Mortgage Forgiveness Debt Relief Act Extended!

Special Report: Real estate provisions
in 'fiscal cliff' bill

WASHINGTON - Jan. 2, 2013 - Yesterday, the House and Senate passed H.R. 8, legislation to avert the so-called "fiscal cliff." Following are real estate-related provisions of the bill, which President Obama plans to sign into law today:

• Mortgage Forgiveness Debt Relief Act extended to January 1, 2014. In place since 2007, the act provided a tax break for homeowners who struggled through financial hardship such as a foreclosure, and were granted mortgage debt forgiveness. In the past several months, National Association of Realtors (NAR) issued numerous calls to action urging its million-plus Realtor members to ask lawmakers to extend the tax break for another year. More than a quarter of all transactions involve distressed properties, the NAR said in its plea. "Homeowners shouldn't be forced to pay a tax on money they've already lost with cash they never received."

• Deduction for mortgage insurance premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012.

• The 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.

• The 10 percent tax credit (up to $500) for homeowners for energy efficiency improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

• "Pease limitations" that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high-income filers. "Pease" limitations will only apply to individuals earning more than $250,000 and joint filers earning more than $300,000. The thresholds are indexed for inflation so will rise over time. Under the formula, filers gradually lose the value of their total itemized deductions up to a total of a 20% reduction.

First enacted in 1990 and named for Ohio Congressman Don Pease, who proposed the idea, the limitations continued throughout the Clinton years. The limitations were gradually phased out starting in 2003 and eliminated in 2010. Reinstitution of these limits has far less impact on the mortgage interest deduction than a hard dollar deduction cap, percentage deduction cap or reduction of the amount of mortgage interest deduction that can be claimed.

• The capital gains rate remains at 15 percent for individuals earning less than $400,000 per year and couples earning less than $450,000. Any gains above these amounts will be taxed at 20 percent. The $250,000/$500,000 exclusion for the sale of principle residence remains.

Tampa Area in Top 10 Markets searched online!

Perhaps we are getting closer to recovery as three Florida markets are in the top 10 searched online. Tourism is picking up and more people are moving into Florida than relocating elsewhere. Now is a GREAT time to be purchasing that home in the Tampa Bay area!! Click on the title for the complete story!

Tampa Bay Prices Unchanged, NOT Down!

Tampa, Florida
May 2009 Home Price Index
One-Month Change: 0.0%
One-Year Change From May 2008: -20.8%
Peak Month: July 2006
Source: S+P/Case-Shiller Home Price Index

Home Sales UP!!!!!

Sales of existing single-family homes in Florida rose 25 percent in first quarter 2009 compared to the same period a year earlier, according to FAR - the third consecutive quarter for higher existing home sales. Statewide existing condo sales in the first quarter rose 19 percent compared to 1Q 2008. Nationally, NAR says sales of all housing types slipped in the first quarter.

Fast Fixes to Sell a Home!

It's not rocket science: Houses that look fresh and attractive sell faster than beat-up homes. Here are some cheap tricks from Money Magazine for boosting appeal:

• Buy a new mailbox, house numbers, doorbell and knocker: $200
• Green the grass with nitrogen-rich fertilizer: $50 to $200, depending on the lawn's size
• Edge and mulch flowerbeds: $300 to $600, depending on the number of beds
• Replace the bathroom faucet: $300
• Install beadboard over dated bathroom tile: $800 to $1,000
• New paint: $60 to $100 per room if homeowners do it themselves
• Replace switch plates and outlet covers: 50 cents each
• Install stone tile over existing Formica countertops: $500 to $1,000

Existing Home Sales

Florida's existing home sales rose 30 percent in March, making it the seventh month in a row that sales activity was higher than year-ago levels, according to FAR's latest housing data. Statewide existing condo sales increased 25 percent over the same period; and last month's home and condo sales were higher than February's levels. NAR reported that national existing home sales - all housing types - fell 3 percent compared to February's activity.

Pending Home Sales Show Gain!

WASHINGTON – Feb. 3, 2009 –
Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the National Association of Realtors® (NAR). Big gains in the South and Midwest offset modest declines in other regions.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.

Lawrence Yun, NAR chief economist, says the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” he says. “The biggest gains were in areas with the biggest improvements in affordability.”

NAR’s Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record. The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun added.

The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007.

The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007.

“However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” says NAR President Charles McMillan. “We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery. Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”

McMillan says some enhancements that could bring more buyers into the market include expanding the $7,500 tax credit to all home buyers, extending it until the end of 2009, and making loan limit increases permanent. “We also need to direct funds in the Troubled Asset Relief Program (TARP) to add liquidity to the mortgage market, buy down mortgage interest rates and increase other forms of credit,” he says.

Yun says the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun says.

© 2009 FLORIDA ASSOCIATION OF REALTORS®