Now with the election behind us, it is time to look to the end of this year and the year beyond.
As we prepare for 2013 one of the big issues in the Sacramento housing market remains distressed properties and if Congress will extend the Mortgage Debt Forgiveness Tax Relief law. This is this act which provides a tax exemption for forgiven debt related to the short sale of homes. The act and the exemption are set to expire at the end of the year and if not extended will virtually remove short sale as an option for homeowners who must sell a home with a value less than the mortgage balance. If the law is allowed to expire, homeowners who negotiate a short sale or lose their homes through foreclosure would have to pay federal taxes on the amount forgiven by their lender.
The NATIONAL ASSOCIATION OF REALTORS(r) has issued a nationwide Call-for-Action, urging members to contact their Members of Congress in support of extending the current Mortgage Debt Forgiveness Tax Relief law. Despite some positive signs of recovery, our nation’s real estate market is still fragile. Over a quarter of all transactions still involve distressed properties. As part of this call I am urging you to contact your representatives and ask them to support an extension of the act.
As we move into 2013 the California housing market will continue to recover. The California Association of Realtors has forecast increased sales for the third consecutive year and the median price to rise for the second straight year. The C.A.R. forecast sees sales gaining 1.3 percent next year to reach 530,000 units, up from the projected 2012 sales figure of 523,300 homes sold. Sales in 2012 will be up 5.1 percent from the 497,900 existing, single-family homes sold in 2011.
C.A.R.’s forecasts the average for 30-year fixed mortgage interest rates will edge up to 4 percent after six consecutive years of declines, but will still remain historically low.
The statewide median home price is forecast to increase a moderate 5.7 percent to $335,000 in 2013. Following a decrease in 2011, the California median home price will climb a projected 10.9 percent in 2012 to $317,000.
The actions of homeowners who are upside down and what happens with the tax forgiveness act will be important in 2013. With prices moving up, some of these homeowners will stay in their homes while others will sell and move forward.
If you or someone you know is considering selling a home where the value is less than the mortgage balance, give me a call at the MagnumOne Realty office in Roseville (916-899-6571) or send an email to firstname.lastname@example.org. I would be happy to answer your questions.