Hurricane damage, oil prices leading to higher costs. Last year's hurricanes created a huge demand for wood products such as plywood and oriented strand board.
Expect prices for New Home Construction to climb contributing to increasingly higher housing prices in the Bay Area.
Saturday, February 11, 2006
Government Auctions offer good deals?
The offerings change daily, the realty sales hype is refreshingly restrained and the caveats plentiful.
"Caveat emptor", Latin for "let the buyer beware"
HUD's real estate site
"Caveat emptor", Latin for "let the buyer beware"
HUD's real estate site
Pros and Cons of Tenant-In-Common (TIC) Investing
Tenancy-in-Common Investing is when income producing real estate is sold as securities - something like stocks and bonds. Investors own buildings directly rather than through a corporation or partnership. It's the age-old tenancy-in-common form of ownership, but with a twist. The investor turns his investment over to the investment management group, such as Triple Net Properties, LLC, and just collect the dividends.
PROS
Ease of Management:
Companies like Triple Net Properties of Santa Ana say they manage office and apartment buildings for investors who don't have to lift a finger.
Tax deferral:
According to a part of federal tax code known as 1031, investors who sell an apartment can defer capital gains taxes if they identify another similar rental property in 45 days and buy it within 180 days.
CONS
Less Liquidity:
These deals are for long-term investors. There is no secondary market for tenant-in-common securities, says the National Association of Securities Dealers. Also, unanimous consent of all investors in a property may be required to sell it.
Government Regulation:
So far government input has been helpful to investors. The Internal Revenue Service set down some rules for tenant-in-common investing in 2002, which helped fuel its expansion. But the NASD and the Securities and Exchange Commission are watching it closely. There is always a chance a government agency or Congress could change the rules.
PROS
Ease of Management:
Companies like Triple Net Properties of Santa Ana say they manage office and apartment buildings for investors who don't have to lift a finger.
Tax deferral:
According to a part of federal tax code known as 1031, investors who sell an apartment can defer capital gains taxes if they identify another similar rental property in 45 days and buy it within 180 days.
CONS
Less Liquidity:
These deals are for long-term investors. There is no secondary market for tenant-in-common securities, says the National Association of Securities Dealers. Also, unanimous consent of all investors in a property may be required to sell it.
Government Regulation:
So far government input has been helpful to investors. The Internal Revenue Service set down some rules for tenant-in-common investing in 2002, which helped fuel its expansion. But the NASD and the Securities and Exchange Commission are watching it closely. There is always a chance a government agency or Congress could change the rules.
Transfer your current property tax base to a new home
You may be able to transfer your current property tax base to a new home. When home prices rise, so do property taxes for homebuyers. You may have considered changing your residence and been concerned about an increase in property taxes.
If you are over 55 years old and meet certain requirements, Propositions 60 and 90 may be the opportunity for you. These propositions allow you to transfer your current property tax base to a home of equal or lesser value. Proposition 60 allow you to transfer to a home within the same county.
Proposition 90 allows you to transfer to a home in any county of California that has passed ordinances enabling Proposition 90. These propositions my be the opportunity for you to make your move and save money. Ther may be an opportunity to transfer your current property tax base, resulting in substantial tax savings.
If you are over 55 years old and meet certain requirements, Propositions 60 and 90 may be the opportunity for you. These propositions allow you to transfer your current property tax base to a home of equal or lesser value. Proposition 60 allow you to transfer to a home within the same county.
Proposition 90 allows you to transfer to a home in any county of California that has passed ordinances enabling Proposition 90. These propositions my be the opportunity for you to make your move and save money. Ther may be an opportunity to transfer your current property tax base, resulting in substantial tax savings.
No time limit on ownership for 1031 exchange
There is no minimum period of ownership required for 1031 exchange properties. A 1031 tax-deferred exhange allows owners of land, investment and business real property to sell at a profit and acquire more valuable real property without being taxed on their gain.
For example, investment land may be sold and a more valuable property - like an apartment building or a percentage ownership in an office building - may be acquired without tax liability. A 1031 tax-deferred exchange is similar to an IRA or a 401(k) retirement plan that is not subject to taxation until the investor begins to cash out of the retirement plan.
IRS rules require that real estate investors or business owners engaged in 1031 exchanges use a qualified intermediary. Many firms provide this service. IRS rules require that the real property must be held for business or investment purposes.
For example, investment land may be sold and a more valuable property - like an apartment building or a percentage ownership in an office building - may be acquired without tax liability. A 1031 tax-deferred exchange is similar to an IRA or a 401(k) retirement plan that is not subject to taxation until the investor begins to cash out of the retirement plan.
IRS rules require that real estate investors or business owners engaged in 1031 exchanges use a qualified intermediary. Many firms provide this service. IRS rules require that the real property must be held for business or investment purposes.
What is Title Insurance
Title insurance is a policy that is usually issued by a title company to protect the lender against somethingvthat might have happened in the past, rather than something that might occur in the future. In essence, an extensive search of public records is conducted by the title company to validate who has held title to the property in the past. The lender wants to know if there are any liens, judgments or easements on the property that they should be aware of.
But title insurance also guards against hidden risks or unknown factors that might cause an encumbrance at some point in the future, such as unknown heirs, forged deeds or wills, misinterpreted wills, false impersonation of the true owner of the property, deeds signed over by persons of unsound mind, or defects in the recording of past titles. Title insurance covers the cost of the title search, and any legal fees that may result from any dispute over past property ownership. It is required by the lender and paid for by the buyer.
The smart home buyer will also purchase title insurance to protect their own interests. This is a one-time premium that protects the buyer or their heirs, as long as they retain an interest in the property.
But title insurance also guards against hidden risks or unknown factors that might cause an encumbrance at some point in the future, such as unknown heirs, forged deeds or wills, misinterpreted wills, false impersonation of the true owner of the property, deeds signed over by persons of unsound mind, or defects in the recording of past titles. Title insurance covers the cost of the title search, and any legal fees that may result from any dispute over past property ownership. It is required by the lender and paid for by the buyer.
The smart home buyer will also purchase title insurance to protect their own interests. This is a one-time premium that protects the buyer or their heirs, as long as they retain an interest in the property.
Thursday, February 09, 2006
Housing affordability stabilizes at low rate
Housing affordability in California stabilized at a very low rate at the end of 2005, the California Association of Realtors said on Thursday.
The percentage of households that could afford a median-priced home in the state was unchanged from November's 14 percent, which is 5 percentage points lower than the rate at the end of 2004.
Nationwide, about half of all households can afford to buy a median-priced home.
The minimum household income needed to purchase a median-priced home at $548,430 in California in December was $134,200, based on an average effective mortgage interest rate of 6.33 percent and assuming a 20 percent downpayment.
In CAR's Santa Clara region, the affordability rate was 18 percent, down from 21 percent the year before. The median price in the region of $734,950 was down 1.3 percent from November, but up more than 11 percent from the end of 2004.
In the Monterey region, where the median price was $712,500, the affordability rate was 9 percent, down from 11 percent in 2004.
Affordability increased slightly in Santa Cruz county, at 11 percent in December 2005 versus 10 percent in November. It was down from December 2004, though, when the rate was 14 percent. The median price there was $742,000, down from $789,500 in November.
The percentage of households that could afford a median-priced home in the state was unchanged from November's 14 percent, which is 5 percentage points lower than the rate at the end of 2004.
Nationwide, about half of all households can afford to buy a median-priced home.
The minimum household income needed to purchase a median-priced home at $548,430 in California in December was $134,200, based on an average effective mortgage interest rate of 6.33 percent and assuming a 20 percent downpayment.
In CAR's Santa Clara region, the affordability rate was 18 percent, down from 21 percent the year before. The median price in the region of $734,950 was down 1.3 percent from November, but up more than 11 percent from the end of 2004.
In the Monterey region, where the median price was $712,500, the affordability rate was 9 percent, down from 11 percent in 2004.
Affordability increased slightly in Santa Cruz county, at 11 percent in December 2005 versus 10 percent in November. It was down from December 2004, though, when the rate was 14 percent. The median price there was $742,000, down from $789,500 in November.
Santa Clara County Inventory Trend
As of February 7, 2006, the inventory in Santa Clara County for single family homes is up to 1,919 and condo/townhomes is up to 661 units. This is up 250 homes and 70 condo/townhomes from January 3rd.
Our inventory levels are now just under 2-times the amount of inventory this time last year. Our current level of inventory is similar to the amount of homes and condo/townhomes that were for sale in the summer of 2005.
We expect inventory to increase as we head into the summer and buying activity has picked up substantially from November of 2005.
Our inventory levels are now just under 2-times the amount of inventory this time last year. Our current level of inventory is similar to the amount of homes and condo/townhomes that were for sale in the summer of 2005.
We expect inventory to increase as we head into the summer and buying activity has picked up substantially from November of 2005.
Tuesday, February 07, 2006
What is your home worth?
All homes have a price, and sometimes more than one. There's the price owners would like to get, the value buyers would like to offer and a point of agreement which can result in a sale.
In considering home values, several factors are important:
In considering home values, several factors are important:
- The value of your home relates to local sale prices. The same home, located elsewhere, would likely have a different value.
- Sale prices are a product of supply and demand. If you live in a community with an expanding job base, a growing population and a limited housing supply, it's likely that prices will rise. Alternatively, it's important to be realistic. If the local community is losing jobs and people are moving out, then you'll likely have a buyer's market.
- Owner needs can impact sale values. If owner Smith "must" sell quickly, he will have less leverage in the marketplace. Buyers may think that Smith is willing to trade a quick closing for a lower price -- and they may be right. If Smith has no incentive to sell quickly, he may have more marketplace strength.
- Sale prices are not based on what owners "need." When an owner says, "I must sell for $300,000 because I need $100,000 in cash to buy my next home," buyers will quickly ask if $300,000 is a reasonable price for the property. If similar homes in the same community are selling for $250,000, the seller will not be successful.
- Sale prices are NOT the whole deal. Which would you rather have: A sale price of $200,000, or a sale price of $205,000 but where you agree to make a "seller contribution" of $5,000 to offset the buyer's closing costs, pay a $2,000 allowance for roof repairs, fund two mortgage points, re-paint the entire house and leave the washer and dryer?
How much is too much?
Because all transactions are unique there is flexibility in the marketplace. The amount of flexibility depends on local conditions.
For example, suppose you're selling a townhouse. Suppose also that there have been five recent sales of the model you own and that sale values have ranged between $200,000 and $210,000. You now have an idea of how your home might be priced. In a strong market perhaps you can ask for $210,000 or a little more. If the market has slowed, $210,000 may be a reasonable asking price, but perhaps more than the final sale price.
Here's another scenario. Imagine that you live in a community of Victorian-style homes, most of which were built in the 1920s. All the homes are different in terms of size, condition, modernization, style and features. In such a neighborhood, an average sale price is just a statistic without much practical meaning. On a single block one home may sell for $400,000 while another is priced at more than $1 million. The average price may be outrageously high for one home and staggeringly low for another.
Who can help?
Experienced REALTORS® are active in the local marketplace and can provide assistance with pricing, marketing, negotiation and closing.
Because experienced REALTORS® have handled many transactions, they're familiar with the terms and conditions that went into individual sales, not just published sale prices which may not reflect various premiums, discounts and adjustments.
Monday, February 06, 2006
Weekly Market Report for the Week of January 22nd-28th, 2006
Overall market activity has increased dramatically over the past 1-2 weeks. The rate and number of sales has increased substantially from the first half of January. Santa Clara County inventory remains quite low (around 2360) so it will be interesting to see if we experience a dramatic increase following the Super Bowl weekend. We are still running very close to 2004 inventory levels (around 2100+ during the same week in 04').
Nearly every office saw multiple offer activity this past week. The most active price range is the under $1.5 million mark, although several higher-end properties went under contract as well. We also had a number of properties in the $2 and $3+ million range go into escrow.
Overall, the number of Santa Clara County sales (units) was off somewhere between 10-20% for January 2006 vs. January 2005. At the same time, the January 2006 sales volume numbers were lower but more comparable to January 2005 figures (around 5-10% lower sales volume in 2006) due to stable sales prices and a number of high-end sales that went into escrow during the first month of 2006.
All in all, the market is definitely going into full swing. Several offices had multiple offers on over 50% of their office sales. One office received around 6-8 offers on properties listed under $1 million. Open Houses are very active with a large number of "real buyers" looking around on the weekends.
Expect increasing demand and activity as the inventory starts to make it's seasonal climb.
Nearly every office saw multiple offer activity this past week. The most active price range is the under $1.5 million mark, although several higher-end properties went under contract as well. We also had a number of properties in the $2 and $3+ million range go into escrow.
Overall, the number of Santa Clara County sales (units) was off somewhere between 10-20% for January 2006 vs. January 2005. At the same time, the January 2006 sales volume numbers were lower but more comparable to January 2005 figures (around 5-10% lower sales volume in 2006) due to stable sales prices and a number of high-end sales that went into escrow during the first month of 2006.
All in all, the market is definitely going into full swing. Several offices had multiple offers on over 50% of their office sales. One office received around 6-8 offers on properties listed under $1 million. Open Houses are very active with a large number of "real buyers" looking around on the weekends.
Expect increasing demand and activity as the inventory starts to make it's seasonal climb.
Sunday, February 05, 2006
When Buying, Don't Forget Your Pre-Approval Letter
Most home buyers know they should get a mortgage pre-approval letter from a lender before they begin seriously shopping for a home. But the reasons for this advice aren't always clear, and buyers sometimes are dismayed by the amount of paperwork involved. Here is some of the reasoning behind the advice:
1. A pre-approval letter is more reliable than a pre-qualification letter. Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a "pre-qual" from a Web site is just as easy. Enter some information, click "submit" and voilà. A pre-approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification The additional due diligence is exactly why the pre-approval carries more weight.
2. You'll know how much money you can qualify to borrow. Most home buyers have a rough idea of how much they would feel comfortable paying every month on their mortgage. However, there's no quick-and-dirty way to translate that monthly payment into a specific maximum mortgage amount because other factors -- down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on -- are part of the calculation. And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history.
3. You'll have more leverage in negotiations with the seller. Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in a close multiple offer situation. And, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you'll be able to obtain a mortgage.
4. Your real estate agent will work harder on your behalf. A pre-approval letter signals to your real estate agent that you're a well-qualified buyer who is serious about purchasing a home. The increased likelihood of a closed sale -- and a commission -- will naturally motivate your agent to devote more time and energy to you. In fact, some agents won't even show property to buyers who don't have a pre-approval letter.
5. A few caveats: Pre-approval letters aren't binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, lease a car or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.
1. A pre-approval letter is more reliable than a pre-qualification letter. Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a "pre-qual" from a Web site is just as easy. Enter some information, click "submit" and voilà. A pre-approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification The additional due diligence is exactly why the pre-approval carries more weight.
2. You'll know how much money you can qualify to borrow. Most home buyers have a rough idea of how much they would feel comfortable paying every month on their mortgage. However, there's no quick-and-dirty way to translate that monthly payment into a specific maximum mortgage amount because other factors -- down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on -- are part of the calculation. And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history.
3. You'll have more leverage in negotiations with the seller. Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in a close multiple offer situation. And, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you'll be able to obtain a mortgage.
4. Your real estate agent will work harder on your behalf. A pre-approval letter signals to your real estate agent that you're a well-qualified buyer who is serious about purchasing a home. The increased likelihood of a closed sale -- and a commission -- will naturally motivate your agent to devote more time and energy to you. In fact, some agents won't even show property to buyers who don't have a pre-approval letter.
5. A few caveats: Pre-approval letters aren't binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, lease a car or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.
Inflation Jitters Push Up Mortgage Rates in Freddie Mac Weekly Survey
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.23 percent, with an average 0.5 point, for the week ending February 2, 2006, up from last week's average of 6.12 percent. Last year at this time, the 30-year FRM averaged 5.63 percent.
The average for the 15-year FRM this week is 5.81 percent, with an average 0.5 point, up from last week's average of 5.70 percent. A year ago, the 15-year FRM averaged 5.14 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.87 percent this week, with an average 0.5 point, unchanged from last week when it averaged 5.75 percent. A year ago, the five-year ARM averaged 5.00 percent.
One-year Treasury-indexed ARMs averaged 5.33 percent this week, with an average 0.7 point, up from last week when it averaged 5.20 percent. At this time last year, the one-year ARM averaged 4.23 percent.
"Declines in worker productivity coupled with accelerating labor costs increase the threat of inflation down the road. Inflationary pressure generated by these two factors pushes long-term mortgage rates upward, which is why we have seen rates rise these last two weeks," said Frank Nothaft, Freddie Mac vice president and chief economist. "Still, to keep things in perspective, mortgage rates are currently only about one-half a percentage point higher than they were at this time last year."
"Mortgage rates will surely fluctuate in the weeks and months ahead, but the trend now is for higher rates over the long run."
The average for the 15-year FRM this week is 5.81 percent, with an average 0.5 point, up from last week's average of 5.70 percent. A year ago, the 15-year FRM averaged 5.14 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.87 percent this week, with an average 0.5 point, unchanged from last week when it averaged 5.75 percent. A year ago, the five-year ARM averaged 5.00 percent.
One-year Treasury-indexed ARMs averaged 5.33 percent this week, with an average 0.7 point, up from last week when it averaged 5.20 percent. At this time last year, the one-year ARM averaged 4.23 percent.
"Declines in worker productivity coupled with accelerating labor costs increase the threat of inflation down the road. Inflationary pressure generated by these two factors pushes long-term mortgage rates upward, which is why we have seen rates rise these last two weeks," said Frank Nothaft, Freddie Mac vice president and chief economist. "Still, to keep things in perspective, mortgage rates are currently only about one-half a percentage point higher than they were at this time last year."
"Mortgage rates will surely fluctuate in the weeks and months ahead, but the trend now is for higher rates over the long run."
Friday, February 03, 2006
Foreclosure activity up 15.6% in California
Foreclosure activity in California was up 15.6 percent in the last three months of 2005, according to a report released on Thursday.
Lending institutions sent 14,999 default notices to California homeowners during the October-to-December period, according to Dataquick Information Systems.
That was up 19 percent from the third quarter, and up 15.6 percent from 2004's fourth quarter.
All regions of the state saw an increase in foreclosure activity, ranging from 10.5 percent in the Bay Area to 19.6 percent in Southern California.
Santa Clara county saw a 5.6 percent increase, while Santa Cruz saw a 14.8 percent increase and Monterey went up 25.3 percent.
Dataquick said foreclosure activity hit a low during the third quarter of 2004 when 12,145 default notices were recorded. Defaults peaked in 1996's first quarter at 59,897.
"There's always going to be a certain amount of financial distress. People lose their jobs, have medical emergencies, get divorced, pass away or make bad money decisions at a certain rate.
increasing amount of equity that people have had in their homes. That equity is now being created at a slower pace, and default activity is inevitably on the rise," said Marshall Prentice, DataQuick president.
The annual home appreciation rate in the state hit 22.8 percent during the second quarter of 2004. Since then it has come down and in fourth-quarter 2005 it was 14.5 percent. The appreciation rate is expected to fall below 10 percent sometime this summer.
The median amount owed when the default notice was recorded was $6,862 in fourth-quarter 2005, up from $6,130 for the same period a year ago.
Dataquick said that only about 5 percent of homeowners who find themselves in default actually lose their homes to foreclosure. Most are able to stop the foreclosure process by bringing their mortgage payments current, or by selling their home and paying the home loan off.
Lending institutions sent 14,999 default notices to California homeowners during the October-to-December period, according to Dataquick Information Systems.
That was up 19 percent from the third quarter, and up 15.6 percent from 2004's fourth quarter.
All regions of the state saw an increase in foreclosure activity, ranging from 10.5 percent in the Bay Area to 19.6 percent in Southern California.
Santa Clara county saw a 5.6 percent increase, while Santa Cruz saw a 14.8 percent increase and Monterey went up 25.3 percent.
Dataquick said foreclosure activity hit a low during the third quarter of 2004 when 12,145 default notices were recorded. Defaults peaked in 1996's first quarter at 59,897.
"There's always going to be a certain amount of financial distress. People lose their jobs, have medical emergencies, get divorced, pass away or make bad money decisions at a certain rate.
increasing amount of equity that people have had in their homes. That equity is now being created at a slower pace, and default activity is inevitably on the rise," said Marshall Prentice, DataQuick president.
The annual home appreciation rate in the state hit 22.8 percent during the second quarter of 2004. Since then it has come down and in fourth-quarter 2005 it was 14.5 percent. The appreciation rate is expected to fall below 10 percent sometime this summer.
The median amount owed when the default notice was recorded was $6,862 in fourth-quarter 2005, up from $6,130 for the same period a year ago.
Dataquick said that only about 5 percent of homeowners who find themselves in default actually lose their homes to foreclosure. Most are able to stop the foreclosure process by bringing their mortgage payments current, or by selling their home and paying the home loan off.
Thursday, February 02, 2006
Mortgage Rates Update
Rates have once again followed the slow rise that has become a familiar trend. As expected the Federal Reserve raised the Fed Funds Rate by 25 basis points to 4.5% when they met on Tuesday bringing the Prime Rate up to 7.5%. With the Fed Meeting behind us, we look towards the Labor Department's report scheduled for release tomorrow. This report is by far the most important of the week. The Labor Department will post January’s Employment data, giving us the U.S. unemployment rate and the number of jobs added or lost during the month among other related statistics. Analysts are expecting to see the unemployment rate remain at 4.9% and approximately 250,000 new jobs. An increase in unemployment and fewer new jobs than expected would be great news for the bond market. It would probably create a bond market rally, leading to lower mortgage rates tomorrow.
Wednesday, February 01, 2006
San Jose chooses Japantown developers
Sharon Simonson
The Olson Co. has beaten a partnership of two of the region's largest developers to enter exclusive negotiations with the city of San Jose to redevelop 7.7 acres in Japantown.
The approval, granted at the San Jose City Council meeting yesterday, gives the Brea, Calif., company approximately eight months to work with the San Jose Redevelopment Agency and the community to come up with a plan that will bring new housing, retail and public spaces, such as Japanese gardens, to three sites. All three parcels sit within roughly a half-mile of one another, generally along Japantown's central spine, Jackson Street.
The total investment in the project upon completion is expected to exceed $100 million.
The most important parcel, 5.8 acres now used by the city for vehicle maintenance and storage, is immediately north of Jackson between Sixth and Seventh streets.
The project has been sought by some in the community for as long as 25 years, Vice Mayor Cindy Chavez told her fellow council members in recommending The Olson Co. and a nonprofit partner, First Community Housing, be selected for the job.
To get the work, Olson and First Community defeated fellow finalists SummerHill Homes and KB Home. The city received nine proposals in total from a variety of interests for the job.
Councilman Chuck Reed sought assurances from the Olson Co. that it would be able to successful develop and tenant the proposed new shop space, saying the city has learned the hard way that it can build space intended for shops but that doesn't necessarily mean that it can find tenants that actually want it.
Olson's vice president for community development in Northern California, Mitch Solomon, said the company is working with a retail consultant with strong qualifications for just this kind of job.
"We have a high degree of confidence that the retail piece will turn out exceptionally well," he said.
The Olson Co. has beaten a partnership of two of the region's largest developers to enter exclusive negotiations with the city of San Jose to redevelop 7.7 acres in Japantown.
The approval, granted at the San Jose City Council meeting yesterday, gives the Brea, Calif., company approximately eight months to work with the San Jose Redevelopment Agency and the community to come up with a plan that will bring new housing, retail and public spaces, such as Japanese gardens, to three sites. All three parcels sit within roughly a half-mile of one another, generally along Japantown's central spine, Jackson Street.
The total investment in the project upon completion is expected to exceed $100 million.
The most important parcel, 5.8 acres now used by the city for vehicle maintenance and storage, is immediately north of Jackson between Sixth and Seventh streets.
The project has been sought by some in the community for as long as 25 years, Vice Mayor Cindy Chavez told her fellow council members in recommending The Olson Co. and a nonprofit partner, First Community Housing, be selected for the job.
To get the work, Olson and First Community defeated fellow finalists SummerHill Homes and KB Home. The city received nine proposals in total from a variety of interests for the job.
Councilman Chuck Reed sought assurances from the Olson Co. that it would be able to successful develop and tenant the proposed new shop space, saying the city has learned the hard way that it can build space intended for shops but that doesn't necessarily mean that it can find tenants that actually want it.
Olson's vice president for community development in Northern California, Mitch Solomon, said the company is working with a retail consultant with strong qualifications for just this kind of job.
"We have a high degree of confidence that the retail piece will turn out exceptionally well," he said.
Tuesday, January 31, 2006
Weekly Market Report for the Week of January 15th-21st, 2006
The overall inventory in Santa Clara County remained stable over the past week at 2390 as increased buyer demand hit the market and new, well priced listings sold quickly (list price remains key for sellers).
It is important to note, however, that the overall number of sales (units) for the month of January 2006 was off approximately 20% from January 2005 according to reinfolink data. The increased activity and demand we're seeing this week should elevate those figures over the next 30+ days.
Some properties coming on the market at unrealistic prices are sitting. Once they adjust and get in line with the market, buyers are swarming over them. One property in our Cupertino office came on the market in the high 900k range. It sat for 45 days with no offers. Once the property was reduced to 949k, it received six offers and sold above list.
Sales activity is increasing across the board from South County, through Santa Cruz and throughout our Silicon Valley offices. Both Los Altos offices reported that 50% of their sales saw multiple offers. Los Gatos reported increased activity and sales in the $1.5 million range and in the $3 million range as well. Gilroy noted that sales "took off this past week" including high traffic and offers on upper end homes in the area.
Expect increased activity as we launch into February as the peak buying season kicks-off following Super Bowl Sunday.
It is important to note, however, that the overall number of sales (units) for the month of January 2006 was off approximately 20% from January 2005 according to reinfolink data. The increased activity and demand we're seeing this week should elevate those figures over the next 30+ days.
Some properties coming on the market at unrealistic prices are sitting. Once they adjust and get in line with the market, buyers are swarming over them. One property in our Cupertino office came on the market in the high 900k range. It sat for 45 days with no offers. Once the property was reduced to 949k, it received six offers and sold above list.
Sales activity is increasing across the board from South County, through Santa Cruz and throughout our Silicon Valley offices. Both Los Altos offices reported that 50% of their sales saw multiple offers. Los Gatos reported increased activity and sales in the $1.5 million range and in the $3 million range as well. Gilroy noted that sales "took off this past week" including high traffic and offers on upper end homes in the area.
Expect increased activity as we launch into February as the peak buying season kicks-off following Super Bowl Sunday.
Monday, January 30, 2006
Home Selling Exclusions: A Great Benefit for Homeowners
by Benny L. Kass
If you have recently sold your house at a significant profit, and if you have not been keeping up with the tax laws, you will be pleasantly surprised. If you are married, if you meet the legal requirements described below, you can exclude up to $500,000 of the profit you have made. If you are not married, or file a separate tax return, the exclusion is reduced down to $250,000 of profit.
For many years, there were two tax concepts which helped save homeowners from paying a lot of capital gains tax: the "roll-over" and the "once in a lifetime." However, the Taxpayer Relief Act of 1997, signed by President Clinton on August 5, 1997, abolished both of these concepts. The roll-over and the once-in-a-lifetime exemption for homeowners over 55 years of age are real estate and tax history.
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If you have recently sold your house at a significant profit, and if you have not been keeping up with the tax laws, you will be pleasantly surprised. If you are married, if you meet the legal requirements described below, you can exclude up to $500,000 of the profit you have made. If you are not married, or file a separate tax return, the exclusion is reduced down to $250,000 of profit.
For many years, there were two tax concepts which helped save homeowners from paying a lot of capital gains tax: the "roll-over" and the "once in a lifetime." However, the Taxpayer Relief Act of 1997, signed by President Clinton on August 5, 1997, abolished both of these concepts. The roll-over and the once-in-a-lifetime exemption for homeowners over 55 years of age are real estate and tax history.
Read More->
Sunday, January 29, 2006
Plenty of Programs for First Timers, Cash Poor
by M. Anthony Carr
With the cooling of the housing market, first-time buyers need to be assertive in elbowing their way up front of the home-buying line -- now. The cooling, or normalizing, doesn't mean the market is tanking. It means just what it says -- it's going to be more normal. Housing will continue to appreciate, sellers will continue to sell and buyers will continue to buy. The question is whether buyers will take advantage of this leveling off and get a good deal while the sellers are forced to give up a few things.
Read More->
With the cooling of the housing market, first-time buyers need to be assertive in elbowing their way up front of the home-buying line -- now. The cooling, or normalizing, doesn't mean the market is tanking. It means just what it says -- it's going to be more normal. Housing will continue to appreciate, sellers will continue to sell and buyers will continue to buy. The question is whether buyers will take advantage of this leveling off and get a good deal while the sellers are forced to give up a few things.
Read More->
Friday, January 27, 2006
Top 10 Tax Breaks, On The House
by Broderick Perkins
The New Year always turns thoughts to the new tax season and when it comes to taxes there's no place like home to find shelter.
Your home offers a score of tax deductions and credits designed to help offset the cost of housing and to keep the housing market fueled with new buyers.
Some federal-level politicians would like to separate you from some of those benefits and they may or may not be successful, so take advantage of them while you can.
Here's a look at the Top 10 Tax Breaks, On The House. Visit the Internal Revenue Service's website for more details on each item.
The New Year always turns thoughts to the new tax season and when it comes to taxes there's no place like home to find shelter.
Your home offers a score of tax deductions and credits designed to help offset the cost of housing and to keep the housing market fueled with new buyers.
Some federal-level politicians would like to separate you from some of those benefits and they may or may not be successful, so take advantage of them while you can.
Here's a look at the Top 10 Tax Breaks, On The House. Visit the Internal Revenue Service's website for more details on each item.
Mortgage Loan Interest: The Mother Of All Tax Breaks, because interest payments comprises a large portion of your mortgage payment in the early years of the loan's term, mortgage interest on a maximum of $1 million in mortgage debt secured by a first and second home is deductible. Deductions reduce your taxable income against which your taxes due are calculated. The $1 million level applies to joint tax filers. You get half the deduction if you file single or separately. Likewise, home equity loan interest is deductible, but limited to the smaller of $100,000 (half as much for each member of a married couple if they file separately), or the total of your home's fair market value as determined by a complicated formula you may need a tax professional's help to decipher.
Home Improvement Loan Interest: The interest on a home improvement loan is also deductible, but calculated differently. You can deduct all the interest on a home improvement loan provided the work is a "capital improvement" rather than repairs, maintenance or cosmetic upgrades. Capital improvements typically increase your home's value (say, because you added a room), prolong it's life (a new roof) or adapt it to new uses (universal design improvements to assist older people or people with disabilities). You get tax benefits from repair work (painting, repairing, etc.) only when you sell your home but you can use a home equity loan to make repairs and deduct the interest -- up to the limits
Points: Points, each equal to 1 percent of the loan principal, are charged by lenders as part of the cost of the loan. You can fully deduct points associated with a home purchase mortgage, but not a mortgage broker's commission. Refinanced mortgage points are deductible too, but only when they are amortized over the life of the loan. Once you refinance a second time, the balance of the old points from a refinanced loan offer an immediate write off, as you begin to amortize the new points.
Property Taxes: Property taxes or real estate taxes are fully deductible. Any local city or state property tax refunds reduces your federal property tax deduction by the same amount.
Capital Gains Exclusion: Home buying investors' best tax shelter comes from provisions in the Taxpayer Relief Act of 1997 which allows married taxpayers who file jointly to keep, tax free, up to $500,000 in profit on the sale of a home used as a principal residence for two of the prior five years. The amount is halved for those filing single or separately. You can use the benefit as often as you qualify.
Home-Based Business Deduction: Home offices that use a portion of your home exclusively for business could qualify you to deduct a percentage of costs related to that portion. Included are a percentage of your insurance and repair costs, utility bills and depreciation. Under clarified provisions of the Taxpayer Relief Act of 1997, if your home office qualifies, you don't have to allocate a home sale's capital gains between the home and the business. Previously if you used, say, 10 percent of your home for a home-based business, 10 percent of the gain from a sale would be subject to capital gain taxes and you couldn't use the capital gains tax exclusion on that portion. The clarified provision does not excuse you from a recapture tax if you've taken a depreciation deduction because of the home-based business.
Selling Costs and Capital Improvements: When you sell your home, you can reduce your taxable capital gain by the amount of your selling costs, which include real estate commissions, title insurance, legal fees, advertising and inspection fees. Cost typically stemming from decorating or repairs -- painting, wallpapering, planting flowers, maintenance, and the like -- are also selling costs if you complete them within 90 days of your sale and with the intention of making the home more saleable. Selling costs are deducted from your gain. Gain is your home's selling price, minus deductible closing costs, minus selling costs, minus your tax basis in the property. Your basis is the original purchase price, plus the cost of capital improvements, minus any depreciation.
Moving Costs: A move triggered by a new job comes with some deductible moving costs. To qualify, you must meet certain requirements including, moving within one year of starting your new job, moving 50 miles farther from your old home than your old job was and working full-time at the new job for 39 of 52 weeks following the move. Deductions include travel or transportation costs and expenses for lodging and storing your household goods.
Mortgage Tax Credit: Mortgage Credit Certificates (MCCs) allow qualifying low-income, first-time home buyers to take a mortgage interest tax credit of up to 20 percent (the amount varies by jurisdiction) of the mortgage interest payments made on a home. This credit is available every year you keep the loan and live in the house purchased with the certificate. Unlike a deduction that reduces your income, the credit is subtracted, dollar for dollar, from the income tax owed. For example, with a 20 percent tax credit, if you paid $10,000 in interest, your tax credit would be $2,000. If you owe $2,000 in income taxes without the credit, you would end up owing nothing to the IRS after the credit was applied. The remaining 80 percent of your mortgage interest -- $8,000 -- is taken as a normal mortgage interest deduction.
Energy Tax Credits: The newest home-based tax credits were made possible last year by the Energy Policy Act of 2005. Tax credits of up to $500 in 2006 and 2007 are available for upgrading heating and air conditioning systems, insulations, windows, doors and thermostats, caulking leaks, installing pigmented metal roofs and for otherwise putting the bite on energy waste in your home. Qualified solar energy and fuel cell systems can net tax credits of up to $2,000. Some states also offer tax credits or rebate deals that could reduce the federal credit. Related tax credits are available for consumers who buy alternative- and clean-fuel burning cars and for entrepreneurial consumers who install clean-fuel vehicle refueling property at the principal residence of the taxpayer.
Thursday, January 26, 2006
Want to be a landlord? Be smart about it
by Al Heavens
I'd hate to be a landlord.
I had the opportunity once. In 1987 we were unable to sell our first house for several months after we'd acquired our second, and we briefly considered getting into the business.
The first house had been built in 1848, and I had spent six years and $30,000 trying to undo all the dumb things previous owners had done in the name of renovation and modernization.
The new house, built in 1904 and three times bigger than the first, need 10 times more work.
We were hoping to use the profit on the sale of the first to rehab the second. But the market was souring, we were around the corner from the worst housing project in the city and our first listing agent didn't seem in any hurry to move the property.
We tightened our belts, prepared to juggle two mortgages (one 13.5 percent, the other 10 percent) and prayed that nothing serious would go wrong with either house before we sold number one.
Read More->
I'd hate to be a landlord.
I had the opportunity once. In 1987 we were unable to sell our first house for several months after we'd acquired our second, and we briefly considered getting into the business.
The first house had been built in 1848, and I had spent six years and $30,000 trying to undo all the dumb things previous owners had done in the name of renovation and modernization.
The new house, built in 1904 and three times bigger than the first, need 10 times more work.
We were hoping to use the profit on the sale of the first to rehab the second. But the market was souring, we were around the corner from the worst housing project in the city and our first listing agent didn't seem in any hurry to move the property.
We tightened our belts, prepared to juggle two mortgages (one 13.5 percent, the other 10 percent) and prayed that nothing serious would go wrong with either house before we sold number one.
Read More->
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