As I disclosed last month, I’m pleased to introduce a new column in the monthly newsletter. “Spotlight On...” will focus on our neighbors and small businesses, but per request, it will first look at tax changes affecting homeowners for its articles in February, March and April.
In May, we’ll start spotlighting a member of the community for this regular column. These are people and businesses making a difference at school, home or in the community.
Mortgage Forgiveness Debt Relief Act of 2007
This law was signed in December. Here’s a summary:
The main attribute of this law is not being taxed on losses in selling your principal residence between January 1, 2007, and December 31, 2009. If you owe more than the home sells for, typically, the bank gives you a 1099 telling you that the forgiven portion of the mortgage needs to be considered as income. If you buy, build, or improve a residence with the loan, you can exclude up to $2 million ($1 million if married filing separately) from being considered as income.
For example, assume that a taxpayer has a $500,000 loan outstanding on his principal residence, of which $80,000 is equity debt. If $100,000 of the loan amount is discharged, only $20,000 ($100,000 discharged debt — $80,000 equity debt) of the debt discharge qualifies for the exclusion under the new provision.
There are other parts of the law addressing gain on sale of a home for surviving spouses, certain income for Volunteer firefighters and EMTs, and partnerships not filing their taxes.
Source: H&R Block
Do you know someone worth Spotlighting? Please send Mr. Chang an email at changhomes@gmail.com. It can be someone with an innovative business idea or product, someone starting their own business, or someone making a difference in school, after-school, work or the community in the Santa Clarita, Antelope or San Fernando Valleys.
Sunday, February 3, 2008
Tri-Valley Housing Markets at a Glance
The following Housing Market Summaries were compiled from Southland Regional and Greater Antelope Valley Associations of REALTORS.
2007 Home Sales Down 35% in the San Fernando Valley, While Prices Post a Modest Increase
Home sales in the San Fernando Valley during 2007 declined a record 34.9 percent from the prior year, while the annual median price posted its smallest increase in many years, the Southland Regional Association of Realtors reported on Monday, Feb. 4.
A total of 6, 271 homes closed escrow compared to the 9,632 sales of 2006. The peak of the recent boom came in 2003 when Realtors completed 13,878 sales, but the record high was set in 1988 with 15,263 single-family transactions.
Annual home sales in the San Fernando Valley have been slowing since 2004.
Realtors managed and negotiated home and condominium sales during 2007 that generated $1.76 billion for buyers, sellers and the local economy.
That figure does not include the added millions of dollars home sales yield for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.
Condominium resale activity throughout the San Fernando Valley during 2007 fell for the fifth consecutive year, down 33.2 percent drop to 2,443 condo sales. However, annual condo sales have been lower – below 2,000 transactions from 1993 to 1995, including the record low of 1,607 set in 1993. The record high of 5,041 transactions was set in 2002.
The annual single-family median price came in at $611,933 – the highest on record. The increase of 1.0 percent was the lowest gain on record with each year posting slightly smaller gains since the 26.3 percent increase of 2003. This year’s annual median price beat the prior record of $605,917 set in 2006.
The annual condominium median price of $385,967 was down 2.3 percent from 2006 when the record high $394,917 annual condo median was posted. It was the first drop in the annual median since 1996. From 2000 to 2005 the annual condo median posted double-digit increases with the largest one of 28.7 percent coming in 2003.
There were 5,671 active listings throughout the San Fernando Valley at the end of December, an increase of 8.8 percent over a year ago.
At the current pace of sales, the inventory represents a 10.9-month supply – a buyers’ market, but a clear improvement from recent months when it went as high as a 16-month supply. For perspective, the record high was a 23-month supply set in February 1993. A balanced market is in the 5- to 6-month range.
December single-family sales plunged 51.6 percent compared to the prior year while condo sales were off 55.6 percent. Declines in the median price of homes and condos were 12.4 percent for homes and 16.5 percent for condos. Prices are still sticky, not dropping nearly as fast as sales would indicate they should.
2007 Home sales in the Santa Clarita Valley off 31%, annual median price falls 5.4%
2007 was the third consecutive year that sales of existing single-family homes in the Santa Clarita Valley declined while the annual median price of homes fell for the first time on record, the Southland Regional Association of Realtors reported on Monday, Feb. 4.
A total of 1,993 single-family homes changed owners last year, down 31.3 percent from the prior year. It was the lowest annual total since the association started keeping statistics in 1998. The record high of 3,869 home sales was set in 2004, the peak of the recent sellers’ boom market.
Likewise, the condominium annual tally of 841 condo sales was the lowest on record. It dropped 32.5 percent from the prior year, with three of the last four years posting sales declines after six consecutive years of typically double-digit increases in sales.
Realtors managed and negotiated home sales in the Santa Clarita Valley last year that generated $1.57 billion for buyers, sellers and the local economy. That figure does not include the added millions of dollars each sale yielded for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.
However, the market is at stalemate because sellers cling to boom market expectations and buyers incorrectly believe they can purchase a home at a dramatically reduced price. But even foreclosed properties listed for sale by lenders are not being priced with large discounts as lenders want to recoup their investment.
The annual median price of the 1,993 homes sold last year was $570,658, down 5.4 percent from the record high of $603,492 set in 2006. It was the first drop in the annual median since the association began keeping statistics in 1998.
The condominium annual median price of $353,333 was down 7.2 percent from the record high of $380,583 set in 2006. Just like single-family homes, the condo annual median posted the first decline on record. From 2001 to 2005 the condo annual median price posted double-digit gains with 2003 and 2004 at 28.3 percent and 28.7 percent respectively.
There were 2,100 active listings throughout the Santa Clarita Valley at the end of December, up 9.4 percent from a year ago, but down 10.3 percent from the November tally. At the current pace of sales, the inventory represents a 12.7-month supply – clearly a buyers’ market, but not as large as the 15.7-month supply reported in November.
Many more homes in the AV on the market; average price decreases
Currently there are 7876 homes actively listed in the Antelope Valley, according to the Greater Antelope Valley Association of REALTORS at an average price of $304,452.
This is almost double the 4783 listings noted in January at an average price of $319,860.
2007 Home Sales Down 35% in the San Fernando Valley, While Prices Post a Modest Increase
Home sales in the San Fernando Valley during 2007 declined a record 34.9 percent from the prior year, while the annual median price posted its smallest increase in many years, the Southland Regional Association of Realtors reported on Monday, Feb. 4.
A total of 6, 271 homes closed escrow compared to the 9,632 sales of 2006. The peak of the recent boom came in 2003 when Realtors completed 13,878 sales, but the record high was set in 1988 with 15,263 single-family transactions.
Annual home sales in the San Fernando Valley have been slowing since 2004.
Realtors managed and negotiated home and condominium sales during 2007 that generated $1.76 billion for buyers, sellers and the local economy.
That figure does not include the added millions of dollars home sales yield for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.
Condominium resale activity throughout the San Fernando Valley during 2007 fell for the fifth consecutive year, down 33.2 percent drop to 2,443 condo sales. However, annual condo sales have been lower – below 2,000 transactions from 1993 to 1995, including the record low of 1,607 set in 1993. The record high of 5,041 transactions was set in 2002.
The annual single-family median price came in at $611,933 – the highest on record. The increase of 1.0 percent was the lowest gain on record with each year posting slightly smaller gains since the 26.3 percent increase of 2003. This year’s annual median price beat the prior record of $605,917 set in 2006.
The annual condominium median price of $385,967 was down 2.3 percent from 2006 when the record high $394,917 annual condo median was posted. It was the first drop in the annual median since 1996. From 2000 to 2005 the annual condo median posted double-digit increases with the largest one of 28.7 percent coming in 2003.
There were 5,671 active listings throughout the San Fernando Valley at the end of December, an increase of 8.8 percent over a year ago.
At the current pace of sales, the inventory represents a 10.9-month supply – a buyers’ market, but a clear improvement from recent months when it went as high as a 16-month supply. For perspective, the record high was a 23-month supply set in February 1993. A balanced market is in the 5- to 6-month range.
December single-family sales plunged 51.6 percent compared to the prior year while condo sales were off 55.6 percent. Declines in the median price of homes and condos were 12.4 percent for homes and 16.5 percent for condos. Prices are still sticky, not dropping nearly as fast as sales would indicate they should.
2007 Home sales in the Santa Clarita Valley off 31%, annual median price falls 5.4%
2007 was the third consecutive year that sales of existing single-family homes in the Santa Clarita Valley declined while the annual median price of homes fell for the first time on record, the Southland Regional Association of Realtors reported on Monday, Feb. 4.
A total of 1,993 single-family homes changed owners last year, down 31.3 percent from the prior year. It was the lowest annual total since the association started keeping statistics in 1998. The record high of 3,869 home sales was set in 2004, the peak of the recent sellers’ boom market.
Likewise, the condominium annual tally of 841 condo sales was the lowest on record. It dropped 32.5 percent from the prior year, with three of the last four years posting sales declines after six consecutive years of typically double-digit increases in sales.
Realtors managed and negotiated home sales in the Santa Clarita Valley last year that generated $1.57 billion for buyers, sellers and the local economy. That figure does not include the added millions of dollars each sale yielded for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.
However, the market is at stalemate because sellers cling to boom market expectations and buyers incorrectly believe they can purchase a home at a dramatically reduced price. But even foreclosed properties listed for sale by lenders are not being priced with large discounts as lenders want to recoup their investment.
The annual median price of the 1,993 homes sold last year was $570,658, down 5.4 percent from the record high of $603,492 set in 2006. It was the first drop in the annual median since the association began keeping statistics in 1998.
The condominium annual median price of $353,333 was down 7.2 percent from the record high of $380,583 set in 2006. Just like single-family homes, the condo annual median posted the first decline on record. From 2001 to 2005 the condo annual median price posted double-digit gains with 2003 and 2004 at 28.3 percent and 28.7 percent respectively.
There were 2,100 active listings throughout the Santa Clarita Valley at the end of December, up 9.4 percent from a year ago, but down 10.3 percent from the November tally. At the current pace of sales, the inventory represents a 12.7-month supply – clearly a buyers’ market, but not as large as the 15.7-month supply reported in November.
Many more homes in the AV on the market; average price decreases
Currently there are 7876 homes actively listed in the Antelope Valley, according to the Greater Antelope Valley Association of REALTORS at an average price of $304,452.
This is almost double the 4783 listings noted in January at an average price of $319,860.
February Holidays
February is...
American Heart Month
American History Month
Black History Month
Children’s Dental Health Month
International Friendship Month
National Cherry Month
National Embroidery Month
National Grapefruit Month
National Snack Food Month
National Wild Bird Feeding Month
Responsible Pet Owners’ Month
February 1
National Freedom Day
February 2
Groundhog Day
February 3
Elmo’s Birthday (remember him from Sesame Street?)
February 4
Create a Vacuum Day
February 5
Super Tuesday: Primary Elections in California
Disaster Day
Mexico’s Constitution Day
National Weatherperson’s Day
Mardi Gras and Fat Tuesday
February 6
Ash Wednesday
February 7
Chinese New Year celebrates the Year of the Rat
February 8
Boy Scouts’ Day
February 9
Hershey’s Chocolate is founded
Toothache Day (makes me wonder if there’s a relationship between these 2 this day)
February 10
Umbrella Day
February 11
Clean Out Your Computer Day
Don’t Cry Over Spilled Milk Day
National Foundation Day in Japan
National Inventor’s Day, in honor of Thomas Edison’s birthday
White T-Shirt Day
February 12
Barbie Dolls go on sale for the first time (long ago)
February 13
Get a Different Name Day
February 14
Ferris Wheel Day
National Organ Donor Day
Saint Valentine’s Day
February 15
National Flag Day in Canada
National Gumdrop Day
February 16
Nylon was patented in 1937 by DuPont
February 17
Random Acts of Kindness Day
February 18
Family Day in Canada
President’s Day
February 19
Chocolate Mint Day
February 20
Hoodie Hog Day – you’re supposed to go outside to shout “Hoodie-hoo!” to scare away Winter and make way for Spring
Toothpick patented in 1872
February 21
Love Your Pet Day
February 22
Be Humble Day
World Thinking Day
February 23
International Dog Biscuit Appreciation Day
February 25
Paper Currency introduced in the U.S. in 1862
February 26
Carnival Day
February 27
No-Brainer Day
Polar Bear Day
February 28
Public Sleeping Day
National Chili Day
February 29
Leap Day
Sources: About.com and Over the Fence Newsletter
American Heart Month
American History Month
Black History Month
Children’s Dental Health Month
International Friendship Month
National Cherry Month
National Embroidery Month
National Grapefruit Month
National Snack Food Month
National Wild Bird Feeding Month
Responsible Pet Owners’ Month
February 1
National Freedom Day
February 2
Groundhog Day
February 3
Elmo’s Birthday (remember him from Sesame Street?)
February 4
Create a Vacuum Day
February 5
Super Tuesday: Primary Elections in California
Disaster Day
Mexico’s Constitution Day
National Weatherperson’s Day
Mardi Gras and Fat Tuesday
February 6
Ash Wednesday
February 7
Chinese New Year celebrates the Year of the Rat
February 8
Boy Scouts’ Day
February 9
Hershey’s Chocolate is founded
Toothache Day (makes me wonder if there’s a relationship between these 2 this day)
February 10
Umbrella Day
February 11
Clean Out Your Computer Day
Don’t Cry Over Spilled Milk Day
National Foundation Day in Japan
National Inventor’s Day, in honor of Thomas Edison’s birthday
White T-Shirt Day
February 12
Barbie Dolls go on sale for the first time (long ago)
February 13
Get a Different Name Day
February 14
Ferris Wheel Day
National Organ Donor Day
Saint Valentine’s Day
February 15
National Flag Day in Canada
National Gumdrop Day
February 16
Nylon was patented in 1937 by DuPont
February 17
Random Acts of Kindness Day
February 18
Family Day in Canada
President’s Day
February 19
Chocolate Mint Day
February 20
Hoodie Hog Day – you’re supposed to go outside to shout “Hoodie-hoo!” to scare away Winter and make way for Spring
Toothpick patented in 1872
February 21
Love Your Pet Day
February 22
Be Humble Day
World Thinking Day
February 23
International Dog Biscuit Appreciation Day
February 25
Paper Currency introduced in the U.S. in 1862
February 26
Carnival Day
February 27
No-Brainer Day
Polar Bear Day
February 28
Public Sleeping Day
National Chili Day
February 29
Leap Day
Sources: About.com and Over the Fence Newsletter
Fast Facts in California Housing, February 2008
For the latest updates on these facts, please see my weekly news blog at http://changhomesnews.blogspot.com/.
Calif. median home price - December 07: $475,460 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Mortgage rates - week ending 01/24: 30-yr. fixed: 5.48%; Fees/points: 0.4% 15-yr. fixed: 4.95%; Fees/points: 0.4% 1-yr. adjustable: 4.99%; Fees/points: 0.6% (Source: Freddie Mac)
Calif. median home price - December 07: $475,460 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Mortgage rates - week ending 01/24: 30-yr. fixed: 5.48%; Fees/points: 0.4% 15-yr. fixed: 4.95%; Fees/points: 0.4% 1-yr. adjustable: 4.99%; Fees/points: 0.6% (Source: Freddie Mac)
FAQ: What do I need to know about taxes now that I’m finally a homeowner?
First of all, congratulations on getting the home! This FAQ is for you, for homeowners who have been in a home for a little while, as well as those currently looking at their first home (to get an idea of the savings you can expect by being a homeowner!).
To make the most beneficial deductions, say goodbye to the simple 1040EZ. You’ll find most of the deductions in Schedule A, the Itemized Deductions form. Some of the big deductions include Mortgage Interest, Property Taxes, Private Mortgage Insurance (if the home is purchased after January 1, 2007) and Discount Points.
If you refinanced your home this past year, you cannot deduct these closing costs all in your taxes right now. It must be spread out over the entire life of the loan.
What you need:
* Property Tax Statement, including Supplemental Tax Statements. If you don’t have it, you can get an estimate online if the property is in Los Angeles County. Contact me for the link to the specific webpage in the Assessor’s Website.
* 1098 Statement from your mortgage lender. This shows the interest you paid the lender. You cannot multiply your monthly payments and assume that is what you put in Schedule A. You only can deduct the interest portion.
* 1099-INT Statement from your mortgage lender. You get this if you have an escrow account with your lender to pay for insurance and property taxes. This statement shows what the lender paid you for keeping your money in this separate account. Information on this screen goes to Schedule B on the Interest portion (not the Dividend portion).
* HUD-1 from your closing paperwork. This 1-2 page document lists all the fees and details for the loan in a tabular format. If you do not have this, contact me if I helped you find the home, otherwise, contact your lender.
Additional Deductions: If you have a home equity loan or line of credit, interest on such loans of up to $100,000 is deductible. It doesn’t matter how the money is used, as long as it is secured by your residence. If you moved to take a job, you may be able to deduct moving costs and relocation expenses. If you’re self-employed, you may be able to take home office deductions (be sure you measure the area you use regularly and exclusively for this!). Lastly, if you make any improvements to the home to alleviate a medical condition, like installing a handicap ramp, you may be able to deduct these under medical expenses.
What’s not deductible: homeowner’s insurance, HOA dues, additional payments, home repairs, depreciation, appraisal charges, title insurance, credit report fees, and state and local "recordation" transfer taxes (as some states call them). I read somewhere that local assessments that pay for neighborhood improvements such as Mello-Roos is NOT deductible.
Standard deductions may still be the best move for some homeowners, especially if the home was purchased towards the end of the year. Mortgage interest and other items on the Schedule A may remain less than the standard deduction. Contact your tax consultant for further details on your particular situation.
For further reading, please see IRS’ Publication 530 at http://www.irs.gov/publications/p530/index.html.
For a helpful recordkeeping chart for income and Schedule A, please contact me at changhomes@gmail.com.
Disclaimer: Mr. Chang is NOT a CPA or Tax Attorney. Any information and advice he provides are to the best of his ability and understanding, but is not guaranteed. If any topic is of importance to you in your home buying or home selling needs, please consult your attorney or CPA. If you need a referral to a qualified professional, please let Wayne know. He loves serving his community and will be happy to recommend those he has worked with.
Questions answered in this column were asked by my clients, past clients, or prospective buyers and sellers. The questions were answered when they were asked, and they were notified if the question is a candidate for the FAQ column. Questions are chosen based on interest to a wider audience, timeliness to the current market, and possibly other factors. Those whose questions are featured in this column get a gift card to their favorite store, restaurant, mall or movie theatre in the Tri-Valley area if they allow me to publish their name or initials and the city in which they live in this column. You can email your questions for a prompt response to changhomes@gmail.com.
To make the most beneficial deductions, say goodbye to the simple 1040EZ. You’ll find most of the deductions in Schedule A, the Itemized Deductions form. Some of the big deductions include Mortgage Interest, Property Taxes, Private Mortgage Insurance (if the home is purchased after January 1, 2007) and Discount Points.
If you refinanced your home this past year, you cannot deduct these closing costs all in your taxes right now. It must be spread out over the entire life of the loan.
What you need:
* Property Tax Statement, including Supplemental Tax Statements. If you don’t have it, you can get an estimate online if the property is in Los Angeles County. Contact me for the link to the specific webpage in the Assessor’s Website.
* 1098 Statement from your mortgage lender. This shows the interest you paid the lender. You cannot multiply your monthly payments and assume that is what you put in Schedule A. You only can deduct the interest portion.
* 1099-INT Statement from your mortgage lender. You get this if you have an escrow account with your lender to pay for insurance and property taxes. This statement shows what the lender paid you for keeping your money in this separate account. Information on this screen goes to Schedule B on the Interest portion (not the Dividend portion).
* HUD-1 from your closing paperwork. This 1-2 page document lists all the fees and details for the loan in a tabular format. If you do not have this, contact me if I helped you find the home, otherwise, contact your lender.
Additional Deductions: If you have a home equity loan or line of credit, interest on such loans of up to $100,000 is deductible. It doesn’t matter how the money is used, as long as it is secured by your residence. If you moved to take a job, you may be able to deduct moving costs and relocation expenses. If you’re self-employed, you may be able to take home office deductions (be sure you measure the area you use regularly and exclusively for this!). Lastly, if you make any improvements to the home to alleviate a medical condition, like installing a handicap ramp, you may be able to deduct these under medical expenses.
What’s not deductible: homeowner’s insurance, HOA dues, additional payments, home repairs, depreciation, appraisal charges, title insurance, credit report fees, and state and local "recordation" transfer taxes (as some states call them). I read somewhere that local assessments that pay for neighborhood improvements such as Mello-Roos is NOT deductible.
Standard deductions may still be the best move for some homeowners, especially if the home was purchased towards the end of the year. Mortgage interest and other items on the Schedule A may remain less than the standard deduction. Contact your tax consultant for further details on your particular situation.
For further reading, please see IRS’ Publication 530 at http://www.irs.gov/publications/p530/index.html.
For a helpful recordkeeping chart for income and Schedule A, please contact me at changhomes@gmail.com.
Disclaimer: Mr. Chang is NOT a CPA or Tax Attorney. Any information and advice he provides are to the best of his ability and understanding, but is not guaranteed. If any topic is of importance to you in your home buying or home selling needs, please consult your attorney or CPA. If you need a referral to a qualified professional, please let Wayne know. He loves serving his community and will be happy to recommend those he has worked with.
Questions answered in this column were asked by my clients, past clients, or prospective buyers and sellers. The questions were answered when they were asked, and they were notified if the question is a candidate for the FAQ column. Questions are chosen based on interest to a wider audience, timeliness to the current market, and possibly other factors. Those whose questions are featured in this column get a gift card to their favorite store, restaurant, mall or movie theatre in the Tri-Valley area if they allow me to publish their name or initials and the city in which they live in this column. You can email your questions for a prompt response to changhomes@gmail.com.
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