Don’t believe rumors about ‘transfer tax’

Realtors across the area are being bombarded by e-mails and phone calls about the transfer tax for real estate sales that is supposedly included in the national health care bill, also known as Obamacare. There is no transfer tax in the bill.

The most recent e-mail cites the National Association of Realtors (NAR) as the source, and states the NAR is upset about the bill. The misinformation has been so widely misreported that NAR has included the factual account on its website.

“The 3.8% Tax is NOT a Tax on Real Estate Sales,” the NAR states. “The 3.8% tax is imposed ONLY on those with more than $200,000 Adjusted Gross Income (AGI) ($250,000 on a joint return).”

The erroneous information states any person selling a house for $100,000 would pay a tax of $3,800. NOT true.

The NAR site includes an example: If John and Mary sold their house and realized a gain of $525,000 – a gain, or profit, of $525,000 – and they had an adjusted gross income of $325,000, they would pay a $950 tax.

To clarify, if John and Mary bought a house for $1,000,000 and sold it for $1,650,000 and had $125,000 in closing costs, they would net $525,000 profit on the transaction. According to NAR, if they had an AGI of over $250,000, they would be taxed $950.

To recap, the sellers must have AGIs of over $200,000 for single persons or $250,000 if they file jointly for the tax to apply to them. If that income is not met, there is no tax. There must be profit made on the house. If there is no profit, there is no tax. The profit is taxed, not the sales price. Now you know the facts. Do with them as you may.

Area Sales

Residential real estate sales continued their torrid pace through July as units sold eclipsed sales for July 2011 by 27.4 percent. Of significance is that 2011 marked the first time in four years that the area had experienced increased sales compared to the prior year.

For the year, there have been 14,568 closings for an increase of 25 percent over 2011. And in 2010, there were only 20,250 for the entire year. With 2,648 pending sales in 2012, the prospects are promising that this trend will continue.

Last year there were 1,997 pending sales in July, indicating August sales might reflect increases of more than 30 percent.

And prices are climbing, with the median price for a single-family residence hitting $181,250, compared to $179,900 a year ago. To add perspective, the median price in 2006 – when real estate hit record highs – was $180,000.

While real estate is trending up on the national level, there are few, if any, markets that have rebounded as well as the Nashville area.

Sales of the Week

Two of those August pending sales closed last week in Lockeland Springs in East Nashville, both selling for more than $400,000.

The first sale is a property listed by Cindy Evans, the queen of East Nashville real estate, and located at 1305 Ordway Place. This residence has 2601 square feet and fetched a sales price of $419,900 on its first day on the market. The buyer paid the list price, but received $6,500 in closing costs from the seller. The price reflects a price per square foot of $160.13.

The house had been renovated four years ago and has 12 foot ceilings, a gourmet kitchen, two fireplaces, and according Ms. Evans, “decorative mullions.” A nice mullion will bring a high price. The house was originally built in 1900 and includes a music room and pocket doors.

Mindy Hill of Crye-Leike Real Estate listed 1618 Russell Street, and Tyler Allen Rygmyr represented the buyer, who paid $159.50 per square foot for this 3,086-square-foot home built in 1915. One improvement made by the seller was the installation of a $17,000 storm cellar. While the term “storm cellar” has become a synonym for a basement, this storm cellar is to be taken quite literally.

Homebuyers apparently are more concerned than ever with tornados, resulting in more houses with true storm cellars. In listings of $1 million or more, these are known as lower-level safe rooms.

So Lockeland Springs is safe, houses are selling and there is no transfer tax. Times are good.

Richard Courtney is a real estate broker with French, Christianson, Patterson, and Associates and the co-author of Come Together: The Business Wisdom of the Beatles. He can be reached at Richard@ricahrdcourtney.com.

Grant to fund research for Portland-Auburn rail

Tony Donovan, president of the Maine Rail Transit Coalition, tells the Bangor Daily News ( http://bit.ly/OAgVpG) that the $15,000 grant is small but represents a “game changer” because it builds momentum.

Real Estate Economist Optimistic About Charleston Market


(Source: David Slade The Post and Courier, Charleston, S.C. (MCT) — The Charleston residential real estate market has been steadily improving since the fall of 2011, and the chief economist for the National Association of Realtors said it looks like a “very sustainable” recovery.

“I feel great about the second half of 2012, going into 2013,” said Lawrence Yun, who addressed a sold-out crowd of area real estate professionals Wednesday at the Charleston Trident Association of Realtors’ midyear market update.

“It could be a sustained recovery over the next five years,” he said.

In Berkeley, Charleston and Dorchester counties, home sales have been increasing this year, at a time when the inventory of homes for sale has fallen sharply. Prices also have started rising, after falling for five years.

Statistics released by the local association show that the Charleston area saw a ninth consecutive month of rising home sales in July, with Charleston County accounting for most of the three-county region’s 10 percent gain in home sales.

A combination of depressed home prices and record-low mortgage interest rates have made homes more affordable than ever, but tighter bank lending standards have made it harder for people to qualify for loans, Yun said.

“Statistically, there has never been a better time to buy,” he said, acknowledging that agents tend to say it’s a good time to buy just about all the time.

A measure of national home builder confidence tracked by the National Association of Home Builders/Wells Fargo builder sentiment index hit a five-year high Monday, and the stock market value of home builders has soared since last fall.

Home sales nationally fell sharply from 7.08 million in 2005 to 4.12 million in 2008, and hovered around that level through 2011, when 4.26 million were sold, according to Yun.

“In 2012 it looks like it is finally going to break out,” he said.

Sales to owner-occupants continued to fall through 2011, but investor purchases have increased, feeding the demand for rental housing, Yun said.

He said he thinks pent-up demand — all the young adults living in their parents’ homes or sharing apartments with roommates — is “like a coiled snake” that will spur the market in the coming years.



Typically, more than 1 million new households are formed each year, but that number fell sharply during the recession, according to Yun, representing lots of people who could soon want homes of their own.

Yun said the number of homes for sale nationally sits at a six-year low, and the number of new homes is at a 50-year low. The reduced number of homes for sale should support prices, he said.

Sheryl Hill, sales manager for Weichert Realtors Palmetto Coast in Mount Pleasant, said she found Yun’s forecast reassuring.

“I feel especially positive after hearing him,” she said.

Hill said that Yun’s ideas about pent-up demand rang true as well.

“Just about everyone I know has someone living at home,” she said.

Reach David Slade at 937-5552 or Twitter @DSladeNews.

———

©2012 The Post and Courier (Charleston, S.C.)

Visit The Post and Courier (Charleston, S.C.) at www.postandcourier.com

Distributed by MCT Information Services

Source: David Slade The Post and Courier, Charleston, S.C. (MCT)


Business events scheduled for the coming week

TUESDAY, Aug. 21

WASHINGTON — Federal Reserve releases minutes from its July interest-rate meeting.

WEDNESDAY, Aug. 22

WASHINGTON — National Association of Realtors releases existing home sales for July, 10 a.m.

THURSDAY, Aug. 23

WASHINGTON — Labor Department releases weekly jobless claims, 8:30 a.m.; Freddie Mac, the mortgage company, releases weekly mortgage rates, 10 a.m.; Commerce Department releases new home sales for July, 10 a.m.

FRIDAY, Aug. 24

WASHINGTON — Commerce Department releases durable goods for July, 8:30 a.m.

Charlotte Realtors promote North Carolina to DNC visitors

The Charlotte Regional Realtor Association will run a billboard campaign targeting DNC visitors starting Aug. 20.








Susan Stabley
Staff Writer- Charlotte Business Journal

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The state and local Realtor associations want to help Democratic National Convention visitors settle down in North Carolina on a permanent basis.

An advertising campaign will run on 10 digital billboards in Mecklenburg, Gaston, Cabarrus, Catawba and Union counties starting Aug. 20.

The billboards will say:

Welcome to North Carolina

Want to call North Carolina Home?

Let a Realtor guide you

The billboards are funded through grants given to the Charlotte Regional Realtor Association and the North Carolina Association of Realtors by the National Association of Realtors.

“We all know Charlotte, North Carolina, is a great place to live, and soon delegates, media and visitors from all over the U.S. will find that out,” says Jennifer Frontera, president of the local association. “Even if visitors to this area don’t come back and call Charlotte home, we want to make sure they remember the Realtors welcomed them to our great city.”

Susan Stabley covers growth, the environment and residential real estate for the Charlotte Business Journal.

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Brian McGovern joins Coldwell Banker

Coldwell Banker Residential Brokerage

Brian McGovern

Coldwell Banker Residential Brokerage in New Jersey and Rockland County, N.Y. is pleased to welcome sales associate Brian McGovern to its Wyckoff office. McGovern serves homebuyers and sellers throughout Bergen and Passaic counties.

McGovern has chosen a career in real estate after extensive experience in law enforcement serving Bergen County for 14 years. “Brian’s negotiation skills as a police officer, as well as his extensive knowledge of the local community, make him a valuable asset to the Coldwell Banker Residential Brokerage family,” said Darlene Bandazian, branch vice president of the Coldwell Banker Residential Brokerage office in Wyckoff. “We welcome Brian to the team and look forward to helping him build his book of business.”

McGovern is a member of the New Jersey and Garden State Multiple Listing Services, the Real Source Association of Realtors, the New Jersey Association of Realtors and the National Association of Realtors. He earned a master’s degree in public administration from Rutgers University, and a Bachelor of Arts degree in history and English, and a secondary education certification from William Paterson University. He is a lifelong resident of Bergen County and is a member of St. Elizabeth’s Church in Wyckoff.

For more information about buying or selling a home, contact Brian McGovern with Coldwell Banker Residential Brokerage in Wyckoff at 201-891-6700 or directly on his cell at 201-803-4145. The office is located at 372 Franklin Ave. in Wyckoff. Listings can be viewed at www.coldwellbankermoves.com/Wyckoff.

Coldwell Banker Residential Brokerage in New Jersey and Rockland County, a leading residential real estate brokerage company, operates 58 offices with more than 3,000 sales associates serving all communities from Rockland County to Monmouth County. Coldwell Banker Residential Brokerage in New Jersey and Rockland County is part of NRT LLC, the nation’s largest residential real estate brokerage company. Visit www.coldwellbankermoves.com for more information.

Lake Gaston Real Estate Market Update

We continue to hear positive news about the housing market across America.

A recent article in the Wall Street Journal stated in certain markets housing prices are on the rise. In many markets foreclosures have slowed, which helps create slightly higher prices. Sold foreclosures reduce the amount of inventory on the market.

Interest rates remaining at record low levels are also helping the housing market gain momentum.

The National Association of Realtors reports new housing starts are on the rise. The homebuilder index (XHB) shows a gain of 25.94 percent YTD and other homebuilder stocks have nice year-to-date gains as well.

The Consumer Confidence Index increased to 65.9 in July from 62.7 in June. These levels are well below the 90.0 level that indicates a healthy economy. The index fell to a record low of 25.3 in February 2009.

Most consumers have a better view of the job market as well, maybe not immediate but within six months. U.S. Consumer spending remains flat while income levels increased slightly.

In July of 2012 there were 21 properties in the Lake Gaston area closed for a total of $6,284,950. In July of 2011 there were 20 properties closed for a total of $7,894,000.

The first seven months of 2012 we have experienced a total of 154 closed transactions totaling $41,010,200 as compared to 118 transactions in the same period of 2011 totaling $38,214,000, or up 7.3 percent. Leading in sales are waterfront homes with 80 sold for a total of $30,526,675 in 2012. The first seven months of 2011, we saw 65 waterfront homes sold for a total of $33,075,250.

The average selling price of a waterfront home on Lake Gaston in the first seven months of 2012 was $381,583 as compared to $508,850 in 2011 and $462,394 in 2010. We have seen buyers purchase lower priced waterfront properties in need of repair and/or major remodel. Another factor in the decrease of the average selling price is the difficulty in some cases to obtain financing. Lenders are very cautious in processing mortgage loans.

Currently the lake area inventory of waterfront homes is on the decline. Buyers continue to search for value in properties, not necessarily bargains but the most value available for the amount they have to spend.

Most buyers begin their search for Lake Gaston property on the internet before they decide on a realtor. Buyers have more tools available, such as county websites, mapping sites, educational blogs and MLS sites, than ever before. A property listing must hold the buyer’s attention or it loses out.

Mostly, when a buyer finds a property they like, they will begin to research that property. They easily find the assessed value, date bought and purchase price. They can go to sites such as Google Earth to check out the neighborhood. Zillow, a real estate website, offers clients a “Zestimate” on the property. Other real estate websites offer similar features.

Sometimes buyers have a predetermined value of various lake properties. An experienced, educated realtor can bring them up-to-date on the current market conditions.

When selling, setting the price correctly in the beginning is vital. The National Association of Realtors and local market statistics have confirmed an interesting trend — homes that have price reductions take three times longer to sell and normally bring less than market price.

Buyers are not looking at overpriced listings. What’s the only reason a property does not sell? The answer is Price. Incorrect pricing equals a longer marketing time. A longer marketing time equals less money in your pocket.

So far, 2012 is shaping up to be a fantastic year in real estate at Lake Gaston. We are excited about our future.

Barney Watson, of RE/MAX On The Lake, can be reached at (252) 532-3274 or at www.barneywatson.com.

Realtors: Home Prices Rise in Second Quarter

Median existing single-family home prices rose during the second quarter, but a lack of inventory is limiting buyer choices in certain markets, according to the National Association of Realtors.

The national median existing single-family home price reached $181,500 in the second quarter, up 7.3 percent from $169,100 in the second quarter of 2011. It was the strongest year-over-year increase since the first quarter of 2006, when the median price rose 9.4 percent. Still, even with the gain the current price is 20.1 percent below the record set in 2006.

The median price rose in 110 of 147 metro areas; three were unchanged and 34 saw price declines. In the first quarter of 2012 there were 74 areas showing price gains from a year earlier, while in the second quarter of 2011 only 41 metros were up.

“It’s most encouraging to see a growing number of metro areas with rising median prices, which is improving the equity position of existing homeowners,” said Lawrence Yun, NAR’s chief economist. “Inventory has been trending down and home builders are still under-producing in relation to growing demand,” he said. “Some of the improvement in prices is due to a smaller share of sales in low price ranges where inventory is tight.”

Total existing-home sales, including single-family and condo sales, slipped 0.7 percent to a seasonally adjusted annual rate of 4.54 million in the second quarter from 4.57 million in the first quarter, but were 8.6 percent above the 4.18 million pace during the second quarter of 2011. At the end of the second quarter, there were 2.39 million existing homes available for sale, which is 24.4 percent below the close of the second quarter of 2011, when there were 3.16 million homes on the market.

“What we need now is additional inventory in the lower price ranges, so we hope banks will be releasing more foreclosure inventory into the market,” said NAR President Moe Veissi. “With gains apparent in all of the price measures, banks also should have more confidence in expanding mortgage credit to home buyers using safe but sensible standards.”

Regionally, existing-home sales in the Northeast slipped 0.6 percent in the second quarter; in the Midwest, sales rose 1.3 percent; sales in the South increased 1.3 percent; and sales in the West fell 5.3 percent.

Home sweet homes

You never know what goes on behind closed doors but it’s probably not much in some luxury locales because the owners are not home.

Based on the tales of real estate professionals and financial planners, multiple home ownership is becoming more common as the wealthy spread out beyond just owning a cottage to having a U.S. address or even some European digs.

Statistics are hard to come by but if the latest numbers from the National Association of Realtors are any indication, foreign buyers are having an impact in the United States. Increasingly those buyers are Canadian.

The Washington-based group said international buyers purchased US$82.5-billion worth of property in the U.S. for the year ending March 31, 2012, compared to US$66-billion a year earlier. Canadians represent about a quarter of those buyers.

If you are looking at diversifying into real estate, why not just buy some income property?

Considering it’s impossible to be in more than one place at the same time, unless you’re renting property you’ve got real estate sitting empty. Is that really a sound investment decision or just one of the luxuries that comes with being wealthy?

Author Talbot Stevens questions the wisdom of owning property that is going to sit mostly vacant and says, “No matter what income you are, if you are only using something 10% or 20% of the time,� it doesn’t make financial sense.

“If you are looking at diversifying into real estate, why not just buy some income property?� Mr. Stevens. “These are people that can stay at the Four Seasons anyway.�

As he puts it, what is the point of having a French home for two months, complete with all the costs?

“The same logic applies to a cottage if you are only going to use it three or four weeks a year. It becomes very expensive. Even those who are mega-wealthy have to ask, ‘What is the most effective use of your money?’ � Mr. Stevens says. “The bigger challenge might be people who do this and can’t even afford it.�

He says so much of this multiple ownership is for ego’s sake. “People just want to say ‘my house in the south of France.’ To be honest, I have more respect for people who are truly wealthy and don’t need to let anyone know.�

Toronto condominium developer Brad Lamb, one of those multiple home owners, says having another address is a convenience many are willing to pay for and it’s not an entirely new concept.

“What’s the difference between owning a condo in New York for $800,000 or a cottage on a lake, it depends on what your thing is,� he says. “You get wealthy investors who have a pied-à-terre. I own a condo in New York City and a condo in Miami. I go to New York probably 12 times a year and Miami six times or eight times a year. I bought them to have an address in the city but also bought at the bottom of the market when they were giving away real estate.�

Mr. Lamb says the idea of having a place to call home in another city is probably at least partially behind the Canadian housing boom as foreign investors pour into luxury condominiums.

He agrees it is a luxury to have a place to call his own when he comes to town. “I have ample room. You can cook your own food, have your own clothes,� Mr. Lamb says.

He says Toronto, at least partially, has become home to that investor/homeowner.

“There is that element to it,� says Mr. Lamb, estimating it equates to 10% to 15% of the condo market. “The building I live in, one of the sub-penthouses was sold to a wealthy South American family that uses it when they are in Toronto. The rest of the time their daughter [in school in Toronto] uses it.�

Multiple ownership usually starts with a cottage but the U.S. is fast becoming a popular place to hold a third property, says Prashant Patel, vice-president of high-net-worth planning services at RBC Wealth Management.

“That’s probably one of the main issues our team deals with quite a bit, all the tax and financial planning issues of owning U.S. real estate,� says Mr. Patel, adding even if you don’t have an income-producing property, you need to think about tax and legal implications.

He says some clients may have roots in other countries, having immigrated to Canada, so it’s not uncommon for them to own property in their native country.

“When we have clients saying, ‘I’m thinking about buying a cottage or a property in the U.S.,’ we say, ‘Let’s step back and make sure it does not impact your future retirement or lifestyle’, � says Mr. Patel, adding most of the purchases south of the border are for personal use and lifestyle.

“We typically recommend them doing a financial plan to see what the impact would be if they buy that cottage or property and how it affects their cash flow, particularly if it’s not an income property and it’s a personal-use property.�

The good news for those buying is an industry has sprung up to support multiple home ownership, says Kimberley Marr, author of How To Buy U.S. Real Estate.

“The big one is Canada-U.S. but there is a growing trend of Boomers purchasing abroad, especially in Europe,� said Ms. Marr, pointing to the steep drop in the euro, as well the decline in property prices, as fuelling demand among Canadians for homes in places like Spain, Portugal and France.

She says a wealthy owner might have $5-million to $10-million in real estate, about 10% to 20% of their net worth.

She’s a member of International Real Estate Society, which is an alliance of real estate professionals around the globe.

“Say I have a property of a Canadian in Toronto, it’s higher-end. The buyer could be someone from Toronto but it could be someone from France, Germany, Hong Kong,� Ms. Marr says. “Through the network, they market [property]. Someone in Paris might market their property in Toronto.�

She says clients might be in some of their “homes� for one month a year while the rest of the time the unit is rented out for income. “In the higher end, you’re generally dealing with professionals renting it out on your behalf,� says Ms. Marr, adding the property manager gets a fee but it includes services like a concierge to take care of clients. “When you get to a place like Paris, there is someone there to greet you, walk you through the apartment, give you the keys. The renter has someone to contact, if they need to.�

It may sound a bit like a timeshare but the difference is these people are in full control of their property, leaving them with all the profit from price appreciation and potentially all of the losses.

“You have all the control but also all the responsibility and the liability,� Ms. Marr says.

Pending home sales slip in June

California pending home sales dipped in June but were still higher than the previous year for the 14th straight month, according to the latest California Association of Realtors report. A National Association of Realtors report indicates nationwide pending home sales declined in June as well. Officials say the low inventory is slowing home sales and could cause more problems later on.

The state group’s Pending Home Sales Index dropped 3.8 percent from a revised 126.1 in May to 121.4 in June, but pending sales were up 4.7 percent from the 115.9 index recorded in June 2011. June marked the 14th consecutive month that pending sales were higher than the previous year.

Low inventory appears to be dragging sales. “Pending sales declined in June, partly due to a lack of housing supply, especially in REO properties,” said state association president LeFrancis Arnold.

The national association reports although nationwide pending sales fell in June, pending home sales still remain above a year ago. The nationwide Pending Home Sales Index slipped 1.4 percent to 99.3 in June from a downwardly revised 100.7 in May but is 9.5 percent higher than June 2011 when it was 90.7.

Lawrence Yun, chief economist for the national trade association, also said inventory shortages are a factor in the nationwide decline in pending sales. “Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities,” Yun said. “We’ve been seeing

a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.”

Yun said there also have been delays in the closing process. “With record-low mortgage interest rates, there has been a surge of refinancing on top of a higher level of home purchases, which has been creating delays recently in the closing process,” he said.

According to the MLS Listings, Santa Clara County’s June inventory of 2,589 homes single-family homes dropped 38 percent from last year. The county’s June inventory was down 57.4 percent from 6,071 homes on inventory in June 2008.

There is worry that the housing shortage could cause problems in the future. “Inventory is important for housing market growth, and though our members report that inventory has improved in the last few months, it is still very low by normal standards,” said Suzanne Yost, president of the Silicon Valley Association Realtors.

A seven-month housing supply is considered normal for California. The state’s June housing inventory is at 3½ months and Santa Clara County inventory at two months.

“Any bank-owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand,” according to Yun. “Housing starts will likely need to double over the next two years to satisfy the pent-up demand for both rentals and ownership.”

Information in this column is presented by the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to rmeily@silvar.org.