Market Pulse

Waiting for a bargain? That ship may have sailed..at least for now. Low inventory levels, low days-on-market and price increases throughout the Tampa Bay region indicate that we now have a seller’s market. The combination of low interest rates, low prices and fear of missing the bottom has spurred fence-sitters to act.

We have also seen record number of real estate investors driving up prices. Both local investors and institutional investors have been bidding on single family homes. Hedge funds have been buying bank owned properties, short sales and tradition listings. In addition, bulk buyers have been scooping up foreclosed properties directly from banks and bypassing the MLS. These investors are paying cash to buy single family homes, then offering the homes for lease.

For example, we had a recent listing in Wesley Chapel that received multiple offers. One of the offers was a cash offer from a subsidiary of the Blackstone Group.  Blackstone did not require financing, appraisals or inspections. Blackstone would allow the seller to pick the closing date. They even offered to lease the home back to the sellers while the sellers were waiting for their new home to be built. How can a traditional home buyer compete with the likes of Blackstone?

Will Tampa’s real estate market recovery last? As long as we have #1) the Fed launching endless rounds ‘QE’ stimulus to drive down interest rates; #2) real estate investors on the prowl; #3) employment continuing to improve, and #4) shadow inventory that remains in the shadows, then we should stay in a seller’s market.

High mortgage default rates could still create another round of price declines.  As more bank owned foreclosures hit the market, supposely late in 2013, the tales could be turned. Check out these execlent charts from Calculated Risk that show defaults by loan type.

More REOs on the Way! See The Charts

While there are sign of a real estate market recovery, there are some causes for concern on the horizon.

Mortgage defaults continue to be high.

While we have seen fewer distressed properties for sale in the MLS, another wave of short sales and bank owned foreclosures is in our future.

Check out these Calculated Risk has some very nice charts that show defaults by loan type.

 

Buy 26% More For The Same Payment

How much impact will an interest rate change have on your next Tampa Bay home?  You can borrow 26% more for the same monthly payment if the mortgage rate is 4% rather than 6%.

Many potential Tampa Bay home buyers are still sitting on  the fence, just waiting for the right time to buy real estate.  Let’s look at how much house you can buy for a $1,000 per month mortgage payment at various mortgage rates:

Rate  Amount
3%     $236,967
4%     $209,644
5%     $186,220
6%     $166,667

How long can these low mortgage rates last? Is now the time to make your move? Contact Annette, Doug or Dale Bohannon today at 813-377-4455 to discuss the options.

 

Lacrosse in Hillsborough High Schools

High School lacrosse in as a sanctioned varsity sport Tampa set to begin in January 2014.

Lacrosse clubs and local boosters have been meeting with school board members for months to come up with a plan.  The Hillsborough County School Board has finally approved a pilot program to add lacrosse as a sport at select Tampa area public high schools.

Participating high schools may include:  Alonso, Durant, Freedom, Newsome, Plant, Robinson, Steinbrenner and Wharton, Jefferson and Tampa Bay Tech.  See the Tampa Tribune article for details.

 

Mortgage Debt Forgiveness Tax Law To Expire

Is a short sale or foreclosure in your future?

Taking a hit on your credit is bad enough, but did you know that you might pay income tax on the bank’s loss?

The Mortgage Forgiveness Debt Relief Act (HR3648) is set to expire at the end of 2012. For short sellers of their primary residences, this act provides tax relief if they close in 2012.

If you undertake a short sale, deed-in-lieu or foreclosure, then you may be taxed on the lender’s loss. If the lender must write off $100,000 for example, then you will receive a Form 1099-C at the start of the year showing that the bank forgave $100,000 of debt – which counts as income to you (see my blog post: Short Sales – Report the income & exemption).

Prior to the Mortgage Forgiveness Debt Relief Act (HR3648) in 2008, homeowners of primary residences were subject to a “Phantom Tax” whereby the amount forgiven would count as income. Since the passage of HR3648, eligible homeowners still report the canceled debt as income, but they also are granted exclusion to write off the income. The write off only applies to forgiven debt on primary residences and canceled debt up to $2,000,000. If you acquired a home equity line of credit (HELOC) after closing that was not used to improve the property, then forgiveness of that loan may be subject to tax.

Bottom line: Tampa Bay homeowners considering a short sale should act now. A short sale may take 3-10 months to complete, and you must close prior to the end of 2012. There is no guarantee that the Mortgage Forgiveness Debt Relief Act (HR3648) will be extended. Please consult a qualified tax professional for details. Below is information from the IRS web site which addresses some of the questions on this law:

 

IRS Tax Tip 2011-44, March 3, 2011

If you are a homeowner whose mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income.

Here are 10 facts the IRS wants you to know about Mortgage Debt Forgiveness.

1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.

2. The limit is $1 million for a married person filing a separate return.

3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.

4. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.

5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

6. Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.

7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.

8. Debt forgiven on second homes, rental property, business property, credit cards or car loans do not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.

9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit http://www.irs.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments.

You can also use the Interactive Tax Assistant available on the IRS website to determine if the cancellation of debt is taxable. The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions

Taxpayers may obtain copies of IRS publications and forms either by downloading them from http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Links:  IRS Form 982, IRS Form 1099-C, Publication 4681

 

10 Highest Priced Sales in New Tampa

Curious about the Luxury Home Market in New Tampa?

According to MLS sales data for 2011, the top 10 home sales in the 33647 sold for between $679,000 and $1,400,000. Of these 10 homes, 9 were traditional (equity) sales, one was a short sale, and none were bank owned. Top neighborhoods included Tampa Palms, Cory Lake Isles and Hunter’s Green.

The median home had 5 bedrooms, 4 baths, 5660 square feet and an asking price of $1,037,200. The median sale price was $889,200, or about a 12% discount off of the final asking price. The median sales price per square foot was $153. The median home was on the market for 238 days prior to going under contract. Follow these links for 33647 Home Sale Details and a 33647 Sales Comparison of these New Tampa homes.

Thinking of buying? Here is a link to the Top 20 For Sale. For a confidential consultation, contact Annette, Doug or Dale Bohannon today at 813-377-4455.

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