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~Education about Today's Real Estate Market

By Laura Kelley | Agent in San Diego, CA
  • ***Did you Remember to "Fall Back"?***

    Posted Under: General Area in La Jolla, Home Buying in La Jolla, Home Selling in La Jolla  |  November 4, 2012 8:48 AM  |  2,164 views  |  No comments
  • The tax benefits of homeownership

    Posted Under: Home Selling in La Jolla, Financing in La Jolla, Moving in La Jolla  |  February 4, 2011 10:23 AM  |  3,737 views  |  No comments

    The tax benefits of homeownership

    Real Estate Tax Talk

    By Stephen Fishman
    Inman Newsâ„¢

    February 04, 2011

    The tax benefits of buying a home include:

    Home mortgage interest deduction: The interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home is deductible as an itemized deduction. In the early years of a home loan most of the payments consist of interest, so this deduction is particularly substantial during the first years of homeownership.

    Depending on the state a buyer lives in and his or her tax bracket, this deduction can reduce the cost of borrowing by one-third or more.

    Home equity loan deduction: Homeowners can borrow up to $100,000 against the equity in their home and deduct the interest as an itemized deduction. The money can be used for any purpose, such as paying off high-interest credit card debt. In contract, the interest on credit card debt is not deductible.

    Property tax deduction: Homeowners also get to deduct from their federal income taxes the state and local property taxes they pay on their home. This is another itemized deduction that renters don't get.

    Deductible homebuying expenses: Various closing costs ordinarily involved in a home purchase are also deductible as itemized deductions, including loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.

    $250,000/$500,000 home-sale exclusion: Perhaps the greatest tax benefit of owning a home comes when a person sells it at a profit. Homeowners who lived in their home for two of the prior five years prior to its sale need pay no income tax on a substantial amount of their profit -- $250,000 for single homeowners and $500,000 for married homeowners who file jointly. This exclusion can be used once every 24 months.

    14 days of free rental income: Another little known tax benefit of owning a home is that the owner can rent it out for up to 14 days during the year and pay no tax at all on the rental income. In contrast, a renter who sublets his or her rental must pay income tax on all the rental income he or she earns.

    Tax benefits of renting:

    The only tax benefit that a renter can qualify for by virtue of being a renter is the home office deduction. This is a business deduction available to renters who own a business and have a home office they use regularly and exclusively for business purposes.

    Some employees can qualify for this deduction as well. The deduction is limited to the amount of profit earned from the business each year. If a renter pays a lot of rent, this deduction can be substantial. Homeowners who are in business and have a home office can also qualify for the deduction.

    Of course, the value of the tax benefits of buying a home depends on the state the buyer lives in and his or her tax bracket. Buyers who live in high tax states like New York or California get the most benefit.

    This is why the blanket statement "it's always better to buy than rent" is not always true. It all depends on the buyer's individual circumstances.

    You should encourage prospective buyers to run the numbers. There are some excellent websites you can refer clients to that have online calculators they can use to compare the costs of renting vs. buying a home.

    A good rent vs. buy tool can be found on the Smart Money Magazine website: http://www.smartmoney.com/personal-finance/real-estate/to-rent-or-to-buy-9687/.

    Freddie Mac also has a good online calculator: http://www.freddiemac.com/corporate/buyown/english/calcs_tools/.

    Stephen Fishman is a tax expert, attorney and author who has published 18 books, including "Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors." He welcomes your questions for this weekly column.

  • Southern California Home Sales Drop Again, Median Price Edges Up

    Posted Under: Home Buying in La Jolla, Home Selling in La Jolla, Foreclosure in La Jolla  |  October 19, 2010 6:03 PM  |  763 views  |  No comments

    Southern California Home Sales Drop Again, Median Price Edges Up

    October 19, 2010

    La Jolla, CA---Southland home sales dropped for the third month in a row amid renewed doubts about a market that is recovering in fits and starts. The median price moved up on a year-over-year basis for the tenth month in a row and has regained about one-fifth of its peak-to-trough loss. The effects on the market of the latest chapter in the foreclosure crisis are unclear, a real estate information service reported.

    A total of 18,091 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in September. That was down 2.4 percent from 18,541 in August, and down 16.0 percent from 21,539 for September 2009, according to MDA DataQuick of San Diego.

    This was the slowest September since 2007, when 12,455 homes were sold. Last month’s sales were 26.3 percent lower than the September average of 24,578. DataQuick’s statistics begin in 1988. An August-to-September drop is normal for the season: On average, sales have dipped 9.2 percent between those two months.

    “Today’s market can be characterized as much by activity that’s not happening, as by the activity that is happening. We’re seeing distress-selling, bargain-hunting and entry-level buying, while the rest of the market is still largely on hold,” said John Walsh, MDA DataQuick president.

    “As many wait for this market uncertainty and turbulence to pass, demand is being generated and is accumulating. At some point, the mortgage spigot will be re-opened and there will be a surge of buying activity, probably financed with low interest rates,” he said.

    The median price paid for a Southland home was $295,500 last month. That was up 2.6 percent from $288,000 in August, and up 7.5 percent from $275,000 for September 2009. The low point of the current cycle was $247,000 in April 2009, while the high point was $505,000 in mid 2007. The median’s peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially foreclosures.

    Foreclosure resales accounted for 33.4 percent of the resale market last month, down from 34.5 percent in August and down from 40.4 percent a year ago. The all-time high was February 2009 at 56.7 percent, DataQuick reported.

    Government-insured FHA loans, a popular choice among first-time buyers, accounted for 36.4 percent of all mortgages used to purchase homes in September, down from 37.3 percent in August and 38.9 percent a year ago.

    Last month 21.2 percent of all sales were for $500,000 or more, the same as August and up from 20.0 percent a year ago. The low point for $500,000-plus sales was in February last year, when 13.6 percent of sales crossed that threshold. Over the past decade, a monthly average of 25.4 percent of homes sold for $500,000 or more.

    Viewed a different way, Southland zip codes in the top one-third of the housing market, based on historical prices, accounted for 31.0 percent of existing single-family house sales last month, up from 30.0 percent in August and 28.4 percent a year ago. Over the last decade those higher-end areas have contributed a monthly average of 33.3 percent of regional sales. Their contribution to overall sales hit a low of 21.0 percent in January 2009.

    High-end sales would be stronger if adjustable-rate mortgages (ARMs) and “jumbo” loans were easier to obtain. Both have become much more difficult to get since the credit crunch hit three years ago.

    While about 44 percent of all Southland purchase mortgages since 2000 have been ARMs, the figure was 5.5 percent last month, up from 5.4 percent in August and up from 4.0 percent in September last year.

    Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 18.1 percent of last month’s purchase lending, the same as the month before and up from 15.2 percent in September 2009. Before the August 2007 credit crisis, jumbos accounted for 40 percent of the market.

    Absentee buyers – mostly investors and some second-home purchasers – bought 21.0 percent of the homes sold in September, paying a median of $205,000. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 25.3 percent of September sales, paying a median $200,000. In February this year, cash sales peaked at 30.1 percent. The 22-year monthly average for Southland homes purchased with cash is 14.2 percent.

    The “flipping” of homes has trended higher over the past year. Last month the percentage of Southland homes bought and re-sold within a six-month period was 3.7 percent, up from 3.5 percent in August and 2.6 percent a year earlier. Last month’s flipping rate varied from as little as 2.9 percent in Riverside County to as much as 4.2 percent in Orange County.

    MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

    The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,177 last month, up from $1,158 for August, and down from $1,189 September a year ago. Adjusted for inflation, current payments are 47.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 57.0 percent below the current cycle’s peak in July 2007.

    Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but is lower than peak levels reached over the last two years. Financing with multiple mortgages is very low and down payment sizes are stable, MDA DataQuick reported.

    Sales Volume Median Price
    All homes Sep-09 Sep-10 %Chng Sep-09 Sep-10 %Chng
    Los Angeles        7,138     6,070  -15.0%   $330,000    $340,000    3.00%
    Orange     2,828     2,524  -10.7%   $429,000    $445,000    3.70%
    Riverside       4,312     3,292  -23.7%   $185,000    $200,000    8.10%
    San Bernardino     3,023     2,454  -18.8%   $150,000    $160,000    6.70%
    San Diego       3,454     3,069  -11.1%   $325,000    $330,500    1.70%
    Ventura       784       682  -13.0%   $371,750    $370,000   -0.50%
    SoCal      21,539   18,091  -16.0%   $275,000    $295,500    7.50%
  • With Little Room for Raises, Companies Can Offer Perks

    Posted Under: Home Selling in La Jolla, Remodel & Renovate in La Jolla, In My Neighborhood in La Jolla  |  September 2, 2010 4:53 PM  |  1,673 views  |  2 comments

    With Little Room for Raises, Companies Can Offer Perks

    By Ruth Mantell

    RISMEDIA, September 2, 2010--(MCT)--You've managed to keep your job during the recession and labor cutbacks. But you may have been working longer and harder than ever with no extra pay, or maybe even endured a pay cut.

    As the economy slowly starts to recover, however, some companies are looking to better compensate their workers. For employees at companies that are strapped for funds, experts say these workers can request rewards that won't necessarily show up on a paycheck.

    "Smart companies are recognizing that we are not where we were in 2009," when jobs were being shed left and right, said John Challenger, chief executive of outplacement consulting firm Challenger, Gray & Christmas. And some companies are now starting to hire. So companies "are looking more to understand who their best performers are, and how to keep them," he said.

    Companies project merit increases of 2.7 percent for 2011, compared with 2.3 percent for 2010, and 1.6 percent in 2009, according to a survey of 1,046 U.S. companies conducted in April, May and June by New York-based professional-services firm Towers Watson.

    Workers with below-average performance ratings will receive a median merit increase of 1.4 percent; those with an average rating will receive an increase of 2.6 percent; and those with the best rating will receive a 4.3 percent increase, according to the survey.

    "Pivotal employee groups are in a stronger negotiating position," said Laura Sejen, global head of pay consulting at Towers Watson.

    Here are some options:

    Flextime — allowing individuals to alter their working hours — can be an attractive reward for hard-working employees, experts said.

    "It might be that someone says, 'I want to go home at 3:00 to be with my kids,' " Challenger said. "A lot of times, these kinds of arrangements can get individualized. Maybe it's coming in a little bit later or working at home on Fridays."

    Companies can consider allowing workers to compress their work week, say, working 10 hours a day, four days a week, instead of eight hours each day, five days a week.

    "People are utilizing that as a methodology for engaging employees without costing the company any money," said Milton Perkins, senior director of work-force consulting solutions for Agile 1, a Torrance, Calif.-based workforce management organization. "At the end of the day, it's about production."

    Employers can teach workers new skills to reward them, Perkins said. "Increase (workers') skills set with the hope that at some time in the future, if the opportunity presents itself, they will be qualified for higher-paying jobs," he said.

    While expanding employees' job functions isn't a guarantee of a pay increase, Perkins said, giving them more varied work can help to keep them interested, perhaps even more so than just a salary bump.

    "If I give you a 2 percent raise, you won't jump through a ring of fire," he said. "The things I am talking about are more intrinsically motivating, where people feel better about being at work, and therefore there is more productivity."

    Linda Lulli, associate vice president for human resources at Bryant University in Smithfield, R.I., said employers can reward younger workers by somewhat stretching their assignments.

    "A lot of individuals are looking for career enhancement or growth," she said. "They can participate in higher-level meetings, or be asked to be a part of projects that they would not normally be involved in."

    Lulli also recommended mentoring programs to help younger workers grow professionally.

    CAREER DEVELOPMENT AND TUITION REIMBURSEMENT: Another option is getting employers to pay for courses, seminars and conferences, or membership to professional groups, experts said.

    "There's an investment for the company, but also the employee gets something out of it," said Bob Cartwright, chief executive and founder of Intelligent Compensation, a compensation and human-resources consulting firm in the Austin, Texas, area.

    Workers can ask to attend classes to help them develop skills, and those who are highly productive can even inquire about receiving a higher reimbursement rate, experts said

    Companies gain better-trained employees, while workers widen their skills. "There is a whole range of benefits that companies might be willing to offer, win-win benefits where it seems like an investment," Challenger said.

    Cartwright said firms should make small moves such as rewarding top performers with a dinner. Bosses at retailers can offer bigger employee discounts.

    "It isn't cash, but it provides (employees) with the opportunity to have more goods or services," he said. "These are the kinds of small things that help to create a better environment. People are going to think twice about walking across the street to make another 25 cents an hour when they know they are working in a great environment."

    (c) 2010, MarketWatch.com Inc.
    Distributed by McClatchy-Tribune Information Services.
  • Why Some Houses Sit While Other Houses Sell

    Posted Under: Market Conditions in La Jolla, Home Selling in La Jolla, Curb Appeal in La Jolla  |  September 1, 2010 11:20 AM  |  1,367 views  |  1 comment

    Even in the hardest hit markets, there are still properties priced well enough and in good enough condition to interest buyers.http://blog.kw.com/2010/08/24/why-some-houses-sit-while-other-houses-sell/?sms_ss=facebook

    Questions about Selling your home Call 619-985-3362.
  • Today's San Diego, Ca Real Estate Market Updates

    Posted Under: General Area in La Jolla, Market Conditions in La Jolla, Home Selling in La Jolla  |  August 31, 2010 1:07 PM  |  1,484 views  |  No comments

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  • Homepage Buy The 10 Coolest Houses of 2010...So Far

    Posted Under: Home Buying in La Jolla, Home Selling in La Jolla, In My Neighborhood in La Jolla  |  August 26, 2010 3:43 PM  |  1,468 views  |  No comments

    The 10 Coolest Houses of 2010...So Far

    After much deliberation, these 10 past Cool Houses have come out on top as the coolest cribs we've seen this year

    By FrontDoor.com | Published: 6/09/2010

    I Next: Party-Ready Residence >>

    "Ahoy!" in La Jolla
    La Jolla, Calif.

    California is known for its extravagant oceanside homes, but this La Jolla residence might take the cake. As seen in Aquatic Abodes: 8 Amazing Waterfront Homes for Sale, a seaside spot this cool ranks high on our list.

    Designed by Wallace E. Cunningham, one of Architectural Digest's Top 100 Designers, this modern masterpiece features floor-to-ceiling glass with uninterrupted views of the ocean, sky and landscape at every turn.

    Located above Torrey Pines State Reserve, this private beachside palace offers exclusive access to Black's Beach, plus a two-level guesthouse with the same magnificent views as the main home.


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