You are currently browsing the category archive for the ‘California Housing Market’ category.
Rising interest and capitalization rates top the list of issues that have future implications for real estate. That’s according to industry expert Scott Muldavin, chair of the Counselors of Real Estate and senior advisor at the Rocky Mountain Institute in San Rafael, Calif.
Muldavin shared his insights on the 10 top issues that could affect real estate in the coming years at the National Association of REALTORS® 2013 Conference and Expo last November. Members of the Silicon Valley Association of REALTORS®, along with about 20,000 REALTORS® from across the country and around the world, attended the conference held in San Francisco Nov. 8-11.
1. Rising Interest and Capitalization Rate Risks
Record low interest rates have driven the economy and real estate markets in recent years. Rising interest rates could raise capitalization rates, which could create anxiety about investing in real estate.
“Interest rates are going to rise significantly, so my advice is to be careful about your investments today and lock in those low rates if you can,” said Muldavin.
2. Health Care
Health care is an important issue with implications for real estate. As the population ages, there will be greater demand for senior housing, requiring a change in the configuration and size of available housing, including composition of households. A growing number of seniors will require greater medical care, leading to expansion in medical facilities.
3. Capital Market Resurgence
A continued capital market resurgence will be good for real estate, according to Muldavin. Underwriting is still tighter for the residential sector than commercial, but rates are near historic lows and affordability is still high in many parts of the country.
4. Event Risks
Major global events, such as war and acts of terrorism, will continue to dominate headlines. Their impact on the stock market and global economies trickle down to real estate.
“The risk of future events is high, and while it’s always hard to anticipate these risks, they need to be considered because their impact is often great,” said Muldavin.
5. Implications of Climate Change/Weather on Coastal Property Markets
Climate change will continue to have a strong impact on properties across the country. Property owners in areas hit by Hurricanes Katrina and Superstorm Sandy are now dealing with changes in zoning standards and higher insurance premiums.
6. Echo Boomer Housing Demand
Future housing demand is likely to come from echo boomers, the 80 million Americans born between 1982 and 1995. This generation prefers a more flexible and active urban lifestyle, relies heavily on mass transit, and is more willing to trade home size for location.
“We are the only developed country that has had an echo boom, and that’s a positive thing if the country can react and respond to it,” said Muldavin.
7. Implications of Increased Natural Gas and Oil Reserves on the U.S. Economy
While increased natural gas and oil production creates more jobs and reduces U.S. dependence on foreign oil, the increase in fracking has raised concern about the environment. More new homes and offices are being built with environmental friendly features.
“Older buildings have become functionally obsolete,” remarked Muldavin.
8. Global Real Estate Growth and Risk
The global economy cannot be ignored. Unemployment in Europe and the global debt crisis affect foreign investment in real estate.
9. Impact of Technology on Office Space
Technology will continue to impact office space. The office market has the highest vacancy rate because technology has introduced new ways of doing business at the expense of employees and space. Work-from-home and telecommuting have allowed people to work when and where they want. This significantly reduces office space requirements and changes neighborhoods, as more people stay home.
10. Retail Malaise and Repositioning
The impact of the Internet on retail stores is causing retail malaise and repositioning. Retail demand is down due to increased Internet sales, which are expected to rise from the current 6.5 percent to nearly 15 percent by 2020.
“Many people are replacing physical items with electronics and free or virtual products, such as e-books and smartphones enabled with cameras, GPS and flashlights. This means businesses will continue to require less retail space, so I believe the trend in the future will be for fewer and smaller stores,” said Muldavin.
The Silicon Valley Association of REALTORS® has received an update from the National Association of REALTORS® regarding Mortgage Cancellation Tax Relief, which is set to expire on December 31, 2013. NAR has been working with Congress since early this year to extend this important real estate tax provision. Without an extension, homeowners who have any amount of a mortgage forgiven by a lender either in a short sale or foreclosure would be subject to paying “phantom income tax” on the amount of the forgiveness at the federal level. To this end NAR has aggressively sought co-sponsors for both Senate and House bills, S. 1187 the “Mortgage Forgiveness Tax Relief Act” and H.R.2994 “Mortgage Forgiveness Tax Relief Act of 2013.”
The U.S. House of Representatives adjourned the first session of the 113th Congress without taking action on H.R. 2994. While Congress will not act before December 31st to extend the Mortgage Debt Forgiveness Act, Congress will most likely address individual tax provisions retroactively in 2014.
There are still many procedural obstacles to overcome, but NAR is confident Congress will move on an extension of Mortgage Cancellation Tax Relief in 2014. As was the case with a previous extension, Congress is expected to retroactively apply Mortgage Cancellation Tax Relief to include transactions between January 1, 2014 and the enactment of the extension.
In the meantime, NAR is asking its members to continue to express the importance of this issue to your Senators and Members of Congress and how it is causing uncertainty in the market. Homeowners shouldn’t be forced to pay tax on money they’ve already lost with cash they never received – and never will receive.
REALTORS® with clients involved in a distressed transaction, such as short sale, should encourage clients to speak with a tax professional for advice on their particular situation.
The California Association of REALTORS® (C.A.R.) announced on Wednesday that it received a letter from the California Franchise Tax Board (FTB), obtained by Board of Equalization member George Runner, clarifying that California families who have lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale.
Last month, in a letter to California Senator Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes. Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB. With the FTB’s clarification, underwater home sellers are now assured that they are not subject to state income tax liability, rescuing tens of thousands of distressed home sellers from California tax liability for debt written off by lenders in short sales.
“We are pleased with the recent clarifications issued by the IRS and the California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California,” said C.A.R. President Kevin Brown. “We would like to thank Senator Boxer and BOE member Runner for their leadership in obtaining this guidance from the IRS and FTB. Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of this year.”
One of the major successes Congress reached in the “fiscal cliff” negotiations at the end of 2012 was the extension of the Mortgage Forgiveness Debt Relief Act for another year. The measure will continue to exempt from taxation mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification (including any principal reduction) or foreclosure.
While debt relief had been extended at the federal level, the state exemption expired at the end of 2012. In order to conform state law to the federal law that recently passed extending mortgage debt forgiveness, C.A.R. sponsored Senate Bill 30 (Calderon, D-Montebello) so California homeowners on the brink of foreclosure could get much-needed debt relief. That measure has stalled at the state level.
“Senator Boxer’s request to the IRS to provide guidance on whether mortgage debt forgiveness in a lender-approved short sale would be taxable and the subsequent rulings by the IRS and California FTB help clarify the state income tax status of distressed home sellers in California. Many have been worried about it and have contacted our association seeking clarification. We are glad the issue has been resolved,” said Carolyn Miller, president of the Silicon Valley Association of REALTORS® (SILVAR).
The National Association of REALTORS® (NAR) has issued a nationwide Call for Action, urging members to contact their Members of Congress in both houses and bring the Homeowner Flood Insurance Affordability Act (H.R. 3370 and S. 1610) to the floor for immediate consideration and a vote in each chamber. This legislation aims to fix some of the unintended consequences from the implementation of the 2012 Biggert-Waters Flood Insurance Reform Act.
REALTORS® and homeowners across the country are reporting significant increases in annual premium rates as a result of National Flood Insurance Program (NFIP) rate changes that took effect on October 1. This is raising concerns among consumers and REALTORS® about decreased property values and a stalled housing market recovery. This drastic increase in flood insurance premiums for coverage under the NFIP is negatively impacting transactions and the nation’s real estate recovery.
REALTORS® need to ensure that this is a priority for Congress and is brought up for vote immediately. Congress has very few working days left of this session, so it is imperative that members answer this Call for Action. Tell Congress we support the “Homeowner Flood Insurance Affordability Act.”
NAR is asking Congress for a four-year time-out to fully correct some of the implementation problems that will threaten real estate transactions where flood insurance is required to obtain a mortgage. Tell Congress to delay changes to the NFIP and that we support the “Homeowners Flood Insurance Affordability Act”.
Brokers share a light moment during their discussion. Left to right are Tom Tognoli, Intero Real Estate Services; Ryan Iwanaga, Sereno Group; Carol Burnett, Alain Pinel Realtors; and Don Tornincasa, Coldwell Banker.
Brokers/managers from SILVAR’s Los Gatos/Saratoga District educated members on the do’s and don’ts of the business at Wednesday’s tour meeting. The panel included Don Tornincasa, Coldwell Banker; Carol Burnett, Alain Pinel Realtors; Tom Tognoli, Intero Real Estate Services; and Ryan Iwanaga, Sereno Group. District Chair Karen Trolan served as moderator.
The brokers said all top agents are educated about the marketplace, they go on tour, keep in constant touch with their database, work long hours, and make it a point to meet potential clients every day, even during the holidays. They encouraged agents to pick up the phone, touch base with clients, send holiday cards.
“We’re in a relationship business. Take advantage of the holidays. It’s an opportunity to connect with people and thank your clients,” said Burnett.
The panel said
Iwanaga observed that the most successful agents are those who work hard in the first quarter of the year, which can define the whole year. He encouraged agents to start contacting potential clients and cultivate relationships now.
“Don’t wait for January 1 to do it,” said Iwanaga.
More than in the past, the real estate business is changing, and changing fast. There are now micro-markets that are also changing. Agents need to be open-minded, flexible, and embrace new things. Read, dedicate yourselves to improving your skills and look forward, said Tornincasa.
“Keep your eyes out in front of you,” added Tognoli.
Passing the exam is not enough. Agents need to invest in themselves, take seminars and learn.
“Preparation means opportunity,” said Tornincasa.
On technology, the brokers recommended embracing social media, but while engaging in social media is good, most important is building a good website because that is where people eventually come to find out more about the agent.
“You need to make sure your website says something to the world,” said Burnett.
The brokers set standards in their offices, discuss the Code of Ethics at office meetings, and some provide training, but in the end, it is up to the agent.
“You can’t teach ethics and honesty,” said Tognoli. Agents needs to care about their image, their behavior and their reputation.
California Association of REALTORS® President Kevin Brown announced this morning the successful outcome of C.A.R.’s work with U.S. Senator Barbara Boxer (D-CA) to protect distressed homeowners from debt relief income tax associated with a short sale in California. As part of this effort, Senator Boxer requested the Internal Revenue Service (IRS) to provide guidance on whether mortgage debt forgiveness in a lender-approved short sale would be taxable income under federal law, given California’s recent non-recourse laws for short sales, which were hard fought victories by C.A.R.
The IRS has clarified in a letter that California’s troubled homeowners who sell their homes in a short sale are not subject to federal income tax liability on “phantom income” they never received. The IRS recognizes that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes. This clarification rescues tens of thousands of distressed home sellers from personal liability upon expiration of the Mortgage Forgiveness Debt Relief Act of 2007 on December 31, 2013.
C.A.R. is seeking a similar ruling from the California Franchise Tax Board (FTB), which has been awaiting the IRS action. C.A.R. anticipates the FTB will act promptly. Short sales may raise other tax issues and, as always, homeowners should speak with their tax professional regarding the tax consequences of a short sale.
C.A.R. 2012 President LeFrancis Arnold
Arnold was a licensed real estate broker for 36 years and a member of organized real estate for the last 35 years. He served as president of the Los Angeles County Board of REALTORS® (LACBOR) in 2008, and was the first appointed large Board National Association of REALTORS® representative for the Rancho Southeast Association of REALTORS® in 2006. He was first appointed C.A.R director in 1994 and was named REALTOR® of the Year by his local association in 1979 and 2008. Arnold served on numerous C.A.R. committees at the leadership level, including the Executive Committee, Strategic Planning and Finance, Housing Opportunity, Housing Affordability Fund, Real Estate Finance, Equal Opportunity and Cultural Diversity, and CREPAC. Active in his community, Arnold served as chairman of the Lynwood Economic Development Committee and was currently on the board of the Los Angeles County Boards of Real Estate.
A former defensive lineman for the Denver Broncos, Arnold followed his mother, Evelyn, into the real estate business in 1976. He became a broker the following year and a general contractor in 1979. Together, Arnold and his mother built Excellence Realty and All Communities Escrow Services, Inc. Most recently, Arnold was a candidate for the California State Assembly 62nd District seat.
Arnold is survived by his wife, Sheryl, and two sons, Jason and LeFrancis II, and two grandchildren. Funeral services will be held on Monday, September 9, 10 a.m. at Faithful Central Bible Church, 321 North Eucalyptus Avenue, Inglewood, CA., followed by a celebration of Arnold’s life at The Proud Bird Restaurant, 11022 Aviation Boulevard, Los Angeles, CA.
In lieu of flowers, contributions may be made to the C.A.R. Scholarship Foundation or C.A.R. Housing Affordability Fund. Mail checks payable to either fund to C.A.R., 525 S. Virgil Avenue, Los Angeles, CA 90020, or to use a credit card, email scholarship@car.org and C.A.R. staff will assist you.
The Silicon Valley Association of REALTORS® (SILVAR) has been appointed the National Association of REALTORS® (NAR) Ambassador Association to the Philippines. NAR’s Ambassador Association program gives members of the Ambassador Association the opportunity to expand their global business networks and get involved in international real estate activities at the local or state level.
“We are pleased to learn that the National Association of REALTORS® has approved SILVAR’s request to be the Ambassador Association to the Philippines. The program will give our members the opportunity to learn more about real estate in that country and develop ties and business opportunities with real estate professionals in this part of the world,” said SILVAR Executive Officer Paul Cardus.
The Ambassador Association program is part of NAR’s International Ambassador Program, which was developed to accommodate international visitors and to expose them to the range of opportunities available to them throughout NAR. Each year NAR hosts more than 2,000 real estate professionals from around the world. Majority of these international real estate professionals attend the REALTORS® Annual Conference and Expo. There are also a number of delegations and individuals that request meetings with REALTORS® throughout the year for guidance on the industry, to network, and to exchange information about the U.S. and global real estate markets. The Ambassador Association program also presents opportunities for REALTORS® interested in developing international business ties, as a result of the growing CIPS Network and globalization within local real estate markets.
As the Ambassador Association to the Philippines, SILVAR will help facilitate contact between the Chamber of Real Estate and Builders Association in the Philippines and any state or local REALTOR® association in the United States that requests assistance. The Ambassador Association works closely with the President’s Liaison assigned to that country and NAR’s Regional Coordinator for that part of the world.
A formal introduction with the Chamber of Real Estate and Builders Association will take place at the NAR REALTORS® Conference & Expo, which will be held November 8-11 in San Francisco.
In line with its goal to enhance members’ professional development, the Education & Technology Committee of the Silicon Valley Association of REALTORS® (SILVAR) will present an Online Transaction Management Training Series FREE for members beginning in September. The courses will focus on how to create and manage transactions online, including how to use, e-sign, and store forms. Members are invited to sign up for these classes online at ims.silvar.org.
The courses are:
OTM 101: Beginner’s Guide to Creating Stress Free Digital Transactions
September 5 and October 3, 1:30-3:00 PM both days
Instructor: Bryan Robertson
An overview of the online transaction process from beginning to end, including the software and online forms you’ll need, preparing digital forms, getting digital signatures, and sharing and storing your documents. You’ll learn about PRDS/C.A.R. forms, ZipForms, Docusign, Authentisign, CutePDF, PDFEscape, CamScanner, DropBox, and GoogleDrive.
OTM 102: PRDS Forms Online: Using Instanet and Authentisign
September 10, 10:00 AM-12:00 PM; October 8, 2013, 1:30-3:30 PM
Instructor: Robert Johnson, SILVAR IT Administrator
Learn about the new PRDS Forms on the Instanet Solutions platform and be able to access your forms anywhere and anytime, from virtually any Internet-connected computer. The class will demonstrate the procedures to log in, create transactions, fill out the forms online, and then either print or email those forms to a client. Students will get a better understanding of the Instanet Solutions platform, including how to use Authentisign.
OTM 104: A Workshop on Creating an Online Transaction on DocuSign
September 23 and October 22, 1:30-3:00 PM both days
Instructor: Chris Alston
In this hands-on workshop, you will create an online transaction from beginning to end on your laptop. You will prepare one PRDS form (e.g. purchase contract) and one C.A.R. form (e.g. AVID) for e-signature by buyer (fellow student) and yourself. Then you’ll email the signed documents in PDF form to listing agent (fellow student) and store the PDF in the cloud. The class will touch on the basics for doing this on an iPad, but the class is geared toward laptops.
Silicon Valley Association of REALTORS® says ... 