Assessing boom-and-bust cycles, the time to buy or sell is ... Nobody knows. Markets fluctuate, but generally the longer you own your home, the better. Some broad conclusions relevant to the questions posed above about timing and cycles and profits and losses:
• Anybody who thinks home real estate values can't go down is wrong. When local economies lose jobs, demand for houses drops and so do property values. Markets where prices have accelerated in part because of speculation by investors are particularly vulnerable when local economies go flat.
• The risk of loss is accentuated for purchasers who do not hold on to their properties for extended periods of time. The longer you own a house, the greater your probability of making net profits on it, even if the local economy hits the skids for a while.
Yes, timing matters. If you buy at the top of an inflation cycle as a speculator and sell into an economic down cycle a couple of years later, you can lose a bunch of money. But if you buy a house and live in it for five, seven, 10 years, the odds are good that you'll come out ahead. Click here to read more.
At 18, Junior can help snag tax boon. Without a spouse, there's no easy way to increase your Internal Revenue Code 121 principal residence sale exemption from $250,000 to $500,000. Minors can hold title; they just cannot convey title. However, for a minor to qualify for an additional $250,000 home sale tax exemption, he must own and occupy the home as his principal residence at least 24 of the 60 months before its sale. If you add him to your title now, be sure you don't plan to sell the house before he becomes 18 when he can convey title. If he is now 16 or 17 years old, and if he will be 18 or older when you plan to sell the home, you could add him to the title so he can qualify in 24 months for the extra $250,000 principal residence sale tax exemption. Click here to read more.
125th ANNIVERSARY SPECIAL HOME SECTION. Check out the Los Angeles Times Home Commemorative Edition. Click here to read more.
One of the least understood areas of real estate would have to be title insurance. Although it can be a big charge on your closing documents, perhaps $1,000 on a $300,000 house, it isn't something that the average homeowner knows much about. It is simply one more requirement in the buying or selling of a home, one that most consumers are all too happy to have a real estate agent or mortgage lender take charge of. While there is an insurance component of title insurance, it really is more of an investigation that you are paying for. A title insurance company searches public records on your property, or the property you are about to buy, to determine if anyone else has any claims on the real estate. Most of those "encumbrances" don't mean much to a homeowner, but they can make a mortgage company pretty skittish. Lenders like to know that no one else can lay claim to a piece of the property which they hold as collateral on a huge mortgages. So they demand title insurance that pays them if something goes wrong. Thus the title companies are really making a bet on their own investigative work: If they're wrong in clearing a title they pay. Home sellers buy a title insurance policy so that they can warrant they are transferring a clear title. Buyers can also buy a policy of their own to protect their interests. Who buys what and who pays for it varies per local custom. But the lender is always protected, one way or the other. Click here to read more.
Long-term mortgages near 4-year high. Rates climb for fifth week; 30-year averages 6.58%. "Indications of a stronger economy gave rise to an increase in mortgage rates this week," said Frank Nothaft, Freddie Mac chief economist. "Consumer confidence and existing-home sales unexpectedly rose. Much of this strength is attributed to a healthy labor market, which translates into greater consumer spending. This should support an active housing market over the next few months." "We expect mortgage rates to gradually rise throughout the year. A stronger labor market, coupled with moderation in house-price growth, means our outlook for overall housing conditions remains upbeat," he said. Click here to read more.
Existing home sales rise 0.3% in March. Inventories rise to 8-year high as price gains slow down. Sales of existing homes rose unexpectedly by 0.3% in March to a seasonally adjusted annual rate of 6.92 million, the National Association of Realtors said Tuesday. "This is a mixed report, but encouraging," said David Lereah, chief economist for the realtors. "This is additional evidence that we're experiencing a soft landing," Lereah said. After five months of declines, existing home sales have risen two months in row. Sales are down 4% year-to-date. "Sluggish prices and a further rise in inventories of unsold homes are a better indicator of underlying conditions," said Robert Kubarych, an economist at HVB Group. The number of homes for sale rose 7% in March to a record 3.194 million, representing a 5.5-month supply at the March sales pace, the largest months' supply since July 1998. Median selling prices are up 7.4% in the past 12 months to $218,000, the smallest price gain since January 2004. "To my mind, that's air coming out of the balloon," Lereah said. "The pull back in housing remains orderly, at least in the existing market," said Joel Naroff, president of Naroff Economic Advisers. "But the red flags are up. Inventories continue to rise and that is a warning that prices cuts could be coming, and soon." Click here to read more.
~Tina Jan~
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
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