Even Inexpensive Homes Too Pricey for Many Workers

Great article from Zillow describing exactly the problem I see with some potential buyers. Most of my clients work in high tech here in the Silicon Valley, but some work for jobs that are not so sexy and not so glamorous. Some work for lower paying jobs. It are those people who are just as hard working as anyone else, but just don't have the income to buy in this valley, especially seeing how the median sales prices keeps going up for the moment. 

The market will go down, I am sure of that. When it does some of those buyers who were priced out of the market will be in a position of buy. The only question is, WHEN will the market go down?

Even Inexpensive Homes Too Pricey for Many Workers
The incomes of low-paid workers are not keeping pace with rising home values.

With rents eating up an ever greater share of people’s incomes, more renters are looking to buy homes. But that avenue isn’t possible for many lower-income workers.

Their incomes are not keeping pace with rising home values. Since 2000, incomes among the lowest third of U.S. workers have grown 15 percent, while home values have gained 41 percent.

Although renters spend an average of 30 percent of their monthly incomes on rent, and home buyers pay an average of 15 percent for mortgage payments, the situation varies considerably by market — and by how much you make.

One extreme case is in Los Angeles, where someone in the bottom third of earners would have to spend an average of 85 percent of her monthly income on a low-priced home. By contrast, middle-income earners would pay 41 percent for mid-priced homes, and the top third of earners would pay 30 percent for the most expensive homes.

Los Angeles is one of four markets — the others are Santa Barbara, Salinas and San Jose, all in California — where the top third of earners would pay 30 percent or more of their monthly incomes for mortgages on expensive homes. Mid-range earners have to pay more than 30 percent of their incomes for mid-valued homes in 11 markets.

But the lowest third of earners have to pay more than 30 percent of their monthly incomes on low-priced homes in 77 markets — effectively pricing many of them out.

Source: Zillow Blog, Melissa Allison
http://www.zillow.com/blog/housing-too-pricey-for-many-workers-175038/

How to Get Started in Real Estate Investing

Happy Monday everyone! I hope you all are having a great day.

Real estate investing is something I encourage all my clients to get into if they have the time and money. I allot of ways real estate is a better, more sound investment that stocks. Below is a great article from the Zillow about getting started in RE investing.


How to Get Started in Real Estate Investing
Your first investment property can be quite lucrative if you prepare adequately.


There’s no reason amateur real estate investors can’t profit from small, individual property purchases. With home values currently rising 3.9 percent year-over-year, and expected to rise another 2.6 percent over the next year, why not allocate some of your savings toward real estate?

To get started off on the right foot, you’ll need to make some decisions. Follow these steps prior to entering the real estate market.

Assess your current finances

Typically, financial professionals advise buyers put down at least 20 percent of a home’s purchase price. But to avoid being responsible for two mortgages, many investors wait until they can pay for real estate outright. Obviously this requires a large savings, but to skip the lender and avoid interest rates you might opt for a foreclosure listed below the local market median.

If you do need a mortgage, you might consider living in your investment property to take advantage of owner-occupant rates. You don’t have to live there forever, either. Lenders typically require just one year of residency to lock in the lower rate for the remainder of the mortgage. Owner-occupied interest rates are much more favorable than secondary home or rental property loans.

For those fortunate enough to purchase multiple income properties simultaneously, it’s important to choose the right financing.

“We recommend our clients leverage their investment capital using cheap 30-year fixed-rate mortgages and buy as many income-producing properties as possible. This is how they accelerate their wealth-building with our turnkey properties,” says Marco Santarelli of Norada Real Estate Investments.

Determine the potential cash flow

House flipping shows can make quick profits look easy. Typically, most homeowners don’t profit when they sell shortly after closing. Of course, a major renovation on a flipped home increases the potential for short-term profit, but such extensive upgrades are going to cost a lot of money. Unless you’re capable or experienced in large-scale home improvements, don’t assume you can flip a house by yourself to benefit immediately.

Renting out the property, on the other hand, is more of a long-term strategy. Pricing requires some serious calculations to attract the largest number of possible tenants, while still covering the mortgage and homeownership costs. Although you’ll aim for profit in the beginning, the real money usually flows in after the mortgage is paid.

“When I calculated my potential cash flow from renting out my house I started with Zillow,” says Andy Prescott of Art of Being Cheap. “I looked at Zillow’s rental estimate to see how much income I could expect. Since I was renting out the home I was already living in, I knew exactly what my mortgage, insurance and tax payments would be, and had a pretty good idea how much I would spend on repairs. So I subtracted all my expected payments from my expected income to get my expected cash flow. If that number had been close to zero, I would have been nervous about unexpected expenses, but since I had a few hundred dollars cushion I knew renting my home out would work out well,” Prescott says.

Today’s rental market is notoriously expensive, and competition among lessees is high. Even if you’re not looking to be a landlord long-term, it could be financially wise to rent out your unit at least until median sale prices in the region peak.

Decide on your investment type

Many investors default to considering individual direct ownership as their only way to profit from real estate. However, partnerships (both close and limited) and publicly-traded investment trusts are designed to help investors who might not have the time, or the skills, to run real estate investments on their own. Partnerships can benefit individuals with similar investment interests who aren’t quite ready to dive in solo. Real estate investment trusts (REITs), on the other hand, enable investors to fund multiple projects simultaneously without the hassle of day-to-day management.

“REITs behave in a certain respect like stocks (potential for capital appreciation/loss) and in certain respects like bonds (high levels of current income),” says Rich Ellinger of Wealthminder. “These somewhat unique properties, combined with the ability to raise rents on the underlying properties in inflationary times, mean that REITs behave a little differently than other types of investments. Although subject to economic fluctuation, REITs have performed well in the past few decades. Over the past 20 years, REITs have appreciated approximately 13 percent per year — the top among all equity classes,” Ellinger says.

Unsurprisingly, your financial capabilities, estimated profit margins and choice of investment are all interconnected. Whether you’re starting out with $10,000 or a million, staying informed in the real estate industry — even as a passive investor — is a key to success.



Source: Zillow Blog, Jennifer Riner
http://www.zillow.com/blog/starting-in-real-estate-investing-174463/

Plan Now to Cash In on Homeowner Tax Benefits Next Year

Plan Now to Cash In on Homeowner Tax Benefits Next Year
Did you miss the chance to maximize your deductions this year? Find out what you need to know to save money next time.


In the rush to file taxes each year, many homeowners are more focused on meeting the deadline than understanding their deductions — especially if it’s their first year as a homeowner.

Now that this year’s tax deadline has passed and you have some time to think, here are some tips on fine-tuning your strategy for next year.

Defining homeowner tax deductions

A tax deduction reduces your taxable income so you pay tax on less income. If you own your primary residence, the IRS allows you to deduct mortgage interest and property taxes you paid throughout the year for which you’re filing.

This deduction happens on Schedule A of your IRS tax returns. You then carry this deduction over to the front of your tax return, which is called Form 1040, and subtract the deduction from your gross income to arrive at a new, lower income, which you’re actually taxed on.

Simply put: Being taxed on income that’s been reduced by deductions means you pay less taxes.

Exactly what can I deduct as a homeowner?

Your property taxes are deducted from your income using line 6 of Schedule A, and this can include all property taxes paid during the filing year.

If your mortgage payments include your real estate taxes, you can deduct only the amount your lender actually paid to your county assessor that year (rather than the amount your lender collected from you to pay taxes).

If you bought the home in the year for which you’re filing, your line 6 deduction can also include any pro-rated property taxes you paid on your final closing statement, so keep that statement in your tax files.

Your mortgage interest is deducted from your income using lines 10 and 11 of Schedule A. Line 10 is to deduct mortgage interest paid to your lender, who will send you a 1098 form showing how much mortgage interest you paid them during the tax year. Think of a 1098 like a W2, but instead of showing how much you made, it shows how much mortgage interest you paid. If you refinanced from one lender to another during the year, you’ll get 1098 forms from each of them, and can deduct interest paid on both.

If you bought the home in the year for which you’re filing, your line 10 deduction can also include any pro-rated mortgage interest, “discount” fees, or “origination” fees you paid on your final closing statement, so keep that statement in your tax files, too.

Line 11 is to deduct mortgage interest paid to a private lender that didn’t issue a 1098. In these cases, the IRS requires you to write that recipient’s identifying number and address on the dotted lines next to line 11. If the recipient is an individual, the identifying number is their social security number. If it’s an entity, it’s their employer identification number.

What does my tax benefit look like after deductions?

Suppose you were a single home buyer earning $90,000 per year and buying a $300,000 home with 20 percent down using a 30-year fixed rate of 3.75 percent.

This would give you a total housing payment of $1,478, which is comprised of $1,111 mortgage payment, $300 property taxes, and $67 insurance. A full year of mortgage interest would be about $9,000, and a full year of property tax would be about $3,600. These two deductions reduce your taxable income by about $12,600.

To quickly calculate your estimated tax savings, you can multiply $12,600 by your estimated tax rate of about 28 percent. The result is $3,528, meaning you’ll pay about this much less in taxes because of your homeowner deductions.

If you convert this to a monthly figure of $294 and subtract it from your total housing payment of $1,478, it reduces your after-tax housing cost to $1,184.

These are only illustrative estimates. You should consult a tax professional for precise figures specific to your situation.

Will mortgage interest deductions be eliminated soon?

Every year, politicians debate the relevance of homeowner tax deductions, and the most recent is a bill introduced in March 2015 to reduce the benefits of the mortgage interest deduction.

There is no timeline for the fate of this bill, and unless the tax code changes, it’s best to focus on current rules for mortgage interest deductions.



Source: Zillow Blog, Zillow Team
http://www.zillow.com/blog/homeowner-tax-benefits-next-year-174789/

Staging a home makes a huge difference in selling your home

I always recommend to my seller clients to stag their home. Most don't have a problem, especially seeing how I offer it as a free service. But sometimes sellers just don't see the benefit, that is until I explain to them that staging will usually fetch more money for the home$$$!

Lights! Camera! Action! Staging homes fattens sale prices

MENLO PARK -- Priced at just under $4 million, the English manor-style house with its exemplary country gardens on a wooded half-acre will undoubtedly sell itself in the runaway real estate market here.

"But just how much can it bring?" asked Robert Graves, the interior designer called in to stage the sale. "Just how much excitement can we bring to it?"

Twenty years ago, in the Pleistocene Era, sellers would pop breads in the oven to create that homey touch for prospective buyers attending an open house. How quaint.

To help speed deals along and incite the inevitable Bay Area bidding wars, today's sales are staged by designers like Graves, who calls his company Napoleon at Home and serves up dreams to the house-buying gentry of Silicon Valley.

He does it three times a week, filling empty or nearly empty houses with sofas and throw pillows, with flowers, mirrors and area rugs, with sleek deck furniture and tall lemonade glasses, set just so on the outdoor patio. He watches for spatial flow. He introduces "pops" of color, as he puts it, to catch a buyer's eye amid the chic taupes, creams and grays that dominate his schemes -- the "neutralist" colors of the current market.

"We want people to come in and feel like they should stay awhile," Graves said, while positioning a large tiered mirror in the manor's living room so that it would catch the reflection of the garden scene just outside the window. "It's a mood that we're creating."

Staging has "exploded over the last 10 years," said Billy McNair, the 4,000-square-foot property's listing agent with Coldwell Banker. McNair tapped Graves for the job and draws on an array of stagers, matching their aesthetics to the architectural styles of houses. "Staging's not cheap. But would you rather invest $5,000 in staging and sell the house for $30,000 more? I think it's a good return on investment."

Mainstream media have helped establish staging in the popular vocabulary. The HGTV series "Flip It to Win It" last year featured East Bay stager Cathy Lee Cibelli, the California president of the Real Estate Staging Association, a national trade organization with more than 2,000 members. She said a deft staging brings a touch that "stirs the imagination" of buyers.

"What sells a house is an emotional response: 'I want to live here,' " said Menlo Park interior designer Jo Ann James, who stages high-end homes, mostly in Silicon Valley and often for techies. "The buying public right now is extremely young. And frequently these people have not owned a home and have no furniture. They've made millions very young, but without much life experience."

Via the staging, James gives them a sense of scale and perspective, she said, so the client can gauge whether a sofa will fit here or a queen bed there. James added that "young people today really like contemporary furniture. And they like clean looks. They don't want a lot of accessories. It should be comfortable, for active lifestyles."

Generally priced between $3,000 and $20,000 -- though the cost can go much higher for estates, say, in Atherton or Woodside -- staging is now part of an essential marketing package that includes online video tours covering every inch of a property. "The better it's exposed," McNair explained, "the sooner the property should sell."

"If you're not staged, you're losing 4 to 5 percent on the selling price, which is a huge difference around here," said Peninsula-based agent Ken DeLeon. "It just keeps on getting more: Furniture isn't enough. Now you bring in original artworks from local galleries. It's gotten to the point where some people want to buy the staging. They say, 'Everything looks perfect. How do I buy the home as is? Maybe give you an extra $70,000?' "

Whereas most sellers pay for staging, veteran East Bay agent Bebe McRae, who sells high-end properties for the Grubb Co., pays for it out of her own budget: She is confident of the payback and doesn't want sellers "to worry about how much it's going to cost." Yet there are occasions when a staging strikes too perfect a chord: "I had one seller, who said to me, 'This is terrible! The staging is just terrible! Now my wife is never going to want to move.' I was a little panicked."

The sale went through.

A 2013 study by academics at the College of William & Mary, Johns Hopkins University and Old Dominion University found that good staging may influence buyers' overall impressions of a property, but that staging alone doesn't convince them to pay more. But a Coldwell Banker survey shows that staged properties sell twice as quickly as unstaged properties. A 2015 survey by the National Association of Realtors reported that buyers often offer a 1 to 5 percent increase on the value of a staged home, with some agents putting the increase as high as 10 percent.

Most agents seem convinced. "Imagine if you were to try to sell your car without having it detailed and washed," said Casey Sternsmith, a Coldwell Banker agent on the Peninsula. "You're going to do everything you can so it presents well and so people will want to pay top dollar for that commodity. That's exactly what we're doing with staging."

She recently sold a 2,400-square-foot house in Hillsborough where Maria Burrington and her late husband, David Burrington, a longtime NBC News foreign correspondent, lived for 30 years and raised their children.

The house -- which listed for $2.4 million and is in escrow, having drawn an over-asking price bid -- first had to be decluttered: "Opium pipes from David's travels, a camel saddle, a few rugs from Beirut, even a hand grenade that we think the Viet Cong made," said Maria Burrington. "I did call the bomb squad."

David Burrington loved exposed wood, but the stagers went for the neutral look, painting ceiling beams white, and doing the same to the kitchen cabinets. And most of the book collection had to go as well.

"And do you know what?" Maria Burrington asked. "It looks better. It made me see my house as much more marketable, frankly. It brought out the spirit of the home, but without our individual taste of decorating.

"Trying to detach and let go from the house -- the staging let me do that more easily in some respect. I'll still miss the garden."



Source: MercuryNews, Richard Scheinin
http://www.mercurynews.com/business/ci_27992306/lights-camera-action-staging-homes-fattens-sale-prices

A Mega Condo Project in Milpitas Set to Rise

Almost everywhere I go here in the Silicon Valley I see new construction going up, and Milpitas is no different. It looks like some developers have gotten the approval for a luxury, mixed use high rise set to break ground next year sometime for completion in 2018. This is another example of the overall economic prospect for this area when you have major investors willing to sink money into a housing project here. They wouldn't do so if the economic forecast here looked pretty bleak.

A Mega Condo Project in Milpitas Set to Rise


BDK Capital Group LLC plans to break ground next year on an approximately $300 million mixed-use project featuring 450 luxury condominiums in Milpitas.

The Landmark Tower is outlined as two 18-story buildings featuring for-sale condos above roughly 34,000 square feet of ground-floor commercial space at 600 Barber Lane, the site of a former Chevrolet dealership.

Arcadia, Calif.-based real estate investment and development group Singpoli Capital Corp. and joint venture partner American BD, which comprise BDK, purchased the entitled three-acre site for $21 million in November from Pham Co. LLC, said William Chu, CFO at Singpoli.
The site was entitled for an up to 760,000-square-foot mixed-use project in 2008, and Singpoli is looking to gain city approval to “fine-tune” the design by bumping up the number of condo units from 375 to 450 and reducing the commercial space, Chu said. The property also will include 1,240 parking spaces.

“It’s a high-quality design,” said Edesa Bitbadal, the city’s economic development director. “It speaks to the direction the City of Milpitas is going,” adding that more millennials and technology employees are moving into the city and seeking housing with “better services and amenities.” The city expects full-service restaurants will occupy the commercial space, she said.

Irvine, Calif.-based architecture firm MVE+Partners is designing the project, which will include eight four-bedroom penthouse units along with a rooftop deck, lounges, fitness center, pool and community room. The project design gives it “an exclusivity and [feel of the] New York lifestyle in Silicon Valley,” Bitbadal said.

Landmark Tower, slated to open in 2018, will be near a local bus route and about one mile from a light-rail station. Also nearby is Cisco Systems, Inc., Milpitas Square shopping mall—featuring many Asian eateries—Asian-American grocery 99 Ranch Market, Wal-Mart, the planned Pacific Mall, and the new Levi’s Stadium, home to the San Francisco 49ers. It also will be near the BART station, scheduled to debut in 2018.

The project will be Singpoli’s first development outside of Southern California. Milpitas fits into its strategy of investing in growing markets, Chu said. He also noted that the company liked the city’s demographics, with a median age of 32 years old and median family income of $103,000, based on 2013 statistics.

The Silicon Valley city, also home to companies such as electronics manufacturer Flextronics and manufacturing firm KLA-Tencor Corp, is easily accessible to Interstates 880 and 680 and Highway 237

Milpitas is garnering much interest from developers and has 7,000 residential units under consideration or in the works, Bitbadal said.

“The city has done its share in developing housing for residents and providing it regionally—we have welcomed it,” Bitbadal said.

In Southern California, Singpoli recently renovated a historic Pasadena hotel into the 130-key upscale boutique DusitD2 Hotel Constance and is now co-developing a 159-room Marriott Courtyard and 129-rom Marriott Residence Inn in Marina Del Rey. Singpoli began as a construction company in Hong Kong in 1977.



Source: Nancy Amdur, TheRegistry
http://news.theregistrysf.com/a-mega-condo-project-in-milpitas-set-to-rise/

How to sell your home despite having lousy neighbors

I've sold homes in great neighborhoods here in the Silicon Valley, and I've sold homes in some no so great neighborhoods here in the valley. In my opinion it really boils down to great marketing and promotion by the Realtor, condition of the property and price.

How to Sell Your Home Despite Having Lousy Neighbors

A shaken Rebecca Rand said the bulldozer ripped right through her kitchen. Another neighbor, Mary Davis, upon receipt of a frantic call from her husband, ran from her home just before the colossal machine demolished it.

While good fences are said to make good neighbors, it was a fence that set Barry Swegle off. This particular fence was erected by a neighbor, lining the driveway Swegle used to get to his property. It was a long-standing dispute and Swegle finally snapped. He used a logging bulldozer to damage or destroy several outbuildings, a truck, a boat, a power pole and four homes in the neighborhood (including those of the two women above).

Thankfully, Swegle is an extreme case and not all neighbors are this nutty – but many can be annoying. Disputes are common, and it's how you handle them that will determine their outcome – and potentially, the value of your home.

What if your neighbor's habits and lifestyle jeopardize the sale of your home – or at the least, affect your ability to get full market value for it? Attempting to reach a resolution with a problem neighbor will require diplomacy and patience.

WHEN TO DISCLOSE A DISPUTE WITH A NEIGHBOR

Home sellers have an obligation to disclose to the buyer any adverse conditions that may materially affect the home's value. Naturally, sellers are hesitant to meet this obligation out of fear they'll drive away the buyer. Failure to disclose, however, may result in a trip to court and huge amounts of money out of your pocket.

If a neighbor creates a nuisance, you are most likely required to disclose that. Your real estate agent is the expert on disclosure regulations in your area, so don't hesitate to ask questions.

If you still feel that a problem with a neighbor doesn't require disclosure, take heed of a 1998 California court case in which the seller failed to disclose ongoing disputes with a neighbor. Sometimes the arguments became so heated that the seller was forced to call the police.

After the buyer moved into the home he, too, experienced problems with the neighbor. He eventually learned about the seller's undisclosed disputes and sued the seller. The buyer prevailed in court, winning a rescission of the sale, court costs, attorney's fees and damages.

There's an old real estate adage that all sellers should follow: "If in doubt, disclose."

NOISE COMPLAINTS

The most common dispute among neighbors is about noise, according to FindLaw.com. Barking dogs, domestic disturbances, loud music and noises associated with motor vehicles are among the complaints most often reported to police.
So, just how much does a noisy neighbor affect your home's value? "I've seen many situations where external factors, such as living near a bad neighbor, can lower home values by more than 5 to 10 percent," Appraisal Institute President Richard L. Borges told Business Insider. For a home that should sell for $200,000, for instance, a bad neighbor might cost the seller $10,000 to $20,000.

HOW TO DEAL WITH A NOISY NEIGHBOR

The folks at Nolo suggest talking to the errant neighbor to try to come up with a solution. They recommend that you approach as if he or she has no idea there's a problem. Be calm and friendly.

If this doesn't work, visit the neighbor again to remind him about the problem, and say that you hope the two of you can solve it without involving the police.

If you think the confrontation may become heated, send the warning in writing – again being polite and friendly. Enclose a copy of the local noise ordinance that addresses noise problems.

Unfortunately, short of calling the police or suing the neighbor in a court of law, this is probably the most you can do to get a loud neighbor to cease and desist.

THIS LAND IS YOUR LAND, THIS LAND IS MY LAND

Another common dispute between neighbors occurs over property boundaries. Perhaps your neighbor plants a tree or installs a fence, and it just so happens to be on your property.

A dispute over property lines must be dealt with quickly, so that it doesn't cloud your home's title. Dealing with this problem is similar to dealing with noisy neighbors. First, however, do your homework.

"Find your settlement papers and search for a drawing that indicates your property line. You can find this information on the plat, a representation of the property survey, which you should have received at settlement," suggests Ann Cochran, writing for the National Association of Realtors®.

You'll need this as proof of encroachment when you speak with your neighbor. If you can't find it, Cochran suggests that you check your state or county government's website for the information. If all else fails, you'll need to order a survey of the property.

Armed with the proof, visit your neighbor and calmly explain the problem. Hopefully, this will bring about a resolution. If it doesn't, your next step is to write the neighbor a letter, once again documenting the encroachment, and again, asking that he remedy the problem. If you still see no relief in sight, consider mediation, and finally, if all else fails, a lawsuit.

So when it's time to sell, unless the noisy neighbor shuts up or the encroacher moves his stuff back to his side of the property line, you'll need to disclose the problem to any buyer that submits an offer on your home.



Source: RealtyTimes, Hellen Kelbaugh
http://helenesellshomes.realtytimes.com/advicefromagents1/item/34654-how-to-sell-your-home-despite-having-lousy-neighbors-baltimore-real-estate

Dedicated to the WCR

Happy Friday everyone! Just a few photos at one of my Women's Council of Realtors (WCR) events yesterday.