Is Real Estate Still A Good Investment?

When considering whether real estate is still a wise investment, in these uncertain times, I encourage you to review the following statistics from the past 39 years:

National data:

1970-1979 = 142% appreciation
1980-1989 = 52% appreciation
1990-1999 = 45% appreciation
2000-2008 = 42% appreciation

Source: The National Association of Realtors

There is no certainty that any investment will increase in value. But the above statistics lead me to believe that the risk may be worth it. What are your thoughts?

Changes to Tax Credit

New Stimulus Plan Offers Changes to The Housing Credit. The main ones are listed below:

• The credit amount is increased from $7500 to $8000.
• The credit continues to apply only to first-time homebuyers.
• Changes are effective for purchases on or after Jan 1, 2009 and before Dec 1, 2009.
• 2009 purchasers can make an election to claim the credit on their 2008 tax return.
• The credit is refundable. The amount of the refund is computed as part of the 1040 tax return filing.
• The unpopular repayment feature of the 2008 version is eliminated for 2009 purchasers. Unfortunately, eligible 2008 purchasers will still be required to repay the credit.
• While the repayment is eliminated for 2009, any credit that is taken for 2009 will be recaptured and paid to the IRS from sales proceeds if the residence is sold within three years of the date of purchase.
• DC homebuyers are eligible for the $8000 credit (In 2008, DC homebuyers had a separate, nonrepayable $5000 tax credit available to them that had already been in effect for several years.)
• Purchasers who finance their 2009 purchases with funds from a state/local housing bond authority will be eligible for credit.

*Contact your tax advisor for your specific situation.

$7,500 Tax Credit not enough? How about $15,000?

The Senate is discussing a new tax credit that could replace the 10%/$7,500 no interest loan for first-time home buyers, scheduled to sunset on June 30, 2009. Instead, a 10%/$15,000 refundable tax credit, for all home buyers, could be instituted for single filers who make less than $75,000 or married couples who make less than $150,000. You would be able to split the refund for 2009/2010 tax years or take it retroactively, for 2008. Obviously, $15,000 is more than $7,500 but since the new credit will be a refundable one, you could actually receive less money if your tax liability is under $7,500. Please contact your tax advisor for additional information.

Get Organized To Sell Your Home

by

Barbara Myers

Increase your chances of selling your home quickly with this eight step solution:

1. Ask a friend to help you de-clutter. You're probably so used to your clutter that you don't see it anymore. Ask an objective friend to help you pack up anything cluttering your home.

2. Clear off countertops in the kitchen. Think model home sparseness. Display only a couple of decorative items or a plant. Hide the trash can in a cabinet. Clean off the refrigerator.

3. Remove all photographs. Buyers want to imagine living in your house. That's hard to do with a wall filled with Aunt Martha and Little Johnny.

4. Clean out your closets. Make them look spacious even if you have to pack most of your clothing and store it elsewhere.

5. Depersonalize your bathroom(s). No matter how cute your toothbrush holder is, seeing someone's personal items is a turnoff. Put them in a container and hide it under the sink.

6. Pack knicknacks. Buyers want to dream of their collections filling the rooms, not yours.

7. Rearrange furniture to open up the space. Remove most items from bookshelves to visually expand the space.

8. De-clutter your yard. Remove toys, empty flower pots, and anything that does not enhance your curb appeal.

Free "50 Ways to Manage Your Time" tips booklet. Visit www.ineedmoretime.com

Barbara Myers is a professional organizer, author and speaker. When planning your next event or needing your personal coach on taking control of your time by organizing your life. © 2009, Barbara Myers. All rights reserved. For information contact FrogPond at 800.704.FROG(3764) or email susie@FrogPond.com; http://www.FrogPond.com.

$7500 Tax Credit Could Change

As many are aware, part of the Bush Administration's stimulus package, last year, offered a 10%, up to $7,500 first -time homebuyer tax credit. First-time homebuyer is defined as anyone who has not purchased a home within the past three years. This was a great idea but few people got on the bandwagon with it because it was designed as a no interest loan. The first two years you would receive a repayment holiday. Then, you were expected to pay $500 per year until it was repaid.

With the Obama recovery Act, however, one of the stipulations, if passed, will be to forgive the repayment of this credit. The credit can be taken in arrears for 2008 taxes so that you don't have to wait until May 2010 to get your money. There is a catch, however, the program is only available until 7/1/2009.

The National Association of Realtors is lobbying hard to eliminate that sunset date and to expand it to all purchasers but it's not known if they will be successful.

Let's talk real estate today!

Rural Subprime Borrowers Are Hit, But Most Rural Property Is Not

by

Curtis Seltzer

Here’s the story in most American cities—existing-home sales are down, pending home sales down, new home sales down and average home prices down.

Adjustable interest rates are up, delinquent mortgages up, foreclosures up.

The loans that are the source of this mess were made by big banks and mortgage companies to individuals who barely qualified for them on terms that do-si-doed with disaster.

As long as the loan originators could flip them to large investors, their high risks were shipped upstream to yield-focused folks who forgot that all the little people downstream were paddling for their lives to keep everyone afloat.

The situation in rural America is both the same and…different.

Where big lenders operated, subprime loans were made—resulting in the same pattern of delinquencies and defaults on high-interest loans to border-line borrowers.

While Cleveland’s Cuyahoga County had more than 13,600 foreclosures in 2006 with 10,000 vacant structures, Geoff Dutton and Doug Haddix of The Columbus Dispatch reported as early as February, 2006 that “…subprime lending and foreclosures are even more pronounced in rural areas” of Ohio.

In Hardin County, a farming area northwest of Columbus, they found high default rates, linked to subprime mortgages embedded with very high interest rates, prepayment penalties and adjustable interest that could rise but not fall below the introductory rate.

Tom Robertson of Minnesota Public Radio reported in August that foreclosures outside of the seven-county Minneapolis-metro area were projected to rise to 8,700 in 2007, up from 2,700 in 2005.

A study from the Greater Minnesota Housing Fund showed that counties outside this metro area were being hardest hit.

The Center for American Progress reported this spring that the percentage of rural mortgage loan originations classified as high-interest loans (17.4 percent) exceeded both the urban percentage (15.5 percent) and the national percentage (15.6 percent).

Rural subprime borrowers were 20 percent more likely than urban borrowers to have loans with prepayment penalties.

In 500 rural counties, one-third or more of mortgage originations involved high-interest loans. These counties tended to have high-poverty rates and high minority populations.

But where subprime rural borrowers found alternatives to predatory lenders, they are getting by.

USDA Farm Service Agency (FSA) low-income loans for single-family houses in West Virginia, for example, showed only eight in foreclosure. No West Virginia farms with FSA loans for low-income borrowers were in foreclosure.

Only 13 FSA single-family house loans are in foreclosure in Virginia, and no FSA farm loans were listed.

In Mississippi, only 33 FSA single-family loans are currently in foreclosure, along with two farms with these FSA loans. Mississippi’s overall mortgage delinquency rate of 10.64 percent is the highest in the country.

The same is true in Minnesota where only six FSA single-family loans are in foreclosure and one farm has been acquired.

California has nine single-family FSA loans in foreclosure and three FSA farms.

Locally owned rural banks that knew their properties, kept mortgages in their own portfolios and did not beguile their customers into unfavorable adjustable rates and prepayment penalties appear to have escaped the subprime crash.

The same is generally true of the federal farm credit associations, lending cooperatives that finance farms, farming and rural housing.

But the biggest difference between urban and rural areas is that the price of rural property continues to appreciate.

“I’ve not seen any effect on rural land prices of the subprime lending crisis,” said Steve Saltman, head of www.landandfarm.com/, a major online site for selling rural real estate. “Timberland prices remain very strong,” he said. “Land [involved with operating farms] is not part of the subprime overleveraging. But these are not subprime markets.”

The one sector of rural property that is vulnerable to softer prices and slower sales is low-price, single-family residences on small lots that are caught in foreclosure.

Those rural Americans who are being foreclosed will have difficulty finding alternative housing.

And their foreclosed properties will sit vacant until lenders and borrowers find terms that work for both sides over time.

Thanks for 2008!

I would like to thank you for your encouragement and support of me in 2008. It’s people like you that have made this profession enjoyable and rewarding. You see, if it weren’t for the effort you put forth in recommending me to people you know, I would not have succeeded in 2008.

I sincerely appreciate your past support and thank you in advance for your continued support during 2009. In this very busy world of ours, we seldom take the time to express our appreciation for the efforts of those who help us in many ways. I wanted to make certain you knew how appreciative I am.

Respectfully,

Gregg Goldhammer

P.S. Thank you for your continued trust and referrals.