Home prices in the fourth quarter of 2012 showed a rate of annual appreciation greater than in any quarter since the end of 2005 the National Association of Realtors® (NAR) said today.  There were 133 metropolitan areas in which median prices rose during the quarter out of the 152 tracked by NAR.  Prices increase in 120 areas in the third quarter and only 29 one year earlier.  Twenty-nine areas posted price declines in the recent period.

The median price of an existing single-family home was $178,900 in the fourth quarter, up 10.0 percent from $162,600 in the fourth quarter of 2011. The annual increase in the third quarter was 8.8 percent.   In the fourth quarter of 2005 the median price increase was 13.6 percent.  NAR uses median price, where half of the homes sold for more and half sold for less, because average prices can be skewed by a relatively small share of upper-end transactions.  The median price of a condo/cooperative was $179,900, an increase of 12.2 percent since the fourth quarter of 2011.  Condo prices increased in 47 metro areas.

Lawrence Yun, NAR chief economist, said all the conditions for strong price growth are at play including increasing home sales, record low interest rates, and the lowest inventory of unsold homes in 12 years.  "Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates," Yun said.  "Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play."  He added that more housing construction is needed to relieve some of the pressure in the market and keep home prices from overheating.

Some of the price increases arise from a smaller market share of lower priced homes.  The share of foreclosures and short sales, which usually sell at deep discounts, fell to 23 percent of sales in the fourth quarter compared to 30 percent a year ago.

Fourth quarter existing-home sales rose 5.0 percent to a seasonally adjusted annual rate of 4.90 million in the fourth quarter from 4.66 million in the third quarter, and were 12.1 percent above the 4.37 million pace during the fourth quarter of 2011.  The last time there was a higher rate of existing home sales was 4.95 million in the fourth quarter of 2009.

The unsold inventory of existing homes was at the lowest level since January 2001.  At the end of the fourth quarter there were 1.82 million existing homes available for sale, which is 21.6 percent below the close of the fourth quarter of 2011 when 2.32 million homes were on the market. 

NAR's national annual Housing Affordability Index, established in 1970, rose to a record high 193.5 in 2012 from 186.4 in 2011.  The index is calculated on the relationship between median home price, median family income and average effective mortgage interest rate.  An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent downpayment and 25 percent of gross income devoted to mortgage principal and interest payments. .  The higher the index, the stronger the household purchasing power.

 "The housing affordability index shows that the national median income of families was almost double the income needed to buy a median-priced home in 2012, so most buyers are able to stay well within their means," Yun said.  Despite rising prices the index is expected to average 161 in 2013, which would be the third best on record.

Existing-home sales in the Northeast increased 2.2 percent in the fourth quarter and are 12.9 percent above the fourth quarter of 2011.  The median existing single-family home price in the Northeast rose on an annual basis by 0.7 percent to $228,400.

Midwest sales rose 5.6 percent in the fourth quarter and are 18.3 percent higher than a year ago.  The median existing single-family home price increased 9.2 percent to $143,800.

Sales in the South were up 5.0 percent from the third quarter and 13.2 percent from a year earlier.  The regional median home price was up 9.1 percent to $160,100.

The West was impacted most by limited housing supplies and had the strongest price increase, jumping 20.1 percent year-over-year to a median of $245,200.  Sales were up 5.9 percent from the third quarter and are 5.0 percent higher than a year ago. 

By Jann Swanson-   Mortgage News Daily

Is a smart home in your future?

SAN JOSE, Calif. – Feb. 20, 2013 – Wouldn’t it be great if you could push a button at night, and all of your doors would lock, your lights would turn off, and your alarm would set automatically?

That kind of “smart home” feature may sound futuristic or simply beyond reach for those without a lot of money or technical expertise. But the technology is already available and new products and services are making it and similar home automation features increasingly accessible to the average homeowner.

“It appears that we may be at a turning point,” said Chet Geschickter, an analyst with Gartner, a market research group. “We may have all the raw materials for this interoperable home automation world.”

In recent months, some major corporations have announced new products and services that could help turn the smart home into a mass market activity. Among the developments:

AT&T announced it will be rolling out its home automation initiative in March and plans to offer the service in 58 markets nationwide by the end of the year. The service will offer connected door locks, thermostats and video cameras as well as basic security protection. Unlike a similar service offered by Comcast, AT&T’s will be sold separately from the company’s broadband offerings.

Lowe’s introduced a collection of add-on services for its Iris home automation kits, which it unveiled last summer. Among the new features are sensors designed to help consumers monitor their elderly parents, an automated pet door that users can lock or unlock remotely, and a lawn moisture sensor that notifies customers when their yards are getting dry and allows them to turn on their sprinkler system remotely.

ADT, the home security giant, added the ability to remotely lock and unlock doors to its Pulse home automation offering. The company already allowed users to adjust their lighting and thermostat and view security video of their home remotely.

Home appliance maker LG showed off a new washer and dryer set that users can start remotely with their smartphones.

The promise of widely available home automation has been around since “The Jetsons” aired 50 years ago. But until recently, smart home systems have been pricey and complex, typically requiring professional installation. And few consumers have been aware of the availability of such services or haven’t been convinced that they needed them.

But in recent years, major consumer service providers – including ADT, Comcast and Vivint – have entered the market, helping promote the concept of home automation and make it more accessible to average consumers. Companies such as Comcast and Vivint now offer basic home automation systems for less than $500 installed. And Lowe’s Iris, which is available for about $300 for a full system, is designed for self-installation.

“We definitely see that (home automation) is moving increasingly into the mainstream,” said Jonathan Collins, an analyst with ABI Research.

Helping drive the decline in price and ease of use are standardized wireless technologies such as ZigBee and Z-Wave that allow users to install light controllers and automated door locks without needing to rewire their house. Such technologies have allowed electronics manufacturers to design more modular and expandable systems, letting users and service providers customize systems for individual needs and budgets.

The spread of broadband, cloud computing and smartphones have also provided new and compelling ways for consumers to interact with home automation systems, say analysts. For example, smart home services can take the smartphone’s location information and use it as a trigger for doing things like turning on lights or sending alerts.

“Without a smartphone, (the smart home) wasn’t really an exciting value proposition,” said Lisa Arrowsmith, a research manager at IHS Electronics and Media.

And new features are making such systems more attractive to consumers, analysts and industry insiders say. Video monitoring, for example, has proved particularly popular among ADT’s customers. And the growing awareness around energy conservation is driving the adoption of smart thermostats that can adjust temperatures when consumers are away or in response to signals from utility companies seeking to reduce peak demand.

To be sure, home automation still isn’t for everyone. While less expensive and easier to install than before, they still aren’t cheap, and many consumers may still need help configuring them.

The smart home services offered by ADT, Comcast and other providers typically are sold only with other services, such as security protection or broadband access. And they generally require users to sign long-term contracts that can include pricey monthly subscription fees.

Also, many smart home technologies and devices are incompatible with one another. So consumers who want to add on to their systems or change their service providers may find they have limited options -- unless they want to start from scratch.

“There still are some questions that need be to be answered around this market,” Arrowsmith said. “I don’t think we’re going to wake up tomorrow and everyone’s got one, but we are seeing decent growth rates.”

© 2013 San Jose Mercury News (San Jose, Calif.) Distributed by MCT Information Services.


U.S. homeowners think it’s a good time to renovate

PALO ALTO, Calif. – April 1, 2013 – Significantly more U.S. homeowners are moving forward with renovation projects compared to this time last year, according to the second annual Houzz & Home survey.

A majority of the homeowners surveyed believe now is a good time to remodel (53 percent), and 58 percent of those planning projects in the next two years will hire professional help. The study also found that three-quarters of homeowners believe that now is a good time to buy a home.

Together with the recent U.S. Commerce Department report showing the rate of single-family home construction is at its highest level in four and a half years, the results of this study point to a strengthening economy, housing and renovation market.

The 2013 Houzz & Home survey garnered more than 100,000 responses from the Houzz community of 14 million monthly unique users. The study yielded detailed data at the national, regional and metropolitan area level.

The number of homeowners who say they will delay projects because of the economy has dropped to 45 percent from 52 percent last year, and homeowners are more likely to cut back in other areas, such as vacations and other big ticket purchases, rather than delay or decrease budgets for their home plans. While improving the look and feel of the space is still the key driver for recently completed projects (83 percent), the number of homeowners who remodeled to increase their home value has increased to 54 percent from 47 percent in 2012.

“We’ve collected an unprecedented volume of data from the community, and we are pleased to share the findings with everyone looking to renovate or decorate their home,” said Liza Hausman, vice president of community for Houzz.

Bathrooms and kitchens top America’s renovation project list again this year, with 28 percent of respondents planning a bathroom remodel or addition, and 23 percent planning a kitchen remodel or addition in the next two years.

In terms of dollars spent, kitchens command the lion’s share. Over the last five years, nearly four in ten home improvement dollars have gone into kitchens and survey data indicates future spending is likely to follow the same trend.

Over the last five years, homeowners on average spent $28,030 to remodel their kitchens; however spending varies widely at different budget levels. Homeowners spent an average of $54,942 nationwide for a high-end kitchen, $22,390 for a mid-range kitchen and $7,133 for a lower-budget kitchen.

The study also found that homeowners renovating at the higher-end were more likely to go over budget than those doing more modest renovations, though a significant number reported going over budget at all project levels. Fifty-six percent of those doing a high-end renovation, 42 percent of those who did a mid-range renovation and 31 percent of those whose renovation was lower budget also spent more than expected on their projects.

Other key U.S. findings

• Spending more time in a room does not necessarily correlate with decorating dollars. Homeowners report spending the most time in their family/TV rooms, but not the most money there.

• Nobody was willing to admit to spending significant time in their bathroom – but apparently the time we do spend there is worth significant investment. The percentage of money spent on kitchens and bathrooms far exceeds the percentage of time spent in these spaces.

• A majority of the homeowners surveyed who are planning to complete a project in the next two years will hire a general contractor (58 percent), and a third a kitchen/bath (36 percent) or carpet/flooring professional (34 percent). Twenty-three percent plan to hire architects and 22 percent interior designers.

• When it comes to hiring a professional for their project, 67 percent of homeowners surveyed rated a “personality I can work with” as a 5 (very important) on a 5-point scale.

• Thirty-four percent of U.S. homeowners cited making their home more energy efficient as a key driver for completing their most recent project.

The Houzz & Home Survey was emailed to registered users of the Houzz website between January and February 2013. Edge Research conducted the survey. To download the full report, go to the Houzz website.

Source: Houzz.com

© 2013 Florida Realtors®


The Top 10 Real Estate Tax Deductions for Homeowners

As the time to file income taxes approaches, we need to take a new look at the changing tax landscape for homeowners. The dynamic atmosphere in Washington, D.C. has a different effect each year on which tax breaks are proposed, rescinded, changed, and extended for taxpayers who own a home.

Thanks to the efforts of many real estate industry groups including the National Association of Realtors, many of the  tax benefits that homeowners enjoy–which were on the chopping block over the past few months–have been protected and extended through the 2013 tax season.

Disclaimer – This is only an informational summary of current tax issues in the news. If you need tax advice, please contact a tax attorney or CPA

1.  Mortgage Interest Deduction

The mortgage interest deduction has always been the most-beloved tax benefit of home buyers in the U.S.  New homeowners’ monthly mortgage payments are made up almost entirely by interest for the first few years. Their ability to deduct that interest can result in a healthy reduction in tax liability. Affordability for first-time home buyers is directly linked to their ability to deduct the interest on their mortgage.

Homeowners who itemize their deductions can deduct the interest paid on a mortgage with a balance of up to $1 million. While there is some movement to limit the total itemized deductions for taxpayers with higher incomes (over $400,000), the current deductions holds for all tax brackets. Americans save around $100 million every year by deducting mortgage interest on their tax returns.

2.  Home Improvement Loan Interest Deduction

The interest on home equity loans used for “capital improvements” to a home can also be a tax deduction. On loans with balances of up to $100,000, the interest is tax-deductible for a homeowner who uses the loan to make improvements to the home such as adding square footage, upgrading the components of the home, or repairing damage from a natural disaster. Maintenance items like changing the carpet and painting a home are usually not included as capital improvement projects.

3.  Private Mortgage Insurance (PMI) Deduction

Homeowners who make a down payment of less than 20% are usually paying some sort of Private Mortgage Insurance. PMI (sometimes abbreviated MIP or just MI), can be a few dollars to hundreds of dollars per month, and it is a large portion of many homeowners’ mortgage payments.

If your mortgage was originated after Jan 1, 2007, and you have PMI, it can be a tax deduction. The deduction is phased out, 10% per $1,000, for taxpayers who have an adjusted gross income between $100,000-$109,000 and those above that level do not qualify. The extension of this tax deduction in 2013 was one of many last-second saves by real estate industry advocates.

4. Mortgage Points/Origination Deduction

Homeowners who paid points on their home purchase or refinance can often deduct those points on their tax returns. Points, often called origination fees, are usually percentage-based fees which a lender charges to originate a loan. A one percent fee on a $100,000 loan would be one point, or $1,000.

On a home purchase loan, taxpayers can deduct the entirety of the points that they paid in the same year. On a refinance loan, the points must be deducted as an amortization over the life of the loan. Many taxpayers forget about this amortized benefit over time, so it’s important to keep good records on the deduction of points on a refinance.

5. Energy Efficiency Upgrades/Repairs Deduction

Homeowners can deduct the cost of the building materials used for energy efficiency upgrades to their home. This is actually a tax credit, one which is applied as a direct reduction of how much tax you owe, not just a reduction in your taxable income.

10 percent of the total bill for energy-efficient materials can be used as a tax credit, up to a maximum $500 credit. Insulation, doors, new roofs, and many other items qualify for the energy efficiency credit. There are also individual limits for certain items, such as $150 for furnaces, $200 for windows, and $300 for air conditioners and heat pumps.

6. Profit on Sale of Real Estate Deduction

If you’ve sold a home in the past year, you’re likely aware that individuals can claim up to $250,000 of profit from the sale tax-free, and married couples can claim up to $500,000 tax-free. Of course, there are some requirements to escaping the capital gains tax on this profit.

The home must be a primary residence. This means that you must have lived in the home, as your primary residence, for two of the past five years. You could rent it out for years one, three, and five, while living in it for years two and four. In this way, a homeowner could potentially claim this tax break on multiple homes within a fairly short time frame, but each tax-free sale must occur at least two years apart from the previous tax-free transaction.

7. Real Estate Selling Cost Deduction

For those lucky folks whose profits on the sale of their home might exceed the $250k/$500k limits, there are still some ways to reduce the tax burden.  The costs of selling the home can be significant, and those in themselves can be claimed as tax deductions.

By adding up all of the fees paid at closing, capital improvements made to the home while you owned it, money spent to make repairs to damaged property, and marketing costs necessary to sell the home, you can add a significant figure to the cost basis of your home.  This basically raises the original price you paid for the home.  Your cost basis begins with the original price of the home, and then adds in the improvement and selling costs.  When the new cost basis price is compared to your selling price, it reduces your potentially-taxable profit on the home significantly.

8. Home Office Deduction

The home office tax deduction is often cited as a deduction that increases your likelihood of being audited.  While the raw numbers might add some credibility to that perception, it’s really the way a home office is deducted that gets some taxpayers into audit purgatory.

This deduction, when used correctly, is just as safe as any other.  Homeowners deduct a percentage of their mortgage, utilities, and repair bills in direct proportion to the amount of their home that is dedicated office space.

There are a few hard and fast rules to live by when deducting the costs of your home office. The home office must be your principal place of business (the primary office location where you get the majority of your work done).  It needs to be exclusively used for business (it can’t be your kitchen by day and office by night).  You need to be realistic with its size and use (unless you enjoy audits).

9. Property Tax Deduction

New homeowners often don’t know that their property taxes are deductible.  While it may sound strange to have a tax-deductible tax, the overall effect is that you don’t pay income tax on money that was spent on property taxes.

Homeowners should be careful to only deduct the amount of property tax actually paid to their local municipality for the year. This is not necessarily the amount you paid to your escrow account, and should not include any other city/county fees that might potentially be on the same bill as your property taxes.

10. Loan Forgiveness Deduction

The Mortgage Debt Forgiveness Relief Act of 2007 was created when short sales were becoming a new and growing part of the real estate market. An underwater homeowner might convince their lender to agree to a short sale of their home at $100,000, even though they owe $150,000 on their mortgage. While the lender forgives the extra $50,000 owed after the short sale, the government views it as $50,000 in taxable income (a gift from the lender to the borrower).

The Debt Forgiveness Act temporarily relieved the taxpayer of that burden, but was set to expire this year. Through much effort, it was extended along with many other homeowner tax relief measures this year and homeowners can continue to claim this tax relief in 2013.

IRS-suggested disclaimer: To the extent that this message or any attachment concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  This message was written to support the promotion or marketing of the transactions or matters addressed herein, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Sam DeBord is a Realtor® and Managing Broker at Coldwell Banker Danforth & Associates. Find him onSeattleHome.com.