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There seems to be no doubt that active government intervention may be forestalling the free market system in the housing market. Need a refresher, the $8000 first time homebuyer tax credit, the federal reserve buying mortgage backed securities, 90 day moratoriums on the foreclosure process, beginning to get the message? But wait, there’s more, Making Homes Affordable, extend and expand the homebuyer tax credit, loan modifications, Home Affordable Foreclosure Alternatives.

Pro or Con?

There seems to be agreement regarding the positive impact of the programs designed to assist and incentivise homebuyers. A stimulus if you will. Where consternation does seem to exist is the benefit being received by homeowner’s who are underwater on their home. I’m hesitant to use foreclosure because a “Notice of Default’ may not yet be filed, but there may be little doubt it will soon be on the way.

Numerous articles have appeared about the lack of success of loan modifications. Many of the qualifications required to successfully achieve a modification or the almost unheard of principal reduction, required financial verification that distressed homeowners simply cannot provide. Anecdotal information also suggests that financial institutions are being lenient with homeowner’s (principal residence) who are not making their house payment. Evidence indicates auction dates are being postponed to allow property owner’s every opportunity to meet their obligation. Investors on the other hand who are behind on payments are not enjoying the same benefits.

The Feds Step In

A new program being proposed would give homeowners more time to qualify for federal programs designed to avoid foreclosure. In other words after your application for a modification has been denied you would now have 30 days to respond and appeal. The bottom line is the lender could not proceed with a foreclosure. More T I M E for the property owner.

If lenders will now be required to provide written certification as to why an applicant was denied a modification, look for more information on this subject in the future. Someone (government bureaucrat) will develop written guidelines as to who and what qualifies. I think lenders will be demanding more guidance from the federal government because the last thing they want to do is have their approval or denial appear subjective.

Apparently the most successful program designed for homeowner’s in distress isn’t reduced monthly payments, but increased time. Twelve or more months of missed house payments can go a long way towards financial security.

Tags: are programs designed to help homeowners in foreclosure helping?, how to delay foreclosure

As details of the President’s recently submitted budget now begin to leak out, we once agin find that property owners are on the hit list. The budget supposedly calls for the elimination of the mortgage interest deduction for homeowner’s who make over $200,000 a year (single) and $250,000 (joint).

I always thought government’s role was to encourage and increase home ownership due to the benefits derived. When individuals can own their own home the community benefits with safer neighborhoods, appreciating home values and the creation of wealth. We see increased parental involvement in the local schools. Our homes represent who we are and what we aspire to. Home ownership has always had a financial benefit associated with it. Remove the incentive and what happens. My guess is demand will fall.

Use interest rates as an example. When rates are low the housing dollar goes further, therby creating more value. When rates rise, demand falls as housing becomes more expensive. Could the same happen by removing the stimulus, which home buyers have relied on for years and have used to rationalize a more expensive home purchase? A robust housing market creates jobs while the economy prospers as appliances along with home furnishings rise as well, fueling the economic cycle.

Removing the financial incentive on housing and taxing the banks that make loans will not create a job. This is especially critical here in California with the housing market making a comeback. Penalize housing, penalize California, as if we needed another hurdle to jump. Consumer purchases create optimism, get business hiring and gets the economy going. You don’t tax your way to prosperity.

The only bright spot I can see at this point is the tremendous power of the National Association of Realtors along with the California Association of Realtors. They have been incredibly successful in putting a stop to bad economic policy affecting the housing market. Probably because they more than anyone else, realize that home ownership is the centerpiece of the American Dream!

Tags: losing the interest deduction, Mortgage interest deduction, tax benefits of housing

Announcing the opening of RE/MAX Property Concierge serving Pasadena, South Pasadena, Altadena and surrounding areas.

Over the last several years what do you think has been the single most important factor affecting the real estate market?

Was it record low interest rates, the ease and availability in which people could obtain a mortgage, sky rocketing home values, or the federal reserve’s monetary policy?

All of the above attributed to the run in the housing market, however the internet could have been the spark which lit the fire.

The internet has had a revolutionary affect on the way consumers buy and sell real estate. Aside from the travel industry, (spoke to a travel agent recently?) profound changes increased the transparency of the real estate process giving consumers new freedoms in which to research and choose their next home, neighborhood, broker and real state agent.

The industry benefits have also been numerous. People in the industry have tapped the power of the internet enhancing its visibility and awareness along with promoting themselves and the properties they have for sale.

The last 10 years in this industry has seen some amazing changes, so the question becomes:

The Future of the Real Estate Industry

What is the future of the industry? This along with many other questions were things we considered prior to joining RE/MAX.

There are many companies that offer career opportunities to individuals looking to enter or enhance their career skills. After looking at the options, RE/MAX was he best option for us. RE/MAX has incredible brand recognition which has been built on a track record of success over the last 35 years. In an industry which has seen many consolidations and closings, the RE/MAX brand has continued to prosper and the RE/MAX balloon is one of the most recognizable icons in American culture.

RE/MAX has a strong management team committed to the success of its agents and to the prosperity of the industry. They are continually at the forefront of issues impacting today’s homeowners and have been diligently working with government agencies to address these concerns.

Real Estate Agents have many opportunities to expand and continue their education while joining an exclusive club of agent productivity. RE/MAX also has a strong history of charitable giving. Their involvement with Children’s Miracle Network, the Susan G. Komen foundation and the support of Operation RE/MAX which serves spouses of military personnel is proof positive to their community commitment and involvement.

If you plan to buy or sell a home, we would appreciate having the opportunity to explain the advantages RE/MAX has to offer. If you are a real estate agent we would welcome the opportunity to discuss the benefits of joining the RE/MAX family. We can be reached at 626-432-4615.

Tags: Pasadena Remax office, Remax in Pasadena, Remax in South Pasadena, Remax office in Altadena, South Pasadena Remax office

After all, it is for the children. The city of LA Canada did it. The city of South Pasadena did it. It passed in San Marino as well. A lead pipe cinch.

In these days of declining revenues and the California State budget well past the stage of life support, local communities are looking for ways to provide much needed monetary relief to the school systems. A parcel tax seems to be the weapon of choice.

Seemingly innocuous in its inexpensive amount of $120 and the indiscriminate application in which it is applied, proponents argue that the .33 cents per day (as reported in the Pasadena Star News) is much less than a cup of coffee at Starbucks or McDonalds. Have you noticed every time someone wants you to pay more, Starbucks is the whipping boy of choice?

I’m not here to express an opinion on this tax, pro or con. Every property owner will be assessed this fee if it were to pass. Across the board, everyone pays the same. Imagine, fairness in taxation. This is not supposed to happen in California. If only the rest of the taxes were as simple and as fair.

The California Tax System is Broken

Who wouldn’t pay an additional $120 in hopes of providing quality schools and good education. Maybe anyone who has to pay property taxes two times a year and before they write the check they stop to think about what they are receiving for their tax money. If you consider for a moment the two sets of rules we as citizens and taxpayers operate under it has to give you cause for concern. The private sector who cannot arbitrarily raise prices to create revenue shortfalls has to continually redefine itself and create value for the consumer. If not, they find that business declines before they may eventually close the doors. The public sector on the other hand receives annual revenue adjustments from automatic tax increases, no need to worry if consumers receive any additional value for their contribution.

Prop 13, Lucky or Not?

There is no better evidence in the lack of value or disproportionate transfer of payments than in our own property tax system in California. Thanks to Prop 13, the taxed based on seniority, here is the situation we face in California:

I looked at four houses next door to each other and all about the same size and market price. They pay $6500, $4800, $827 and $864 in annual property taxes. All based upon the duration of how long the present owner has owned the property. This is a neighborhood in Pasadena, but it has to be like this all across California.

Maybe the ones who pay $827 and $864 think an additional tax of $120 is no big deal and gladly pay it. While the two paying $6500 and $4800 think they pay more than their fare share and vote no. This is a great example of the inequity that is pervasive in our tax system and needs to be addressed.

We are seeing evidence of home buyers in the last few years who were placed into home loans that charged more expensive rates and fees, but the loan brokers received more money. Now we call them predatory lenders because they profited at consumers expense. Couldn’t we apply the same example to property taxes?

The good news about a parcel tax is that it is put to the voters, you get to decide if it passes or fails. Unlike property taxes which are put to the voters in a different way.

Tags: California's unfair Prop 13, Pasadena Parcel Tax

If you have been out looking for a home to buy or browsing the internet you may be wondering where all the housing inventory has gone. Over the last couple of months we

have been noticing that housing inventory in Pasadena, or in other words, “Homes For Sale” has been declining and is at a 52 week low. This trend has evidently became pervasive throughout California as the weekend edition of the Wall Street Journal featured an article about the low housing inventory throughout the entire state of California.

Single Family Homes in Pasadena

Taking a look in the Pasadena multiple listing service as we near the end of January there are 215 homes for sale, plus another 122 that are under contract. Add to this the 74 homes that were sold in December and the inventory issue becomes quite evident with just a little over a 4.5 month supply.

Another View

I was always told there are two ways to increase profitability. Either sell more or spend less. Real estate is no different. The more houses sold, the fewer homes available. My opinion is Pasadena and probably California as well experienced such a strong 4th quarter that many of the homes which were for sale actually did sale, thereby reducing the number of homes available. And you thought the term shadow inventory only applied to the homes in foreclosure being withheld by banks.

The stats for condos and town homes is as follows: December sales were 51 units and there are 212 units for sale and 79 units under contract, which equates to about a 5.7 months supply.

Pasadena Condos and Town Homes

If you notice condo’s and single family homes do not always move in unison. The main factor affecting the Pasadena condo and town home market has been new development. This number has actually been manipulated to look better than it is. The reason is that many of the new developments in town that are for sale have not been listed in the local multiple listing service. Developers want to create the impression that the sales volume on these units is happening at a quicker pace and will only list the units when they have an accepted contract.

Tags: Buying a home in Pasadena