Real Estate Trends

Welcome 2010! We at Rinehart Realty look forward to a positive and prosperous New Year!!

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REALTOR® Magazine-Daily News-Another Big Gain in Existing-Home Sales.

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A court case in Connecticut that involves property rights has been an interesting piece of news in the last couple of weeks. The case is the Kelo case in which the city of New London decided it was in it’s best interest to take Mrs. Kelo’s house, which was an ocean front property, for a private development to further economic development in the city. That private development was to develop a building for a small company known as Phizer. Well, when Phizer decided they were not going to go into New London, it left out 1500 jobs and the entire basis for the economic development reasoning the city used. So, it’s not always in the best interest of a city to take property. Unfortunately, now we’ve had another case in New York City. A private developer in Prospect Heights, Brooklyn, NY has now gotten the go ahead for redevelopment of an area of public property so that he can continue developing and again this is for private property development that the city is taking the property. Now being an attorney by trade, we always look at case law and when you’ve got 2 cases back to back supporting this, that is not good for people who want to hold onto their property. They’re saying that recovery of blight (urban decay) areas in a major city is of more importance than me (the individual property owner). Now, our SC State Legislature has addressed this in SC. So know that this would be a very unusual thing in SC. But it is a concern that is sweeping the nation and of course legislature can change their mind, so it’s something to watch long term.

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As we are starting to roll towards the end of the year, a lot of people are beginning to think about year end planning. Specifically tax planning. Believe it or not, there is tax planning that occurs even in a recession. There are a lot of people who look at opportunities to get a check back from Uncle Sam. Certainly as your looking toward the end of the year, you need to be talking with your tax advisor and also your financial planner. It is time to take those losses in the stock market or for a lot of people that I’ve been talking to recently the gains. Now may be a perfect opportunity to balance out the 2008-2009 losses and gains. There may be opportunities to look at whether or not to get rid of property this year (that being real property) and maybe investing in new property going forward. There are always opportunities in the 1031 exchange marketplace where when your dealing with commercial or residential rental (investment) property that you might be able to move that into a different investment. I’ve said before it’s a buyers market and in the commercial market we have seen some price adjustments. We know what the tax law is right now, but we are really uncertain about what it will be next year. It’s going to be higher, there’s no way around it. So maybe you should act now rather than later. In the NAR tax committee meetings in San Diego, one of the discussions was capital gains and whether or not we are at the lowest point in history at this 15% tax bracket. Something to think about….

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The entire state of SC got a big Thanksgiving gift and a Christmas gift for the next 10 or 20 years with the announcement of Boeing bringing their huge assembly plant to the Charleston area. This is a new world that we live in and announcements like that are few and far between.  I gather it will lead to more of our smaller upstarts. One of the funniest things that happened while I was in San Diego was our contingent from Washington State seeking out the SC group. Those were interesting discussions. But where the good part of the Boeing acquisition for our state comes in is the additional ancillary jobs that it creates. Don’t underplay the large numbers that come out of Boeing, when we start talking about 150 million dollar investment and the creation of 12,000 to 60,000 jobs. Those are big numbers but one of the things that don’t make the news is the 2000, 5000 and 10,000 square foot acquisitions that happen to help support businesses. Also, don’t under estimate those acquisitions of property during this time and how it’s going to add to our recovery. I mean 10,000; you can put almost 100 people in an office environment with 10,000 sq feet. That’s a big building and that’s a lot of jobs.  As the recovery occurs you are going to start seeing little retail spaces starting to be gobbled up and also office spaces, so as those for lease and for sale signs start to disappear. Know that our residential market is also recovering and we are going to start seeing, in my opinion, some price increases.

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I have been at the National Association of Realtors yearly meeting in California and there has been a lot of positive buzz. However, the key thing is getting the banks to open the “vault” so that the home builders can get back into the market place and start building the inventories. The new home starts are below the replacement inventory levels. Most builders are small businesses and until the banks free up some money and allow small business starts to occur, then our economic recession will be a jobless recovery. So we need to get some money out into the hands of the builders, plumbers, electricians, etc. All of these people that can help us in the recovery and also help build the market place. Which causes people to go out and spend money on retail and other items and get this economic engine going. Real Estate is the catalyst for the economic recovery as we’ve shown time and time again. Of course congress is now agreeing with us by extending and revising the tax credit and The Obama Administration agrees as well because the day after it was passed by the house, he signed it 12 hours later.

The mortgage money is available, the underwriting criteria is just unbelievable in some areas. So while the money is there, a lot of lenders are ski-dish about housing prices in different areas of the country.

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Wow-what a fall.  It’s a GREAT time to BUY or SELL!!

By the way, have it said: It’s a GREAT time to BUY or SELL!

In case you have not heard: It’s a GREAT time to BUY or SELL!

Let me explain why:

1. Congress IS GOING TO EXTEND THE TAX CREDIT!!! While we do not have a final version of what is going to be the opportunity, we KNOW that it is going to be extended to EVERYONE.

2. If I am a first time  home buyer that was going to miss the Nov 30, 2009 deadline- welcome back to the market.

3. If I am a home seller- welcome back to the table with new buyers.

4. If I am ANY home buyer– YIPPEE!!

With supplies of good quality inventory homes at a low for the year, now is the time to get your home on the market. Lower supply with increased demand means stable pricing and motivated buyers. With buyer motivation at a recent high due to the tax credit, what a great time to look for that new home that you always wanted.

As always check us out at rinehartrealty.com or contact YOUR Rinehart Team member.

This will be a continuous process so keep checking back!

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Check out this “good news” article!
http://www.thestate.com/746/story/990662.html

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Tips 3 & 4 that can expedite a closing:

3. Don’t go on a shopping spree before you close

Wait to make big purchases on a credit card until after you close on the home. Large spending amounts can raise a red flag because a buyer’s debt-to-income ratio is one of the most important factors that lenders use to determine the loan amount. The ratio compares your income amount to your debt amount. Once the process begins, the ratio is set. If your in the middle of securing a loan, a $10,000 car loan or $3,000 furniture purchase may alter that balance.

4. Be aware of closing costs

Closing requirements vary by states. You should do your homework before the time of purchase to be prepared on the amount you are required to cover. Some states require that the buyer pay closing costs. In most states, the buyer and seller share the costs. Some require that costs be paid in cash at time of closing. 

Also, working with a professional Realtor will help you make sure that nothing is overlooked!

smartmoney.com

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The $8,000 tax credit runs out Nov. 30th but it can take 45-60 days to close on a home. There are some ways to expedite your home purchase so you can take advantage of this gift.

To find out if you qualify for the credit, check the IRS website.

The process of buying a home is neither quick or easy. Gathering your financial paperwork, applying for a  loan, negotiating an offer and signing contracts can take months. That’s if it goes smoothly.

Here are 2 of 4 tips that can expedite a closing:

1. Make sure you’re liquid

Be prepared for the down payment. Have enough cash available. Funds should not be tied up in a stock portfolio, 401 (k) plan or other investment that could delay the money. Even using a ‘gift’ can delay the process because the bank underwriting will need a paper trail to track the money’s origin. Money that just shows up in your account can raise a red flag and buyers should expect a thorough financial examination which would slow down the process.

2. Forget about the short sales

A short sale occurs when a homeowner is no longer able to make his mortgage payments and owes more on his home loan than what it can sale for in the current market. They are attractive but can take months to close. So if your after the tax credit, this won’t work for you. When you make an offer on a short sale, not only does the seller have to accept the offer, but the bank must accept and approve it, too. It could approve in 30 days or 300 days.

smartmoney.com

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