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

Now that 2009 is in the history books, I was curious to find out how our local real estate market performed compared to previous years. If I was ask to sum up this past year’s real estate market, the phrase that comes to mind would be “cautiously optimistic”.

The reason’s for the cautious optimism are numerous:

1. Pasadena home sales have shown increasing monthly demand beginning in January of 2009, compared to the previous 12 months and for the most part on a month to month basis.
2. Interest rates remain low, albeit with the help of government intervention, and
3. Based upon our higher home values I don’t anticipate a slowdown in activity when the home buyer tax incentives expire in April.

The graph of Annual Pasadena Home Sales shows that the number of home sales were highest in 2005. Rates were low, mortgages were easy. As we went into 2006 the spread on adjustable rate mortgages began to widen decreasing affordability, plus prices were at their all time high. The middle of 2006 marked the beginning of the downfall as bank failures begin to appear and lending was changed forever.

The 2009 Housing Recovery

2009 was a year of marked improvement as the market for lower priced homes developed. Looking at the chart below, we see that homes priced below $200,000 comprised about 2-3% of overall home sales. This category was absent in the years from 2005 to 2008. Also homes priced up to $599,000 made up approximately 63% of the homes sold in Pasadena, a much higher percentage than in years past.

The area of weakness this past year was in homes priced over $1 million. This could be attributed primarily due to the less than favorable lending conditions in the first part of they year with regards to jumbo loans. Lower priced homes precipitated the action and recovery this year while step up and luxury homes were more active in the second half of ‘09.

The Future of Pasadena Home Prices

One thing I occasionally hear is a home seller may wait a couple of years before putting their house on the market in hopes of obtaining a higher price. I feel pretty confident in stating that we will never see the appreciation in home prices that we saw in the early to mid 2000’s. The free and easy monetary policy with regards to mortgage lending is gone forever and if not forever at least a long, long time. Secondly, home prices will remain steady due to supply $600,000, home ownership is still out of reach for many residents, insuring a balance in the real estate market.

I think in nature they call this the circle of life, or at least they did in The Lion King.

Tags: housing recovery, Pasadena housing market recovers