Two Energy Credits To Trim 2010 Taxes

Still smarting from your 2009 taxes? Start whittling the bill for next April.

A good place to begin: two federal tax credits for homeowners who want to save energy, one of which expires at the end of this year. The credits have appeal both for true green diehards and those who are staying put due to housing market doldrums.

The credits took effect in their current form in February 2009. Both offer dollar-for-dollar write-offs against taxes, not just a deduction from income. And unlike many tax benefits, there are no income limits on who can use them.

The smaller benefit, known as the Residential Energy Property Credit, will appeal to a broader swath of taxpayers. It applies to 30% of the cost of retrofitting an existing home to save energy, up to $1,500. That means you have to spend $5,000 to receive the maximum credit. This benefit expires at the end of 2010, and amounts claimed in 2009 count toward the $5,000 total.

Items that qualify include insulation, windows, doors, roofing, hot water heaters and air-conditioning systems. Not included: ceiling fans or window air-conditioning units. Installation costs are permitted for some items but not others (see chart below). The Internal Revenue Service recently said that qualified items installed in an addition to an existing house also are eligible.

The other credit, known as the Residential Energy Efficiency Property Credit, is far more generous but typically requires greater expense and commitment to green living. It is for 30% of the total cost of items such as solar panels, windmills and geothermal heat pumps, and the credit amount is unlimited. It expires at the end of 2016.

Comprehensive information about eligibility is available on the National Association of Home Builders Web site and from the IRS. Retailers like Home Depot and Lowe's also provide useful guides. For a listing of separate state and local energy tax incentives, see www.dsireusa.org.

via WSJ

Foreclosures Hit Rich and Famous

While on a plane headed to New York I finally caught up on my reading of The Wall Street Journal. I came across an interesting article by Craig Karmin and James R. Hagerty.

The rich and famous now have something in common with hundreds of thousands of middle and lower-class Americans: The bank is about to take their homes. Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study for The Wall Street Journal.
Just this week, a Tudor mansion in Bel-Air belonging to film star Nicolas Cage was in foreclosure auction and reverted to the lender. On Wednesday, Richard Fuscone, a former top Wall Street executive, declared personal bankruptcy, forestalling a foreclosure auction that had been scheduled this week on his 14-acre Westchester mansion. Last month a Manhattan condominium owned by Italian film producer Vittorio Cecchi Gori was sold in a foreclosure auction for $33.2 million.
In February alone, 352 homes nationwide in this category were scheduled for foreclosure auction, the final step before a bank acquisition. That is the largest monthly number of these so-called notices of sale since the financial crisis began. By comparison, in all of 2009, there were 1,312 such notices. Economists say the super-wealthy are among the last to lose their homes in a mortgage crisis because they usually have high savings, better access to credit and other means for staving off foreclosure. But many of them work in financial services and other industries hit especially hard by the crisis, and have seen their wealth shrink in the market crash.
While the numbers are modest compared with foreclosures at other income levels, they suggest the possibility of a sudden spike in bank takeovers of the wealthiest Americans' property. Typically half the notices of sale result in homes being turned over to creditors, though the figure could be slightly lower for the richest Americans who have more financial options, according to Daren Blomquist at RealtyTrac. Big borrowers are more likely to default than ordinary people, according to data from First American CoreLogic. Its loan database, reflecting more than 80% of the overall home-loan market, includes 1,700 loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American. Sam Khater, a senior economist at First American, said the bigger borrowers may be more prone to stop making payments when they have lost all their home equity. Mr. Fuscone, Merrill Lynch's one-time head of Latin America, put his mansion up for sale in November, asking $13.9 million. But he couldn't find a buyer. The court had scheduled a foreclosure auction for Thursday for the 18,471-square-foot mansion—with two swimming pools, two elevators, six fireplaces, 11 bathrooms and a seven-car garage. The personal bankruptcy filed in U.S. Bankruptcy Court Wednesday temporarily freezes the foreclosure process. Reached by phone, Mr. Fuscone declined to comment. Brokers and real estate tracking companies say that his home is one of the most expensive properties to face foreclosure proceedings yet. The phenomenon is not limited to the New York area. Banks have taken over homes with loans of $5 million or more in Georgia, North Carolina and Colorado, RealtyTrac says. Mr. Cage had tried to sell his 11,817-square-foot Bel-Air property for $35 million but failed to get any offers, said James Chalke, a real-estate agent who had the listing. At a foreclosure sale Wednesday, the property attracted no bids from investors and so was acquired by the foreclosing lender. Annett Wolf, a spokeswoman for Mr. Cage, said he had no comment. A representative of Mr. Cecchi Gori, producer of more than 200 films including "Il Postino" and "Life is Beautiful," said his financial situation is improving. Wealthy people have the means to stretch out the distress process, sometimes for years. "It's very, very difficult for these people to believe they've had such a severe reversal of fortune," says Maggie Navarro, a real-estate agent in Pasadena, Calif. Marc Carpenter, a San Diego-based foreclosure specialist, adds that while it's much harder for potential buyers to get loans, there are also fewer buyers who can pay for top-dollar properties. "The upper end is definitely a lagging indicator," he says. "Now there are people you'd never expect two or three years ago to have problems, who live in multimillion dollar homes."
—Nick Timiraos and Josh Barbanel contributed to this article.

More scam artists posing as landlords

The glut of vacant foreclosed homes has inspired con artists to concoct a new scam: posing as landlords to swindle prospective tenants out of rent and deposit money.

Cases of landlord impersonation have jumped throughout California in the past couple of years, according to sheriffs and legal aid clinics.

"With a lot of foreclosures, the property sits empty for a long period of time," said Assemblywoman Fiona Ma, D-San Francisco. "What we're finding is that scam artists will come in, change the locks and advertise on Craigslist at a very enticing price. They tell people, if you want to get this deal you need to come back soon with cash for the deposit. People give them the money, sign a lease, get keys and a couple of days later the legitimate owner (an agent for the bank) comes and says, 'What are you doing here?' Then they're out whatever cash they've laid out."

But many victims don't report the crime, law enforcement officers say, which makes it hard to know how common it is.

Unfortunately, most victims never get restitution. Because the victims pay in cash, police can't easily track down the perpetrators. One way people could guard against landlord fraud would be to check at the county recorder's office (or online where available) about who actually owns the property, but most people don't have the savvy or the time to do that, she said.

Complete Article at SF Chronicle

Green-building advocates take the LEED

Many four-letter words are being tossed around these torturous days in the world of commercial real estate.

Only one would not offend the polite police. It is, however, prompting considerable debate within companies and among property owners.

That word: LEED, for Leadership in Energy and Environmental Design.

Since its debut by the U.S. Green Building Council in 2000, LEED has rapidly become the rating standard by which green-building advocates measure commitment to the cause. As "going green" has evolved from a fringe lifestyle choice to a widespread initiative, even at work, the pressure has grown for building owners to at least consider LEED certification.

So landlords crunch numbers and evaluate operations to assess whether a LEED rating - from simple certification to silver, gold or platinum, the highest level - is worth the cost and effort.

For cash-squeezed commercial-property owners, never have those calculations been so important. With the recession, landlords are struggling to retain tenants and make mortgage payments as demand for office space - and, consequently, rental income - has dropped.

Then again, green-building advocates contend the time is fast approaching when not having a LEED-certified building could hamper a landlord's efforts to attract tenants.

View Full Article by Diane Mastrull

Los Angeles Top 40

"Los Angeles is a diverse city filled with green space, urban space and all different kinds of people, incomes and tastes. Although this can make for a disparate social scene, it makes architecture really interesting. See some of the top homes as voted on by Los Angeles Times readers in their new best hits list."

LA Times Top 40

Walk appeal. Homes in walkable neighborhoods sell for more: study

Homes located within walking distance of amenities such as schools, parks and shopping aren't only more convenient for their owners, often they're also worth more than homes in neighborhoods where driving is the rule, according to a new study released Tuesday.

The report looked at 94,000 real-estate transactions in 15 markets. In 13 of those markets, higher levels of "walkability" were directly linked to higher home values.

Controlling for other factors including a home's size, the number of bathrooms and bedrooms, age, neighborhood income levels, distance from the Central Business District and access to jobs, the study found that a one-point increase in Walk Score is linked to an increase in home value between $500 and $3,000, depending on the market, according to the study.

The premium for homes in neighborhoods with above-average Walk Scores ranged from $4,000 to $34,000, according to the report.

Click here for Full Article via Market Watch

Realty Q&A - Finding your place

Q.My husband and I are contemplating adding a $200,000 extension to our home instead of upgrading to a bigger house. We’re expecting a fourth child and desperately need the space. Our current house is worth between $650,000 and $700,000 and we owe $200,000 on it. The downside is, it’s over 100 years old and we’re not sure if we’ll make our money back. To upgrade to a larger home in our neighborhood, we’d have to spend $800,000 to $1M.

A. Sounds like you should sell your house and buy a new one. With 70% equity in your home, you have more than enough for a down payment for something new. If you can find a big enough home in excellent condition for less than $1 million, it would be a lot simpler than taking on a construction project while you’re expecting.

Construction always costs more and takes longer than expected. Why live through a major project, particularly with small children and a newborn baby on the way? And don’t worry about getting the best possible price for your smaller house. You can afford to take less because you’ll more than make up the difference by getting a great deal on a bigger house. This is the perfect market for upgrading.

Q. My partner and I own a home on Staten Island, and, a year ago, we bought a house in Asheville, N.C. We will be moving there sometime in the next six months to a year. We don’t want to sell our home here on Staten Island yet, with prices the way they are now. We’re thinking of allowing my niece and nephew and their new baby to rent from us with the option to buy. Can you explain just how this works? I have heard about it, but I am not familiar with the process.

A. I’d look for a tenant with a traditional rental agreement before trying the lease/option route. It’s easy to find a new tenant, but it would be downright impossible to find a new niece and nephew.

Read more via NY Daily News from Barbara Corcoran

William Krisel, Architect at The Getty Center - Event

April 13, 7:00 PM–9:00 PM

The Getty Research Institute, 1200 Getty Center Drive, Suite 1100 Los Angeles, California 90049

Please join us for a special screening of Design Onscreen’s latest documentary film, William Krisel, Architect at The Getty Center, Los Angeles, on Tuesday, Apr. 13, 2010 at 7:00PM. A conversation between William Krisel and Wim de Wit, head of the Department of Architecture and Contemporary Art at the Getty Research Institute (GRI), will follow the screening.

Over the course of his sixty-year career, Architect William Krisel has brought “modernism to the masses,” designing more than 40,000 individual housing units across the U.S. Krisel’s influential work has come to epitomize midcentury Southern Californian design. Krisel’s archive now resides at the GRI.

William Krisel, Architect (2010), directed by Jake Gorst, explores his life and work, including his roots in 1930s China, his ground-breaking designs for modern living, and interviews with scholars, his contemporaries and family. “I’m a firm believer that good modern design can make your life happier, more productive and more enjoyable,” says Krisel.

During the 1950s, Krisel built thousands of mass-produced tract homes in Palm Springs–and throughout Southern California–and thus played a key role in establishing the desert modernism of the area. By devising airy dwellings with massive windows opening into the bright expanse of the surrounding landscape, Krisel proved that modest midcentury homes did not have to be “cracker boxes” of unimaginative and claustrophobic design.

William Krisel, Architect is produced by Design Onscreen, a Denver-based nonprofit dedicated to producing, preserving and promoting high-quality films on architecture and design.

Admission to this event is free, but a reservation is required. To make a reservation, please visitwww.getty.edu/research or call (310) 440-7300. Note, late arrivals cannot be guaranteed seating. Parking is $15.00; free after 5:00 p.m

Read more via Dwell

National Open House Week - April 10-11

Homebuyers looking to take advantage of the extended and expanded First-time Home Buyer before it expires should leave the weekend of April 10-11 open and plan on attending the first annual National Open House weekend! The event is designed to increase consumer awareness of the benefits of buying a home, give sellers an opportunity to increase the exposure for their home for sale and increase awareness of the pending expiration of the Home Buyer Tax Credit on April 30 (homes need to be in contract by April 20th and close no later than June 30th).

Real Estate Should Be Part of Your Retirement Program

According to USA Today, 3 of 100 people age 65 are financially secure; 97 of them can’t write a check for $600 and 54 are still working. With the federal government now needing to pay back the Social Security System for the $2.3 trillion surplus it borrowed over the years, it’s time to rely on your own ability to save for retirement and not rely on the federal government to take care of you.

One of the best ways to become financially self-reliant is to set up and consistently invest in an Individual Retirement Account. The term IRA refers to Individual Retirement Arrangements established in 1974 by Congress, but everyone uses the term interchangeably with Individual Retirement Account.

Today, the federal government lets you contribute up to $5,000 each in separate accounts for you and your wife. If you’re over 50, you can contribute an additional $1,000, making it $6,000 apiece. For 2009, the contributions must be made by April 15, 2010, so you don’t have much time before the deadline passes. Since you can make a contribution for 2010 beginning Jan. 1, 2010, you could even make your 2010 contribution, if you wanted to.

The type of IRA account you should consider setting up is a Roth IRA, named after William Roth, the Senator from Delaware who initiated the legislation as part of the Taxpayer Relief Act of 1997. A Roth IRA differs from a traditional IRA in how the contributions and earnings are treated from a tax standpoint. A traditional IRA allows you to deduct the contribution in the year it is made, but then requires you to pay ordinary income taxes on the accumulated earnings in the year you begin taking distributions. Without being penalized, you can begin taking distributions as early as age 59 ½ , but must begin taking distributions no later than age 70 ½. With a Roth IRA, the contributions are not tax deductible, but the accumulated earnings come out tax free. Also, there is no mandate that distributions begin at age 70 ½.

The beauty of a Roth IRA is that it allows you to invest in real estate. With real estate prices being at their lowest in years, now is a good time to invest and your Roth IRA can be part of the acquisition. There are some rules, so check with the custodian/administrator you select to make sure you do things right. By Ken Holman

The Smartest Home Renovations Are the Least Visible

"Homeowners are spending more than they did last year on renovations. But trophies of the housing boom—granite countertops, bamboo floors—have been supplanted by utilitarian improvements such as insulation.

During the boom, homeowners often were rewarded for big kitchen expansions and splurges like master-suite additions with custom vanities and enough shower heads to wash a car.

But these days, many additions and improvements are bringing lower returns that they once did. Blame lower demand for trade-up housing, a glut of new homes and tight financing. And stiffer home-appraisal rules mean fewer banks will lend extra to buy or remodel homes with features that are out of line with comparable properties nearby.

Now, in the slower housing market, the best projects save owners money on energy and maintenance expenses. Or they modestly increase usable space, such as an attic bedroom or an additional bath, if the house had fewer than others in the neighborhood, appraisers say."

Read the full article via WSJ

Green Real Estate - Risk or Reward?

In a previous post, I mentioned that "The 2009 Ernst & Young real estate business risk report itemizes the ten top business risks faced by the industry as ranked by leading analysts."

Not surprisingly, The Green Revolution as they call it, makes the list at #8.

"8. Green revolution, sustainability and climate change - real estate is at the forefront of the green movement with pressures intensifying to build and operate in sustainable ways and minimize the carbon footprint throughout all types of real estate."

As we know, building Green pushes any price tag upwards of 20%. And with its heavy reliance on capital, Real Estate especially has felt the tightening conditions of the global economic crunch which is expected to last over the next couple years. Being forced to scale down, the question of whether to go Green or not for many builders becomes less of a choice.

On the other hand, those with a broader scope see that going Green in any capacity makes for a better long term investment because of the long term benefits gained from buying Green. That coupled with significant tax incentives (solar panels for instance) and the budget friendly aspect of Green homes make up for the bite one may feel in the initial purchase.

Now I suppose only time will tell, but lets hope that developers, builders, estate agents and buyers continue to see the importance of moving in the Green direction.

California rebound boosts 20-city home price index.

LOS ANGELES — A surprisingly strong rebound in California's real estate market helped lift a key home price index for the eighth month in a row.

That's good news for people who plan to sell their homes this spring. Prices are now up almost 4 percent from the bottom in May 2009, but still almost 30 percent below the May 2006 peak.

Prices rose 0.3 percent from December to January on a seasonally adjusted basis, according to the Standard & Poor's/Case-Shiller 20-city home price index released Tuesday. Prices increased in 12 cities in the index.

The biggest monthly gain was in Los Angeles, where prices rose 1.8 percent from December. And real estate agents say there's a distinct sense the worst of the downturn is over.

Prices in San Diego, meanwhile, rose by almost 0.9 percent. Phoenix had the third-largest gain at 0.8 percent.

Rising home prices also could boost consumer optimism. For most Americans, their home is their largest asset, so as values climb from the depths of the housing bust, homeowners feel wealthier and more comfortable spending. And, for homeowners who owe more on their mortgages than their properties are worth, rising prices rebuild equity.

Still, shoppers remain cautious and there are signs that last year's housing rebound won't last. Home sales sank during the winter, and government incentives that have propped up the market are ending.

However, bargain-hunting homebuyers continue to pack open houses in California, often facing off with investors for foreclosed homes.

"We're seeing multiple offers in most of the markets here in the San Francisco Bay area," said David Kerr, an agent with ZipRealty in Oakland, Calif. "People are getting off the fence."

With such high demand, supply is dwindling, driving prices higher.

California home sales will likely get a boost in coming months thanks to a new serving of government stimulus.

Last week, state lawmakers enacted a tax credit of up to $10,000 for homebuyers that kicks in May 1. The state allotted $100 million for first-time buyers and another $100 million to anyone who buys a newly built home. California had a round of tax credits last year that proved to be popular; that program ended in July.

Still, there remain pockets of weakness. Sales of homes priced above $500,000 are sluggish. And despite rising prices, more than one-third of all homeowners with a mortgage still owe more on their loans than their homes are worth, according to First American CoreLogic.

Many analysts expect the Case-Shiller 20-city index will again turn downward in the coming months as more foreclosures in other states hit the market.

"It is only a matter of time before the index records a double-dip in prices," wrote Paul Dales, U.S. economist with Capital Economics, who forecasts a 5 percent drop. The market will be tested in the second half of the year, he wrote, when a tax credit that has boosted sales is gone.

Full Article: By ALAN ZIBEL and ALEX VEIGA (AP)

In Real Estate, A Picture Is Worth More Than 1,000 Words

"In today's web-centric world, real estate photos are more important than ever. Many home buyers will "shop" homes online for weeks or even months before actually calling their agent to set up showings of their favorites. If your home isn't presented well online, the number of in-person visits can suffer.

While there are many different levels of photography equipment, lighting, and software editing techniques available, the broad emphasis is to use at least one of the newer technologies to enhance your photos. Interior photos just don't show up well on an old digital camera. The user can only get a small portion of the room into a shot, and the colors look less than real-life.

By using a wide-angle lens, you can really start to show the online buyer what a room actually looks and feels like in person. Your eye is basically a wide angle lens itself, so recreating the in-person view of the home is the goal.

It's not a necessity to have professional photography done in a real estate listing. Many homes sell without it. However, there's a clear trend in the market towards more online browsing and less in-person visits before a purchase. Professional photography can definitely give a home an edge, or at least entice a buyer in for more evaluation." VIA Sam DeBord

Click the property websites below as an example of photographs that make the grade:

2833 Putnam Street - Silverlake, California

8555 Hollywood Blvd. - Hollywood, California

Realtor Q and A: Tax credit ends soon

Q: I've heard a lot about the home buyer tax credit but am not sure if I qualify?

A: The tax credit was part of a plan to stimulate the U.S. housing market and help address the economic challenges facing the nation. Originally passed by Congress in 2008 as part of a larger economic stimulus package, it was implemented in 2009 and extended to allow for maximum consumer participation. The program allows for an $8,000 tax credit for first-time buyers and up to $6,500 for (eligible) current home owners who purchase a new or existing home.

As recipients of the first-time home buyer tax credit, the purchaser and/or their spouse may not have owned a residence during the three years prior to the purchase. For current home owners looking to take advantage of the tax credit, they must have lived in their current residence for five consecutive years within the last eight. There may be other eligibility requirements so it's best to consult with a tax expert, such as a CPA, or your own tax preparer if you have specific questions.

One very important fact about the tax credit is that in order to get it, buyers must have a contract to purchase a home in place by April 30, and must close on the transaction by June 30.

Currently, there are tremendous opportunities available to buyers; however, indications are that these favorable conditions will not be around forever. Real estate markets are fluid and one has to take advantage of opportunities while they present themselves. Interest rates are expected to rise, moderately, in 2010, and the tax credit will only be available through the end of April. If you have been waiting for a "golden opportunity," then now is the time to get off the fence and take action. With just a few weeks left of the tax credit opportunity, there may be no better time for you to buy a home then right now.

Next weekend there will be an opportunity for potential buyers to preview homes currently listed on the market with the first "Realtor Nationwide Open House Weekend" April 10-11. The weekend-long event will provide potential home buyers with an opportunity to view homes throughout their communities and obtain information and answers to questions about specific properties, market conditions and the home-buying process. via UnionLeader

As Fed's mortgage purchases end, eyes turn to investors

Reporting from New York - The government's $1.25-trillion program to prop up the housing market by purchasing mortgages came to an end Wednesday -- in a small, messy room at the Federal Reserve Bank of New York with four desks and a Nerf basketball hoop.

For the last year, a small team of traders has worked here to buy massive amounts of mortgages to fill the void left after institutional investors quickly retreated in the throes of the 2008 financial crisis, unable or unwilling to put money into the fast-melting mortgage arena.

The purchases have given the Federal Reserve its largest balance sheet ever and triggered fears of runaway inflation. But most analysts now credit them for lowering mortgage rates, providing a vital lifeline for the battered housing market.

"Something like this had never been tried on this scale before," said Mark Gertler, a former resident scholar at the New York Fed and an economics professor at New York University. "The fact that they got it mostly right is quite remarkable." via LATIMES. Full article after the jump