SubscribeTax Credit Extended, Markets Further Stabilizing and Real Estate Ideal Hedge
November 11, 2009
Tax Credit and Conforming/FHA Loan Limit Extended
Made official on Friday, the tax credit for home purchases was extended through July 1, 2010 and the important details are exactly as they were in my post on Friday the 30th of October, which was summarized as follows:
· Effective on binding real estate contracts from December 1, 2009 through April 30, 2010, The tax credit would be $8,000 for first time home buyers and $6,500 for move-up buyers who have owned their current home for at least five years
· The tax credit expires on April 30, 2010; however, if a binding contract is reached by April 30, 2010, buyers have an additional 60 days to close the deal and still be eligible for the tax credit
· For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return
· The income limits for both first time home buyers and move-up buyers would be $125,000 for single return and $225,000 joint return.
· Cost of the home may not exceed $800,000 to be eligible.
Remember that a tax credit has about THREE TIMES the impact of a tax deduction, which allows someone earning $125,000 per year to be taxed on about $102,000*. And since other items like interest and property taxes are also deductible*, that same individual may be looking at less than half of their earnings being fully taxable..!*
Add the above news to the fact HUD also extended the conforming loan limit of $729,750 in the Bay Area to December 31, 2010, and you have a “perfect storm” for every qualified first-time buyer in the Bay Area.
S&P Case-Shiller Confirming Further Improvement of Housing Prices
Released last week, the S&P Case-Shiller index confirms that housing prices continue to improve, especially in areas like San Francisco where the index moved another 2.8% in August to 132.47. This marks the seventh straight month of improvement.
Zillow also reported that their index reflected further stabilization for the third quarter, with over 26% of the metropolitan statistical areas showing signs of improvement.
Real Estate as an Ideal Hedge to Both the “W” Concern and Inflation
You may recall from my last post that we are seeing far more application activity for purchases in the $1mm+ range, especially the $1.5mm to $4mm range. These applications have been coming from our more financially-minded clients, as they not only see tremendous opportunity to obtain a more valuable home, but they are very concerned about a “W”-shaped economic recovery and subsequent inflation. As such, obtaining an upgraded home for less, cheap financing and hedging against inflation make buying a larger home an ideal move. All things being relative, the reality is that the S&P 500 currently has a rather high price-to-earnings ratio at about 19.52 versus the historical average of 15.7. As such, if we were in average economic circumstances, it’s arguable that the stock market is overvalued by about 25%. Given the fact that our current economy is FAR from being in average condition, it’s anyone’s guess just how overvalued the stock market is. All I know is that my savviest, financially-minded clients think that the stock market is due a correction and that real estate is a great asset to have as a hedge against both a market correction and inevitable inflation.
Fannie’s New Program: Deed for Lease
Announced on November 5, Fannie Mae is helping those qualified applicants to essentially sell and lease back their current home. This program is also applicable to investment-property owners who are facing foreclosure and wish to deed the property over to the lender and allow the renters to continue renting at market levels.
Rates and Activity
- Rates continue to run as low as 3.75%, depending on a number of different factors, with the conforming 30-year at just under 5% and the jumbo 30-year at about 4.75%
- 71% of our transactions last month were purchases, and the average loan was in the $500k range.
- As mentioned above, we’re seeing a heavy trend in purchase applications for the move-up market, but inventory is turning off a majority of those buyers
- We closed a deal in TWO weeks, but we still recommend a 30-day closing period
- If you or someone you know prefers to pay cash for a purchase, then finance that purchase within 90 days to protect valuable tax advantages, we can help, as we have programs that DO NOT require 6 months seasoning and pricing is based on purchase money, NOT a cash-out refinance
* Does not constitute tax advice. Please seek any qualified tax professional for proper guidance.
Tackling the Single-Property Website Conundrum
April 11, 2007
For my upcoming “most Internet-advertised” listing, I — naturally — want a website for the property. There are lots of opinions out there about the efficacy of single-property websites (see, for instance, what Mary McKnight, Greg Swann, and Joel Burslem have said).
Here’s my take: they provide
- Great property marketing — If done well, a website provides a convenient place to get out your marketing message. The property I reviewed yesterday, for instance, has its own web site — www.655-14thAvenue.com — which is very easy to remember.
- Terrible SEO — No matter how well done, a single property web site is not going to have good SEO since it’ll be competing with sites like Movoto and Trulia for searches like, “Menlo Park Fair Oaks real estate” and “Homes in Fair Oaks neighborhood” and “655 14th Ave Menlo Park.” Remember: Real estate professionals and experienced home buyers and sellers may well know where the local MLS site is, but many people go to the same place they always do to get information: Google or Yahoo.
As an example, consider the property I reviewed yesterday. A search on Google for 655 14th Ave Menlo Park lists
- Movoto.com
- ListingProducer.com (the company hosting www.655-14thAvenue.com, but clicking on the link gives you all recently created ListingProducer sites, and the property in question quickly gets buried)
- My write-up from yesterday
The actual web site itself is nowhere to be found!
So how do you combine the marketing cachet of a single-property web site with the SEO benefits of an established blog?
Matt Dunlap from Realivent recommended purchasing an appropriately-named domain, and then redirecting that domain to a subdomain under an existing well-established site, and that’s what I’ll be doing for this project. PropertyAddress.com will be redirected to 3OceansRealestate.com/PropertyAddress.
I’m looking forward to building this site, using some of Matt’s expertise, widgets and plugins.
Stay tuned!
Update: Matt gives more of his thoughts on his blog.
Shackprices launches
December 13, 2006
Last weekend, this Bay Area resident was shocked — shocked!!! — at how affordable homes are in the Seattle area. (This might be scant comfort to those who just moved to Seattle from, say, Boise.) To satisfy my curiosity about just how cheap real estate really is there, I (naturally) poked around a bit on Zillow for a sense of historical home values, but since Zillow’s inventory of actual listed homes is still pretty low, I needed to find an MLS-sourced site as well.
Fortuitously, Galen Ward (frequent Rain City contributor, entrepreneur, and guru on all
things real estate-search related) emailed me yesterday to give me a heads-up about his brainchild Shackprices’ launch today. I thought I’d give it a test run; here’s what I found…
The site’s home page is sparse, as it should be. Having a zoomable, draggable, clickable Google-maps based search page is pretty much de rigeur these days, and Shackprices does not disappoint. That feature alone puts it way ahead of most broker and MLS sites, but does nothing to set it apart from, say, Movoto or Redfin.
Shackprices offers a nice intuitive way to refine your search: you can add criteria (like square footage, lot size, or property type) by selecting from a drop-down box, and removing criteria is also intuitive: just click the “x” next to it. Very nice, very Web 2.0.
Clicking on a home icon gives all the expected details — without requiring user registration, showing that Shackprices understands that in the Web 2.0 world, the only way you attract people is by showing that you trust them to come back without holding their email address hostage.
For each shack you examine, you can get suggestions, which show similar, nearby homes. You also get information on nearby recent solds, a clear indication that the NWMLS (of which Shackprices is a member) has finally woken up to the dangers that Zillow presents to those who would hide information as a way of maintaining control. Unfortunately, only a few comps are available per house, perhaps by design, more likely by NWMLS fiat.
Shackprices also provides the expected neighborhood information about nearby schools, parks, and shopping centers. A pleasant surprise was the link-up to Flickr (to show pictures of the area) and to 43places (whose site was unfortunately down). I’ve been dreaming for a while of a real estate/outside.in/neighboroo mashup, and Shackprices goes pretty far in providing that.
Overall, it’s a very pleasant, well-designed, intuitive, and informational site. The bigger question, as always, remains: What is their business model?
At least for now, Shackprices appears to be an agent referral site; though they’re a registered broker, they “do not employ any agents.” They make it clear that they’re not trying to replace agents either — a much-needed caveat in today’s world where agents find the bogeyman of disintermediation in almost anything online.
If they do decide to become a regular brokerage, I wonder whether they’ll have the cool factor (and discount model) to compete with Redfin, or the reach and reputation necessary to succeed as a more traditional broker. Another possibility would be to enter the admittedly crowded agent search web site provider, a la Realbird.
Here is my challenge to Galen and his crew: how about a Zillow mashup that has all solds and all listed properties on the same map? That would definitely take the real estate search wars to the next level!
Slick real estate search on the cheap
September 16, 2006
So I run a real estate blog. It’s gotta have some real estate search capabilities, doesn’t it?
