What does this mean?  Well, if you were waiting for a better rate, you’ve missed out. Or, at least this time. Rates are still at very low levels, but many think that those times are coming to an end.

For the past 4 weeks, rates have been consistently on the rise.  Average rates are up from a record low 4.1 percent to around 4.61% percent.  And just this past week, they went up somewhat dramatically (.2%)  These increases have been spurred on by Obama and Congress’ recent deal to not increase taxes for the next two years, and in some cases, decrease taxes. This has caused an increase in investors selling bonds, leading to higher interest rates.

As I mentioned, 4.6% is still pretty darn low. However, with rates on the rise, people waiting for lower rates have now missed the boat. One consolation is that home prices remain significantly low. And, as we see it, they will remain that way for some time in Santa Fe. The combination of tight lending and continued increases in foreclosures are still continuing to effect house prices. Neither of these items look like they are going to change in a positive way anytime soon.

The following is a link to a USA Today article about the rising rates and what it all means. It’s a quick/good read. Interesting stuff..

ARTICLE

Contact Ryan Bolton and Matt Desmond

In Defense of Home Ownership
by Ron Lieber; The New York Times

It’s hard to read the headlines and not conclude that becoming a homeowner is a terrible idea.
 
Last week, the National Association of Realtors announced that existing-home sales in July had fallen an astounding 25.5 percent from the previous year. Sure, there was a federal tax credit in place last summer. But with single-family home sales at their lowest level since 1995 and unemployment still stubbornly high, home prices may fall further.

In the meantime, millions of homeowners are still far underwater, and government programs to help them have fallen well short of their goals. More foreclosures are coming, casting a deeper shadow over home prices. So it’s hardly surprising that the conventional wisdom says that home values will never again rise faster than inflation.

But as with stocks and the weather, it is dangerous to assume any certainty in the housing market. And by wallowing too much in the misery of others, people looking for a new place to live run the risk of thinking every home purchase will end in regret, at least financially.

Many still could, if they buy in hard-hit areas where prices could fall further.

But a mortgage is still a form of long-term forced savings, after all. This is more important than ever, since fewer people have access to generous pensions than they did during the last big housing slump. A 401(k) or similar plan is no bargain, either, with its erratic returns and employer matches that come and go as the economic winds shift. Social Security is also likely to be less generous, and Medicare will probably cost more.

Besides, owning a home isn’t just about what shows up on a net worth statement — something that bears repeating after all the “investing” that people thought they were doing when buying homes over the last 10 or 15 years. Many of these more qualitative factors, from living free of a landlord’s whim to having access to a good school district or retirement community, haven’t changed and probably never will.

It is possible, as a homeowner, to make very little money but still buy plenty of happiness. So before you swear off real estate, reconsider a few of the basics.

Worst Cases

Some buyers may rue the day in 2010 they bought their homes. They may end up like those who bought in 2006 and have lost their jobs. Now those people face the difficulty of moving to pursue employment elsewhere because they owe much more than their homes are worth.

Marke Hallowell and Allison Firmat, who are getting married next month, are well aware of the history. Yet they plan to put 5 percent or less down, using a fixed-rate mortgage backed by the Federal Housing Administration, once they find a condominium in southern Orange County, Calif. (They’ve already been outbid a few times.)
Ms. Firmat is not working, and Mr. Hallowell is a Web developer. Does he worry about mobility problems or making the payments in the event of a job loss, given that he’s the sole breadwinner? “We’re getting such a good deal on interest rates that we could rent our place out,” he said.

Mr. Hallowell and Ms. Firmat say they believe their approach is conservative, at least compared to what they might have done five years ago.

“Nothing is going to change the rate we will have,” Mr. Hallowell said. “Condos like the ones we’re looking at now were unobtainable in the past, unless we went into something with a total balloon payment. There were times I was tempted, but never seriously.”

Indeed, many people who are buying at the moment are locking in mortgage rates of about 4.5 percent. A year ago, they might have paid 5.25 percent on a $300,000 loan for a monthly payment of about $1,657. Today, you could lock in a lower monthly payment of around $1,520 on a mortgage that size, or you might not need to borrow that much, given that prices have fallen in many areas.

Forced Savings

You may make nothing at all beyond inflation over time on a home, but the part of your mortgage payment that goes toward principal is a form of forced savings.

Sure, you might do better by renting and investing the difference between the rent and the total costs of ownership. But at least three things need to go right.

First, you need to actually save the money. Americans have trouble with that sort of plan. Then, you need an after-tax return that’s better than whatever a home would deliver. That’s a task that might not have gone so well over the last 10 or 12 years, and it involves its own future risk, given how little safer investments are returning now. Finally, you must not raid the savings along the way.

Difficult Landlords

A bank can kick you out only if you don’t pay your mortgage. But landlords can drive you away in any number of ways.

Laura Mapp and her husband, Carl Berg, rented from a relative, but it didn’t go particularly well. They found another landlord they liked, but came back from a holiday trip one year to a note saying he wanted to move in himself. They had a month to scram. (The note came with a bottle of wine, at least.)

In yet another rental, they let their landlord know they were looking to buy and inquired about a month-to-month lease. No problem, their landlord said, as long as they used his boyfriend as their real estate agent.

Earlier this year, the couple gave up on landlords and bought a house in the Highland Park neighborhood in Seattle.

The Nice Part of Town

No matter how pretty the neighborhood, prices may still fall further in places like greater Detroit, Cleveland and Las Vegas; outlying areas of Los Angeles, San Francisco and Phoenix; and much of Florida.

But if you want to live in the Fox Hill Farm development in Glen Mills, Pa., you’ll have to buy because renters are not allowed, said Bob Kuhn, who lives there. The same may be true of other communities for older people.

And there may not be many family-size rentals — or at least any financial edge to be gained by renting — in suburbs or urban neighborhoods with excellent public schools.

After many years of building their down-payment fund and a couple of years of watching the listings in the Eagle Rock and Mount Washington areas of Los Angeles, Garret and Alison Williams realized that prices simply were not falling much there.

By the time they were ready to pounce this year, they had a big enough down payment and interest rates had fallen so far that renting didn’t make much financial sense, even if they could have found a rental big enough for them and their two small children.

“Had we rented, we would be paying more than we’re paying for a mortgage,” said Ms. Williams, who had lived in the same two-bedroom rental for 12 years before she and her family moved into their new house in Eagle Rock earlier this month. “I don’t see how we could really regret having made the move when it’s so much better for us on so many levels.”

Link To Original Article

Contact Ryan Bolton and Matt Desmond

Long road to a short sale: Struggling homeowners turn to lenders for last-chance option
by:Anne Constable

Tenants feeling effects of volatile housing market

The house that Anna Bogaard-Hazen and her husband, Barry Hazen, bought on a cul-de-sac in Eldorado in 2005 had everything on their list of amenities — views, privacy, a pretty front porch.

In fact, when they first saw it, “Our jaws just dropped,” she recalled.

Because others were bidding on the property, the couple paid the owners their asking price of $389,000 for the 1,800-square-foot house.

When they refinanced in 2007, the appraised value of the property had jumped to $460,000 and they thought, “Oh boy, we made a great investment. We were thrilled,” Bogaard-Hazen said.

As someone who had moved a lot earlier in her life, Bogaard-Hazen was ready to settle down. “We expected to grow old in this house,” she said. And with her new teaching career and her husband’s promotion, they felt optimistic about the future.

Then the bottom fell out of the housing market. Like many other families around the country, the couple found themselves owing more than their house was worth — in this case nearly $50,000.

Then in April, Hazen lost his job and they could no longer make their mortgage payment, which was more than $2,000 a month.

Bogaard-Hazen, 41, said that as a level 1 teacher at Tierra Encantada, she makes $33,000, and it now takes her three paychecks to save enough money to pay the mortgage. She made the September payment in October but expects to continue falling further behind.

Hazen, 48, who worked for 30 years for a large, Denver-based company, now has two part-time jobs, one with the state Office of the Medical Investigator and a second with Double Take, a resale shop owned by a friend. But their combined incomes are not nearly enough to make their current monthly payments.

Last weekend, the couple began selling off their possessions at a garage sale (“We may even be willing to just give stuff away,” Bogaard-Hazen said in an e-mail) and put their dream house on the market for $340,000, $38,000 less than they owe the bank.

By holding a short sale, they hope to avoid foreclosure and protect their credit rating.

They’re resigned to losing their home — and the many interesting, one-of-a-kind possessions that fill it.

Options for when you’re underwater

More and more, homeowners who are upside down are seeking short sales.

In the past, it was rare for lenders to agree, but because of changes in the real-estate market, they are more willing to accept less than the full balance of the loan at closing.

In February 2009, the Obama administration introduced the Making Home Affordable plan to stabilize the housing market and help homeowners get relief from mortgage payments they can no longer afford.

The goal of HARP (Home Affordable Refinance Program) and HAMP (Home Affordable Modification Program), two original components of MHA, is to help eligible homeowners at risk of default to avoid foreclosure either through refinancing or loan modification.

HAFA (Home Affordable Foreclosure Alternatives), which took effect in April, complements these programs by helping homeowners who were not approved under the refinance or modification options of the MHA program to avoid foreclosure through a short sale or deed in lieu of foreclosure (in which the homeowner transfers ownership of the property to the servicer). In a short sale, the lender approves the terms and accepts the payoff in satisfaction of the mortgage. And under HAFA, which will be effect until Dec. 31, 2012, the homeowner can receive financial incentives to help with relocation and other costs.

To qualify for a short sale, homeowners must be facing financial hardship, a shortfall in their monthly income and insolvency.

Recent statistics confirm the number of short sales is soaring.

They increased 42 percent in the second quarter of 2010 and were up 126 percent from a year earlier, according to the U.S. Treasury Department.

The Distressed Property Institute’s website says more than 96,000 homeowners in the first half of this year were saved from foreclosure by short sales, although they still represent only 26 percent of overall distressed property transactions. A majority of people end up in foreclosure, or worse, abandoning their homes.

In Santa Fe County, there were 23 short sales in 2009, but this year so far there have been 39 successful transactions, according to Peter Kahn of Santa Fe Realty Partners.

What he finds staggering is the number of short-sale listings that expired. “They indicated potentially that a Realtor undertook the responsibility of trying to help a struggling homeowner avoid foreclosure and failed,” Kahn said in an e-mail.

He recommends that property owners thinking about short sales should contact a qualified broker, preferably a certified distressed property expert. And homeowners should expect some very frank conversations with the agent.

Short sales are not easy, and they’re not really short. In fact, they should be called long sales, Kahn said, because “while the bank is getting shorted, they take longer.” It might, for example, be 60 days before the buyer or the seller gets a response from the bank to an offer, he said, and both sides need to be patient.

Fred Raznick, the agent acting for Bogaard-Hazen and Hazen, said he was representing a seller in a short sale that took so long that another department of the same lending institution foreclosed on the house — and then sold it for less than the offer on the table.

Foreclosure, he noted, “is not in the best interest of anybody,” as this story illustrates.

Buyers and sellers also need to be well informed about the differences between short sales and other real-estate transactions, said Kahn, who is currently involved in four of them, one on behalf of a buyer. For example, banks don’t lock in rates (not so much a problem now that interest rates are so low) and they won’t pay traditional sellers’ expenses such as tax on the sales commission, repairs or the cost of a septic permit.

And in New Mexico, banks can and do pursue customers for the difference between what they owe and the price their home sold for. It all depends on what they believe the homeowner can pay. Sometimes the deal requires the seller to sign a promissory note.

(If customers do not repay the lender, the money is considered ordinary income by the IRS and subject to taxes.)

Bill Enloe, CEO of Los Alamos National Bank, which has about $1.3 billion in mortgage loans and currently owns 52 properties, said short sales are a useful tool, both for the customer and the bank because they eliminate the costs of foreclosure or bankruptcy.

“If the instance warrants a short sale, we consider it,” Enloe said. “Usually what that means is that the owner has no ability to pay the deficiency. If we’re convinced that’s true, we will consider taking the loss up front.”

But the bank has to make sure it’s not dealing with someone who simply wants to get out of their house and take advantage of the lender.

He expects the number of short sales and foreclosures to continue rising. Three years ago, “everybody was churning money. But those times are over. Everybody’s learned a lot” since then, Enloe said.

The frustration of negotiating with lenders

For Hazen and Bogaard-Hazen, who expect to be rebuilding their bank accounts, a short sale makes sense.

But Bogaard-Hazen said she spent much of her summer vacation on the phone with lenders. Figuring that lowering their interest rate from 6 percent would help them stay in their home, the couple looked into refinancing. But they soon learned no bank would take a chance on them, even though they had previously paid on time. A local broker agreed there was “no way,” but added, “let me know (if you succeed) because I’m in the same situation.”

They notified CitiMortgage of their shortfall and applied to HAMP, the federal program that provides eligible homeowners the opportunity to modify their mortgages to make them more affordable. They thought they’d be a shoo-in. More than a million households have supposedly gotten relief from the program, but not Bogaard-Hazen and Hazen. They were turned down, Bogaard-Hazen said, because “Barry’s job loss is no longer considered a sufficient hardship.”

“The truth is,” Enloe said, “most people don’t qualify.” In some cases, homeowners have assets the feds believe they should commit to the mortgage, and in other cases homeowners are unable to make even a reduced mortgage payment.

“Very few people are able to successfully modify their mortgages,” Raznick confirmed. “That process needs to be streamlined.”

On the advice of CitiMortgage, Bogaard-Hazen and Hazen applied to the lender’s traditional loan-modification program and were told that process might take six months. Bogaard-Hazen’s question was, “What do you expect us to do? Do you want us to go into foreclosure?” Eventually they learned they’d been turned down by CitiMortgage as well, although they never received a notice in writing.

Through sheer persistence, Bogaard-Hazen finally got in touch with the secretary to the director of the department that handles loan modifications, and a decision-maker from the short-sale department called her back. Working with Raznick, the lender agreed to a short sale and the couple listed the house recently. Bogaard-Hazen said it would have been better to put the house on the market earlier in the year, however, when more buyers were shopping for homes.

Although Bogaard-Hazen and Hazen are determined not to be shaken by saying goodbye to the trappings of their old life, Hazen said he resents the attitude of the lenders. He and his wife made all their payments on time, he said, “But the minute you get in trouble, they turn a blind eye to you. It doesn’t matter how you got there.”

Bogaard-Hazen added that she understands they made mistakes, too. “If we’d followed the traditional rule of thumb (20 percent down) we might have been better off. But we wanted this beautiful house, and we were greedy.”

Financial distress rising

Many other homeowners in Santa Fe are obviously in distress. Reports from RealtyTrac for the third quarter of 2010 show that there were 293 properties in the county for which there were filings — either default letters, auction notices or bank repossession. (That compares to a total of 68 in the first quarter of 2008.)

The general manager for the Eldorado Community Improvement Association recently sent out an e-mail to residents asking for their help in identifying possible foreclosures and abandoned homes in the community.

While there are some vacant homes, Raznick, the agent working with Bogaard-Hazen and Hazen, said that he doesn’t know of any that have been abandoned. But there are 90 homes on the market — a bit higher than normal — and another 13 under contract. Of those, he estimated six might be short sales and three or four are foreclosures.

“I think a lot of them have to do with speculation,” Raznick said. “People from out of state bought, thinking they were going to be instant real-estate barons.”

Another Eldorado homeowner facing foreclosure showed up at Bogaard-Hazen’s estate sale last weekend — to commiserate and to shop. She said she feels angry and misled by her lenders. In 2007, at the height of the real-estate market, she and her boyfriend, a contractor, bought a house on a greenbelt for $460,000. Today it’s worth only $330,000.

The original lender (Countrywide) was “very pushy” and the couple agreed to an interest-only mortgage, figuring “You can’t go wrong with real estate.”

Turns out, of course, that you can.

The couple never missed a payment even though the mortgage was close to $3,000 a month. But then the contractor broke his leg and wasn’t able to work. And her income was sporadic.

While their credit was good enough to buy the house, she pointed out, six banks were not interested in refinancing their loan to a more manageable rate. And in July, the HAMP program turned them down too. A lawyer advised them to stop making payments, or partial payments, so that the lender (now Bank of America) would take them seriously.

The whole experience has been mind-boggling, the woman said. She wondered, “How can you say you’re turning us down because we can’t afford our house? Where were you in 2007?”

She said she kept getting conflicting information; paperwork was lost or misplaced and had to be refiled. In August, Bank of America finally said, “We have to tell you you’re in foreclosure now.”

Ironically, like Bogaard-Hazen and Hazen, she said she and her partner could have afforded a payment under the HAMP program, but at this point she said, “I don’t know what our recourse is. We’re exhausted. And we’re kind of in denial.”

Next: Housesitting

Holding a short sale is, of course, no guarantee of a buyer. Although Bogaard-Hazen and Hazen are pricing their house aggressively — at $349,000 it is well below the median price for the community of $379,000 — at the current absorption rate it might take five or six months to sell.

But if the short sale works, Kahn said, it does “far less damage to your credit, which could be repairable.”

Meanwhile, they’re looking for a housesitting gig for the winter while they get back on their feet.

BY THE NUMBERS

7 million: Mortgage loans delinquent or in foreclosure process in U.S.

11.5 million: Number of U.S. homeowners in danger of losing their homes by end of the year

1 million: Homeowners who have gotten help from federal HAMP

39: Number of short sales in Santa Fe County in 2010

293: Total default notices, auction sale notices and bank repossessions in Santa Fe County in the third quarter of 2010

 Link to original article here

We have been involved in both foreclosure and short sale proceedings in the past year. These types of sales happen in all price ranges (the short sale we dealt with was a property valued at over 1 million), and on a more and more frequent basis. What is most important in buying a foreclosed or short sale property is using agents that know how to navigate the often complicated processes involved in these transactions. Contact us for more information regarding the short sale process and/or to find your Santa Fe dream home.

Contact Ryan Bolton and Matt Desmond

So, now what happens?

With the tax factor/incentive out of play, many predict that the market will see a bit of a hiccup.  In fact, only two weeks after the expiration, national home sales have shown significant declines.  While it’s still to early to look at the entire month of  May statistics, we’re pretty sure there are going to be down ticks across the board.  Showings and pendings have also slowed a bit, both good indicators of what if going on.

These happenings are topped with the highly tumultuous mortgage market.  With the big crashes on Wall Street last week, (and, wow, I just looked at today’s Dow and it’s down at least 100 points) mortgage rates are a 2010 lows again.  However, we also just read that mortgage applications have dropped off 27% since April.  Thus, even though rates are low, not many people are applying. Interesting signs indeed.

In summary, the tax credit has passed but home prices remain incredibly low, which still makes this a great time to buy. If you can lock in a great rate and find a nice place, you just may find yourself a fabulous deal. 

Link the AP Article on April Home Sales Here

Contact Ryan Bolton and Matt Desmond

The following is an article that was just published in the New Mexican. It outlines sales numbers and prices, and provides good information on where/why the market is moving.

Article:

Santa Fe home sales sputtering back in 2010

By: Bruce Krasnow; The New Mexican

Home sales bounced a bit in the first quarter of 2010, with sale volumes increasing across all sectors of the Santa Fe market, according to several measures.

The Santa Fe Association of Realtors reported Wednesday that the total volume of city-county detached home sales increased 16 percent from a year ago to 205. While the median sales price in the unincorporated area fell, prices of homes sold inside the city were up some 50 percent to $464,000.

The numbers are year-over-year comparisons, and 2009 was the worst year for home sales in at least a decade. The number of sales in the first quarter is still down more than half from its peak in 2006.

But considering Santa Fe’s cold, snowy weather in January, February and March and that overall prices lifted, the statistics show the market has come off the 2009 bottom.

“All segments of the market at moving,” association president Lois Sury said. “It seems to be across the board.”

Like elsewhere in the United States, the federal government’s homebuyer tax credit — up to $8,000 for new buyers and $6,500 for current owners buying again — helped first-quarter sales, though it will be months before anyone knows the number of buyers in each state who have claimed the money.

Homes must be under contract by April 30 to qualify for the tax break — and that sent March sales up 34 percent in Albuquerque and 54 percent in Rio Rancho, according to the New Mexico Business Weekly. In Santa Fe, the quarter was more even, with volume increases all three months.

In Santa Fe, the incentive has helped many empty-nest couples who may have wanted to sell a larger home and move into a smaller house, condo or townhome, said Sury, as sales of those units more than doubled from a year ago.

“I’ve helped families like that,” said Sury. “They want something small here. We’ve seen those buyers come back into the market.”

Alan Ball said the March sales numbers in Santa Fe are “kind of a big deal” because the 2010 number beat both the 2009 and 2008 sales numbers. He also said the high-end market showed momentum for the first time in two years, with 18 sales over $1 million.

Some of it is the homebuyer tax credit, said Ball, who publishes a monthly newsletter on the Santa Fe real estate market, but it’s also a sign the market is righting itself.

“What some people wanted last summer (in asking price) is now even lower,” Ball said. “That’s what buyers are seeing and acting on.”

There were some wide fluctuations in the county’s median prices. Some of that is because the new homes in Rancho Viejo are being targeted to first-time buyers, with some selling for under $200,000, to take advantage of the tax credit.

The other big decline is Las Campanas, where luxury home prices have reset.

Sellers are more realistic, said Kay Sutt, a real estate appraiser. “The closer to balance our market comes, the quicker we’ll recover,” she said.

The fact that sales volume was strong despite terrible weather is another plus, Sutt said about the first quarter.

She is not seeing a “a magical healing” of Santa Fe’s market from the federal tax credit, but a lot of things going on are positive, including low interest rates, cheaper land and labor costs.

On that point, Donna Reynolds, chief executive of the Realtors Association, said the number of inquiries coming into the association office were the highest they’d ever been after The New York Times published a travel story about Santa Fe style reinventing itself and a large image of the new Railyard Park.

Sill, longer-term numbers compiled by the Realtors indicate how far sales tumbled from earlier years.

The number of single-family homes sold countywide in 2009, for instance, was 966, which was less than the 1,437 sold in the year 2000 and half the 1,996 sold at the 2005 market peak.

Likewise, the total sales volume in 2009 was $540 million, slightly higher than the start of the decade, but a huge decline from the $1.2 billion in 2006.

Median sales prices started the decade at $235,000, peaked at $425,000 in 2007 and stood at $356,000 at the end of 2009.

New single-family home permits in the city of Santa Fe were flat in the first quarter, 48 in the period, up from 44 a year ago, said city planner Reed Liming. Eighteen of the 2010 permits were for multifamily attached homes, he added, with six of those going to a new complex at Paseo de Peralta near Washington Avenue.

 BY THE NUMBERS

• City of Santa Fe: Sales totaled 110 single-family homes in first quarter, up from 95 a year ago. Median sold price $464,000, up from $308,000.

• Unincorporated area: Sales of 95 single-family homes in first quarter, up from 82. Median sold price $318,224, down from $440,000.

• Condo/townhome sales: 62 in first quarter, up from 27. Median price $286,500, up from $248,000 a year ago.

• Total sales volume for homes stood at $92.1 million in the first quarter of 2010, up from $81.6 million last year.

Link to Original Article

Contact Matt Desmond and Ryan Bolton

Of course, it talks about Santa Fe real estate, the local economy, and the views/thoughts of locals.

Here is the article:

ARTICLE

by: Kay Bell on Bankrate/Yahoo

Over the last few years, lawmakers have created new housing tax laws and tweaked existing ones to give beleaguered homeowners some relief at filing time. Even non-property owners who aren’t in financial straits get some breaks, such as help in buying a first home.

And some homeowners have more options when it comes to selling. Plus tax breaks for energy-efficient home improvements also made it back onto the books.

But not all the changes help homeowners save money. The law affecting vacation-home sales was designed to put a bit more cash into the U.S. Treasury. This new tax money source was created primarily to pay for other home-related tax breaks.

As with most taxes, whether the residential tax law changes will help or hurt you depends upon your individual circumstances. Check out these seven recent real-estate-related tax measures to gauge their possible effects, for good or ill, on you.

1. Cancellation of debt income

One of the first housing-related tax relief measures was the Mortgage Forgiveness Debt Relief Act of 2007. Enacted Dec. 20, 2007, the law’s main provision allows taxpayers to exclude debt forgiven on their principal residence when the mortgage is restructured or the property goes into foreclosure.

Previously, when a homeowner renegotiated a home loan and convinced the lender to reduce the amount of principal owed, the homeowner owed taxes on the amount of forgiven mortgage debt. A similar canceled debt situation occurred in foreclosure situations.

So that these financially strapped homeowners wouldn’t face taxes on top of their property debt problems, the law now enables them to exclude the mortgage debt from their taxable income. Up to $2 million in forgiven debt is now untaxed.

As the scope of the housing crisis expanded, Congress modified the original debt forgiveness law. The latest change came in the Emergency Economic Stabilization Act, the bailout bill enacted in October 2008. Now, mortgage loan debt canceled in 2007 through 2012 is not taxed.

Your lender should send you a Form 1099-C, Cancellation of Debt, showing any forgiven debt. You need to report the eligible canceled mortgage debt on Form 982 and send it in with your personal tax return.

2. First-home buyer credit

Washington has worked overtime on this tax break. Since it was created in 2008, it’s been modified several times and now is available to more than first-time buyers.

What began as an interest free loan from Uncle Sam is now a true credit of up to $8,000 for first-time homeowners as well as a possible $6,500 credit for folks who’ve previously or now own a residence.

This tax break also was extended. Under the Worker, Homeownership and Business Assistance Act of 2009, signed into law Nov. 6, 2009, you have until April 30 to buy or sign a contract to buy a principal residence. You then get two more months, until June 30, to close on the property.
You also get the option of claiming the credit on either your 2009 tax return or waiting until you file your 2010 taxes next year. If you want to use the tax break on your 2009 return but your home purchase isn’t completed until after April 15, you can file for an extension and then finish your taxes, including the credit, from the comfort of your new home.

In addition to the purchase deadlines and taxpayer ownership qualifications, income and home price limits also apply to the credit. You can find details in Bankrate’s story, “Home tax credit extended, expanded.”

3. PMI deduction

Typically, if your home down payment is less than 20 percent, your lender will require you to buy private mortgage insurance, or PMI. This policy protects the lender if you default, but you must pay the premiums, usually as part of your monthly mortgage payment.

However, on certain home loans issued since 2007, these premium payments have been deductible as an itemized expense. This tax break is in effect for eligible new home loans issued through the 2010 tax year.

The Form 1098 or similar year-end statement you get from your lender should show the amount of PMI premiums you paid during the tax year. Enter that figure in the “Interest You Paid” section (line 13) of your Schedule A.

The amount of PMI you may deduct is limited if your adjusted gross income is more than $100,000 ($50,000 if married filing separately). You’ll get no deduction if your adjusted gross income is more than $109,000 ($54,500 if married filing separately). A work sheet on Page A7 of the Schedule A instruction book, or your tax software, will help you calculate your exact PMI deduction amount.

4. Property tax addition to standard deduction

Another popular home-related tax break, the property tax deduction, also has been expanded.

Previously, real estate taxes were a welcome tax deduction for homeowners who itemized. These annual payments to county and local governments could be claimed on Schedule A to increase the taxpayer’s deduction total.

Now, however, homeowners who do not itemize will get to claim at least a portion of their real estate tax payments as part of their standard deduction. Up to $500 for single homeowners, double that for joint filers, can be added to the taxpayer’s standard deduction amount. This year, you’ll also have to complete the new Schedule L to claim this amount as part of your standard deduction. You can find details on doing so in “2 big home ownership expenses to deduct.”

5. Surviving spouse home sale tax exclusion

A widow or widower has many difficult decisions to make soon after losing a spouse. But a provision in the Mortgage Forgiveness Debt Relief Act of 2007 now offers surviving spouses some tax relief in connection with one of those decisions, the sale of the family home.

In most cases, a seller can exclude up to $250,000 in profit from the sale of a primary residence. The tax-free amount is $500,000 when the home is sold by a married couple filing a joint return.
Under previous law, when a spouse died, the surviving husband or wife could take advantage of the full $500,000 sale exclusion only if the home was sold in the same year the spouse died. If the sale took place after that year, the surviving husband or wife was entitled to only the $250,000 exclusion amount.

Now, however, a surviving spouse can exclude up to the full $500,000 as long as the sale occurs within two years of spouse’s date of death. The surviving spouse still must meet the regular ownership and use requirements; that is, the widow or widower must have lived in the property as his or her primary residence for two of the five years before the sale.

There is no sunset date for this tax law. The surviving spouse home sale exclusion relief is permanent.

6. Energy-saving home improvements

Tax breaks for making a home more energy efficient first appeared in the 2005 energy bill. In 2009, those tax benefits were expanded.

For qualifying improvements made to your home between Feb. 17, 2009 — the date the latest stimulus act in which they were included became law — and the end of this year, you can claim a tax credit of up to 30 percent of the product’s cost. There is, however, a maximum credit cap of $1,500 per homeowner for all improvements combined.

Taxpayers who take advantage of common energy upgrades, such as installing storm windows and doors, adding insulation and buying a new energy-efficient air conditioner or heat pump, should be able to take this $1,500 credit. Others who install more elaborate energy-saving options, such as fuel cells, wind energy and geothermal and solar heating equipment, will get even bigger tax savings.

Tax credits in 2009 and 2010 for energy-efficient home improvements

Product category Product type
Windows Exterior windows and skylights and storm windows
Doors Exterior doors and storm doors
Roofing Metal roofs, asphalt roofs
Insulation Insulation
HVAC Central A/C
Air source heat pump
Gas, oil, propane furnace or hot water boiler
Advanced main air circulating fan
Water heaters Gas, oil, propane water heater
Electric heat pump water heater
Improvements must meet or exceed specific energy-saving standards. Additional product and tax savings guidelines can be found at the U.S. government’s Energy Star Web page.

For all tax years and all types of home energy improvements, you’ll need to file IRS Form 5695 to claim your credits.

7. Second-home sale limits

In order to help pay for many of the new housing-related tax breaks, the tax law affecting second-home sales was changed beginning in 2009.

Thanks to a provision of the Housing and Economic Recovery Act of 2008, the U.S. Treasury now should make more money off second home sales. Previously, owners of multiple properties could move into one of their other homes, live there as their primary residence for two years and then sell the house and pocket any gains tax-free, up to $250,000 if single, $500,000 for a home owned by a married couple who files a joint return.

Now, however, the time that the property was a second home or investment property must be taken into account. The owners now will owe tax on part of the sale money based on how long the house was used as a second, rather than their main, home.

As with the surviving spouse home sale exclusion change, the taxation of second home sale profit also is a permanent tax law change.

Of course, “permanent” doesn’t always mean forever on Capitol Hill. Neither is there any guarantee that temporary tax breaks will be extended.

So keep an eye on all these home-related tax changes. If any can help you, be sure to take advantage of them while they still are on the books.

Link to Original Article Here

Contact Matt Desmond and Ryan Bolton

The United States Commerce Department announced that national housing starts rose in January to their highest levels in 6 months.  Starts were up 3% for the month, seeing increases in 3 of the 4 nationwide regions.  The only region that did not show increases was in the Midwest. Here in the West starts were up 9%, whereas in the South they were up 1%, and in the East, 10%.

The most recent quarterly report (4th quarter 2009) for existing home sales and condos showed a 14% increase in sales over the previous quarter. Trasactions increased in 48 of the 50 states, with double digit increases in 32 of those states.  Promising numbers, indeed. Once again, here in the West some of the highest numbers were seen, with a 16% increase over the previous quarter.  Contrary to the housing start data, the Midwest showed a sales increase of 15%. The South showed a 14% increase in sales and the Northeast, 11%.

Of the 151 housing markets followed by the National Association of Realtors (NAR), 67 showed higher median prices. 16 of the metro areas in the survey actually showed double digit increases in median prices. Another sign of a recovering market.

Here in Santa Fe the market seems abuzz with activity. We are seeing buyers in all price ranges, but particularly people looking to cash in on the first time home buyers credit which ends on April 30th (unless it gets extended). Hopefully, the market will continue to recover and thrive.

Contact Ryan Bolton and Matt Desmond

The Home Affordable Modification Program (HAMP) is designed to help homeowners in states where home prices have fallen at least 20% statewide.  The five identified states are: Arizona, Nevada, California, Michigan, and Florida.  All of these markets have notoriously taken a big hit in the past few years due to previous rapid appreciation, speculation, and the weak economy.

Obama has blamed irresponsible lending practices for much of the problems, and is trying to make sure that the money is properly spent by state and local finance agencies. A very specific application process for lending institutions has been designed to create oversight for the program.

The program seeks to aid troubled homeowners by modifying their mortgage and lower their monthly interest rates through participating lenders. The lender then lowers the interest rate, and the feds provides subsidies to the lender and borrower. According to Herb Allison, assistant secretary of the Treasury for Financial Stability, the program should help approximately 3 to 4 million Americans before it terminates at the end of 2012. Currently, about 1 million homeowners have had their mortgages amended due to the plan.

Unfortunately, New Mexico isn’t currently part of the program, which does cause some concern.  Sure, our home prices haven’t dropped as a whole by 20%, but unemployment is high, and many homeowners are teetering on the edge of default. As with all governmental programs, this one may be ammended to fit more states, particularly if the money isn’t being spent in the currently eligible states.  Time will tell.

Contact Matt Desmond and Ryan Bolton

New Mexico has two of the top retirement spots in the US- Santa Fe and Las Cruces. Perhaps this is helping to stabilize our Real Estate Market.

 Boomers are willing to move farther than previous generations when they retire, and they are choosing places unlike stereotypical retirement hotspots, says Tom Brokaw in his report on Boomer retirement, airing on CNBC, Thursday, March 4 at 9 p.m. ET

The top places listed by AARP and explored on the show are:

1. Loveland/Fort Collins, Colo.
2. Las Cruces, N.M
3. Rehoboth Beach, Del.
4. Portland, Ore.
5. Greenville, S.C.
6. Sarasota, Fla.
7. Ann Arbor, Mich.
8. Tucson, Ariz.
9. Montpelier, Vt.
10. Honolulu
11. Santa Fe, N.M
12. Atlanta
13. Charleston, S.C
14. Northampton, Mass.
15. San Diego, Calif.

Source: CNBC, Paul Toscano (02/05/2010)

Foreclosures hit hard but less so in N.M.
By | The Associated Press

2/11/2010

The number of U.S. households facing foreclosure in January increased 15 percent from the same month last year, and a surge in cash-strapped homeowners who’ve fallen behind on mortgages could be on the way.

More than 315,000 households received a foreclosure-related notice in January, RealtyTrac Inc. reported Thursday. That number is down nearly 10 percent from 349,000 in December, which saw the third highest total since the company began tracking foreclosure data in 2005.

There were 107 foreclosures in Santa Fe County in January, according to RealtyTrac, most of them (33) in the 87507 Zip Code. That was followed by the 87505 Zip Code, where there were 22.

Santa Fe’s foreclosure rates for January 2009 were not included in RealtyTrac’s report, precluding a comparison with 2010′s rates. RealtyTrac’s data specialist could not be reached.

In New Mexico there were 1,281 new foreclosure filings and nine foreclosure sales, according to RealtyTrac. The average sales price of foreclosed homes in January was $208,841.

The rate of foreclosures in New Mexico remains low. In his most recent newsletter, Santa Fe title company executive Alan Ball said foreclosures in states such as California and Florida exceeded 400,000 last year.

In New Mexico, by contrast, there were just over 7,000 foreclosures.

Ball also said that Santa Fe real estate sales in January were up 58 percent from the same month last year.

“We have already thanked the first-time homebuyer tax credit law and can certainly do so again” for the increase in home sales, Ball said. “Does that account for the increase? That is difficult to say.”

In January, one in 409 homes across the country were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions. Banks repossessed more than 87,000 homes last month, down 5 percent from December but still up 31 percent from January 2009.

January marked the 11th straight month with more than 300,000 properties receiving a foreclosure filing. The numbers could stay above that level as unemployed homeowners who have tried to keep up with their mortgages finally start missing monthly payments.

Mortgage financier Fannie Mae reported in late January that the rate of borrowers who have a conventional loan on a house and are seriously delinquent was 5.29 percent in November, more than doubling the rate of 2.13 percent in November 2008. Borrowers are considered seriously delinquent if they are past due by three months or more, or are in foreclosure.

“There’s a lot of foreclosures in the pipeline, and the number is going to continue to get bigger,” said Patrick Newport, an economist with IHS Global Insight.

Last month’s foreclosure activity followed a pattern similar to that of a year ago, when a double-digit percentage increase in December was followed by a 10 percent drop in January.

The dip in January’s numbers may be due to processing delays by lenders during the end-of-year holidays, said Rick Sharga, senior vice president of RealtyTrac, which is based in Irvine, Calif.

“I don’t think it’s an early sign of the coming of the end of the foreclosure crisis,” Sharga said.

A record 2.8 million households were threatened with foreclosure last year, and the numbers are expected to rise to between 3 and 3.5 million homes this year, RealtyTrac said.

Slowing the foreclosure rate is a key step in the recovery of the real estate market and the overall economy. The foreclosure crisis forced the federal government and several states to come up with plans to prevent or delay the process to help delinquent borrowers.

Foreclosed homes are usually sold at steep discounts, so they often lower the value of surrounding properties. Cities lose property tax dollars from foreclosure homes that sit empty and from declining home values, straining local economies. Home prices have stabilized in some cities, but are still down 30 percent nationally from mid-2006.

Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Initially, subprime mortgages were mostly the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

Among states, Nevada posted the nation’s highest foreclosure rate, followed by Arizona, California, Florida and Utah. Rounding out the top 10 were Idaho, Michigan, Illinois, Oregon and Georgia.

The metro area with the highest foreclosure rate in January was Las Vegas, with one in every 82 homes receiving a foreclosure filing. It was followed by Phoenix and the California cities of Modesto, Stockton, and Riverside-San Bernardino-Ontario.

The New Mexican contributed to this story.

Here is a link to the Original Story