Housing market shows few signs of slacking off
From the New York Times, and featured in today’s Chronicle, “The housing boom in the United States has survived 11 rate increases by the Federal Reserve, and lately, it has faced increasing jawboning from Fed officials who warn bankers not to ease lending standards too far and caution homeowners that, as Fed Governor Donald Kohn said last week, “a substantial slowing in the pace of house-price appreciation seems inevitable.”
“Indeed, as the current boom shows, the Fed has some trouble even slowing a boom. Long-term interest rates have not risen with the short-term rates the Fed does control, and the financial system has responded with creative mortgages that let home buyers hold down monthly payments even as the purchase price rises.”
“With the Fed worried about speculative excesses in housing, it would dearly love to slow the boom without bringing on a bust reminiscent of the old days. Builders know what the Fed is saying, but so far, they believe that customers will keep lining up to buy whatever they build.”
Mortgage deduction safe, for now?
From SF Gate, “Is there really any chance that Congress could take away mortgage interest and state and local property and income tax deductions from homeowners? A presidentially appointed bipartisan commission is expected to urge precisely that on Tuesday, when it delivers its final report to the Bush administration.”
“The mortgage interest deduction — which allows write-offs on first and second loan amounts up to $1.1 million — would be scrapped and replaced with a 15 percent credit on sharply limited mortgage amounts. Deductions for state and local property and income taxes would be eliminated. The 15 percent credit would be for only mortgages up to a $300,000-$350,000 ceiling. Interest on home equity loans no longer would be tax deductible.”
“But let’s get real here: Nobody seriously believes that the president or Congress — all elected politicians — would do anything to reduce tax benefits for their largest and most potent constituency, right? Isn’t the mortgage interest deduction sacrosanct, politically untouchable, carved in marble on Capitol Hill? Ditto for write-offs of local property taxes and income taxes?”
“Can it become law? Not in an election year. Could some of it find its way into law someday, as the country grapples with budget deficits, war expenses and disaster relief reconstruction? That’s where the odds start looking slightly better.”
Why you should never ask for a property tax reassessment
NOTE: See a more recent article I posted about why this posting below is not accurate…
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From this week’s Guardian comes an article that gives me the opportunity to point out something that you as a homeowner should NEVER do.
“You see, [George] Sibthorp makes a living getting people a break on their property taxes. He drums up business by stuffing mailboxes with offers to work on a contingency basis until his clients first win back some cash from the tax collector. Judging by public records on tax assessment appeals, Sibthorp has been quite successful.”
The basis of this article is that Sibthorp will help you navigate through the city maze to have your property taxes reduced if you feel you have been over-assessed. Especially if you have paid a mint for your house, there may be times when you think that your market value may have diminshed enough to warrant a lower valuation.
I can’t over-empahsize this enough: DON’T EVER DO THIS!
You see, years ago some political geniuses created Proposition 13, which locks your property tax rate at the value when you bought your property, with very small (miniscule, really) increases over time. Nobody can touch this valuation, until you ask them to re-assess your property. If you do that ONCE, you drop your Prop 13 rights and they have the right to reassess every year for as long as you own your property.
As a hypothetical example, let’s say that you bought your house in Noe Valley in July 1989 for $250,000. In January of 1990 (post-quake) you’re feeling like you got fleeced. You’re feeling like you deserve a reassessment on your tax basis. So you call up the city (or a service like the one the Guardian describes) and have your property reassessed. They do their research and determine that your house in this post-quake economy is only worth $220,000 now. You feel like a rock star. You just saved your family hundreds of dollars per year, and your tax bill is roughly $2,500/year.
Fast-forward to 2005. That same home is now worth $1.6 million. Since you gave up your Prop 13 rights for the benefit of reassessment in 1990, they have reassessed your house each and every year and your property taxes are now $17,000/year.
See what I mean?
As a general rule, it’s always better to keep the city out of your business anyhow, but in this case, I think you get my point.
More details about the assessment process can be found on the County Assessor’s Web Site. There is nothing specific on the site about the reassessment triggering subsequent reassessments, but I have emailed them and will let you know what their official response is.
Foreclosures in Bay Area down 13% to a 14-year low
From the Chronicle today, “Foreclosures in the Bay Area dipped to their lowest level in 14 years during the third quarter. Lenders sent a total of 2,006 default notices to homeowners in the nine-county region during the three months that ended Sept. 30 — down 13 percent from the year-ago period and 6 percent from the second quarter, the real estate information firm DataQuick reported Thursday.”
“Brisk price increases across the Bay Area have helped keep foreclosures at rock-bottom levels, analysts said. As prices rise, even financially strapped borrowers can usually sell their homes at a profit.”
“DataQuick found mortgages were least likely to go into default in San Francisco and Santa Barbara counties.”
Smaller Home Depot proffered to supes
From the Examiner, “Two days after a proposed Home Depot on Bayshore Boulevard did not get enough support from city leaders, planners for the big-box company are sketching out a store smaller than the 140,000 square feet currently envisioned. “Home Depot has said that they would be amenable to 107,000 [square feet],” Supervisor Bevan Dufty said on Thursday.”
“Home Depot spokeswoman Kathryn Gallagher said company representatives started looking at alternatives immediately after Tuesday’s adjournment. “We’re committed to having a store in San Francisco,” she said, noting that for 10 years the Atlanta-based corporation has been trying to settle at one location or another. She said she couldn’t estimate the money already spent, but said millions of dollars would be a reasonable guess.”
Who cares how much they spent in the past 10 years? It’s obvious that the majority doesn’t want Home Depot in San Francisco. HD wouldn’t have spent this much money if they didn’t feel that they would be able to profit significantly from the addition of the store to San Francisco (only five minutes away from their Colma store and ten minutes from their Emeryville Store). Is anyone dumb enough to think that Home Depot really ‘cares’ about San Francisco? Do they ‘care’ about our neighborhoods? About our neighborhood hardware stores that carry property-specific items for our unique, older homes? Do they even care about the Hunter’s Point residents they claim to be focusing their jobs on?
Hell no. They care about one thing and one thing only, their shareholders. It’s all about marketshare. There are people in San Francisco that don’t drive to Colma or Emeryville and they want those dollars.
Are the Supes really fooled by this? This is one time that Chris Daly is allowed to throw a little tantrum (IMHO), but we haven’t heard a word out of him. Why does he choose to shut up now? I’m actually surprised he hasn’t offered up a site in SOMA with some outrageous fee attached…
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