Bay Area Real Estate Sales.com Newsletter

January 2005

 

In this Issue:

 

Marin & San Francisco Real Estate Market Update

Exciting Liz McCarthy News for 2005:

§1031 Tax Deferred Exchanges and Home Offices

News: 2004 California Housing Market:  One for the Record Books

News: Historically Strong U.S. Housing Market Seen for 2005

Fast Facts

 

January 2005

 

Marin & San Francisco Real Estate Market Update

 

Although the holidays are behind us, winter has certainly arrived!  I hope you are staying dry with all of our recent rain.  As you can see by the statistics chart in this newsletter, there are very few available properties for sale in Marin and SF Counties.  Currently, there are only 458 homes for sale in Marin (as compared to 927 in November).  Almost half (46%) of those are already in contract, which means we are still in a "Strong Seller's Market".  The situation in San Francisco is even worse, as 63% are in contract which makes it an "Extreme Seller's Market".

 

 

 

As of 1/10/05, the average price in Marin County is $1,845,095 and the median is $1,100,000.  (A number of high-priced properties skew these figures).  Multiple offers still are the norm for properties that are properly priced in sought-after areas.  Currently Marin home-buyers seem to want properties close to town with level yards.

 

The extreme shortage of homes for sale in San Francisco has made Marin County with it's proximity to the city, a great option for many buyers.  Other great Marin qualities that are helping to drive prices upward:  top-rated schools, low crime, quality of life and outdoor activities.   Furthermore, with interest rates remaining fairly low I don't see prices dropping anytime soon.

 

In the next few weeks I will send out a special 2004 Housing Statistics report that I hope you will find helpful.

 

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Marin & San Francisco Home Sales Statistics**

 

 

 

 

 

 

 

**Charts represent information gathered from BAREIS and SFMLS at a specific point in time.

***Includes all: Sale Pending & Contingent properties

 

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Exciting Liz McCarthy News for 2005:

 

·Brokers License.  I have taken and passed my Real Estate Brokers exam although I have no intentions of leaving my fantastic employing broker, Pacific Union.

 

·E-Pro Certification:   I took and passed the National Association of Realtors (NAR) endorsed e-Pro Certification program.    This means that I am prepared to employ the latest technology and internet techniques for my clients' benefits. I was awarded the e-Pro scholarship courtesy of Rapattoni Software (the software that is used to run the SF and Marin MLS systems due to my technical background.  I am one of only 10 Realtors in all of Marin County to be e-Pro Certified.

 

·Published.  I am going to be published weekly in the following Marin Newspapers (Mill Valley Herald, Ross Valley Reporter, Twin Cities Times (Larkspur & Corte Madera), Marin Scope, & News Pointer.  Look for my weekly Real Estate column called: Liz's Real Estate Corner.  If you would like to receive a copy of this column via email, please reply back and let me know!

 

 

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§1031 Tax Deferred Exchanges and Home Offices 

 

Liz recently interviewed Toni Esposti, a Certified Exchange Specialist and is the North Bay Regional Account Manager from OREXCO (Old Republic Exchange Company).

 

Q:  TONI, WHAT IS AN IRC §1031 TAX DEFERRED EXCHANGE?

 

A:   A tax deferred exchange is a wealth building tool.  An individual can dispose of an investment property, use all the equity to leverage into a replacement property to be held for investment and defer the capital gains tax.  There are requirements and time limitations to be followed to successfully complete a tax deferred exchange which should be understood before starting the process.

 

Q:  CAN I EXCHANGE MY PERSONAL RESIDENCE?

 

A:  A property that is currently being used as a personal residence is not eligible to be exchanged under IRC § 1031.  A property that was previously a personal residence and later converted to an investment rental could be eligible after being held as an investment for a period of time.  There is no stated time period in the regulations so it is best to consult with a tax advisor when trying to determine if a property is eligible.

 

Q:  IF I HAVE BEEN USING A PART OF MY HOME FOR BUSINESS PURPOSES WOULD THAT PORTION BE ELIGIBLE FOR AN EXCHANGE?

 

A:  If you have been using a part of your home as an in home office or other business purpose and have been writing that portion off on your taxes, it may be beneficial for you when selling your personal residence, to exchange that portion that has been used for business into either your new personal residence if you still intend to use a portion of your home for business purposes or into another entirely separate investment property.  To determine if this would be to your advantage, you should contact your tax advisor.

 

Q:  HOW CAN I FIND OUT MORE INFORMATION ON THIS SUBJECT?

 

A:  I would invite you to call me with any questions you may have or for a copy of our exchange booklet.  You can reach me at 888.677.1031, email me at:  TEsposti@ortc.com or visit our website at www.orexco1031.com.

 

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2004 California Housing Market:  One for the Record Books

 

LOS ANGELES (Dec. 23) - While housing market statistics for December will not be available until next month, the California residential real estate market in 2004 will be one for the record books, according to the California Association of REALTORS®.

 

Here are some highlights:

 

·       2004 will be a record year for home sales, which are projected to increase 3 percent over last year's record sales figure of 601,800 existing detached homes.

 

·       2004 will be a record year for home prices. The median price of a single-family home in California crossed the $400,000 threshold late in 2003, and will finish the year with an annual median in excess of $450,000, 22 percent higher than the 2003 annual median of $372,700.

 

·       The percent increase in the median price of a single-family home increased by double-digits for the third consecutive year in 2004.

 

·       C.A.R.'s Unsold Inventory Index reached a historic monthly low of 1.5 months in April 2004.

 

·       Time on the market -- the median number of days it takes to sell a single-family home -- was the third lowest on record at a projected annual average of 29 days, surpassed only by 2003 at 27 days and 2002's all-time low of 26 days.

 

·       C.A.R.'s Housing Affordability Index (HAI) fell to 19 percent in May, the first time the index has hit the teens since December 1989. Since that time, rapid price appreciation and marginally lower interest rates have generally offset each other, keeping the HAI in the 18- to 19-percent range throughout the summer and fall of this year. If not for unexpectedly low interest rates throughout much of the year, price appreciation might have driven the HAI to historically low levels that were last seen in May/June 1989 (14 percent). 

 

·       The affordability gap between California and the U.S. reached an all-time annual high of 36 percent in 2004. Nationally, affordability was at 56 percent in 2004, four points below its record high.

 

·       First-time homebuyers as a share of the total market fell to an all-time low of 26 percent in 2004, based on C.A.R.'s annual Housing Market Survey.

 

·       The Boomer Generation exerted a tremendous influence on the California housing market in 2004, accounting for three out of four transactions.  Because of its size and current life-cycle, the boomer generation is likely to play a significant role in the housing market over the next several years," says association president Jim Hamilton. "Trade-ups and the purchase of second homes will continue to put pressure on the housing market."

 

·       Internet use by homebuyers and sellers continued to climb in 2004. Based on C.A.R.'s Internet Versus Traditional Buyers Survey, 56 percent of all buyers used the Internet in a substantive way as a part of their homebuying process, surpassing the 50 percent mark for the first time.  Forty-seven percent of homesellers indicated that they had used the Internet in the homeselling-process, a dramatic increase from 12 percent in 2003, according to C.A.R.'s Survey of California Home Sellers.

 

·       The survey notes that 29 percent of sellers sold their home because of investment or tax advantages, 24 percent because their family status changed, 40 percent because low interest rates afforded the opportunity to trade up, and 15 percent because they wanted to take their appreciation and cash out.

 

·       Condos also had a big role in the market. The number of detached home sales dropped to 76 percent in 2004 from 90 percent the previous year, while attached home sales increased to 24 percent last year from 10 percent in 2003.

 

 

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Historically Strong U.S. Housing Market Seen for 2005

(January 12, 2005) --   After four consecutive record years, home sales should ease but remain close to record levels in 2005, according to the NATIONAL ASSOCIATION OF REALTORS®.

Following an estimated 8.9 percent jump to 6.64 million existing-home sales in 2004, activity will remain strong. Sales should decline about 2.5 percent to a total of 6.48 million in 2005, which would be the second highest on record.

New-home sales should come in at a record 1.19 million for 2004, up 9.5 percent from 2003, with 1.11 million sales expected in 2005-which also would be the second strongest on record.

David Lereah, NAR's chief economist, says the housing sector is operating at a higher plateau. "No one expects home sales to set a record every year, with some ebb and flow normal as market conditions and needs shift," he says. "Even so, home sales will stay well above what was considered to be a healthy level in the late 1990s. The population has grown, household formation is strong and demographics tell us this trend will continue. In addition, a similar mix of economic conditions expected in the United States for the foreseeable future."

Housing starts for 2004 are projected at 1.94 million units, the best showing since 1978; new construction is forecast at 1.87 million units this year.

The rise in the national median existing-home price should be 7.7 percent for 2004, with the annual price at $183,100; an increase of 5.3 percent is expected in 2005 to a median of $192,800. The typical new-home price rose about 10.4 percent in 2004 to $215,300; this year, the median should grow by 5.5 percent to $227,200.

"A modest slowdown in home price appreciation will be healthy for the market, offering sellers a good return on their investment while keeping prices within reach for homebuyers," Lereah says.

Lereah expects the 30-year fixed-rate mortgage to trend upward to 6.5 percent by the end of 2005, "still very low by historical comparisons," he says. "Outside of the last two years, when the fixed-rate mortgage averaged 5.8 percent, we have to go back to the mid 1960s to see comparable mortgage interest rates."

Inflation should remain modest with the Consumer Price Index rising 2.6 percent this year, following an increase of 2.7 percent in 2004. The U.S. gross domestic product is forecast to grow by 4.0 percent in 2005, after seeing a growth rate of 4.4 percent last year. The unemployment rate should decline to 5.1 percent by the end of 2005.

"Even with similar numbers, the reasons for economic growth have changed," Lereah says. "Over the last few years, the economy was driven by consumers, housing and defense spending. Over the next couple years, the economy will grow nicely on the weight of business spending, along with some improvement in net exports."

Inflation-adjusted disposable personal income is projected to grow 3.8 percent this year, following a 3.0 percent increase in 2004. The consumer confidence index should rise to 106 by the second half of 2005.

-NAR

 

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Fast Facts

 

Calif. median home price - Nov. 04: $473,260 (Source: C.A.R.)

Calif. affordability index - Oct. 04: 19 percent (Source: C.A.R.)

Calif. highest median home price by C.A.R. region - Nov. 04: St. Barbara So. Coast $1,175,000 (Source: C.A.R.)

Calif. lowest median home price by C.A.R. region Nov. 04: High Desert $248,320 (Source: C.A.R.)

Mortgage rates - as of 1/10/05: (Source: Freddie Mac)

·     30-yr. fixed: 5.77%; Fees/points: 0.7%

·     15-yr. fixed: 5.21%; Fees/points: 0.6%

·     1-yr. adjustable: 4.19%; Fees/points: 0.6%

FREE.....Email (Liz@BayAreaRealEstateSales.com) or call (415) 380-2114 Liz and she'll send you a free Marin Information packet.  You can also search for Marin listings directly on my website:  Search for Homes