Mortgage Debt Relief and Taxes

 The Mortgage Debt Relief Act is set to expire at the end of 2012. This is the law that may exclude from taxation qualifying debt forgiven at the conclusion of short sales. Although it is possible that this law will be renewed, no one knows for sure.

 For some time now, emails have circulated suggesting that the federal health care law will impose a 3.8% federal tax on the sale of all homes. The emails are terribly misleading – the tax referred to is neither a real estate transfer tax or a sales tax. Instead, it’s a 3.8% tax increase on capital gains (and other unearned income) for individuals with adjusted gross income over $200,000 (or $250,000 for married couples filing joint returns). In addition, the normal capital gains exclusions that we work with every day still apply – which in most cases means no tax on the sale of principal residence (assuming less than $500,000 gain under a joint return, $250,000 for an individual return). In the end, a small percentage of homesellers will be affected by this new tax. See my previous blog article.

For more information on the Mortgage Debt Relief Act

For more information on the capital gains tax

Property Taxes and Market Values

If you're like me, you just received your property tax statement for next year's taxes and were shocked by how low the assessed value is.

Based on our neighborhood property values, my assessed value is below what my home would sell for in the current real estate market and yours may be as well. (see chart below showing YTD Maple Grove increase in median sales prices)

The taxable market value is established each year by the Maple Grove assessor using appreciation/depreciation percentages, sales data and computer programs. Additionally, every five years the assessor visits your property to confirm condition and updates which he/she also factors into his/her valuation.

A few details to consider:
(1) Make sure you are looking at your taxable market value and not the net value after the homestead market value exclusion is subtracted (see previous blog article on this)
(2) You can appealing your taxes and taxable market value - an appeal is required by April 30. See the city website and a previous blog article for more details.

If you still have questions on your taxable or actual market value, drop me a line.

Whirlyball - what's that?

You've probably noticed that the Mann Theater in Maple Grove closed but have you heard what's moving into the old theater?

Whirlyball! What's that? Whirlyball is a cross between bumper cars and lacrosse. Click HERE for the YouTube video. The facility featuring two Whirlyball arenas and a lasertag course is expected to open in spring 2013.

And the large building in the parking lot? That's a 2nd Maple Grove Goodwill store which is expected to open as early as December 2012, just in time for your Christmas decoration shopping!

Neighborhood Market Update

Finally. The news is catching on that the real estate market has recovered. Sales are up - 21% through the end of September for Maple Grove over 2011 levels which has led to inventory being down 37% over 2011 levels. source: Mpls Area Association of Realtors

In our neighborhood, the average sales price for the 16 homes that have sold so far this year is $203,025 and an avg list price of $206,350. (an avg pricing discount of just 1.6%)

A map showing the current active listing and those sold or otherwise off the market since September 1st are below. Click HERE for a link to these listings (which will be good until Dec 2012).

To recap, the real estate market in our neighborhood and Maple Grove is recovering nicely and I expect we'll see 3-5% APPRECIATION of values this year.

Is There a Health Care 3.8% Real Estate Sales Tax?

Let me say this up-front - the 3.8% real estate sales tax rumor is mostly false.
There's a popular rumor being circulated that starting January 1, 2013, the health care reform bill will add a sales tax to all home sales. NOT TRUE.
Now, before I go into details, a caveat -- I am NOT a tax expert! Consult your tax professional for the details on how your taxes could be affected.
Who/what will be taxed:
Adjusted Gross Income (AGI)

• above $250,000 AGI married filing jointly
• above $200,000 AGI for single filers

Taxed Amount (principal residence home sales)

• gains above $500,000 if married filing jointly
• gains above $250,000 for single filers

For more details on the tax, including examples for various scenarios, a brochure is available from the National Association of Realtors.

Maple Grove Home Sales Up

Home sales in the Maple Grove market are up 4.1% year-to-date while the number of homes for sale has dropped 39.9%.
With just a 3.6 month supply of homes for sale, the number of homes is below the 5 month supply that is considered a "balanced market" meaning the market is considered tilted in favor of sellers, a welcome change to many home-owners.
Driving this decline in inventory is a drop in bank-owned and lender-mediated short sale homes listed which are down 19.9% and 25.7% respectively while "traditional" owners selling their homes are up 4.1%.
With rents up, exceeding the cost of home ownership in many cases and interest rates at all time lows, the rate of home sales is not expected to decline, at least through the typically robust summer home-buying season.
Data and graphics courtesy of the Minneapolis Area Association of Realtors

Bear Sighting in Elm Creek Park

A black bear was sighted in the Elm Creek Park Reserve on June 9 and again a couple days later, first in the picnic areas and then wandering through the northern areas of the park. The park informed patrons not to approach the bear and to alert park staff if they see the bear. With coyotes in the park and now a bear sighted, authorities have warned residents not to leave their pets or small children unattended in their yard, even if the yard is fenced as these animals can be predatory.
Stock photo courtesy of Fox-8 Cleveland

Neighborhood Garage Sale-June 14, 15 & 16

The Elm Creek Park Reserve neighborhood will be holding its 3rd annual neighborhood garage sale on June 14-16 from 9AM-5PM.

The Maple Grove neighborhood is located on the west side of Zachary Lane between County Road 81 and 101st Ave N or enter from the round-a-bout at the Elm Creek Blvd/Park Reserve exit from 610, just west of Osseo. Signs will be posted.
(1) 11282 98th Pl N
(2) 11474 100th Ave N
(3) 9946 Deerwood Ln N
(4) 11613 100th Pl N
(5) 11655 100th Ave N
(6) 11867 101st Ave N
(7) 11900 101st Ave N
(8) 9710 Forestview Ln N
(9) 9881 Balsam Lane N
(10) 11290 97th Ave N
(11) 11270 97th Ave N
(12) 11950 101st Ave N
(13) 10011 Ives Ln N - plant sale
(14) 9816 Norwood Ln N - lots of kids clothes

Refinance Tips

Interest rates are at all time lows so it's a great time to think about refinancing.
I use a thumb-rule of 1% to determine if it makes sense to refi. If you can lower your interest rate by 1% or more, just do it providing you have at least 7 years remaining on your mortgage. It will typically cost around 3% of your new mortgage amount in closing costs to refinance so the pay-back period for a 1% reduction in interest is roughly 3 years.

How do you choose a mortgage product? (ARM, fixed rate, 10 yrs, 15 yrs, 30 yrs, ...) Talk with your loan officer - they're the experts, and you should also decide what your personal goals are.
Get out of debt quickly? A 15 year mortgage with slightly higher monthly payments but lower interest rate may be best.
Planning to remain in your home for under 10 years? An Adjustable Rate Mortgage (ARM) which remains fixed at an attractive interest rate for the 1st 3-7 years may be best or an FHA loan which is an assumable giving you a marketing edge over the competition when you sell may be best.

What if you owe more than the home is worth?
The federal goverment, as part of a legal settlement with the big five lenders: Ally Financial, Bank of America (Countrywide), Citigroup, Wells Fargo and JP Morgan Chase, has made re-financing available if your loan was originated prior to January 1, 2009 and is serviced by one of those lenders. There is also HARP2, a federal program available only if your loan is backed by Fannie Mae or Freddie Mac. To find out, you can call your lender or use the websites:
http://fanniemae.com/loanlookup/
www3.freddiemac.com/corporate/,

Before you refinance, it's a good idea to review your credit report - you can do this free of charge once each year by requesting a copy of your credit report from each of the big three credit agencies: Equifax, Transunion and Experian or you can request the report through AnnualCreditReport.com or by calling 877-322-8228.

Zachary Square Updates

With an increase in the number and frequency of vandalism and thefts at local park and ride lots, the city of Maple Grove just approved the budget to install security cameras at the Zachary Square park and ride lot.

From the 5/7/2012 council meeting minutes: Motion to authorize Mayor and City Administrator to accept proposal from Pro-Tec Design for a security camera system for the Zachary Park-and-Ride lot for a price not to exceed $34,166.

As you may be aware, the Parnassus Preparatory School opened in August 2011 in Zachary Square. Due to much higher than expected enrollment rates, the school is already working with the city to allow an expansion of 13,000 square feet, an increase in the occupancy from 10 years to 15 years and a relocation of the playground.

GARAGE SALE!

Hi Neighbors, Reminder that our neighborhood garage sale is coming up! Thurs-Fri-Sat June 14, 15 and 16 I'll be providing signs at the neighborhood entrances and advertising on Craigslist and in the MG Press. If you will be having a garage sale, send me a note (stevehoem@edinarealty.com) or call me (763-494-8183) and I'll add you to the list of the garage sales on our neighborhood website.

May Neighborhood Market Update & Neighborhood Garage Sale

Interest rates remain at AMAZING levels (around 3.75% for a fixed 30 year FHA) and prices seem to have stabilized with inventory driving this bus. New listings are down 15% week over week from a year ago. This combined with sales being up 21% has led to a decrease in inventory of 28% so quite a bit fewer homes to choose from which we starting to feel this winter.

Shadow inventory and the economy are the unknown players here. If the economy and job market begin to soften, that could put a damper on sales and even out the supply-demand curve. Likewise, with new lending regulations causing speedier foreclosure to market times, we could see a slight but noticeable increase in the numbers of foreclosed properties coming for sale which could raise the supply, again evening out the supply-demand curve. Time will tell but regardless, the combination of amazing interest rates and low prices have created home affordability not seen in quite a few years.

Our neighborhood is seeing the effects of this with a few homes listed at around $200K selling relatively quickly in the past 30 days. An encouraging trend!

This map shows the homes for sale (green) or pending-accepted purchase agreements (orange) since April 1st. FYI - 9792 Ives at $149,900 is a short sale. Five homes for sale and all but one have offers accepted. Click to see the listings (link will expire in July)

Stay tuned for information on our neighborhood garage sale coming up mid-June. Drop me a line with your address if you'd like to be included as I'll publish a map hear with the garage sale locations.

Q1 2012 Neighborhood Real Estate Summary

The real estate market continues to show signs of improvement and increasing activity with sales up around 30% from 2011 and inventory down a corresponding 27%.

Our neighborhood has seen five homes sold since January 1 with an average sale price of $159,950 for the two that have closed and an average list price of $187,433 for those that are still awaiting closing. (see accompanying table) I have also included a map
showing the locations of the homes for sale (green dots), yellow for pending and not yet closed sales, red for those that have sold and closed and black for those that failed to sell.
Click here to see the listings (note that the link will expire in June 2012)
The market is approaching a seller's market with a strong shortage of homes for sale - multiple offers are becoming quite common.
Contact me with any questions.

January and February Real Estate Summary

Let's see the numbers from the 1st two months of 2012!
Inventory is down, way down as 21% of homes sold in 2011 were investors - they realized that market values were great. Now, as 2012 unfolds, the news is out that the bottom has passed and traditional home buyers, particularly 1st time homebuyers are also getting it -- sales are up 50% as of 2/25 for the Twin Cities while inventory is down 24%.

Key: Green dots represent homes that are for sale, yellow homes that have sold but not yet closed, red are homes that have sold and closed and black are homes that failed to sell.



In our neighborhood, there are five homes for sale and two have sold in the past two months (click here to see the MLS listings*). Both homes were bank-owned which typically sell at 20% below market value of a "clean, traditional home sale".
Call, text or e-mail me with any questions.

*Note that the link to the listings will expire in May 2012.

Banks Agree to Settle for Unsound Foreclosure Practices

The big four (Bank of America, Citibank, JPMorgan Chase, and Wells Fargo) have agreed to a $394M penalty paid to the Federal Government in response to their unsound practices ("robo-signing") that were identified in early 2011 and resulted in a temporary moratorium on foreclosures.

For more on the action, you can read more at the Federal Government website: http://www.occ.gov/topics/consumer-protection/foreclosure-prevention/correcting-foreclosure-practices.html
Additionally, there will be funds paid to people that were negatively affected by these practices. To help determine if you are eligible for a settlement, you can go to http://www.independentforeclosurereview.com/.

2011 Neighborhood Real Estate Wrap-up

2011 - what a year in real estate, both as a home-owner and as a Realtor!
This year saw interest rates drop to subterranean levels of below 4% and inventory of homes for sale fall 25% below 2010 levels.
19 homes sold this year, 10 of which were "distressed" - either bank-owned or short sales. The average sales price of the "traditional" sales was $191,604 while the distressed sales average sales price was $138,759.

The real estate market is predicted to improve slightly in 2012. Everyone is keeping their eye on foreclosures. With shadow inventory (loans 90+ days delinquent) remaining essentially constant, any small increase in the numbers of these homes entering the market as bank-owned homes could drive the market and market values lower rather than the increase in values that we all hope for.

Highway 610 added considerable convenience to getting places from the neighborhood and so far doesn't seem to have considerably raised background noise levels. The park reserve playground re-opened and the single track mountain bike trails are open while the nature center was torn down and is being re-built currently. The park reserve and access to this fabulous recreation area remains as a strong value-adder for our neighborhood and will continue to set us apart from other homes.

Traditional Home Sales


Key: Green dots represent homes that are for sale, yellow homes that have sold but not yet closed, red are homes that have sold and closed and black are homes that failed to sell.
Click here for a detailed look at this year's traditional sales (links will expire in February 2012)

Distressed Home Sales


Click here for a detailed look at this year's distressed sales