the IRS and FTB. Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of the year.”
This is wonderful news for California families still struggling with an underwater home. We still recommend all REALTORS® encourage their clients to speak with a tax professional who can advise them on their specific situation. This information in no way should be taken as either legal or tax advice.
(Sacramento Association of REALTORS® Web Log, Caylyn Brown Thursday, December 5th, 2013)
(City of Elk Grove Press Release, December 4, 2013)
Elk Grove — In response to the forecasted night temperatures in the upper 20s and low 30s, the City of Elk Grove and Cosumnes Community Services District (CSD) have opened a warming center in Elk Grove as a proactive safety precaution for residents who may be unsheltered or living in homes without heat.
The warming center, located at the Barbara Morse Wackford Community & Aquatic Complex at 9014 Bruceville Road, will be open from 7 p.m. to 8 a.m. on Wednesday and Thursday nights. The warming center may remain longer, depending on weather conditions. The situation will be monitored daily and the public will be updated in conjunction with the City and County of Sacramento and County Office of Emergency Services.
The warming centers will offer seating and a heated room that will provide shelter from the cold temperatures. The warming center will be operated by CSD staff. The Barbara Morse Wackford Community & Aquatic Complex facility can accommodate pets.
Besides a warming center, other options to stay warm include stores, community centers, public libraries, coffee shops and family and friends’ homes. Sacramento County recommends the following advice to stay warm during freezing temperatures:
Check on your family, neighbors and seniors, especially those living alone
Make sure your pets are secure and safe out of the elements
Discuss emergency plans in advance
Keep an emergency kit in an easy‐access location
Around the House and in Your Car:
Clear debris from gutters and downspouts
Store outdoor furniture, lawn equipment, decorations properly
Secure outdoor plants or cover with blankets or plastic to prevent freezing
Learn where your water shutoff valves are in case a pipe bursts
Do not bring heating devices in doors that are intended for outdoor use, such as barbecues or other fuel‐burning devices
Insulate pipes and allow faucetsto drip during cold weatherto avoid freezing
Prepare your auto for cold weather
Keep extra blankets, food and water in your vehicle
Drive safely and slowly
Avoid downed power lines
Additional cold weather preparedness tips can be found on www.SacramentoReady.org. For more information about emergency preparedness, visit www.elkgrovecity.org/ep or contact City of Elk Grove Emergency Manager Don Stangle at 478‐3610 or email@example.com.
Short sales have become a part of the normal fabric of real estate business. At a minimum, most people now understand the term “short sale” doesn’t mean the sale will be short, will take less time, or that the price the home will sell for will be much less than market value.
Surprisingly though, there is still a large segment of the population unaware of what may probably be three of the most important benefits to completing a short sale. With that being said, you too may be surprised to learn that, if you complete a short sale there may be:
1. No cost to you, the seller
That’s right. For the majority of sellers, to complete a short sale is totally free. The proceeds from the sale cover the costs associated with the sale, and your lender approves all fees. For example: title and escrow fees, state mandated items (NHD reports), broker fees for service (commissions), and most lenders even pay outstanding property tax liens!
You should never be asked to pay a fee to complete your short sale. If an agent asks you to pay a fee as a requirement to start or complete your short sale, find another agent.
2. Zero Tax Liability, Zero Deficiency Liability Tax Liability – In the past, when you completed a short sale, your lender would send you a 1099 and view the forgiven difference as taxable income for the year. This gets filed with your next tax return and, unless you have an exemption, you must pay taxes on the forgiven income. This would, of course, push most people into a new tax bracket requiring you to pay taxes on that forgiven difference.
Loan Amount Owed $300,000
-Short Sale Price $160,000 Difference $140,000
However, for owner occupied residences, the Debt Forgiveness Act allows tax liability protection on the difference up to $250,000 if you are single, and $500,000 if you are married. President Obama recently extended the act until December 31, 2013. So let’s apply this law to our example above:
Loan Amount Owed $300,000
-Short Sale Price $160,000 Difference $140,000 = FORGIVEN!!
Up to $250,000 (single); $500,000 (married)
In addition, there are numerous exemptions that apply which can enable you to avoid this tax even if it is not your primary residence.
Deficiency (In the state of California) – The California Legislature passed Senate Bill 931 adding Section 580e to the California Code of Civil Procedure and stating that the senior lien holder could not pursue a deficiency judgment after a short sale which they had previously approved. The law equally applies to purchase money, hard money and refinance – as long as there was no cash out.
They later passed Senate Bill 458, amending Section 580e and extending the protection of SB 931, by making it applicable to junior liens as well. In addition to not being able to get a deficiency judgment it provides that after a short sale, no deficiency shall be owed or collected and no deficiency judgment shall be requested or rendered provided the short sale closed escrow and the lender was paid the amount they agreed to accept.
The amended law further provides that the holder of a note shall not require the seller to pay any additional compensation, aside from the proceeds of the sale, in exchange for their consent to the short sale.
How’s that for protection? So, to recap – you get to complete a short sale at no cost to you, your debt and deficiency are also forgiven, and the lender cannot ask you to come in with any additional funds above the amount they agree to accept. What more could you ask for? How about cash back?
3. Cash Back to You
Lenders learned rather quickly the magnitude of the financial responsibilities which came with foreclosed properties; tax liens, outstanding utility bills, property damage, vandalism, etc – all at a very large price tag and not including their standard attorney fees. So not only did it make sense to pay the seller an incentive to remain in the home and keep the home in good condition until close of escrow, but it also helped the seller with moving expenses as well. This turned out to be a win-win situation for everyone. Thus, relocation assistance was born and adopted.
How much assistance you will receive and specific assistance guidelines will vary. For example, if you short sale under HAFA (Home Affordable Foreclosure Alternative), you could receive $3000. However, many lenders now have their own in-house incentive programs which offer relocation assistance anywhere from $3000 to as much as $30,000 or more.
So if you are facing foreclosure, contact Mathews & Co Realty Group with Century 21 Landmark Networ at (916) 678-1803 or me, Keisha Mathews, (team short sale specialist) via direct email at SacramentoShortSaleLady@gmail.com. I would be happy to meet with you to go over your options helping you avoid foreclosure, and explain how you could reap the many benefits as well.
The information contained above is not to be construed as legal or tax advice. Each individual’s personal situation may vary. We at Mathews & Co Realty Group are not tax professionals or attorneys. Please consult a real estate attorney or tax advisor to determine whether the information above is applicable to your individual situation.
Homeowners who lost their homes at unprecedented numbers inadvertently created extraordinary opportunities of home ownership for both investors and owner occupants. Upside down home ownership blazed a grave trail with foreclosures and short sales (distressed sales) paving the way of Sacramento’s “buyers’ market”.
The recovery has been painful and volatile. At the height of the crisis, industry analysts were incredibly optimistic predicting it would last only a year or two at the most. Seven years later forecasting continues to be a challenge. Just as the mainstream media seems to sync with the analysts, Bernake speaks, interest rates bump up overnight, and you and I get to buckle up for another exciting ride in the wonderful world of real estate. However, there is actual evidence that recovery may truly be underway.
AND NOW THE LIGHT AT THE END OF THE TUNNEL
An analysis by RealtyTrac Inc. shows Sacramento as one of the hottest turn-around markets and predicts we are headed for a more normal pattern because of a rapid increase in new-housing permits at the start of this year and a significant drop in foreclosures.
To give you an idea of what that foreclosure drop looks like and some comparisons, the breakdown of sales for May was 115 REOs (6.9%), 371 short sales (22.2%) and 1,186 conventional sales (70.9%). Compared to one year ago, REO (bankowned) sales accounted for 27.8%, short sales 30.1% and conventional sales 42.2%. Since then REOs have dropped 75.1%, short sales dropped 26.2% and conventional sales have increased 68%.
However, low inventory remains a serious issue for buyers, especially would be first time buyers. Compared with May 2012, the sales volume has decreased 7.9% from the 1,816 units sold. Although active listing inventory increased for the month of May, rising 7.7% from 1,381 units to 1,488 units, the months of inventory remained at .9. This number explains the amount of time (in months) that it would take to deplete the current inventory at the current sales rate.
SAR President Chris Little adds his observations: “The number of listings continues to decline and months of inventory remain exceptionally low with supplies lasting less than 3 weeks. Both the median and mean sales prices continue to increase significantly and cash buyers, though significant, are a declining portion of the buyers.”
WHERE’S THAT LIGHT AGAIN?
So when will we begin to see some of this new inventory from the housing permit increase? According to an article in the Sacramento Business journal, “Large homebuilders are snapping up the available lots out there, with plans to build on them as soon as possible, according to Jim Radler of Land Advisors organization in Sacramento… JMC Homes bought 54 finished lots called Sienna in an unincorporated area north of Elk Grove, between Calvine and Robbins roads and east of Elk Grove/Florin Road, near a strip mall.” As soon as this time next year we can begin to see move-in ready new home construction.
SAR President Chris Little continues, “Demand is high, supply is very low and investors are moving away. If interest rates continue to rise and lender practices continue to be stringent, it may flatten the rising demand due to challenges for buyers on the financing side. Therefore, homeowners with equity and a desire to sell should act on it and consult a REALTOR®.”
All these combine to make it a STRONG sellers’ market. With inventory on the rise and interest rates still at record lows, it’s STILL a great time to buy and sell. If you or someone you know is looking to buy or sell, give us a call.
(Market Data – Sacramento Association of REALTOR’s RESIDENTIAL RESALE STATISTICS May 2013)
What once was a predictable pattern, real estate market conditions now seem to change about as often as Daylight Savings Time and are about as unpredictable as the Spring to Summer weather transition – hot one day, rainfall the next.
Add to this mix, low inventory, a surplus of buyers, slowly increasing interest rates, and frantic “buy now”, “sell now” mixed messages from the media and we will work ourselves right up to a quiet storm where the people do nothing. No buying, no selling, just waiting, watching, and analyzing. Over analysis paralysis will soon be the “weather” of the day if we don’t use good old common sense.
In this article, I’d like to address the buyer. A few tips to help you come out of analysis paralysis and be able to take advantage of today’s market, now:
1. Save up at least 5% of the purchase price to be competitive in this current market. Down Payment Assistant programs are great, but they work even better if you come in with some skin in the game. 100% financing programs don’t work very well in this market.
2. If you qualify at $200K, look for homes at $150K. Why, so that you can have somewhere to go if you get into a multiple counter situation (which will most likely occur). You can then be a true contender and increase your offer when needed.
3. Understand the order of preferred financing in this current market – This is a seller’s market so VA loans are “low man on the totem pole”, next FHA, then Conventional, and finally Cash is King! The more “risk” you have (cash), the better your ability to negotiate an acceptable offer.
4. A hard working, full-time agent who is proactive and follows up on every offer made, asks why yours did not get accepted, and what could you have done to be an offer which gets accepted.
5. Be committed to that agent. Need I say more?
Advice to the seller, coming next.
My best to all of you soon to be homeowners out there and to the agents making it happen for you!
Keisha Mathews & Co Realty Group has partnered with National Mortgage Forgiveness Plan (NMFP) to assist homeowners who are experiencing a hardship and can no longer continue to pay their mortgage. There are still homeowners who have fallen on hard times. There is help available and now incentives for homeowners to short sale rather than just walk away or do nothing.
Our goal is to find out what’s most important to you and help you acheive that goal. There are many options for someone in this position and we would like to help you find the right one for you that fits your circumstances. Please click on our website below. There is great information to assist you. If you are already behind on your payments, dont wait. Call today. It doesn’t cost you anything for a consultation, Neither does it cost you anything for a short sale if we decide that is your best option.