The White House’s Deficit Reduction Commission issued a proposal this week that calls for changes in how the country spends money and collects taxes. Among the recommendations that could be made to Congress is a proposal to change the mortgage interest deduction.
The proposal recommends offering a 12 percent nonrefundable tax credit to all taxpayers and capping the mortgage-interest deduction to loans less than $500,000, with homeowners receiving no credit from mortgages on a second home.
The California Association of Realtors strongly opposes the proposal and has consistently communicated its opposition to any such change to elected officials. As the housing market continues to recover from the worst financial crisis in recent history, any change that reduces the ability of the market to heal is misguided and must be rejected. The proposal from the Deficit Reduction Commission will negatively impact the housing market, further erode opportunities for homeownership across the country, and will contribute to further price declines and diminished equity for homeowners.
C.A.R. is working closely with the National Association of Realtors staff in Washington, D.C. to make certain that the real estate industry’s opposition to this proposal is heard and its far-reaching implications understood.
Thursday, December 2, 2010
Wednesday, October 27, 2010
Price Reductions Continue to Increase
Trulia.com recently announced that price reductions for homes currently listed for sale have increased for the fourth consecutive month to an all-time high of 27 percent and account for a total reduction of more than $30.7 billion nationwide.
“We would normally expect to see a seasonal uptick in price reductions between June and October, as motivated sellers whose homes are still on the market after the summer selling season aggressively cut prices in an effort to get their homes sold before the holidays,” said Tara-Nicholle Nelson, consumer educator, Trulia.com. "Comparatively speaking, we've found that seasonal considerations combined with a lack of urgency on the part of would-be buyers and continued job market doldrums nationwide have led to more significant reductions during this time period than during the same time frame in 2009."
Five California cities were on the top 10 list of “Highest Percentage Increase in Price Reductions: June to Oct. 2010”:
Number 2, San Diego, 64 percent increase
Number 3, Sacramento, 61 percent increase
Number 4, Fresno, 51 percent increase
Number 5, San Jose, 46 percent
Number 9, Oakland, 31 percent
Since June 2010, the five largest increases in price reductions have occurred in the Western U.S., with Las Vegas registering the most substantial increase (194 percent). Five major California cities remain beneath the national average in October, but price reduction rates in all seven of California’s largest cities have increased dramatically since June, with San Jose, Fresno, Sacramento and San Diego seeing the largest increases, according to the report.
“We would normally expect to see a seasonal uptick in price reductions between June and October, as motivated sellers whose homes are still on the market after the summer selling season aggressively cut prices in an effort to get their homes sold before the holidays,” said Tara-Nicholle Nelson, consumer educator, Trulia.com. "Comparatively speaking, we've found that seasonal considerations combined with a lack of urgency on the part of would-be buyers and continued job market doldrums nationwide have led to more significant reductions during this time period than during the same time frame in 2009."
Five California cities were on the top 10 list of “Highest Percentage Increase in Price Reductions: June to Oct. 2010”:
Number 2, San Diego, 64 percent increase
Number 3, Sacramento, 61 percent increase
Number 4, Fresno, 51 percent increase
Number 5, San Jose, 46 percent
Number 9, Oakland, 31 percent
Since June 2010, the five largest increases in price reductions have occurred in the Western U.S., with Las Vegas registering the most substantial increase (194 percent). Five major California cities remain beneath the national average in October, but price reduction rates in all seven of California’s largest cities have increased dramatically since June, with San Jose, Fresno, Sacramento and San Diego seeing the largest increases, according to the report.
Friday, September 24, 2010
The American Dream of Home Ownership Has Become a Nightmare
Culturally a decent house has been a symbol of middle-class family life. Practically, it has been a secure shelter for the children, along with access to a good free education. Financially it has been regarded as a safe store of value, a shield against the vagaries of the economy, and a long-term retirement asset. Indeed, for decades, a house has been the largest asset on the balance sheet of the average American family. In recent years, it provided boatloads of money. to homeowners through recourse to cash-out refinancing, in effect an equity withdrawal from their once rapidly appreciating home values.
These days the American dream of home ownership has turned into a nightmare for millions of families. They wake every day to the reality of a horrible decline in the value of the home that has meant so much to them. The pressure to meet mortgage payments on homes that have lost value has been especially shocking—and unjust—for the millions of unemployed through no fault of their own. For the baby boomer generation, a home is now seen not as the cornerstone of advancement but a ball and chain, restricting their ability and their mobility to move and seek out a job at another location. They just cannot afford to abandon the equity they have in their homes—and they can't sell in this miserable market.
American homeowners have experienced an unprecedented decline in their equity net of mortgage debt. The seemingly never-ending fall in prices has brought an average decline of at least 30 percent. Furthermore, the country is now going through an unprecedented nationwide slide in sales, despite the fact that long-term mortgage interest rates nationwide plummeted recently to a record low of 4.3 percent before rising slightly. The result is that home occupancy costs for home purchases are now down to roughly 15 percent of family income, dramatically lower than the conventional, affordable figure of 25 percent of family income devoted to home occupancy costs. Yet new home sales, pending home sales, and mortgage applications are down to a 13-year low.
Read more...
These days the American dream of home ownership has turned into a nightmare for millions of families. They wake every day to the reality of a horrible decline in the value of the home that has meant so much to them. The pressure to meet mortgage payments on homes that have lost value has been especially shocking—and unjust—for the millions of unemployed through no fault of their own. For the baby boomer generation, a home is now seen not as the cornerstone of advancement but a ball and chain, restricting their ability and their mobility to move and seek out a job at another location. They just cannot afford to abandon the equity they have in their homes—and they can't sell in this miserable market.
American homeowners have experienced an unprecedented decline in their equity net of mortgage debt. The seemingly never-ending fall in prices has brought an average decline of at least 30 percent. Furthermore, the country is now going through an unprecedented nationwide slide in sales, despite the fact that long-term mortgage interest rates nationwide plummeted recently to a record low of 4.3 percent before rising slightly. The result is that home occupancy costs for home purchases are now down to roughly 15 percent of family income, dramatically lower than the conventional, affordable figure of 25 percent of family income devoted to home occupancy costs. Yet new home sales, pending home sales, and mortgage applications are down to a 13-year low.
Read more...
Friday, September 17, 2010
California Housing Prices on the Rebound
The national housing market is shrouded in uncertainty. But in California, there are glimmers of stability. Click here to read the full story at cnnmoney.com.
Friday, September 10, 2010
Inventory Up... not good...
Housing inventories rose in many U.S. cities for the eighth straight month in August in a sign of the continued headwinds facing a soft housing market.
Full Story: http://www.nytimes.com/2010/09/06/business/economy/06housing.html?_r=1&ref=realestate
Full Story: http://www.nytimes.com/2010/09/06/business/economy/06housing.html?_r=1&ref=realestate
"Let" the Market Fall?
The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.
full story: http://www.nytimes.com/2010/09/06/business/economy/06housing.html?_r=1&ref=realestate
full story: http://www.nytimes.com/2010/09/06/business/economy/06housing.html?_r=1&ref=realestate
Looking to Qualify for a Mortgage?
Lenders scrutinize all elements of a mortgage application, but one factor remains critical: The debt-to-income ratio, or the percentage of a borrower’s monthly gross income that goes toward housing expenses. If it surpasses 36 percent, lenders typically will reject the loan.
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