The president signed into law December 20, 2007 bill H.R. 3648 creating temporary tax breaks on indebtedness for some troubled borrowers. Here is a brief summary of the Real Estate related provisions.

3-year Exclusion from Gross Income of Discharged Home Mortgage Indebtedness. The bill amends current law, which requires taxpayers to include discharges of mortgage indebtedness as income and to pay tax on this income. This bill provides a three-year exclusion for discharges of up to two million dollars of indebtedness (on or after January 1, 2007) which is secured by a principal residence and which is incurred in the acquisition, construction, or substantial improvement of the principal residence. Instead of including this amount as income, the basis of the individual’s principal residence would be reduced by the amount excluded from income under this bill. 3-year Extension of the Mortgage Insurance Deduction. The bill extends the deduction for mortgage insurance for three years (through the end of 2010). Current law limits the deduction for mortgage insurance to payments (including Veterans Administration, Rural Housing Administration, and Federal Housing Administration insurance premiums) made prior to the end of 2007. The bill would provide that payments will qualify for this deduction so long as the contract is entered into after 2006 and before 2010.

Modification of Exclusion of Gain on Sale of a Principal Residence. The bill amends the current law exclusion of up to $250,000 ($500,000 if married filing a joint return) of gain realized on the sale or exchange of a principal residence. Under current law, the sale of a home will qualify for this exclusion if the home is a taxpayer’s principal residence for at least two of the five years ending on the sale or exchange. This exclusion applies even if the home was initially purchased as a second home. Under bill HR-3648, if a taxpayer moves their principal residence to a second home, the taxpayer will only be able to utilize this exclusion to the extent that it relates to the period of time when the home was first used as a principal residence. Modification of the Qualification Tests for Cooperative Housing Corporations. The bill would modify the requirements for qualifying for the special rules available to cooperative housing corporations. Under current law, a cooperative housing corporation must meet several requirements, including a requirement that 80 percent or more of the cooperative housing corporation is earned from the corporation’s tenant-stockholders. The bill would provide two alternatives to this 80 percent rule (i.e., one based on square footage and another based on cooperative expenditures). These two alternatives will make it easier to qualify as a cooperative housing corporation.

"What is more mortifying than to feel you've missed the Plum for want of courage to shake the Tree?"   ~Logan Pearsall Smith

WOULD YOU ENTER THE BLACK DOOR?

Many years ago, in a country far away, a ruthless dictator terrorized his prisoners. On their execution day, each prisoner was summoned for an audience with the cruel dictator. Standing face-to-face, the dictator gave each condemned man a final choice - to either face the firing squad - or go through the "black door."

Having experienced countless episodes of torture and cruelty already, the prisoners invariably chose death over the unknown terror that they imagined must lie beyond the "black door." Finally, the day came when the dictator himself lay on his deathbed. Curious, his inner circle of advisors asked him, "What lies beyond the 'black door'?" His answer? "Freedom!"

People are still making that choice today - choosing lives dampened by fear, rather than taking a chance on the unknown beyond the black door. That awful, scary feeling that comes from "fear of the unknown" is often just enough to keep us from breaking out into the clear light of day that illuminates our success.

The next time an opportunity presents itself, yet fear threatens to smother success, take time to understand your fear. Make a list of what you fear may happen. Write down the worst that could happen. Next, make a list of the benefits you would reap by taking positive action. When the benefits exceed the risks, the decision will become clear.

Get in the habit of setting clear, concise daily goals for yourself. As you set and achieve them, you will notice that "fear of the unknown" begins to fade. You will accomplish more in a day than you otherwise would in a month.

Finally, remember one of my favorite and often used quotes: "Fear knocked at the door. Faith answered. No one was there."

Good Monday Morning!

Happy Presidents Day!

Last week, I spent some time reviewing statistics from a number of major Real Estate markets across the country.  The one thing that I noted was the fact that our Real Estate market in the Palm Springs area is currently fairing better than most.  With the Fed's recent decisions to lower  term rates, we could see a trickle down of lower mortgage rates in months to come.  This could begin a slight improvement nationally and have a huge impact on our local market.

I do have one word of caution at this time.  If you are thinking about selling your home, don't wait for Summer.  The amount of interest could be less by Summer if the typical situation of less home buyers at that time.  If you are serious about selling, get your home on the market now or a the latest by the first of next month.

Weekly Weather Forcast

Today                 70°F / 50°F

Tuesday      Wednesday    Thursday      Friday''''''y      

 77°F / 50°F    69°F / 49°F       69°F / 48°F     70°F / 50°F    

Saturday      Sunday  

68°F / 50°F     74°F / 50°F    

Have An Awesome Week!

Rob Zwemmer

Monday Morning Real Estate Update 02/18/08

What a gorgeous Winter Weekend!  It just does not get any better.

Our local Real Estate market continues to hold up with a much better market than what we see nationally.  All of the bad press that we read about the national Real Estate market does not accurately describe our local market.  Certainly the market has shifted some, but overall we continue to see home prices rise and we see good sales activity in most price ranges.  Our current market is ideal for home buyers and investors.  Look for more of the same through the next several months.

On Thursday, the Senate approved, 81-16, an amended version of the Economic Stimulus Plan. 

Part of the Economic Stimulus Plan is for to increase conforming loan amounts from $417,000. What’s this mean?  For places like Coachella Valley, who have large inventory over the $417,000 price threshold, and for loan amounts between $417,000 and $625,000 now will be considered conforming loans and will decrease by 1.25%!!  On a $625,000 loan amount that means a decrease by $505.06 per month on a 30 year fixed.

BUILD A WALL OF HAPPINESS!

To affect the quality of anything first requires action of some sort. Affecting is the opposite of passivity. In a passive state we can only BE affected, but we ourselves have no effect on our surroundings or other people. Hold that thought for a moment and consider next the result of your "affecting."

Ambition leads to action. Your ambition leads you to affect the quality of the day through some action. So what is the ultimate result of your ambition transformed into action? Johnson suggests it is "to be happy at home."

If, as Johnson recites, being "happy at home" is the ultimate result of your ambition, then why are you working so hard? Is there a way to avoid working evenings and weekends? Could you schedule your child's soccer game into the week's plans? Is that next appointment more important than celebrating life with your spouse at anniversary time?

One way to affect the quality of your day, which in turn may result in happiness at home, is to "build a wall," to paraphrase Frost. Keep in mind that walls may limit you if they are constructed of heavy gauge steel mesh rimmed with concertina wire. Walls can also be formed as a low hedge or a split-rail fence - even more simply as a line in the sand. Rather than limiting us, they become a mere reminder of how far we are willing to go.

As we affect the quality of our life and push our ambition to the limit, we may also make choices about the boundaries of our lives. By choosing sound principles of living, for example, we may say, "No!" to friendships with those who operate outside our boundaries of accepted activities. We may decline meaningless activities, or the occasional committee appointment, which robs us of our valuable time.

In the end, WE are solely responsible for affecting the quality of our individual lives. We must choose wisely.

Good Monday Morning!

The rain continues to cover most part of Southern California, the good news is The Real Estate market here in the desert remains level compared to many other parts of the country.

There has been increase in home sales and re-finances in the last week after the Feds lowering the interest rates by a 0.75%.  This will  continue the steady increase of home sales here in the desert.

As of the end of last week I was seeing 30 year fixed conventional loans as low as 5.4%.  This is the lowest level in years and buyers are learning that this combined with lower home prices and a very nice inventory of homes to choose from has given them a great opportunity. 

Compared to many other parts of the country the Real Estate market here looks very good.  .  For home sellers there is a good window of opportunity to sell from now through April.  Typically, we will see the number of homes for sale increase significantly during the season.  This could make for a much more competitive market and softer sales prices.

Have An Awesome Week!

Rob Zwemmer

Don't Be Afraid of the Big Bad Housing Market

By Matthew Graham - OP-ED COLUMNIST

If you don't have a TV, a radio, or a newspaper, you may have missed all of the negative press surrounding the mortgage and housing markets. The severity of the situation has created a sort of panic that has paralyzed the consumer. Rather than deal with any aspect of the problem, we wait for someone to yell: "it's OK to come out now!" If you are waiting for a "bottom" to the overall crisis, and for all the news to turn positive, don't hold your breath. But where there's tragedy, there's opportunity. Let me show you why it is, in fact, "OK to come out now," and why you might be sorry if you wait too long.

The Pendulum Effect:

Depending on the data you are looking at, national average home prices are down significantly. On average, this trend will continue, but consider three things. First, the hardest-hit markets drag down the average depreciation. Second, mid to high priced homes were more inflated than entry level housing. When those homes depreciate, they have farther to fall than a lower priced home. This also brings down the average. Finally, because panic can create a knee-jerk reaction among sellers, and market perception can create a hesitance among buyers, prices can be lower on the way down than they will be at the bottom.

What does this all mean? It's a GREAT time to shop for a moderately priced home. When the market has found a solid bottom and the demand returns, there will be a lot less ambiguity about what a home in your area is really worth. sellers will be less willing to entertain offers, and selection will decrease.

Mortgage Meltdown?:

The news might have you thinking that no one can get a loan these days. This is far from true. Hindsight has given us a clear picture of the kinds of loans that shouldn't be offered again. But the loans that have performed more consistently are still abundantly available, and you might be surprised what you can qualify for.

Banks like to see to see strength in at least 2 of the 4 areas:

1.       Credit Score

2.       sufficient verifiable income for the payment amount

3.       equity in the property or down payment

4.       Liquid assets (money in the bank, stock market, IRA's, 401k's, etc...)

The items that will make your loan more difficult to obtain:

1.       Non-Owner Occupied (investment property)

2.       Stated or No Income (meaning you can't prove it with W2's or Tax Returns)

Bottom Line: If you can legitimately afford to make a regular house payment, there's a very high chance that this can be proven to a lender, who will in turn be happy to give you an excellent loan.

To make things better, interest rates are historically low. At the very lowest point in mortgage rate history, a 30 year fixed conforming loan danced around the 5.0% range. In the last several weeks, it has dropped to 5.625%. (Follow day to day changes in mortgage rates at www.franklinloancenter/bcohn .)

There's even further impetus to act on this information. Even if prices decline another 10%, due to the market panic, there are sellers out there right now selling for 20% under current appraised value. So you might find a house for $160,000 today that will end up being worth $180,000 when the market bottoms out. A paradox, but true. This also means that your value is likely to be at it's highest as far as refinancing is concerned, and remember that EQUITY is one of the positive factors banks consider.

If you think you might be in your current home for more than a few years, have an adjustable rate mortgage, or have an interest rate that's over 6%. Or if you are a potential home-buyer, it is "OK to come out now," and doing so could save you lots of money.