Archive for February, 2010

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Move over Los Gatos – Morgan Hill: Quaint – Yet Progressive

By Ralph Chellino | February 26th, 2010 0 Comments

3rdstreet250Over the next five years downtown Morgan Hill will be undergoing significant changes to become more vibrant and active – to serve as the true hub of our community.  The Morgan Hill Redevelopment Agency will invest $40 million in downtown to improve parking, lighting, landscaping, infrastructure (water/sewer/utility undergrounding), and expand public art and cultural activities.

The first major project is the Third Street Promenade.  Over the last four months, Third Street has been transformed into a pedestrian-friendly thoroughfare between Monterey and Depot Streets, featuring:

  • wide sidewalks
  • decorative street furniture & art
  • pedestrian scaled lighting
  • street trees and landscaping.

It is envisioned that Third Street will become a place where Morgan Hill residents and those in surrounding communities will want to come to for dining, shopping, mingling, relaxing and enjoyment of outdoor entertainment.

What? Los Gatos without the traffic and congestion?  Come visit us and see for yourself!

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Does it Pay to Remodel?

By Russ Boyd | February 25th, 2010 0 Comments

Every year, Remodeling Magazine publishes the Remodeling Cost vs Value Report. You can now view the 2009-2010 Cost vs Value Report here:

2009 was a year of transition for the remodeling and real estate. One would have thought that the costs for remodeling projects would have fallen, but that turns out to not be the case, although the rise was smaller than in previous years. On the other side of the coin, even though costs increased slightly, the value added of the projects dropped slightly. Of courses some of the difference could be the result of consumers sticking to projects that are “back to the basics”.

According to the report, for now, it looks like “Bling is not the thing.” The four-year Cost vs. Value trend toward smaller, low-maintenance projects and an emphasis on essentials over extras will likely continue to influence homeowners remodeling plans. Exterior improvements were more common, primarily because exterior improvements contribute to the overall look and feel of a building. In other words, in a market where there are more buyers than sellers “curb appeal is king.”

For the San Francisco Bay Area, improvements that increase a home’s value above the project’s cost included, adding a bedroom in the attic, a new deck, new entry doors, kitchen and bath remodels and window replacement.

The report provides data on a national, regional and local level for easy comparisons.

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A Condo Here or a Single Family Home There?

By Dawn Thomas | February 24th, 2010 0 Comments

One of the classic trade-offs in real estate is the choice between a single family house with a longer commute versus a more centrally-located condo or townhome.   If you decide to go for the condo or townhome – here are 9 critical items to consider when considering a purchase:

  1. Homeowners Dues – are they too high?  too low?  High dues (in comparison to other similar properties in the area) could reduce your purchasing power and may indicate that the complex is playing “catch up” on deferred maintenance.  Unusually low dues may indicate that the association is under-budgeting for future maintenance and repairs – potentially resulting in a future “special” assessment.
  2. HOA Financial Analysis – how are the budget and cash reserves for the Homeowner Association (HOA)?  Are there any special assessments in the recent past or in the near future?
  3. HOA Documents – Carefully review the documents governing the Homeowners Association – including the CC&R’s  (Covenants, Conditions & Restrictions) as well as less formal documents like newsletters.  Consider hiring a real estate attorney to review these documents.  Newsletters may indicate potential issues that could become litigation or special assessments in the future.
  4. Exterior condition – do you like what the outside of the complex looks like?  If the landscaping, parking lot, or pool looks like a “fixer upper” – it may not be easy to convince your new neighbors to agree and fund the changes.
  5. Parking – how’s the parking in the complex – not only for you – but also for your guests?   If guest parking is limited to “street parking” – check out its availability at a peak “at home” times like Sunday evenings.
  6. Floor plan – does the layout of the condo work for you?  Unlike a single family home – you won’t be able to “bump out” the dining room 4 feet to make room for Grandma’s china hutch.
  7. Who are Your Neighbors? Two vital stats that may affect your ability to get financing are the percentage of owner occupants in the complex as well as the number of units in foreclosure.
  8. Size of the Complex – Is the complex too small, too big, or just right?  This is a matter of personal taste.  Very small complexes with only a few units may demand more of your time and money to manage.  Very large complexes may feel impersonal, be more complex to manage, and always seem to have several competing properties on the market (which may affect your future resale).
  9. Location, Location, Location – and finally – where is the condo or townhouse located?   Consider both the macro location – where in the Bay Area do you want to live – as well as the specific location of a given complex (commuter route, shopping nearby, schools).
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Intero Insider: It’s almost April … Do You Know Where Your Tax Credit Is?

By Gino Blefari | February 23rd, 2010 0 Comments

Over the course of the last year or so, I’ve written a lot about the Homebuyer Tax Credit. There are some faint rumblings among lobbyists and in Congress about whether it’s going to be extended yet again (I’m betting that it won’t), but for those who are already eligible, how exactly to claim the credit isn’t exactly … straightforward.

For one thing, there are two different credits with which to be concerned: the original First-Time Homebuyer Tax Credit, and the extended Homebuyer Tax Credit. Each has different rules, each has its own set of quirks and foibles.

First, let’s recap who’s eligible to claim the credits in the first place.

If you purchased a home between January 1, 2009 and November 6, 2009, you may be eligible for the Homebuyer Tax Credit, as it originally stood.

To qualify, you (the buyer) must not have owned a home for three years prior to your purchase. Your new home must be your primary residence, meaning you can’t use it for a vacation home or an investment property — you actually have to live there. The maximum allowable credit is equal to 10% of the purchase price, up to $8,000. Single buyers with incomes up to $75,000 per year or married couples with incomes of up to $150,000 are eligible.

That’s pretty clear. When it comes to the extended tax credit, things are a bit hazier.

If you purchased (or if you intend to purchase) a home between November 7, 2009 and April 30, 2010, you may qualify for the extended Homebuyer Tax Credit.

If you are a first-time homebuyer (meaning that you hadn’t owned home for at least three years prior to your purchase) OR a current homeowner who had lived in a house as a primary residence for five years in a row out of the last eight, you may qualify.

For first-time homebuyers, the maximum allowable credit is $8000. For current homeowners, the maximum credit is $6,500. As with the original credit, the buyer’s eligibility depends on the price of the home (this may not exceed $800,000) and his income. For the extended credit, income levels were increased to $125,000 for single buyers and to $225,000 for married couples. Even if your income exceeds these levels, check with your tax professional to see if you might qualify for a portion of the credit.

As long as there is a contract to purchase in place prior to April 30, 2010, and so long as that transaction is closed before July 1, 2010, buyers can claim the credit on their 2009 income tax returns.

In all cases, buyers will need IRS Form 5405, as well as a fully-executed HUD-1 statement from the property closing.

As always, be sure to consult your tax professional for any questions that you may have on matters such as these. The tax credit won’t be around forever; be sure to take advantage if you’re able!

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Intero Insider: Selling Short? Keep Track of Everything

By Gino Blefari | February 17th, 2010 0 Comments

It’s that time of year again. The Winter Holidays are behind us, we’ve cheered a new Super Bowl champion and exchanged boxes of chocolates for Valentine’s Day. That can only mean one thing: Tax Season is upon us.

When it comes to your home, there is plenty of documentation of which you need to keep track when it comes time to file your annual return. For those of you filing “standard” income tax returns, this is all fairly clear and straightforward.

With the current real estate climate, however, there are scores situations, like having lost a home to foreclosure, or staring personal bankruptcy in the face, in which many never thought they’d find themselves. Situations like these can make filing taxes a bit trickier.

There’s one circumstance in particular on which I’d like to focus today:

Short sales.

If you’ve gone through the short sale process (where you can no longer afford the payments on your home, but your lender allows you to sell the home at loss, rather than go through with foreclosure), then you know it’s long, it’s arduous, and it’s one in which things have the potential to be very murky.

When completing the reams and reams of paperwork required by your lender to complete the short sale process, it’s likely that you signed a promissory note, or other like document, granting the lender the right to take action against you to collect the deficient amount. This is pretty standard. It’s possible, though, that you also got a copy of a document with the heading 1099-C, which the lender has filed with the IRS, indicating that the unpaid portion of the loan has been canceled. This is a trigger for the IRS to assess taxes against the forgiven debt.

Wait. What?

“How is that possible?” you might ask. Good question. It doesn’t stand to reason that a lender can pursue you for unpaid debt and that the IRS can assess taxes, as well. Logic would dictate that one or the other is reasonable, but not both.

Keep copies of everything having to do with anything related to the transaction.

If you signed paperwork indicating that the lender can take collection action against you, but you’ve also received a 1099-C for the uncollected debt, you’ll have plenty of documented proof to show the IRS that you don’t owe taxes on that amount. Similarly, if there is nothing in your sale paperwork that gives the bank the right to collect the debt, nor is there any other reference to it, the 1099-C will serve as evidence should the bank, at some point, decide to take action against you.

They can’t have it both ways.

I’m not a tax professional. I’m not certified to give that sort of advice. But I can advise you to seek the counsel of a tax professional, so that negotiating the maze of tax ramifications that come with a short sale is made somewhat easier.

For additional information you can also download IRS Publication 4681 from the IRS website at www.IRS.gov

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2010 Census: More than Just Counting People

By Cindy O'Leary | February 15th, 2010 1 Comment

2010 Census Details:
The objective of the 2010 Census is to count all residents living in the United States on April 1, 2010. Census forms will be mailed in March and are scheduled to arrive in mailboxes between March 15-17th. Residents are asked to answer ten questions (one of the shortest in history) and return the form by April 1, 2010. Responses to the Census questionnaire are required by law.

Besides counting all residents, the 2010 Census population totals also determine which states gain or lose representation in Congress and how more than $400 billion of federal funding is spent each year on infrastructure and services like hospitals, job training centers, schools, senior centers, public works projects, and emergency services. How California will be affected by the 2010 Census will surely be an anticipated result of this survey.

All responses are confidential, by law, and cannot be shared with any other government agency such as the FBI, the IRS, welfare and immigration.

History:
The first census was taken in 1790 to determine the number of seats for each state in the House of Representatives. This census also provided a better understanding of where people lived and helped to establish settlement patterns as the nation grew. In 1902 the Census Bureau was established. Besides gathering population data every 10 years which is constitutionally mandated, the Census Bureau administers more than 200 surveys annually including the Current Population Survey and economic censuses every five years.

For more information on the 2010 Census, log onto www.2010census.gov.

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The Party Might Just Be Ending for Low Interest Rates

By Ed Gory | February 12th, 2010 0 Comments

It’s safe to say that mortgage interest rates have been at historic lows since the summer of ’09, mostly around and sometimes even under 5%.  Currently, they’ve been floating around the 5 & 1/8% range.

Part of the reason for these low rates has been because the Fed has been on a buying binge of Mortgage Backed Securities (MBS).  The Fed has been buying $1.25 trillion in mortgage-backed securities in its effort to prop up the economy, but has said it will end those purchases March 31.

As I speak fairly regularly with seasoned, well-informed, and intelligent mortgage lenders and brokers, one thing they all seem to agree on is that the expectation is that, after March 31st,  rates will head upwards, and will likely be in the 6% range.

Still pretty low, historically – but, a significant impact to the buying power of home buyers out there.

Just think about it, if you’re looking at a loan amount of say $700,000, this means that a 1% increase in interest rate translates to paying $450 MORE per month on the same loan.  Or looked at another way, a 1% increase in rate just reduced the sale price you can afford by about $80,000.

Quoting some highlights from a recent WSJ article:

What happens when it (the Fed) stops buying hundreds of billions of dollars in financial assets?

In its monetary-policy statement, the Fed said it would “gradually slow the pace of these purchases in order to promote a smooth transition in markets.” Suddenly cutting to zero, presumably, could prove too much of a jolt.

But even a gradual pullback could have big repercussions. Zero interest rates and Fed purchases — financed by printing money — have played a massive role in reviving stocks and bonds and rekindling the economy.

Mortgage rates will likely move up, as private-market buyers will charge more than the Fed for bearing the risks of holding government-backed mortgage securities. Now, the Federal Reserve has said they would consider reopening its program to support the mortgage market if interest rates spiked or the economy showed new weakness.

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Are Greener Homes a Passing Fad or Here to Stay?

By Tadas Narauskas | February 12th, 2010 0 Comments

solar home

Whether one takes climate change seriously or not, one truth stands tall for any home buyer – energy efficiency, resource conservation and healthy indoor air is becoming a must.  But with the economy still unraveling and the cloud of uncertainty hanging over our heads, a question looms… Can green homes gain traction in our fragile housing  market?

As you may be aware, Santa Clara County real estate market has been quite unpredictable.  It went from four months of inventory into less than one month of inventory in one year and no one really knows what the future holds.  Even some of the biggest market experts have been embarrassed and increasingly keep their Nostradamus like market predictions to themselves.

At the same time, for the past few years, we may have noticed a quiet revolution taking place in our hearts.  Not only we are craving to live happier, healthier and more empowered lives, we are seeking friends and atmosphere that will support that earning.  Also, with raising energy costs and ever growing health problems, many of us are looking for answers right where we sleep – our homes.

So what has kept more people from seeking out these energy efficient and often healthier homes?  Mainly – the lack of awareness and price.  We’ve been conditioned to think that everything green and organic come with an extra big price tag, and with a good reason!  However, when it comes to homes it’s not always true.

Some new home builders who have built green home developments in San Jose claim that their homes are not more expensive than their non-green certified competition. The reason being is that builders are able to buy renewable energy systems like solar panels at bulk prices and receive incentives from PG&E and the state.  In fact, smart builders can use fewer resources to build homes and save money on materials.  This effectively helps developers pass the savings to the consumer.

Now if an older home has undergone a deep retrofit and was upgraded with energy saving systems like solar panels or solar water heater, it may indeed cost a bit more than regular homes.  One must keep in mind though that here we must look at price vs. cost of ownership analysis.  What do I mean?  Well, imagine your home had a mortgage that is $100 higher than your neighbor’s but you were saving $150 in utility bills, would that be such a terrible predicament to be in?

One may say… but wait, some folks really go all out with their upgrades and “eco-chic” elements that they will never re-coup the costs.  It’s true, but it’s also true with high end upgrades that have nothing to do with energy efficiency or sustainability.

As for the future of our real estate market and green homes, my crystal ball has nothing but beautiful images.  Why?  Because energy conserving homes not only produce less pollution but also because owning one will absolutely, most definitely make perfect financial sense.

Think about it, if you had a choice whether to buy a home that is more energy efficient, healthier for your kids, and conserves resources or a home that was built to minimum standards that had high utility bills, which would you choose?  You see, once we are increasingly presented with this choice in the future, the decision will be as easy as popping a soap bubble.

Personally, I am thrilled to see more and more people considering the impact their homes have on the environment.  In addition, something very profound is taking place during this economic turmoil – we’re shaping to be smarter consumers.  We’re growing in wisdom that we must consider the true cost of owning “stuff”.  This is why greener homes will set new standards of quality and resource management in the very near future.

More on Green Homes:  http://SanJoseGreenHome.com

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Redwood City’s Edgewood Park to Open Up a New Ed Center

By Ed Gory | February 11th, 2010 0 Comments

Nestled in the Emerald Hills neighborhood, one of the gems of Redwood City is its county park, the 467-acre Edgewood Park (on Edgewood Rd & Crestview).  A beautiful place to hike, run, picnic, and get jaw-dropping vistas of the mountains and the SF Bay.

After a long-time coming, a new educational center is set to open up in the fall. More info via this article in the Merc, but here’s the highlights:

After more than a decade’s worth of fundraising and countless volunteer hours spent on planning and design, the county will break ground today on the 1,200-square-foot Bill and Jean Lane Education Center, which should be completed by next fall.

The $2.3 million center will give 100,000 annual visitors to Edgewood new insight into the park. Though it only stretches 1 square mile, tucked into a pocket of forest and grassland on the fringes of an urban area, the park boasts more than 500 different plant species and 70 resident and migratory bird species.

A hike along one of Edgewood’s many trails uncovers many different ecosystems, from oak and redwood trees to rivers and serpentine grasslands, each with its own flora and fauna.

The executive director of the San Mateo County Parks Foundation said the educational center will include interactive displays, games and even computers to give people a new perspective on everything they see.

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Intero Insider: A Delicate Balance

By Gino Blefari | February 10th, 2010 0 Comments

For the past two years or so, our nation’s economy has been floundering, doing all it could to get its head above water. The real estate industry has played — and continues to play — rather a large role in how the story pans out. But contributing to successes and failures in our own industry are untold numbers of mitigating factors, from fraudulent lending and sub-prime mortgages, to over-inflated sales prices, foreclosures, tax credits, and the some of the best sales prices in recent memory. When working together properly, these things can spur wonderful upward movement.

When something is knocked even slightly askew, however, that delicate balance can be thrown into a tailspin.

There has been great news of late, of course. Many neighborhoods across the nation have seen upticks in sales prices, many listings are, once again, seeing multiple offers, and interest rates are at astonishingly low levels.

Now, though, we are holding our collective breath, as several things that have helped spur the market along are poised to come to a halt.

First, the homebuyer tax credit. It’s been credited (no pun intended) with getting a lot of buyers into the market that wouldn’t have been otherwise. It was expanded in the Fall, but will expire this Spring.

Strike one.

Second, foreclosures. As we’ve reported already, the incidence of foreclosure continues to rise. Many homeowners in financial distress are simply making the decision to walk away from their homes, and their debts right along with them.

Strike two.

Third, we have another wrinkle. Those low interest rates that we just mentioned? They’re due in large part to Federal Reserve purchases of mortgage-backed securities. Thus far, the Fed’s purchases total almost $1.25 trillion dollars, but those purchases are due to stop near the end of March. This move will likely cause interest rates to turn upward. How much will they rise? That remains to be seen, but initial estimates have them climbing by more than a percentage point by year’s end.

Strike three.

These three factors coming together at roughly the same time could, potentially, throw the tenuous balance and modest signs of recovery we’ve seen thus far completely off kilter. The ever-changing conditions make the handling of a real estate transaction, whether for a buyer or a seller, all the more difficult. Intero’s real estate professionals stay up-to-date with the latest trends and will know which will affect you, and which won’t.

Negotiating the most important financial decisions of your life requires all of the information.  Your Intero real estate professional has that information and will help you keep things in balance.

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