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Have Tax Questions About Selling Your Home?

Have Tax Questions About Selling Your Home

A recent article posted on Intuit’s Turbo Tax website addressed a series of questions and answers that every property seller should know before engaging in a real estate contract.

This is good information to be aware of, thus our sharing.  Providing answers to these questions is “out of bounds” for anyone without the proper legal credentials, which is why we are simply going to cite the post here and let the experts inform you of the regulations you should consider.

For those home owners in California who are considering moving from bigger cities such as San Francisco, Silicon Valley or even Los Angeles and want to settle down to more rural areas such as Sonoma County or even Napa County, this is some good information to know about when connecting up with your Realtor to sell.

Among the topics covered in this article are the following:

As you can see, answers to these questions can impact your tax obligations significantly.  They may either confirm your decision to sell or encourage you to wait.  Either way you will be making a more informed and sensible decision.

For detailed information please refer to the original post here:  https://turbotax.intuit.com/tax-tips/home-ownership/tax-aspects-of-home-ownership-selling-a-home/L6tbMe3Dy?&cid=em_44867_6306_001_2019__DT_

North Bay Area August Real Estate Report

North Bay Area August Real Estate Report

And we thought we had seen it all…but, no, there was more!  How about record-breaking heat, more fires, unhealthy air, and a pandemic?  Despite it all, the real estate market in Sonoma, Marin, and Napa counties have continued to thrive and even grow!

Here are the statistics for single family homes as recently reported in the Press Democrat, by local Realtor Jeff Schween, on September 13, 2020:

Sonoma County

New listings:  356 (down 25% from 2019)

Escrow openings:  585 (up 32% from 2019)

Closings:  534 (up 33% from 2019)

Homes for sale at end of August:  650 (down 43% from 2019)

Absorption rate:  82%

(Note:  Absorption rate is calculated by dividing the number of homes sold by the number of homes available at the end of the month)

Marin County

New listings:  198

Escrow openings: 247 (up 49%mfrom 2019)

Closings: 258

Homes for sale at end of August: 287 (28% down from 2019)

Absorption rate:  89% (one of the Bay Area’s hottest)

Napa County

New listings:  97 (down 38% from 2019)

Escrow openings: 173

Closings: 154

Homes for sale at end of August:  262

Absorption rate:  59% (this indicates an increase in values will follow)

The reasons for this healthy increase in the North Bay real estate market are probably three-fold:  more work-from-home opportunities, desirability of wine country, and more affordable housing than other local urban areas.

So, despite some of the disasters that have occurred in our northern counties, they still appeal to a myriad of homebuyers.  Sun Pacific Mortgage has seen an increase of borrowers who need a fast close for their property purchase.  The lack of inventory makes each escrow a sprint to the finish.  We have been known to finish many of our loans in as little as a week!  If you find yourself in a time crunch to close your deal, or just want to look better than the next guy when presenting your offer, give us a call at 707-523-2099.

Santa Rosa Sees New Interest from Buyers

Santa Rosa Sees New Interest from Buyers

Santa Rosa Sees New Interest from Buyers

Local Sonoma County Realtor, Jeff Schween, published an article in the Press Democrat on August 16, 2020 summarizing today’s happenings in the Santa Rosa real estate market.  He says we are seeing a shift in affluency from larger metro markets to nearby suburbia.  In the past, buyers looking to relocate stayed near their current residence.  This does not appear to be the case during this pandemic.  He goes on to state some surprising data to support his observation.  Here are some statistics from the MLS used to substantiate the claim that Metro Bay Area has discovered Suburbia North Bay:

SANTA ROSA METRO REGION – JULY:

  • Active Listings: 324 single-family homes (11% less than July 2019)
  • Pending Contracts: 245 (45% increase over July 2019)
  • New Listings: 195
  • Completed Sales: 231 (38% increase over July 2019)
  • Months’ Supply of Inventory (MSI): 1.4 [Note: 4.0-6.0= balanced market]

Here was the summary breakdown by neighborhood:

NORTHEAST SANTA ROSA

  • Active Listings: 152
  • New Escrows: 95
  • Completed Sales: 93 (a record for this submarket)
  • MSI: 1.6

SOUTHEAST SANTA ROSA

  • Active Listings: 52
  • New Listings: 32 (26% less than July 2019)
  • Completed Sales: 37
  • MSI: 1.4

OAKMONT:

  • New Listings: 19
  • Active Listings: 55
  • New Escrows: 28
  • Completed Sales: 15
  • MSI: 3.7

NORTHWEST SANTA ROSA:

  • New Escrows: 59
  • Active Listings at end of July: 46
  • New Listings: 54
  • Completed Sales: 63
  • MSI: 0.7

SOUTHWEST SANTA ROSA:

  • Active Listings at end of July: 19
  • Completed Sales: 23
  • New Listings: 19
  • New Escrows: 27
  • MSI: 0.8

From this well-documented report on the activity in Santa Rosa in July, it is apparent that folks have discovered our “Paradise” and are actively looking to migrate North!

Good news/ Bad news:  we can look for home prices to rise and supply to be lower than preferred.

If you have been considering a change of scenery and live in any one of these coveted areas of Santa Rosa, now is the time to contact your real estate agent.  We are already seeing bidding wars in some areas.

If you are looking to buy but find yourself just short of meeting the restrictions of a conventional loan or need a quick close, give Sun Pacific Mortgage a call at 707-523-2099.  We have been in business in Santa Rosa or 32 years and have maintained a sterling reputation based on our honesty and helpfulness.

Wildfires and Sonoma County Real Estate Market

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While the fires have no doubt slowed real estate buying & selling activity in the North Bay for the time being, we know from past disaster experiences, that we can expect the market to tighten up.  With more demands for housing already existing within Sonoma County and surrounding regions – and the demands being placed on the market from those wishing to move into the area – we should see some intense home buying activity going into September!

Below are some statistics regarding the average price per square foot (psf) this month compared to last year as quoted in the recent issue of the Press Democrat:

  • Sonoma County:  $477 (7% up Med. Prop value- $700,000)
  • Sonoma Coast:  $597 (17% up)
  • Northwest S.R.: $412 (13% up)
  • Sonoma:  $692 (11% up and most expensive city in County)
  • Northeast S.R.: $429 (8% up)
  • East Petaluma: $414 (6% up)
  • Cotati & Rohnert Park: $389 (6% up)
  • Russian River:  $450 (4% up)
  • Windsor: $366 (3% up)
  • Healdsburg: $631 (no change)
  • Southwest S.R. $368 (no change)
  • Petaluma West: $453 (6% down)
  • Oakmont: $394 (6% down)
  • Sebastopol: $556 (7% down)
  • Cloverdale: $323 (10% down)
  • Southeast S.R.: $385 (23% down)

Having been through ups and downs in Sonoma County over the past several decades, we can safely predict the aftermath relative to the real estate market.  Going into this phase, we were already facing a dearth of inventory and the demand just continues to grow now with those who have lost homes in the fires or those who have decided not to rebuild but just buy another home elsewhere in this area.

For anyone thinking of selling this is the time!  For anyone looking to buy, you want to connect up with an experienced local Realtor and Lender to find out what you qualify for.  Then find a loan program to make your purchase offer stronger so yours can be accepted!  For example, consider shorter closing dates, possibly getting alternative financing such as a Hard Money loan so your loan condition can be shorter, etc.

Good luck!

So Many Mortgage Changes…So Many Myths!

So Many Mortgage Myths

In an excellent article written by Erica Sweeney for Realtor.com, the author lists common myths that she wishes to debunk.  We feel that this article is so on-point with California mortgage market, that we want to share the essence with you.

Recent days have brought on changes unheard of in the past, especially in the mortgage business.  Experts have shared their truths regarding what is really happening, and these facts are presented here with their opposing myths being debunked:

  1. Everyone qualifies for a low interest loan:  This is only true for borrowers with good credit scores (a minimum of 620) or higher.  It also depends on the size of your down payment, condition of the property and other factors.
  2. Getting a mortgage today is easy: Because of the pandemic and unemployment jitters, lenders have tightened their loan requirements.  Some financial institutions are not even considering jumbo loans (max of $510,400).  Other Mortgage Brokers are asking for 20% down and a minimum credit score of 700.  As if this were not discouraging enough, the anticipation of lower interest rates has generated a glut of applications waiting to be reviewed, so if you’re in a hurry, you could potentially miss your window of opportunity.
  3. Everyone should refinance their mortgage:  This makes sense if you plan to stay in your current house for a long period of time. Otherwise, for those Californian’s who are looking to move out of expensive real estate cities such as San Francisco, San Mateo, Marin, etc. should just consider the 2%-6% origination fees it takes to acquire a new mortgage so you work out additional savings or realize the cost for the refinance.
  4. You can apply for a mortgage after you’ve found a home:  This is a very real mistake borrowers make.  In these riskier and surprisingly faster paced days of house-hunting in Sonoma County, San Francisco County and in fact the entire Bay Area, sellers want to make sure you are not just a “looky-loo”.  They will know you are serious if you are pre-approved and, as a buyer, you will know exactly how much financing you can expect – so get pre-qualified before you waste time or effort.
  5. Mortgage forbearance means you don’t have to pay back your loan:  Nearly 8% of mortgages (3.8 million homeowners) were in forbearance as of July 26 according to the Mortgage Bankers Association.  It is wise to understand that forbearance is not forgiveness.  It is more of a “time-out” with no negative impact to your credit score and no late fees.  Borrowers will still need to reach an agreement about these missed payments with their lender, and agreements usually entail adding these payments to the back end of the loan, not forgiving them.

If, after reading this information, you realize that you need help getting that real estate financing you need or want, consider calling Sun Pacific Mortgage.  We have been in business over 32 years in California, offering our alternative financing – also known as  hard money loans – for home owners & home buyers just like you.  We are not restricted by the stringent regulations for these low-cost loans.  Our office has been able to help many Realtors and other Mortgage Brokers and their clients, who fall short of qualifying for a conventional loan of any type.  Give us a call at 707-523-2099 to see what we can do for you.  We can perform fast, with many financed in under 1-2 weeks.

See entire article here: https://www.realtor.com/advice/finance/coronavirus-mortgage-myths-debunked/?identityID=8647352&MID=2020_0813_ArticleNL&RID=329709942&cid=eml_promo_Marketing_NonPRSL_ArticleNL_cons.11799702_2020_0813_ArticleNL-hero-blogs_finance

 

Not Even the Pandemic Can Keep Home Prices Down

Not Even the Pandemic Can Keep Home Prices Down

Not just the California real estate market but majority of the US market has surprised even the most knowledgeable experts in the field.  Despite the crippling pandemic, unemployment crisis, a recession, and the looming presidential election, the residential real estate market is staging a surprising rebound.

According to realtor.com, the median home price increased by 6.2% over last year.  Homes are selling faster than they did in 2019 and bidding wars are back!

To quote Ali Wolf, chief economist of Meyers Research, a national real estate consultancy:

“The housing recovery has been nothing less than remarkable.  The expectation was that housing would be crushed.  It was – for about two months-then it came roaring back.  People are really quick today to compare today with the Great Recession, but we’re dealing with a different animal.”

The reason for this resurgence in home buying may well be because we are beginning to feel more confident about the idea of buying or selling a home.  In fact, according to a survey conducted by Fannie Mae in June nearly 61% out of 1000 consumers said it was a good time to buy a home.

What’s driving this surprisingly hot market?  One big reason is the severe shortage of homes for sale, making it great for sellers, not so much for buyers.  This inequity leads to higher prices even during a recession and the worst public health crisis we have ever experienced.  Add to that the historically low mortgage rates and you have another reason for the run on housing.  In both Northern and Southern California the shortage started prior to the firestorms which occurred in 2017, 2018 & 2019.

But, why the rush to buy now?  After spending several months at home, these potential buyers are asking, “If I’m going to spend the next 6-12 months working out of my house, I need a bigger house.”

Surprisingly, even with the worst unemployment since the Great Depression, many working Americans have held on to their jobs.  These tend to be the higher-paid workers with the means to buy homes.  Staying home more has meant more savings to boost their down payment reserves.

If you are in the “turned down elsewhere?” category for a conventional loan, but don’t want to be left out of this opportunity to move up or get into the market for the first time, give Sun Pacific Mortgage a call at 707-523-2099.  We offer alternative financing, also known as Hard or Private Money.  It has proven helpful to hundreds of our clients.

California Homeowners Are in the Driver’s Seat

California Homeowners Are in the Drivers Seat

If you have been considering a move up or buy your first-time home, consider this the optimal time to make the investment!  While today’s homeowners have been staying in their homes longer, equity has been building, and when equity grows, selling a house becomes increasingly desirable.  This equity can now be applied forward to the purchase of a new home.

According to Q2 2020 U.S. Home Sales Report:

“The latest figure, based on median purchaser and resale prices, marked yet another peak level of raw profits in the United States since the housing market began recovering from the Great Recession in 2012.”

With the “work-from-home” opportunities presented since the beginning of the pandemic, you might have been taking a looser look at how well your present home fulfills your new needs going forward.  Additionally, those with kids who are faced with distance learning for this 2020-2021 school year, have to figure out extra space for undistracted school work to be done.

Many California homeowners are considering accessing the equity in their homes to make a move to a home that better accommodates their new circumstances.

This need for more appropriate living conditions has spawned a group of buyers who are not just talking about looking for a new home, they are actively engaged in the buying process.  The Covid-19 crisis and the record low mortgage rates have converted some prospective buyers into active buyers.  Millennials are driving this market rush according to Keeping Current Matters:

“Of Millennials planning a home purchase in the next year, 57% are actively searching for a home.”

Especially here in the North Bay, we have seen a growing number of interested buyers looking for a simpler, quieter way of life which offers more   more affordable housing than the South Bay or San Francisco.

Bottom Line:  If you have considered taking advantage of your built-up equity and wish to improve your present living arrangements now that you are spending more time at home, this is the time to sell.

If you need a fast close or are just shy of qualifying for a conventional loan, give Sun Pacific Mortgage a call at 707-523-2099.  We have helped thousands of buyers just like you for over 32 years.

California Real Estate Remains Best Long-Term Investment

California Real Estate Remains Best Long Term Investment

For the seventh year in a row, Gallup is reporting that more Americans prefer real estate over other long-term investments as a vehicle for wealth growth.  The total numbers align like this:  35% prefer real estate, 21% prefer stocks, 17% CDs/bank accounts, and 16% prefer gold.

The Gallup Poll goes on to state:

“Americans have become less likely to view stocks or mutual funds as the best long-term investment after U.S. markets dropped by more than a third as the economic implications of the coronavirus outbreak set in last month.”

The obsession with the stock market took a hit with the dot-com bubble crash of 2000.  This event sucked the enthusiasm out of Americans’ ideas about investing in that market, however, and they have been mostly negative — and mixed at best — since.

Real estate was and is the No. 1 tangible investment and generally a safe haven for all, especially when financial markets take a plunge.  Billionaire Andrew Carnegie famously said that “90% of millionaires got their wealth by investing in real estate.”  We wanted to know:  Is this still true?  Is investing in real estate still a good idea?

According to nine Advisors in The Oracles, who made millions by investing in real estate, the answer is a resounding yes.  One of the advisors stated:

Most millionaires I know made more money from owning real estate than any other investment. Real estate consistently increases in value over time and outperforms other investments.”

Investing in real estate allows you to better protect yourself and your wealth. While it is true that the California real estate market has gone up and down, it has never had a long decline and just continues to maintain its current strength, despite the recent pandemic. Compare that to when Wall Street collapsed or currencies that aren’t backed by anything tangible.

It’s always a good time to buy real estate. In fact, the real wealth is made by buying when everyone else is selling and vice versa. While many are talking about a recession, the California real estate market is strong, with increasing prices and transactions throughout this sunny state!

If you would like to start on a secure path to wealth without the hassles, think about investing in available Deeds of Trusts through Sun Pacific Mortgage.  We offer California Notes with a higher return up to 13% on your investment.  Give us a call at 707-523-2099!

Are California Buyers Still in Bidding Wars?

Are California Buyers Still in Bidding Wars

Because of the lack of inventory that still exists in California real estate markets, sellers remain in the driver’s seat.  At the beginning of the pandemic, in early March, there were many who feared that this recession would trigger a repeat of the 2008 real estate debacle.  By May, the real estate market surprised the economists by remaining stable, and even growing.

Looking at Southern California for the month of May, for example, there were 6 out of 7 counties that saw increases in the both the number of homes sold and in the average selling price.  These counties included:  LA, Orange, Riverside, San Bernardino, Santa Barbara, and San Diego.  The only county to drop in average selling price, and only by 1.2%, was Ventura County.

Today, housing is truly driving the U.S. economy forward.  Because there are so few homes to purchase right now prices are rising, a natural consequence of the “supply-and-demand” principle.

Chief Economist at realtor.com, Danielle Hale explains:

“People are surprised that prices are rising, not falling, because in the last recession home prices fell, the difference this time is the severe shortage of homes for sale…We are seeing bigger price increases with{a limited} number of homes…That is likely to lead to more competition and potentially multiple offers and bidding wars.”

We saw this happen in San Francisco during the month of July, where out of 163 single-family homes that sold, 89 sold over asking price.  Another statistic stated that 42% of homeowners who made a purchase from the period January to May ended up in a bidding war.

The lesson here for prospective buyers this summer is to have your “ducks-in-row”.  Hire a trusted local real estate expert to help you navigate those muddy waters out there.  Additionally, get pre-approved for a mortgage.

If you find that you fall short qualifying for a conventional loan, or you need a loan fast (like in a week), give Sun Pacific Mortgage a call at 707-523-2099.  We are a family owned business licensed and operating in California for over 32 years.  Our private investors finance your real estate projects.   We can get you qualified quickly and have funds in your hands with lightning speed, allowing you to make a solid offer on your real estate purchase or refinance. During these incredibly competitive days in the world of real estate, that is a significant step up when bidding on property.

Recession? Yes, California Housing Market Crash? No

Recession Yes California Housing Market Crash No

The National Board of Economic Research (NBER) has announced that the U.S. economy is officially in a recession.  To which most of us would respond, “No kidding!”  The Bureau defines a recession like this:

A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators.”

We are all very aware of the consequences to the economy since this shutdown.  There is, however, a vast difference between this recession and the last one a decade ago with regards to the housing industry!

Mark Fleming, Chief Economist at First American, explained the situation thusly:

“Many still bear the scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak.  But there are distinct differences that indicate the housing market may follow a much different path.  While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

Taking into consideration our home state of California, what factors are present that make the difference between this recession and the last one?  We can look to four major reasons:

  1. Families generally have larger sums of equity in their homes.
  2. We have a shortage of housing inventory.
  3. No more irresponsible lending practices.
  4. Home price appreciation is not out of control.

It is good to remember that in three of the four previous recessions before 2008, home values appreciated.  It is the consensus of the experts that this time the housing industry is far better positioned to ride out the storm – and even come out stronger in the end.

And for both Northern California and Southern California real estate markets, values have slightly dipped but are already on their way back up to pre-pandemic.

So, get out there and connect with your local licensed Lender to get pre-qualified for a purchase and connect up with your local Realtor to find you that perfect home.

Best, Ken – Another Guy in the White Hat

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