Crescent City Real Estate News

Tax Credit for New Home Purchase in California-

The information below is from the State of California's website and pertains to the $10,000 tax credit for home buyers who purchase a NEW HOME in California.  This credit, combined with the $8,000 federal tax creditfor first time buyers, low prices and fabulous interest rates make this the "Perfect Storm" for first time home buyers. The fed tax credit is available to a first time home buyer who qualifies for new or resale homes. Consult your tax professional regarding these credits.

This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.

The State of California will accept applications for allocation of credit by fax only (916.845.9754), starting March 1, 2009; however, they will not send notifications of credit allocation until they have developed procedures. Once they begin processing allocation applications, credits will be allocated on a first-come, first-served basis. The state will update their information page as soon as they begin mailing credit allocation letters. The state plans to begin mailing credit allocation letters no later than May 1, 2009. This delay is necessary to allow time to develop a system to capture and verify the application information, allocate the credits, and send the credit allocation letters. Please be patient with them and do not send applications more than one time.

Tax credit amounts

California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from the state. Applications will be reviewed and credit allocations will be made on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available. Please check this page for updates on the allocated and remaining credits available.

Total credit allocated: Remaining credit available:

$0

$100,000,000

Note: The remaining credit amount displayed above only reflects allocations processed. This amount will be updated here once they begin mailing credit allocation letters, which is expected to commence by May 1, 2009. This amount does not include applications that have been received, but not yet processed.

Applications for New Home Credit received, but not yet processed through 4/15/09

As of Total Applications received:Total Credit claimed:

3/4/09	173	$ 1,715,826
3/11/09	711	$ 6,987,515
3/18/09	1,188	$ 11,599,825
3/25/09	1,710	$ 16,647,498
4/1/09	2,624	$ 25,578,709
4/8/09	3,135	$ 30,559,124
4/15/09	3,589	$ 34,939,035

This reflects the total amount of credit reported on applications received as of the date indicated. This amount has not yet been verified and may include duplicate, incomplete, and invalid applications. This amount is provided for informational purposes and does not reflect the actual amount to be allocated. The State of California will update the amount received, but not yet processed, on this webpage each Friday. As they approach the $100,000,000 limitation, they will update the reported amounts on a daily basis. Keep in mind, that all applications will be processed on a first-come, first-served basis, based on the date received by fax only.

California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.

How to apply

• Within one week (seven calendar days) after the close of escrow:
  • The seller must complete Part I of Form 3528-A, Application for New Home Credit, certifying that the home has never been occupied, and provide a copy to the buyer or escrow person.
  • The buyer will complete Parts II & III of Form 3528-A.
  • The escrow person on behalf of the seller and buyer will fax the completed Form 3528-A to FTB at 916.845.9754, and provide a copy to the buyer.
• Fax is the only delivery method that will be accepted and considered for credit allocation by FTB, as the date and time stamp on the fax will determine the order in which credits are allocated.
• Fax only one completed application per residence with all qualified buyers listed. Do not include information on non-qualified buyers. An incomplete application may delay or prevent credit allocation.
• Do not fax the application to FTB before escrow closes.
• Do not fax the application to FTB more than once. We will process the applications in the order received as quickly as possible.
• Escrow companies should only send one application per fax transmission.
• The buyer keeps a copy of the completed Form 3528-A for their records.
• The Form 3528-A is now available online as a fileable form. Simply fill in all required information, print the form, and sign. If you fill out the form by hand, please print numbers as clearly and neatly as possible using CAPITAL LETTERS and staying between the lines. The faxes can be very hard to read.

Application processing

• The buyer will receive notification of credit allocation from the State of California.
• An allocation of credit will not be issued if:
  • The home has been previously occupied.
  • The application is not received within one week after the close of escrow.
  • The application is received after the total credits available ($100,000,000) have been allocated.

Requirements of the credit

• The home must be a "qualified principal residence" as defined under California Revenue and Taxation Code Section 17059(b)(1). The home must:
  • Be a single-family residence, whether detached or attached.
  • Never have been previously occupied.
  • Be occupied by the taxpayer for a minimum of two years.
  • Be eligible for the property tax homeowners exemption under California Revenue and Taxation Code Section 218.
• For over three successive taxable years, the total credit allocated among owners that occupy the home must not exceed $10,000. (Multiple qualified buyers that occupy the home will be allocated credit based on the amount paid and their percentage of ownership.)
• Any credit that reduced tax on a tax return must be repaid if the buyer does not occupy the home for at least two years immediately following the purchase date.
• FTB may request documentation to ensure buyers have complied with the requirements of the credit.

Claiming the credit

• The buyer must receive an allocation of credit from the State of California to claim the credit. The credit allocation letter will state the amount they can claim listed by tax year.
• The buyer should refer to Publication 3528 (available by 12/2009) for instructions on claiming the credit.
• The buyer must claim the credit on an original timely filed return, including returns filed on an extension.
• Special rules apply to married/RDP (Registered Domestic Partners) taxpayers filing separately, in which case each spouse is entitled to one-half of the credit, even if their ownership percentages are not equal. For two or more taxpayers who are not married/RDP, the credit amount will have already been allocated to each taxpayer occupying the residence on their respective credit allocation letter.
• If the available credit exceeds the current year net tax, the unused credit may not be carried over to the following year.
• The credit is not refundable.

Definitions

Purchase date:
The date escrow closes.

Qualified buyer:
A taxpayer who purchases a single-family residence, whether detached or attached, that has never been occupied, that is purchased to be the principal residence of the taxpayer for a minimum of two years, and that is eligible for the homeowners exemption under California Revenue and Taxation Code Section 218.

Qualified Principal Residence/New Home:
A qualified principal residence means a single-family residence, whether detached or attached, that has never been occupied and is purchased to be the principal residence of the taxpayer for a minimum of two years and is eligible for the property tax homeowners exemption.

• Types of residence: Any of the following can qualify if it is your principal residence and is subject to property tax, whether real or personal property: a single family residence, a condominium, a unit in a cooperative project, a houseboat, a manufactured home, or a mobile home.
• Owner-built property: A home constructed by an owner -taxpayer is not eligible for the New Home Credit because the home has not been "purchased."

Contact us

Phone:

• 888.792.4900 (press 5)
• 916.845.4900 (not toll-free)

Email: wscs.gen@ftb.ca.gov
This is not a secure email address. Please do not send confidential information.

The house of cards built over the preceding years of unprecedented home appreciation has crumbled. It's demise has created some incredible deals in my market.

The run away spending that got so many of us caught up in thinking we can "have it all." has landed countless homeowners in a compromised position leaving no way out, but to walk away from the mortgage*. 

Banks are overwhelmed with this new way of thinking and are dumping their REO (bank owned/foreclosed) inventory on the market at way below market value, giving buyers who are ready, to get some awesome deals.

Homes that just one year ago were selling above 300,000 are now below $200,000 as prices continue to decline. 

Have we hit bottom?  I get tired of this question.  If I knew the answer to that one, I'd be rich and retired.  Unfortunately, I have my best guess and that would be not yet, but there are great values and low interest rates NOW.  Who knows what the future will bring? 

I have a closing next week and my buyer locked his interest rate at 4.875!!!  Yippee, skippee.  That makes my previously thought of, screaming-deal interest rate of 5.5 pale in comparison. 

If you are thinking of getting in on some of the great deals in my market, then you better come to the table with a pre-approval or proof of funds letter in hand, because the really great deals are getting swept up quickly. 

If you are a first time home buyer and are not sure where to start, call me and I'll get you going in the right direction. 

What are you waiting for...interest rates to drop to 1%? 

* If you find yourself unable to make your house payment, contact your lender and seek a loan modification.  Your lender should be able to handle this for you.  Statistics show that the majority of homeowners who lose their home to foreclosure never contact their bank. Don't let this happen to you.

        

Brought to you by Fran Gatti at  THE REDWOOD COAST REAL ESTATE CONNECTION  Bus: 707-464-5400, Cell: 707-218-8162 Email: fgatti@charter.net Website: FranGattiHomes.com My Blog: Fran's Blog Put Fran to work for you.

My inquiries from first time home buyer's have increased dramatically in the past week.  In most instances, the curious  homebuyer does not know how to start the process. 

I am happy to take the time to get you started in your pursuit of a home in person at my office, or over the phone. If you are not ready to take that much of a plunge, maybe this post will point you in the right direction.

There is some very necessary information you need before you should invest a lot of time looking for a home.

Getting pre-approved is the best way to make your home shopping experience fruitful, focusing you and your REALTOR in a specific price range. 

If you do not have a trusted lender, or know someone you trust who has PERSONAL experience with a trusted lender, you should consider first finding a trusted real estate agent who can point you in the right direction.  Real estate agents work with lenders and all the other people it takes to complete a real estate transaction on a daily basis and generally have a few lenders they refer their clients to because they know the mortgage broker or lender is reputable, has integrity and can get the job done. 

A real estate agent is not permitted to get a kick-back from anyone they refer you too.  Your agent's only motivation should be to see that you, their client, gets the professional advice you need and that you will be well-cared-for throughout the loan process.

Once you are pre-approved, you will work closely with your full-time agent who should be an expert in your market.  It would be helpful if you educated yourself as well on current pricing trends in your market.  You can do this by accessing listings in your market on various internet websites. My website at www.frangatti.com has all Del Norte County MLS listings as well as listings grouped in several convenient subsets, i.e. foreclosures, luxury homes, etc and I would suggest you subscribe to my monthly market report.

It is also helpful to narrow your home search to a few specifics you require in a home, for instance, a minimum of 3 bedrooms, or a two car garage.  You can't get too many specifics in the Del Norte County market, because we do not have a lot of listings and to many search criteria will limit you to just a few homes.  This is where your agent's knowledge of the MLS will be beneficial, guiding you towards the neighborhoods and types of homes that seem to best fit your needs.

To recap:

• Goal # 1 - if you do not have a trusted lender, get a referral from someone you know and trust who has personal experience with a lender and get pre-approved.  Remember that a real estate agent is usually a good place to find a lender referral.
• Goal # 2 - Find a FULL-TIME real estate agent who is an expert in your market.  Believe it or not just as not all teachers, or doctors are the same, not all agents are either.  If you do not know of a full-time agent who is an expert in your market, talk to people who have sold or purchased a home recently and ask them if they were happy with their agent, then interview a few agents.  You will be working very closely with this person for a minimum of 45 days, but more than likely 2 or 3 months, so a good rapport really helps.

 Click on this link for more information on the home pictured in this post; it is a SCREAMING DEAL.

I am here to assist you with all your Crescent City/Del Norte County real estate needs. Thank you for checking out my blog.

        

Brought to you by Fran Gatti at  THE REDWOOD COAST REAL ESTATE CONNECTION  Bus: 707-464-5400, Cell: 707-218-8162 Email: fgatti@charter.net Website: FranGattiHomes.com My Blog: Fran's Blog Put Fran to work for you.

Be prepared to snap-up that foreclosure!

I had a refresher course today in the advantages of being prepared to purchase when that REALLY GREAT DEAL comes up.

I listed an REO yesterday at about 3:30 in the afternoon.  When the listing agreement reached me by email and I saw the price, I was surprised.  It was far below what I had figured would be a good list price and it immediately became the Best Buy on the market upon listing it on the MLS.

I had several agents who had been showing an interest in the home pre-listing and they asked me to call them as soon as I had a list price, which I did immediately.  They were surprised at the price as well. 

Most foreclosures in my market are hitting the MLS between $135 - $180 a sq. ft. (anything above $135 seems like a waste of time to me), but my listing hit the MLS at $94 a sq. ft., which is a really good buy.  The home was shown at least 5 times yesterday from 3:30 on and I had multiple offers within a very short period of time.

The person who was ready to go, with all their ducks in a row, got in there right away, but with an REO the agent will continue to submit offers until one is fully executed, so in a situation like this, have your pre-approval letter and your highest and best offer ready to go and get it in!

If you missed out on this one, there will be others, without a doubt, so get ready to snap-up the next "best buy."  If you are in my market and missed out on this "best buy," take heart.  You can subscribe to my foreclosure alerts and you will get all the best buys the second they hit the market.  What are you waiting for?

Click this button to register:

  

Should you consider your primary residence an investment? 

First off, I am not qualified to give financial advice; I am sharing my considered opinion.

I wrote a post in January titled Now is the Perfect Storm for Buying real estate.  I received the following comment on that post (skip to where I bolded if you like):

"An opinion from someone who does not make money selling real estate is needed here.  This market won't bottom for at least another 12 - 20 years.  We are at the precipice of a world wide depression that will make The Great Depression look like a walk in the park.  When it does finally bottom it isn't just going to shoot back up... housing prices will most likely stay low for a while.  The only real estate broker I trust is actually advising people to "RENT RENT RENT".  That is someone who you can trust. Here are links to my website and blog: (I deleted them...I don't need to have this persons spam in my post when it's already in my comments). You should really educate yourself on how bad this real estate collapse is going to be before you start telling people that this is a good time to buy.  Please understand that my intentions are not to offend but inform you that you're giving bad advise.  After all, a home IS an investment."

The commentator believes the market is not going to bottom for 12-20 years and that the only broker he respects is the one who is saying rent, rent, rent.  I'm stupefied that anyone would think it's sound advice for someone who is purchasing a home responsibly, i.e., making sure they can comfortably afford their payments, not using negative amortization, have a secure job (this may be hard to determine), etc., to not do so for 12-20 years.  Homeownership, if done responsibly, is one of lifes greatest joys and "The American Dream." 

This reminds me of an incident that happened to an acquaintance of mine.  She belonged to a group who believed the world was going to end, literally, at some point in the 1950's.  She was instructed to sell her belongings, including her home and was further told not to have any children because it would be irresponsible to bring children into the world when it is going to end.  Needless to say, the world did not end. She no longer belongs to that group. 

Imagine waiting 12-20 years to purchase a home only to find they went back up in price and now you can never afford to buy.

My contention is this, your home is the place you live, it gives you shelter, protection against the elements, a place to safely lay your head at night, somewhere to hang your clothes, watch the Superbowl, etc.

 If nothing else, the downturn in the economy has shown that it's only safe to treat your home as an investment in a rising market, and therein lies the risk, you can't time the market.

Wikipedia says: An investment is the choice by the individual to risk his savings with the hope of gain. Rather than store the good produced, or its money equivalent, the investor chooses to use that good either to create a durable consumer or producer good, or to lend the original saved good to another in exchange for either interest or a share of the profits.

Investments are by nature, fraught with risk, of course some are mitigated better than others, like a standard savings account in a bank, but even that's not low-risk anymore.  Let's face it, you will need shelter no matter what and risking your shelter is not wise in any situation. 

Now I want you to know I am the "pot calling the kettle black." My husband and I built a spec home that we are living in and it's not pleasant. What makes it especially distasteful is I knew to, "never consider your primary residence an investment";  "do not put your home at risk,"  and a few more catch phrases I haven't done, but who knows, there's still time, such as: "do not use your home to fund your lifestyle," and "do not use it to pay off your credit cards and car," (I know plenty of financial advisers disagree with this, but let's face it, the average individual is not a professional financier who is going to get a HELOC and follow the payment plan). 

In closing, I personally know the risks involved with using your home as an investment.  It was great selling my previous home at the height of the market and raking in the dough, but it isn't fun being stuck with a high mortgage in a declining market.  Better to keep your house payment affordable, and invest money that you can afford to put at risk.

I'd love to hear your opinion, but please do not spam my post.  Thanks.

Crescent City/Del Norte County Market Report for January 2009 - Slooooowwwww

Residential sales slipped from 8 in December to 9 in January making it a slow start for 2009 real estate sales in Del Norte County. 

With inventory climbing back toward the 300 mark and currently resting at 275 listings, the absorption rate is an appalling 35 months.  That means at the rate of January sales of 8 houses a month, it would take 3 years to sell the current inventory of 275 homes. 

The price per square foot of those 8 homes that sold last month averaged about $135 a sq. ft. much lower than most current listings (other than foreclosures) that are listed at $150 a sq. ft. and up. The homes that were priced correctly for the current market are the homes that sold. 

CAN YOU STILL SELL A HOME IN THE CURRENT MARKET? - Yes, but...seller's need to have an agent who is keeping an eye on the local market now more than ever if they want to sell in a timely manner. 

"I don't want to give it away," has little meaning in our current market.  If you do not want to price competitively for the current market, than withdraw your listing to list another day when prices crawl back up. In my opinion it's going to be a very long, slow crawl, so keep that in mind if you have to sell.

Buyer's, I know your are nervous that you'll buy and prices will continue to fall. Well, that is more than likely what is going to happen, but taking advantage of low interest rates could be the key to getting qualified to be able to purchase at all, so talk to a reputable lender about the variables of having a lower interest rate and slightly higher price or a higher interest rate and slightly lower price, either way, it's good to be informed.

Here is the market at a glance:

	1/09  Sold	1/09 Median	1/09 Average	1/09 Avg DOM	1/08 Sold	1/08  DOM	1/08  Median
Residential Sold listings	8	187,220	183,505	92	10	237	148,000
Price range	% Active listings	% of 1/09 sales
199,000 & under	39%	75%
200,000-299,000	25%	25%
300,000-399,000	13%	-
400,000-499,000	9%	-
500,000-599,000	3%	-
600,000-699,000	2%	-
700,000-up	8%	25% of 1/09 sales were REO's.

There are currently 275 active listings with an average DOM of 197 days. Current Absorption rate is 35 months.

        

I am here to assist you with your real estate needs!

Brought to you by Fran Gatti at  THE REDWOOD COAST REAL ESTATE CONNECTION  Bus: 707-464-5400, Cell: 707-218-8162 Email: fgatti@charter.net Website: FranGattiHomes.com My Blog: Fran's Blog Put Fran to work for you.