Hi Neighbors,

Some of my home buyers have used this energy credit.  Often the tax credit can be used along with other rebates offered by PG&E and SMUD.

Here's an article published by RISMEDIA with more details:

As the weather turns chilly in many parts of the country, homeowners are looking at improvements to help them keep their energy costs down-and the government can help with part of the bill. 

Upgrade your insulation, windows, doors, roofing, heating and air-conditioning system or water heater, and you could qualify for a federal tax credit for 30% of the purchase price of the product-up to a $1,500 maximum credit. The credits can be claimed on a homeowner's income taxes for 2009 or 2010, whatever year the improvements were purchased. With a credit, the amount comes off any taxes you owe. The credit is nonrefundable, meaning it allows taxpayers to lower their tax liability to zero, but not below zero, according to the Internal Revenue Service. 

"It's a good time to be thinking about this," said Ronnie Kweller, spokeswoman for the Alliance to Save Energy. The alliance notes that a more energy-efficient home, along with the lower fuel costs and the mild weather expected for this winter, should make for lower heating bills a blessing for many cash-strapped consumers. 

To qualify for the credit, you must place those purchases in service between January 1, 2009 and December 31, 2010. "The $1,500 cap applies to the aggregate amount of credits claimed in both years combined," said Robin Christian, senior tax analyst at the tax and accounting business of Thomson Reuters. "Also, only improvements made to your principal residence qualify-vacation homes are not considered." 

Typically, for more costly improvements-including solar water heaters, solar panels, small wind-energy systems and geo-thermal heat pumps-the credit is for 30% of the purchase price, with no cap, according to the Energy Star website. Fuel cells also are covered, at 30% of the cost, up to $500 per 0.5 kilowatt of power capacity. Credits for these improvements are available through 2016, but you must claim them for the tax year in which you made the purchase. And all but the fuel-cell equipment can be used for a vacation home as well. To qualify for the credits, all of the products must be used inside a home. That means equipment used to heat a pool or hot tub doesn't qualify, Christian says. 

Also, the federal tax credits don't always cover the cost of installation. The installation costs for heating and cooling systems and some other higher-cost improvements qualify, according to the Energy Star site. But installation of windows, insulation, doors and roofs doesn't. The tax-credit rules are different if you are building a new home. In this instance, you can qualify for the credit for some upgrades, including geo-thermal heat pumps, solar panels, solar water heaters, small wind-energy systems and fuel cells. But you won't get a tax credit for the purchase of windows, doors, insulation, roofs, heating and air-conditioning systems, and nonsolar water heaters, according to the Energy Star site. 

Make sure any products you purchase come with a Manufacturer Certification Statement, a signed statement from the manufacturer that says the product qualifies for the tax credit. You will need that and any receipts when you claim the credit on your taxes. Monica Rebella, a certified public accountant in Tustin, Calif., suggests making a copy of receipts since the print can wear off over time. 

When looking to make a home more energy efficient, consumers typically first turn to insulation and windows. "If you need insulation, that is the most cost-effective upgrade you can make-even without a tax credit," said Karen Schneider, website manager for Energy Star. "If you have a 50-year-old home and never looked at the insulation, now is the time to do that." Many insulation projects, such as upgrading or adding insulation in an attic, are easy for do-it-yourselfers, said Michael Chenard, director of environmental affairs for home-improvement store Lowe's. "Insulation is one of the easiest things to do that is covered by the tax-credit promotion," he says. Replacing windows also can be done by amateurs, as long as the measurements are accurate, Chenard said. 

The federal tax credit doesn't cover the cost of installation, says Art Donnelly, of Legacy Builders & Remodelers Corp., on Long Island, N.Y. Still, the credit makes the cost of a more efficient window competitive with a lower-grade window that doesn't qualify, Donnelly says. And because of the weak economy, it's also easier to pick up the phone and get an appointment for a window installation today, he adds. 

Jeff

http://EnglePropertiesOnline.com

NAR reports that REO Buyers can now select their Escrow and Title companies.  Here is the text of the

REO Buyer Can Select Escrow and Title: Effective October 11, 2009, the Buyer's Choice Act prohibits an REO lender selling residential property up to four units from directly or indirectly requiring the buyer to purchase escrow services or title insurance from any particular company.  A buyer, however, who has received written notice of the right to make an independent selection, may agree to the REO lender's escrow or title recommendations.  An REO lender that violates this law can be held liable for three times the charges the buyer incurred, whereas a violation by the seller's agent may be subject to license disciplinary action.  This law expires on January 1, 2015.  Assembly Bill 957.

Jeff
http://www.EnglePropertiesOnline.com

 

Hi Neighbors,

As mentioned in a blog article from a couple of months ago, be ready for potential extensions in escrows due to changes in financing regulation.

But... don't just take our word for it, take a look at what the California Association of Realtors (CAR) just published.

THANK YOU CAR!

NEW LOAN DISCLOSURE RULES MAY POTENTIALLY AFFECT CLOSE OF ESCROW

Starting July 30, 2009, if the APR on an initial Good Faith Estimate is no longer accurate (within a 0.125% range) at close of escrow, a lender must generally provide a residential borrower with a new disclosure and a three-day right to rescind before consummating the loan. REALTORS® are forewarned that, because of this new three-day waiting period, a lender's failure to timely provide corrected disclosures has the potential of delaying funding of the loan and close of escrow.

This new requirement is part of the Mortgage Disclosure Improvement Act (MDIA) implementing new loan procedures to protect borrowers and foster greater transparency in mortgage lending. For loan applications submitted on or after July 30, 2009, the new MDIA changes to the Truth in Lending Act are generally as follows:

Applicability: The new MDIA rules pertain to federally-related mortgage loans covered under RESPA and secured by a consumer's dwelling. The rules apply to both purchase and refinance loans.

Early Disclosures: A lender must provide a borrower with an initial Good Faith Estimate within three business days of receiving the borrower's written loan application as specified. For this provision, a "business day" is generally defined as a day on which the lender's offices are open for business.

Upfront Fees Restriction: Neither a lender nor any other person may impose an upfront fee on the borrower (except for credit report) until the borrower has received the early disclosures in person or, if mailed, three business days after the early disclosures are mailed. For this rule, a "business day" is defined as all calendar days except Sundays and legal public holidays as specified.

Seven-Day Waiting Period: A lender must wait seven business days after providing the early disclosures before consummating the loan. For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified. A borrower may waive the waiting period in writing in case of personal financial emergency, such as an imminent foreclosure sale.

Re-disclosure Requirement: If the final Annual Percentage Rate (APR) at loan consummation varies more than 0.125% (or 1/8 of one percent) from the initial APR on the early disclosures of a regular transaction, the lender must provide the borrower with a corrected disclosure at least three business days before the loan is consummated. For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified.

Three-Day Waiting Period: For corrected disclosures, a lender cannot consummate a loan until three business days after the borrower receives the corrected disclosure in person. If the corrected disclosure is mailed, the borrower is deemed to have received it three business days after it is placed in the mail. A borrower may waive this waiting period in writing in case of a bona fide personal financial emergency, such as an imminent foreclosure sale.

Source: The new MDIA rules and regulations are set forth at 74 Federal Register 23,289 (May 19, 2009) (to be codified at 12 CFR 226) available at http://www.federalreserve.gov/reportforms/formsreview/RegZ_20090519_ffr.pdf.

Again, our sincere thanks to CAR for this content.

Hi Neighbors,

I've written about this before, but I think it is especially true for the Sacramento region.  Now is the time to buy.  Historically if you look at home values increasing over time, home prices have kept pace with inflation over the long run.  With our current adjustment, the Sacramento - Placer - El Dorado counties are now actually below the long range trend.  That indicates to me that not only will this region be among the first to recover, but will some modest appreciation.  Of course the big caveat is the overall economy.   You have to have jobs in order to have a decent economy.

Another thing to keep in mind from an investment point of view, your home values increase based on the purchase price of the home.  So if your home is purchased for $100,000 and it increases 2% your HOME is now worth $102,000.  But let's say you bought the home with 30% down.  You have actually increased your $30,000 investment by $2,000.  That's a 6 2/3% increase in your home equity.  If your put down 3.5% FHA your increase based on investment is even greater.

The important thing to remember is that home ownership should make sense for you, and when you factor in all of the benefits and costs involved typically your ahead of the game when you buy a home.  Some of those benefits may be intangible - like being able to have your children go to the schools you want them to, being able to have a home that fits your lifestyle, etc.

Here's a great quip from the NAR bulletin on this very topic:

The American dream of homeownership is still a good bet, financial advisors say firmly.

Despite the downturn in the last couple of years, homes have still appreciated an average of 4 percent a year since World War II. Plus, it's a leveraged investment; a 10 percent down payment yields a 1,000 percent return if the price of the home doubles.

There are also valuable intangibles. Owning a home provides independence, security, community, and a roof over the owner's head. No one can say that about investing in stock.

Source: Associated Press, Dave Carpenter (10/12/2009)

 Jeff
http://www.EnglePropertiesOnline.com

Hi Neighbors,

I'd like to share two links to home buying calculators reported from Business Week via the National Association of Realtors.

There are a number of free tools to help potential home buyers decide how much home they can afford to buy.

One of the best calculators is offered by the National Association of REALTORS®. It is simple to use and includes all the important criteria, says BusinessWeek columnist Marc Roth, founder and president of Home Warranty of America. If that doesn't work, Roth also recommends the real estate-related calculators offered by Michael Bluejay.

Source: BusinessWeek.com, Marc Roth (10/09/2009)

Happy Columbus Day

Jeff
http://www.englepropertiesonline.com

 

Hi Neighbors,

Leslie Appleton-Young, California Association of Realtor's Chief Economist released the 2010 California Real Estate Market Forecast.  In that:

The median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to C.A.R.'s "2010 California Housing Market Forecast," presented today at CALIFORNIA REALTOR® EXPO 2009 in San Jose. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009

The report has some regional data in it.  For example the peak of the housing market for the Sacramento Region was August 2005 where the median priced home was valued at $394,450.  August shows that median price to be $192,050 or down 51%.

NOTE:  Real estate is a neighborhood market.  For example, the report shows that Concord's median price was down 16% Year-To-Year while neighboring Walnut Creek saw 13% decline.  Placer County has a whole for example has not been hit as hard as Sacramento County as a whole.  But when you look at it neighborhood by neighborhood great variations exist.

Another interesting note is that for California almost 20% of the sales were All Cash, up from 8% in 1998.  My first time home buyers sure saw this action in the under $250,000 homes!  Competition has been fierce. 

 

 

 

Hi Neighbors.  Last weekend I was out with one of my buyers looking at new homes.  One thing we noticed was a lack of 'incentives'.  This is in line with this article published in thw Wall Street Journal:

Home builders are cutting back on the freebies they've been tacking on new homes for the last couple of years to woo buyers.

The reason is simple: Demand is almost back in sync with supply. According to Jeffrey Laverty, analyst with research firm Oscar Gruss & Son, new-home inventory has declined from 12.4 months in January to 7.3 in August, close to the six-month mark considered standard.

While eliminating incentives like free cars and free pools, some builders are continuing to offer to pay points on mortgages and discounts on upgrades-"Incentives that make sense," says Laura VanVelthoven, Hovnanian's corporate vice president of marketing and sales.

Source: The Wall Street Journal, Dawn Wotapka (10/05/2009)

There are still incentives, just not as much as there was a few months ago.  As one salesman told me about the Pulte homes selling in Roseville is that they have kept their prices in line with demand and have not needed extra incentives.  Good point!  Check out the bottom line of what features you are getting and the total price for the product when you do your comparison shopping (often times not that easy with new homes).

Jeff
Neighborly Realty
http://www.EnglePropertiesOnline.com

 

Hi Neighbors,

John Graham of Neighborly Financial has been gone the past several days helping a search and rescue effort in a nearby county.

From John:

I went to help search for the missing deer hunter in Calaveras County, last Wednesday. We spent all day looking for the subject. We were able to track his footsteps from the truck for about 7 miles, step by step, until darkness forced us to retreat for the night. Attached is a photo of the footprint we were following during the Calaveras County search. As of Friday, his location is still unknown. I have no details on the outcome, other than he is alive.

I am a member of the Placer County Sherriff's Search and Rescue team. We are recognized as one of the largest and better trained teams in the state, and therefore we get called out to assist with searches in many other counties. We assist with both backcountry and urban searches, for missing hikers, hunters, motorcycle riders, children and Alzheimer's patients. We also assist the Sherriff with evidence searches for criminal cases. We get called out about once or twice a month. Volunteers spend many hours training and in the field on searches. We all serve as ground searchers, willing to hike in any conditions and any terrain, but also we are divided into teams with specialties in 4WD, radio communications, motorcycles, mountain rescue, horses, and canine search, to name a few.

NICE work John. Another example of supporting our local community. We love doing it, just wish it wasn't a tough story.

Our thoughts go out to this family as they continue the search

Jeff
Neighborly Realty
http://www.EnglePropertiesOnline.com

 

Hi Neighbors.  The NAR (National Association of Realtor's) posted this excerpt of an article originally published in the Chicago Tribune.  Neat tidbit to share:

More than 80 percent of new single-family homes have at least two bathrooms, which occupy an average of 300 square feet of floor space, or 12 percent of the total area, according to a study by the National Association of Home Builders.

The home builder's study reports a major return on value for extra bathrooms: "When the number of bathrooms is approximately equal to the number of bedrooms, an additional half-bath adds about 10 percent to the home's value, and one additional bath adds about 19 percent."

A mid-range bathroom remodel, which costs $10,500 on average nationwide, repays a home buyer at least 100 percent of the outlay when the property is sold, the home buyer study concludes.

Source: Chicago Tribune, Mike McClintock (09/21/2009)

Now is a great time to do some of those home improvements you have been thinking about.

Jeff
Neighborly Realty
http://www.EnglePropertiesOnline.com

 

Hello Neighbors,

I attended this month's Finance Forum (meeting) at the Sacramento Association of Realtors branch office.

Interesting stuff.

A term we've been hearing more and more of recently was discussed..... "Shadow Inventory".

What is Shadow Inventory?

Homes that are in some sort of Notice of Default (NOD) or foreclosure proceedings... but haven't yet been taken back by the banks. Meaning? Homes that are vacant - or will be soon - that aren't yet being reported on the bank's financial books.

How much?

I heard an estimate this morning that shocked me: 35,000 - 40,000 homes in the "Greater Sacramento area". Now that area probably includes parts of Sacramento County, Placer County, and even El Dorado County. If those numbers are correct, it is a HUGE amount of homes that will some day come to market. If. If. If.

Impacts?

Obviously, if such numbers exist, that has huge macro-economic implications. Prices will drop. Banks will be in financial trouble. Buyers will benefit - if they can get loans. Sellers will have to hold tight for much longer, or compete with insanely low price points.

HOWEVER, there is a problem - accurate data.

No one has actually published the data we need to verify such speculation. Search MLS and you will find that there isn't much bank owned inventory now. It's dried up. You can search county tax records, but those tools aren't very user friendly. It would take days and days to compile such data. One industry professional says the inventory is there... another say the Obama plans have curbed the problem.

So?

We continue to listen. Speculation runs from all ends of the spectrum. If we had the data, we could guide you in the right direction. Until then, we (all of us in this industry) continue to be reactive instead of proactive.

I'm looking forward to changing that behavior.

Jeff
Neighborly Realty
http://www.EnglePropertiesOnline.com