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Real Estate for Today’s Magalia and Paradise California Home Sellers and Home Buyers

Spring Has Sprung On Paradise Housing


The past 7 days have brought a solid ray of sunshine to the housing market. Not only did the January S&P/Case-Shiller Home Price Index rise for the eight straight month but SUPPRISE, SUPPRISE, SUPPRISE, February’s Pending Home Sales beat market expectations 8.2% (a decline of 0.2% was anticipated.


Steven A. Wood chief Economist at Insight Economics, LLC states:


'The S&P/Case-Shiller 20-City Home Price Index ROSE by 0.3% (seasonally adjusted) in January to 146.3, its eighth consecutive increase for the first time since September 2005 - April 2006 at the end of the boom.'


“Home prices ROSE in January for the eighth straight month. This trimmed the year-on-year rate of decline to its slowest pace in 2 years. Although home prices are still falling on a year-on-year basis, there are increasing signs that home prices have begun to stabilize, even in some of those areas where the housing boom was quite substantial. In many regions, home prices have actually begun a modest recovery. Even in those areas where housing boomed the most, the rate of home price decline has slowed significantly. However, with unemployment remaining high, with mortgage delinquencies still climbing, and with more mortgage rate resets on Alt-A and Option ARM loans due to take place over the next year, home prices are still at risk for another dip.”


'Pending Home Sales ROSE by 8.2% in February to 97.6, compared with market expectations for a 0.2% decline. Pending home sales are counted when sales contracts are signed and a viewed as a leading indicator of existing home sales. This surge occurred despite the severe snow storms in mid-month and may reflect homebuyers' attempt to purchase before the expiration of the extended homebuyers' tax credit at the end of April. Pending home sales are 17.3% ABOVE their year ago level. The regional composition showed a huge increase in the Midwest, big gains in the South and Northeast, and a moderate decline in the West. However, in every region, pending sales are ABOVE their year ago level.'


'Pending homes sales have plunged between October 2009 and January 2010 as the initial first time homebuyers tax credit expired. With the extended tax credit 'now set to expire at the end of April, homebuyers appear to be returning to the market. If that is indeed the case, another sharp run-up in home sales should occur through April before another sharp decline is experienced. A bottom has been reached in existing home sales and a recovery is underway but it is being heavily underpinned by government stimulus.'


For more information, you can visit my Web site or feel free to give me a call.


Tammy Vertrees, Paradise California Realtor


530-413-8383 Direct
530-872-5428 Office


www.TammyVertrees.com

 
 
NO MORE STATE TAX ON FORGIVEN DEBT

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification.  Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law.  For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012.  Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
 
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions.  Most notably, taxpayers who are bankrupt are exempt from debt relief income tax.  Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage.  The full text of Senate Bill 401 is available at www.leginfo.ca.gov. 

C.A.R. provides REALTORS® with many legal articles covering a wide range of topics of interest.  Some of the new or newly revised legal articles available at http://qa.car.org/ are as follows:

 

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