House Values 2020 BEWARE- COVID

House values in pocketed areas are strong again. Interest is LOW, however the economy is trending downward as we wait for the solutions to the virus. Watch/ wait 6 months from now to see the real affects on the housing market. If you study it you will see lumber, materials, copper, and building are lagging,
Home depot and Lowes are doing well- why you ask? Because people are staying put, repairing and updating because the economy needs to rebalance. Houses may drop, if demand goes soft- it is, relatively speaking, soft now. Beware when buying , get the house you want at the price you want, don’t be emotional, don’t over buy.
This is a difficult time in the market for appraisers too.
We know our market, however open houses, market demand, viewing, and tours are down now because of COVID. It has become another market consideration, it has taken over home buying.
Buyer beware, and educated- watch the sunset a little bit longer right where you are!

Keep more of your money!

People think that owning a home is a great way to save money, or should I say that the house goes up wildly in value, and there will so much equity - just is NOT true. It costs so much to own a home, maintain it, insurance, taxes, utilities and repairs. Most average buyers have NO idea of the costs of owning and don’t have enough money saved for a household emergency. Most buyers have no ideas what it costs to sell their house and what to do to keep more of the money.

Selling your home- if you do sale your home how much can you keep? Sometimes gains goes right into Uncle Sam’s pocket, however most of the time the tax rules on your primary residence are favorable. Only large capital gains , over $500,000 for  married couples, and $250,000 for singles are taxed if you lived there for at least two of the last five years before the sale date. This isn’t a one time event either. You can claim the profit exclusion each time you sell a principal residence if the requirements were met and not more frequently than once every two years.

WHY did you sale the home affects the tax outcome also- Work related move- 50 miles or more away from home, or  your old work location, you begin a new job 50. Spouse is included in this move  or change of job.

HEALTH related exceptions- you moved for several medical reasons , to obtain, provide or facilitate diagnosis. Get a doctors note confirming the exact details.

Rolling equity into another residence-NOPE,  You can’t defer or eliminate capital gain taxes by simply selling the house and rolling over the proceeds into another home that costs as much or more, that law changed in  the 1990s.

What happens if I sell my home for less than I paid? Can I deduct that  loss as a long-term capital gain loss?  NO, You can’t deduct a loss on the sale or exchange, of personal  use property, including your home.  You may be able to deduct property used for trade or business.

EXCESS above exclusions- the amount over the exclusion is taxed as long term capital gains- investment income, for purpose of taxation- 3.8% tax on net income.

What if my spouse dies?? You have two years to sell after the spouse’s death and you haven’t remarried ; as of  the sale date.  You can count any time your spouse owned the house as time you owned it, you also can count any time your spouse owned it as your residence.

Are there special exceptions for the disabled? Yes, there is a break for those who have a disability and can’t take care of themselves. You only need to show your residence was your primary for 12 months out of the 5 years, prior to the sale.   Also, any time you spend living in a care facility counts toward your residence requirements, as long as the facility has a license from that state.

Appeal your taxes (county assessor) if your taxes went up unusually high, you had an issue with your home or property  that could affect the value of your home(a flood, termite damage, settlement, law suit) or your taxes are way higher than your neighbors. Hire a professional.

Appraisal-Get your house appraised before you list the property, so you have a professional idea of what similar  properties SOLD for in your  area. Listings aren’t  an accurate indicators of value, don’t count on Zillow or online values, they can’t take into account, views, additions, upgrades, stigmatized properties and so on.

Be an educated buyer, read local papers, talk to neighbors, sit in the neighborhood at different hours of the day, buy where you know, chose a realtor who has a track record for your type of property and location. Understand YOUR housing market in your city. You get what you pay for.

Don’t think every upgrade is going to return money dollar for dollar. A new Pool, green or solar  upgrades less than 50% value, watch costs! Maintain your house;  new appliances,  AC, water heaters, roof, landscaping, exterior and  interior paint. Kitchens and bath remodels have the best return – often NOT money, but the house will sell faster, saving YOU monthly payments.

Average mortgage deduction(2014) for a $50,000- $100,000 property  $7,216.00

Average mortgage deduction for a $100,000- $200,000 property   $9,140.00

Understand average  inflation in the housing market is 3% in Tucson and NOT all areas have that.

Every little bit helps! Keep more money!

Appraisal new technologies

Tucson doesn’t create enough good jobs, have a stable influx of new people, or have friendly policies for new business, therefore the housing market is extremely volatile. We rode the wave of increased prices last year as everyone believed the housing market was improving, and indeed several areas of the country saw great gains- however Tucson has remained sluggish and probably will until 2016. The price increase in 2013 has flattened this year and only lower priced homes continue to be in a sellers market range. Still a few investors are buying, but that has slowed also.
Current credit liabilities and banking requirements with loans, documentations, house pricing, have increased the pressure of more accurate valuations. Appraisers have made adjustments to the changing increase of market data using advanced analytics and influencing technology, both having a significant influence on how the appraisers come up with value. The seemingly endless information, facts, figures, numbers, and charts is leading regulators to hold banks to a higher standard thus turning down more individuals for loans. In return they are holding appraisers to more stringent requirements and increased usage of mobile technology for market analysis. Big data is one of the five biggest trends redefining the valuation process. Augmented reality,a virtual layer of data with geographic specificity, will facilitate market analysis. These new technologies will be enhanced by experienced appraisers in your area who understand the value of mega data, and the changing economics of YOUR community. Be aware poor appraisals have become part of the problem in house price devaluation/ fluctuation, banking standards, and government policies, nobody is really winning here. Low values of homes keep people from moving, relocating, fixing up their home, or feeling positive about the economy.
It is a complicated time to buy, buy only if you anticipate staying 5 years. Realize a 3% increase in home values will be the norm. We are finishing up a 7 year downturn in the business/builder cycle, perhaps the model will return in a positive upturn-

Housing recovery a long way to NORMAL

A new year and maybe new hope, I stopped writing for so long because nothing has changed, but a new year brings new HOPE! ha maybe-Forecasts for home price gains of a couple percentage points this year seem possible. There is rising debate among real estate analysts on whether some recovery calls are getting overheated. Nationally the skeptics are barking, the rosy forecast for rising home prices is strickly local trends and cannot be considered a positive trend, moreover the stablization of the markets IS trending upward. That means the markets are improving, but not necessarily going to go up quickly.
Most likely the housing market will trend sideways or slightly up for a few years, as we get rid of all the foreclosures and consider the tough underwriting processes.
The National Association of Realtors forecast U.S. existing home sales to rise about 9% nationally, this year and the median price to lift 5%, on the heel of a 9.5% year over year increase. That means, the rise in median or midpoint price, can reflect either appreciation or change in the mix of sales toward higher priced properties and less forclosures. A recent poll taken by Zillow found consensus expectaions for about 2.3 % price increase, a big rise from the flat early quarters of 2012. However, 113 economists surveyed have various opinions of the housing markets for 2013- anywhere from 2.5% to 9.2%, averaging 3.9% in 2013 and 5% in 2014. Average time to recoup the losses from the housing bubble to be 12 years. Comparing perspectives into a normal time period of housing, from 1987- 2000, when the annual rise in housing prices would have been rise 3.6 % across 10 big cities. In todays stablizing housing environment, adjusted for inflation that would be 2.6% increase in value.
What could change the positive scenario? Additional regulations, foreclosures, boucing interest rates, and uncertainity with a divided government. Several well know housing economists(Karl Case, Robert Shiller,Anne Thompson,David Blitzer) have concluded while the recovery is plausible”we don not see any unambiguous indication in our data of a sharp upward turning point for demand in housing that some in the media have suggested.” Location is a key factor, Phoenix, sun belt,or Miami may trend upward with appreciation, with Tucson or smaller cities lagging a little behind a bigger city with similar location.
Bottom line be careful, it is a good time to buy, but realize appreciation may not be rapid. Buy and plan to stay, build equity and enjoy your purchase ,go back to old fashion values of ownership and pride. Be happy to own a home and pay down debit to build equity, not thinking of your house in trems of Money – as a open check book.
Most important point to make at this time, chose your realtor carefully make sure they know HOW much you can spend, do your buying homework, ask an appraiser to value the property if you are paying cash.
Don’t rush to buy, interest rates are slightly higher as I write this(Jan 2013), they will come back down(I hope) over the next couple weeks. Good luck!

Same old, same old….

It seems to me the great recession just keeps on giving, or should I say taking. Home repossessions will be topping 1 million, up from 804,000 in 2011. Total foreclosures fell 34% in 2011 national to 1.89 million, so we are still cleaning up inventories. Housing inventories are slowly going down , but only a few can really get credit to buy, are stable enough to purchase a house and or feel confident with the economy. The MEDIA will continue to report a very rosy picture, but the reality is still tepid, barely breathing. The houses that are selling are forclosures and distressed sales- don’t sell if you can help it. It still isn’t a good time. Things, the micro economies(house values) are improving, however the macro economies are NOT. The job markets are improving in certain areas, that weren’t affected to begin with, some house sales(pricing) are improving, however it is so diferent from area to area, Tucson is still considered declining overall. Watch out for the statistics from January because they are going to be ugly, it will be affecting all sorts of numbers- stocks, housing, and retail. Remember people buy when they feel confident. 2012 should be a better year, that means- stablization of prices generally speaking, however gas is going to affect people in a negative, way once again. That has a negative affect on how people feel about buying- it all runs together.
The greatest asset Tucson has is our weather – because boomers will come with money and THAT ALONE, is the future. It will grow our markets. At some point we WILL need more housing, apartments, inexpenisve first time homes, and single family residences. Yea, to the future of growth.
I have lived in Tucson my whole life and have watched the building cycles, this is an odd one- because of the continuation of negative influences. Prices won’t be increasing any time soon, but hopefully we will feel more confident. Several factors need to come together to make our market stronger. More lending flexibility(Frank Dodd regulations -government), lower cost of ownership(local taxes,government) , increase in educational values and a strongereducational system(local governement), and so it goes, there is a theme that we cannot readily fix. Several personal ideals come into play also, personal responsibility- (affording what you buy),being realistic about values going forward, and understaning what it takes to be a homeowner. Buying a homes is an investment with time and resources. Until these things are understood in the market the housing slump will not improve. It is slowly improving, but it could just continue this way until 2015 -flat. Then it becomes a TEN year business cycle, not a seven. Be involved understand real estate before you buy! Use a MAI appraiser to understand value before buying, or selling- real estate agents job is to SELL understand that fact- they don’t eat if they don’t sell!

Keep waiting!

The housing market in NOT going to improve anytime soon. With poor slow improving unemployment, foreclosures, bank regulations and financial constraints the housing market is doomed to death. Don’t buy anything unless you have money(cash) a really undeniably stable job and are going to stay for 5 years. The market has a long way to go to pull itself from sinking. It is no ones market! Keep in cash, keep debt low and be prepared for a rocky ride throughout next year. The election is the absolute pivital point of the housing market . Houses continue to go down, there is very little value that is stable in the stock market, and gold and gas are rising, this combination is only waiting for for one ounce of bad information to drop further. Foreclosures still out sell existing homes, and prices have been pushed lower, the good signs, inventory is dropping, interest is at record lows, and new homes are beginning to sell. Buyers with great credit are buying multiple houses, however rents are still weak in Tucson. There really is no good sign yet, keep waiting. You finally need to realize the house prices of 2005,2006, and 2007 are gone and will NOT return for twenty years. Be prepared to take a hit at some point.

What does a Real Estate Appraiser really do for ME?

An Appraiser protects your interest in your biggest assest and understands the local market trends! He is a person with a service to offer the community where he lives and cares about. There is so much controversy over how the housing market is failing I thought it would be good to bring some professional insight into the mix. The governement’s view point of housing lacks the knowledge of how the free market really works- and because now FEAR has controlled the buyers/ sellers in the market ,the competive edge of the market has changed- exactly like the stock market. A great point to remember, (when trying to make money) when eveyone runs away – you STAY. Now is a good time to buy, it is just conviencing the average buyer with money and good credit. This housing market however, is not going to turn around anytime soon. The govenment policies will have to change to really make a positive impact on sales. We will continue to improve slowly at best, otherwise flat and that means house prices will remain the same.
Now to explain WHY an appraiser is an important PERSON in the mix.
We are professionals (MAI, SRA, designated appraisers)that often study market trends nationally, understand and relate to values in time(estate properties), can review markets in particular stigmatized neighborhoods through documentations, and have specific collected data that most normal individuals can’t afford to use or have. For instance, how problems with Zillow affect your property; it can’t compare YOUR views, YOUR particular property assests, it can only clump information that is gathered on the computer and average that information together to get an average- therefore often it is severly incorrect. If banks use these number you won’t ever get a loan, some real estate agents use something called a CMA Comparative market analysis- this too has its faults. Real Estate agents look at the property from a SALES point of view , not a value- Two entirely different ways to understand property- often it is only about making the sale, being your FRIEND, working the area, and so on. Remember it is thier job and if they don’t make a sale, they don’t eat.. Appraisers have no interest in what the price of the property is only value. They care what it will sell for-in a specific time frame. So if an appraiser from Phoenix( out of the Tucson area ) comes into to appraise your home they only know to compare Phoenix prices, zillow or CMAs the lowest values…..they only have access to computer statistics, BAD news for you the seller! They really have no interest, they are salaried employes for a management company- they just do thier job, from a form. They are often from out of the area!
This is a big problem in the housing market now- many unqualified appraisers are coming through management companies (because they are cheap and ordered through an online management company from banks, they have minimum educations, qualifications and only do houses because the government gives them a format form. You get no extra choices for views, custom, neighborhood accommodations, and so on. If this continues we might as well all live in track homes because that is where the value is going. We all will have equal living arrangements. Ask your banking institution for an MAI or ask “Does all the money I pay go directly to the appraiser?” You will be shocked out of the $350.00 you pay the bank keeps most of it and gets the cheapest guy to simply write a report. Repeat, I said “write a report” not do an appraisal of your property.That IS not good for you or looking out for your interests. Be aware, be a wise consumer, protect your valuable assest, pay attention to governement rules and how they affect your assests. These are difficult times for homeowners and if mortage tax breaks go away we all are going to take another hit. Hang in there we are half way through 2011 and maybe the end of 2012 will be better! Realistically it looks like 2013 .

Get ready for the Fed’s fix? It may affect YOU!

Ok, so now before we are stable in the housing market comes another interruption to our teettering market- THE FEDERAL RESERVE- IT’S EASY MONEY POLICIES( WHICH NEVER HAVE REALLY AFFECTED US, ARE GOING TO SOONER THAN WE THINK) Remember, money put into the market ,serves the public like money spent into the market- causing false demand, except or course for, housing, because their isn’t any demand at all. No jobs, no increase in disposal income, no consistant friendly government policy, to calm the fears of consumers. I am one of the consumers and also an employer, who has to deal with more and more red tape, tighter lending policies, and less real interest in buying a home to add wealth. A few investors are still out there, but that has tapered off also- so whats left now?
The Fed will probably raise short term interest rates( this may or may not affect us dramacaticaly at first) by trying to reduce $2 trillion of treasury securities on its balance sheets. But…
It will be hard to make the overnight bank lending rate to go up–p.s. why? so much money in circulation. Easy money from the government makes false short term jobs, extra bank funds available and other monetary funds,(not from spending consumers) but given from the government in excess. This excess has to be paid back someway( how about inflation) increase in cost of goods sold- more taxation, more banking fees, and so on.
The Fed already has a lot of debt-$1.3 trillion long term treasury debt-$9.34 billion (from our home ownership lending)or backed mortgages. Officials want to reduce this, but ha ha- they took away a lot of other lending sources. They practically own all sources of money to lend, from Fanny Mae and Freddie Mac, if you have heard of those terms. No more small community banks, Mortgage brokers, limited mortgage bankers and less companies for competition. The government put their own regulations on our ability to borrow.
Inflation, however unfortunate, may be our friend for now- this will be carefully monitored. If we feel like it is under control, then it probably is and beware- watch rates go up , be prepared-
Watch for a change in the EXACT verbage, from “short term rates will remain low for an extended period” to “we are monitoring the progress on the economic uptrend” that really means, they will raise interest rates because they see the economy strengthening, for example.
Rates can go up so fast- that is- car loans, credit lines, borrowing costs to name a few.
The Federal Reserve policies most likely will have to change to accomodate the new situation in the economy. The current policies haven’t helped HOUSING improve! It hasn’t helped jobs! It certainly hasn’t stablized gas prices or groceries. This is what concerns everyone about our current policies- not just a few elitists. Where is the help for the working bloak? So as a normal working individual getting by, be aware of what the FED does and says in the next couple weeks! Education, not ignorance, is the key to financial stability in rough times.