What's Causing This Slump?
It's no secret that real estate is experiencing a market slump; in fact sales are lower than they've been in 16 years. Wall Street economists compile a seasonal market forecast; a rating higher than 50 indicate a positive market. The current forecast was only 30 and has remained below 50 since may of 2006. Gone are the golden years of bidding wars or listings at unrealistically high prices. For the seller, it's time to come back to reality and do whatever it takes to sell your home. For the Myrtle Beach home buyer, your time has arrived!
With new homes creating about 15 percent of all home sales, there is a glut of inventory in the homebuilder industry. What do stores do when they have extra stock; they have a clearance sale! As a result the market is saturated with buyer incentives offered by over 70 percent of U.S. builders trying to unload their homes.
Some prospective home buyers may purchase before they are ready. On the flip side, some may hold back because they feel overwhelmed. Currently the federal government has been investigating the legalities of all these "buyer incentives" that are being promoted in the real estate industry. Although no final reports are available, there are some basic considerations to keep in mind.
Make certain the cost of any incentive is not built into the price of the home, as it must be a legitimate perk.
If the promotion involves financing, the buyer cannot be coerced into dealing with the builder's financial associate or a particular lender as a prerequisite to the sale.
If the incentives exceed 6% of the purchase price, be cautious; generally even high risk home buyers are required to put at least 10% down.
And lastly, if it sounds too good to be true, it probably is.
There's no question that now is the best time to buy a home that we've seen in a very long time. Talk to us if you're even THINKING about buying a home right now. We'll be happy to discuss the options and great buys on the market right now.
Phantom Income Bll Update:
In a move to relieve some of the burden that faces homeowners filing for foreclosure, the US House of Representatives voted to remove a tax penalty known as "phantom income" tax.
Under present rules, if a lender or creditor forgives all or part of a debt due to a foreclosure or short sale , the amount forgiven is seen as income by the IRS, which is taxable. The IRS requires lenders to send a Form 1099 reporting they cancelled the debt to any homeowners that foreclose or participate in a short sale. The IRS turns around and taxes the homeowner on the "phantom income."
Another portion of the new bill would extend mortgage insurance deductibility through 2014. The current version of this bill is only effective for homeowners who bought in 2007. The guidelines on the current law for PMI deductibility will remain the same - the home must be a new purchase and the homeowner's adjusted gross income must be less than $110,000 annually to deduct the mortgage insurance premium paid.
The new bill will now move to the Senate, where a similar bill is in the works. The White House supports the bill, but wants to limit the tax relief to three years, whereas the current proposed bill would be permanent.
Another positive side of the bill is that it is retroactive to January 1, 2007. Homeowners who fell behind or have foreclosed this year will be able to avoid the phantom income tax under the bill as it currently stands. There is no proposed relief for homeowners who foreclosed in 2006 and earlier.
Choosing a Moving Company
Here are some tips to help avoid the pitfalls of making the wrong choice when it comes to moving, whether it's locally, or across the country.
- Is the moving company known to you, either through past experience or recommendation/reputation?
- Have you seen their vehicles and do they and the occupants present a good image?
- Have you seen the Company's premises and do they have adequate security? (Particularly important if your possessions are to be stored either short or long term).
- Does the company have any recognized quality standards such as ISO or FAIM?
- Does the company have sufficient resources to handle your move, or will they sub-contract part or all of it? (Beware of Brokers!)
- Does the company belong to any recognized association whose criteria include meaningful requirements for membership?
- If you're moving Internationally have you been informed of what shipping line your move has been scheduled on, the vessel's ETA, and whether transhipment is involved?
- Have you been given details of the destination agent who will be responsible for clearance and delivery of your shipment?
- Are you satisfied the insurance coverage offered is comprehensive and underwritten by a reputable Insurer?
If there is a moving company tip that we've overlooked, we welcome your added comments by using the comment link below.
Refinancing Your Home
Refinancing your home can be an excellent way to lower your monthly mortgage payment, raise cash, or consolidate debts with high interest rates. However, you need to do your homework before deciding to refinance.
One important factor is the difference between current interest rates and the rate of your original loan. You also need to take into account the amount of time it will take to recoup the costs of refinancing.
Keep in mind - refinancing usually lengthens the time it takes to pay off your mortgage. If you are 3 years into a 30-year mortgage and then refinance with a new 30-year loan, you'll end up making payments on the house for 33 years. Nevertheless, if the monthly savings are substantial enough, you still could end up paying much less over the long haul with the new loan.
Be careful of lenders offering 100 or 125 percent home equity loans, as their rates are often markedly higher than traditional lenders. In addition, any amount you borrow that is above the market value of the house is NOT tax deductible. Check with your tax professional on this.
Talk with your lender about the different types of refinancing loans available today. You should take some time to shop around and speak with several lenders before making a decision. Be sure to discuss all the expenses and benefits, as well as what will be expected of you, in advance. The more you educate yourself, the better your chances of finding the right refinancing package.
Have comments about this article? Please use the comment link below to share your thoughts.
Home Builders vs Home Buyers in Myrtle Beach
The National Association of Home Builders reports that the confidence of United States homebuilders in the market for new single-family homes fell in October to its lowest levels since the series began in Jan. 1985. The reason: continuing problems in the mortgage market, large inventories of unsold units, and the perceived effect of negative media on potential buyers.
NAHB Chief Economist David Seiders said in a statement recently that "consumers are still trying to get the best deals they can and many may have unrealistic expectations as to prices for new homes as well as what they can get for their existing homes.
The good news Seiders said is that builders expect sales conditions to remain stable in the next six months instead of decline further. NAHB’s housing forecast indicates the second half of the year will show significant improvement.
Federal Reserve Chairman Ben Bernanke said recently that the weak housing market will be a “significant drag” on economic growth into next year.
What do you think? We'd love to hear your opinion on the future of the real estate market. Leave us your comment below.
