For years, the condo conversion craze has turned abandoned warehouses, firehouses, & schools into hip personal dwellings. And then there's this:
Daily Real Estate News May 28, 2008
Maine: Why Not Buy an Old Stone Jail?
Anyone looking for security should check out the place just listed by Dawson Commercial Realty in Bangor, Maine.
It’s a roomy, brick and stone county jail in the middle of Skowhegan. Constructed in 1897, the 14,000 square-foot building is for sale for $200,000 and comes complete with razor-wire fencing. There are no zoning or permit-use restrictions, but Philip Roy, chairman of the Somerset County Commission, says only buyers with profit in mind should apply.
"I'd like to have it go back on the tax rolls of Skowhegan, and I'd also like to see it create jobs – ultimately, that's what we're looking for," he says.
Source: The Associated Press (05/28/2008)
Wednesday, May 28, 2008
Tuesday, May 20, 2008
Further Analysis of the Quarterly Comparisons & Some Suggestions
I usually laugh when I hear national news regarding "the housing market" or "the real estate market". My reasoning is simple: All real estate is local. You've probably heard this statement a lot lately, so I apologize for adding to the cliche parade. This statement, however, is not only true, but it helps provide perspective when all of the housing news is dire.
Don't get me wrong, I am not here to sugar coat anything. Many markets across the country are down in some shape or form. Inventory is high, loan commitments are harder to obtain, and therefore, there are fewer buyers capable of absorbing the large inventory of listings. Still, depending on how one measures the different housing numbers, not every market is suffering.
I've analyzed three zip codes in the Louisville area for the past couple of years. My comparisons measure sales volume (total number of single-family home sold), high sale price, low sale price, median sale price, & average sale price. I then compare those categories for each quarter against the previous year's applicable quarter (i.e. year over year). To me, this is a more accurate comparison than to compare in a straight line quarterly sale figures. Granted, no measurement timeframe is perfect, but at least this type of analysis should help to equalize weather conditions & the frequency of holidays. Both of these factors are influential with regard to home sales.
Just looking at the 1st quarter of 2007 versus the 1st quarter of 2008, a few trends appear to hold across the board: Sales volume decreased substantially (20% in the 40205 zip; 54% in the 40206 zip; 32% in the 40207 zip), median prices are up in all three zip codes (11% in 40205; 9% in 40206; 11% in 40207), & average prices are up in all three zip codes (9% in 40205; 36% in 40206; 15% in 40207). So how do we make sense of such conflicting data?
From my perspective, it's pretty simple: The best products still sell, and they still sell for a good price. The problem for home sellers is, there's not as much overflow to help diminish the inflated inventory. Simply put, the buyers that are out there & actually capable of purchasing a home have the luxury of being picky. Once they find a home to purchase, there's still plenty of good choices available for the remainder of the smaller buyer pool. Buyers are more patient. They expect to get a fair, if not, great deal, and they're willing to look long & hard to find it. Since there's fewer buyers competing for the available properies, homes that look tired, cluttered, dumpy, and/or out-dated don't sell--unless they are offered at a discount. Few home sellers want to discount their price to a level that is required to sell it, and even fewer are willing to do a few things to their home to make it stand out. Thus, inventory remains high, and sellers remained convinced that the reason their home isn't selling has to do with something other than these two factors.
My question is: WHY? Many buyer objections can be mitigated with little expense to the seller. Simple things like cleanliness, fresh paint, & minimal landscaping can mean thousands to a seller, or at worst, these changes could be the difference between a sale & a home sitting on the market for months.
It's time for sellers to be proactive in regaining leverage in the transaction. Everyone believes leverage is clearly on the side of buyers, however, sellers can put serious pressure on prospective buyers to act fast by pricing their homes accordingly & sprucing up their homes so that every buyer that walks through the door perceives that this home is too good to pass up. In this current market, leverage might be more important even than location, location, location.
Don't get me wrong, I am not here to sugar coat anything. Many markets across the country are down in some shape or form. Inventory is high, loan commitments are harder to obtain, and therefore, there are fewer buyers capable of absorbing the large inventory of listings. Still, depending on how one measures the different housing numbers, not every market is suffering.
I've analyzed three zip codes in the Louisville area for the past couple of years. My comparisons measure sales volume (total number of single-family home sold), high sale price, low sale price, median sale price, & average sale price. I then compare those categories for each quarter against the previous year's applicable quarter (i.e. year over year). To me, this is a more accurate comparison than to compare in a straight line quarterly sale figures. Granted, no measurement timeframe is perfect, but at least this type of analysis should help to equalize weather conditions & the frequency of holidays. Both of these factors are influential with regard to home sales.
Just looking at the 1st quarter of 2007 versus the 1st quarter of 2008, a few trends appear to hold across the board: Sales volume decreased substantially (20% in the 40205 zip; 54% in the 40206 zip; 32% in the 40207 zip), median prices are up in all three zip codes (11% in 40205; 9% in 40206; 11% in 40207), & average prices are up in all three zip codes (9% in 40205; 36% in 40206; 15% in 40207). So how do we make sense of such conflicting data?
From my perspective, it's pretty simple: The best products still sell, and they still sell for a good price. The problem for home sellers is, there's not as much overflow to help diminish the inflated inventory. Simply put, the buyers that are out there & actually capable of purchasing a home have the luxury of being picky. Once they find a home to purchase, there's still plenty of good choices available for the remainder of the smaller buyer pool. Buyers are more patient. They expect to get a fair, if not, great deal, and they're willing to look long & hard to find it. Since there's fewer buyers competing for the available properies, homes that look tired, cluttered, dumpy, and/or out-dated don't sell--unless they are offered at a discount. Few home sellers want to discount their price to a level that is required to sell it, and even fewer are willing to do a few things to their home to make it stand out. Thus, inventory remains high, and sellers remained convinced that the reason their home isn't selling has to do with something other than these two factors.
My question is: WHY? Many buyer objections can be mitigated with little expense to the seller. Simple things like cleanliness, fresh paint, & minimal landscaping can mean thousands to a seller, or at worst, these changes could be the difference between a sale & a home sitting on the market for months.
It's time for sellers to be proactive in regaining leverage in the transaction. Everyone believes leverage is clearly on the side of buyers, however, sellers can put serious pressure on prospective buyers to act fast by pricing their homes accordingly & sprucing up their homes so that every buyer that walks through the door perceives that this home is too good to pass up. In this current market, leverage might be more important even than location, location, location.
1st Quarter 2007 vs. 2008
1st Quarter 2007: 40205
# of Sales-------High--------Low--------Median--------Average
----54--------$795,000-----$118,000-----$219,200-------$246,355
1st Quarter 2008: 40205
# of Sales-------High--------Low--------Median--------Average
----43--------$700,000-----$118,500-----$242,500-------$267,465
--------------------------------------------------------
1st Quarter 2007: 40206
# of Sales-------High--------Low--------Median--------Average
----61---------$475,000-----$36,000-----$149,000-------$171,718
1st Quarter 2008: 40206
# of Sales-------High--------Low--------Median--------Average
----28-------$1,050,000-----$66,000-----$162,976-------$233,798
--------------------------------------------------------
1st Quarter 2007: 40207
# of Sales-------High--------Low--------Median--------Average
----100------$1,260,000-----$120,500----$206,500------$260,903
1st Quarter 2008: 40207
# of Sales-------High--------Low--------Median--------Average
----68-------$2,300,624-----$123,000----$230,000-------$298,990
--------------------------------------------------------
# of Sales-------High--------Low--------Median--------Average
----54--------$795,000-----$118,000-----$219,200-------$246,355
1st Quarter 2008: 40205
# of Sales-------High--------Low--------Median--------Average
----43--------$700,000-----$118,500-----$242,500-------$267,465
--------------------------------------------------------
1st Quarter 2007: 40206
# of Sales-------High--------Low--------Median--------Average
----61---------$475,000-----$36,000-----$149,000-------$171,718
1st Quarter 2008: 40206
# of Sales-------High--------Low--------Median--------Average
----28-------$1,050,000-----$66,000-----$162,976-------$233,798
--------------------------------------------------------
1st Quarter 2007: 40207
# of Sales-------High--------Low--------Median--------Average
----100------$1,260,000-----$120,500----$206,500------$260,903
1st Quarter 2008: 40207
# of Sales-------High--------Low--------Median--------Average
----68-------$2,300,624-----$123,000----$230,000-------$298,990
--------------------------------------------------------
4th Quarter 2006 vs. 2007
4th Quarter 2006: 40205
# of Sales-------High--------Low--------Median--------Average
----76---------$1,000,000---$119,900----$218,000-------$243,179
4th Quarter 2007: 40205
# of Sales-------High--------Low--------Median--------Average
----84---------$779,500-----$139,00-----$215,000--------$252,778
---------------------------------------------------------------
4th Quarter 2006: 40206
# of Sales-------High--------Low--------Median--------Average
----40--------$1,150,000-----$68,204-----$199,000-------$251,546
4th Quarter 2007: 40206
# of Sales--------High--------Low--------Median--------Average
----39---------$500,000-----$65,000-----$195,000-------$216,038
-------------------------------------------------------------
4th Quarter 2006: 40207
# of Sales-------High--------Low--------Median--------Average
----88--------$2,350,000---$120,000----$210,000--------$284,858
4th Quarter 2007: 40207
# of Sales-------High--------Low--------Median--------Average
----66---------$880,000-----$112,337----$250,000-------$323,256
-------------------------------------------------------------
# of Sales-------High--------Low--------Median--------Average
----76---------$1,000,000---$119,900----$218,000-------$243,179
4th Quarter 2007: 40205
# of Sales-------High--------Low--------Median--------Average
----84---------$779,500-----$139,00-----$215,000--------$252,778
---------------------------------------------------------------
4th Quarter 2006: 40206
# of Sales-------High--------Low--------Median--------Average
----40--------$1,150,000-----$68,204-----$199,000-------$251,546
4th Quarter 2007: 40206
# of Sales--------High--------Low--------Median--------Average
----39---------$500,000-----$65,000-----$195,000-------$216,038
-------------------------------------------------------------
4th Quarter 2006: 40207
# of Sales-------High--------Low--------Median--------Average
----88--------$2,350,000---$120,000----$210,000--------$284,858
4th Quarter 2007: 40207
# of Sales-------High--------Low--------Median--------Average
----66---------$880,000-----$112,337----$250,000-------$323,256
-------------------------------------------------------------
3rd Quarter 2006 vs. 2007
3rd Quarter 2006: 40205
# of Sales-------High--------Low--------Median--------Average
----103------$925,000-----$102,000-----$210,000--------$247,795
3rd Quarter 2007: 40205
# of Sales-------High--------Low--------Median--------Average
----85--------$823,800-----$103,000-----$250,000-------$273,777
---------------------------------------------------------
3rd Quarter 2006: 40206
# of Sales-------High---------Low-------Median--------Average
----42--------$725,000------$60,000-----$170,000--------$248,415
3rd Quarter 2007: 40206
# of Sales-------High--------Low--------Median------- Average
----69-------$1,250,000-----$25,000-----$200,000--------$272,694
----------------------------------------------------------
3rd Quarter 2006: 40207
# of Sales-------High--------Low--------Median--------Average
----116------$1,850,000----$130,000-----$230,000-------$305,868
3rd Quarter 2007: 40207
# of Sales-------High--------Low--------Median--------Average
----102------$1,137,500----$117,000-----$228,000-------$269,187
----------------------------------------------------------
# of Sales-------High--------Low--------Median--------Average
----103------$925,000-----$102,000-----$210,000--------$247,795
3rd Quarter 2007: 40205
# of Sales-------High--------Low--------Median--------Average
----85--------$823,800-----$103,000-----$250,000-------$273,777
---------------------------------------------------------
3rd Quarter 2006: 40206
# of Sales-------High---------Low-------Median--------Average
----42--------$725,000------$60,000-----$170,000--------$248,415
3rd Quarter 2007: 40206
# of Sales-------High--------Low--------Median------- Average
----69-------$1,250,000-----$25,000-----$200,000--------$272,694
----------------------------------------------------------
3rd Quarter 2006: 40207
# of Sales-------High--------Low--------Median--------Average
----116------$1,850,000----$130,000-----$230,000-------$305,868
3rd Quarter 2007: 40207
# of Sales-------High--------Low--------Median--------Average
----102------$1,137,500----$117,000-----$228,000-------$269,187
----------------------------------------------------------
2nd Quarter 2006 vs. 2007: Finally Catching Up
It's been awhile since I've posted comparison numbers for the three zip codes I've been monitoring for the past couple of years. I've finally caught up, and the figures are below for the 40205, 40206, & 40207 zip codes in the Louisville area. The numbers are based on the Greater Louisville Association of REALTORS MLS. As usual, the data include only single-family homes. Condos were excluded from this analysis. Enjoy!
2nd Quarter 2006: 40205
# of Sales:-------High---------Low--------Median----------Average
----105--------$1,700,000----$102,000----$203,608---------$247,244
2nd Quarter 2007: 40205
# of Sales-------High----------Low---------Median---------Average
----115--------$1,500,000----$117,000------$226,950--------$253,850
-----------------------------------------------------------------
2nd Quarter 2006: 40206
# of Sales-------High---------Low---------Median----------Average
----63---------$1,138,000----$67,500------$168,500---------$217,149
2nd Quarter 2007: 40206
# of Sales-------High---------Low---------Median---------Average
----66---------$800,000-----$39,900-------$182,000--------$221,496
------------------------------------------------------------------
2nd Quarter 2006: 40207
# of Sales-------High---------Low---------Median---------Average
----118-------$1,427,500----$114,000------$225,000--------$299,473
2nd Quarter 2007: 40207
# of Sales-------High---------Low---------Median---------Average
----139-------$1,025,000----$118,000------$215,000--------$283,927
-------------------------------------------------------------------
2nd Quarter 2006: 40205
# of Sales:-------High---------Low--------Median----------Average
----105--------$1,700,000----$102,000----$203,608---------$247,244
2nd Quarter 2007: 40205
# of Sales-------High----------Low---------Median---------Average
----115--------$1,500,000----$117,000------$226,950--------$253,850
-----------------------------------------------------------------
2nd Quarter 2006: 40206
# of Sales-------High---------Low---------Median----------Average
----63---------$1,138,000----$67,500------$168,500---------$217,149
2nd Quarter 2007: 40206
# of Sales-------High---------Low---------Median---------Average
----66---------$800,000-----$39,900-------$182,000--------$221,496
------------------------------------------------------------------
2nd Quarter 2006: 40207
# of Sales-------High---------Low---------Median---------Average
----118-------$1,427,500----$114,000------$225,000--------$299,473
2nd Quarter 2007: 40207
# of Sales-------High---------Low---------Median---------Average
----139-------$1,025,000----$118,000------$215,000--------$283,927
-------------------------------------------------------------------
Friday, May 02, 2008
Short Sale Tax Implications--REWIND
I need to set the record straight it seems, as I've run across information that disagrees with my post regarding short sales & the tax implications for the sellers of short sales. It appears that back in December of 2007, President Bush signed into law the Mortgage Forgiveness Debt Relief Act of 2007 which, for all intents & purposes, removes the former tax consequences that accompanied this type of forgiven debt. So instead of the seller of a short sale being taxed on the shortfall of what is owed on his/her home, the seller can sell his home short with no Federal tax liability. This is truly remarkable, and it's important to note that this law expires on December 31, 2009.
Most importantly, however, is that sellers of short sales consult their CPA or tax professional to ensure that they are completely & professionally informed of any tax consequences that could result from selling their home for less than what is owed.
Here's the article:
The IRS Forgives Until December 31, 2009
Thursday, May 01, 2008 - By Thomas M. Mitchell
If being in default and the threat of foreclosure aren't troubling enough, the thought of the IRS coming around after the fact is sure to keep sellers up all night. They have all heard the stories of being tracked down by the tax man to pay taxes on “forgiven debt.” To them it’s like a bad dream turned into a nightmare, all summed up and justified by a bunch of letters and numbers. But not every code section is necessarily a 4 letter word.
Code Sec 108(a)(1)(B),(C) – better known as 1401, means everything to some homeowners in today’s market … but it only has meaning in light of HR 3648. Then again, Section 163(h)(3)(b) is really the key to the whole thing. Make sense to you?
It doesn’t to your homeowners either. Staring foreclosure in the face they want to know if there is anything they can do. Can you sell their house before the deadline? In most cases your answer would be no because they are completely “upside down” but there are cases in which a short sale could work. And when you broach that subject one of the first questions they may ask is “what is our tax liability if we agree to a short sale?”
While the correct response is that you are neither a tax lawyer nor a CPA, you need to be able to let them know that if they qualify there are some options that may resolve that issue. And it all ties back to December 20, 2007, when President Bush signed into law a new measure giving tax breaks to homeowners who have mortgage debt forgiven. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.
Why is this so important? In most instances, debt that is forgiven or cancelled by a lender must be included as (ordinary) income on the seller’s tax return and is taxable. There are a number of terms within the bill that are central to the issue, such as “Acquisition Indebtedness” – and you need to know them.
And don’t forget December 31, 2009. That’s the date when this tax break expires. It only applies to debts discharged from January 1, 2007 to December 31, 2009. And tell your sellers that “being insolvent” as a result of bankruptcy doesn’t count.
http://nationalrealtynews.com/content/templates/default.aspx?a=963&template=print-article.htm
Most importantly, however, is that sellers of short sales consult their CPA or tax professional to ensure that they are completely & professionally informed of any tax consequences that could result from selling their home for less than what is owed.
Here's the article:
The IRS Forgives Until December 31, 2009
Thursday, May 01, 2008 - By Thomas M. Mitchell
If being in default and the threat of foreclosure aren't troubling enough, the thought of the IRS coming around after the fact is sure to keep sellers up all night. They have all heard the stories of being tracked down by the tax man to pay taxes on “forgiven debt.” To them it’s like a bad dream turned into a nightmare, all summed up and justified by a bunch of letters and numbers. But not every code section is necessarily a 4 letter word.
Code Sec 108(a)(1)(B),(C) – better known as 1401, means everything to some homeowners in today’s market … but it only has meaning in light of HR 3648. Then again, Section 163(h)(3)(b) is really the key to the whole thing. Make sense to you?
It doesn’t to your homeowners either. Staring foreclosure in the face they want to know if there is anything they can do. Can you sell their house before the deadline? In most cases your answer would be no because they are completely “upside down” but there are cases in which a short sale could work. And when you broach that subject one of the first questions they may ask is “what is our tax liability if we agree to a short sale?”
While the correct response is that you are neither a tax lawyer nor a CPA, you need to be able to let them know that if they qualify there are some options that may resolve that issue. And it all ties back to December 20, 2007, when President Bush signed into law a new measure giving tax breaks to homeowners who have mortgage debt forgiven. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.
Why is this so important? In most instances, debt that is forgiven or cancelled by a lender must be included as (ordinary) income on the seller’s tax return and is taxable. There are a number of terms within the bill that are central to the issue, such as “Acquisition Indebtedness” – and you need to know them.
And don’t forget December 31, 2009. That’s the date when this tax break expires. It only applies to debts discharged from January 1, 2007 to December 31, 2009. And tell your sellers that “being insolvent” as a result of bankruptcy doesn’t count.
http://nationalrealtynews.com/content/templates/default.aspx?a=963&template=print-article.htm
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