East Bay Blog

The holiday weekend is almost upon us, and with that the “official” start of summer. I appreciate you taking the time to come back to the East Bay Real Estate Blog, and if it is your first time then welcome. I wanted to make sure to get my update in today, because tomorrow will be busy, and the Friday before a three day weekend is always a tough time to try to sit down and write intelligently.

Today I thought it would be interesting to write about a tax law that I think will take more and more people by surprise in the coming year. Anyone that is going through a foreclosure or short sale and is paying their lender less than what is owed will be hit by this tax. Now let me back up for a second, for those of you who are not familiar with a short sale, it is when you sell a house for less than what is owed, and the lender agrees to “forgive” the difference between what is owed and what they will actually get. This happens when the loans on a property exceed what the property is worth. In a foreclosure, the lender simply takes the house back from the owner for non-payment.

So this tax law says that when personal debts are canceled by a creditor, the amount forgiven is treated as ordinary income unless the taxpayer is insolvent or bankrupt. Worse yet, the lender is required by law to report the amount cancelled to the IRS. So let’s say that Mr. Seller owes $700,000 on a house, but now the house is only worth $625,000. Mr. Seller decides that instead of paying the mortgage, they will approach the lender and tell them that they must sell that house now, or else they can not pay. So the house is sold for the present market value of $625,000 and the $75,000 difference between what is owed and what the property was sold for is “forgiven” by the lender. The lender is able to get some money out without the expense of foreclosure. Now the lender is required to send the IRS a Form 1099-C showing that Mr. Seller had a $75,000 debt forgiven. Next year at tax time Mr. Seller will be required to pay tax on that $75,000, and it will be taxed at Mr. Sellers ordinary income tax rate, ouch!

Currently there is legislation on Capitol Hill that would soften the impact for these financially stressed homeowners. The Mortgage Cancellation Tax Relief Act of 2007 (HR1876) would amend the tax code to exclude debt forgiveness on principal home mortgages from treatment as income. If this bill passes, it will be welcome news for the thousands of homeowners who are going through short sales today.

If you have any topics you would like me to write about, or an opinion on a previous topic, please don’t hesitate to contact me. Thanks again for stopping by, and have a wonderful Memorial Day Weekend!

Welcome back to my East Bay Real Estate Blog. I apologize for not updating it in a while. The good news is that we are getting busier, and that is one reason why I have not had time to update lately.

It always seems that things really start to pick up around the Memorial Day holiday, which is a week from this coming Monday. It is probably because kids are about to get out of school for the summer, and families want to take advantage of that time to get their moving done.

With that said, I am going to make my blog a little more statistical today, and instead of giving you my opinion on a topic related to Real Estate, I am going to give you some numbers. The following is some information regarding sales of Single Family Homes in several East Bay cities. I think this information should prove valuable when deciding how you will price your home, or what kind of offer you can submit on a home for purchase. The following numbers are only for Single Family Homes. If you need stat’s for condo’s & townhomes, give me a call or shoot me an e-mail and I’ll be happy to help. The following stat’s compare April 2007 with April 2006. April of this year is the most recent month that these numbers are available, and that is why I am using it. Here we go:

Castro Valley

Median Sales Price- April 07-$697,500 / April 06-$692,000

Units Sold- April 07-20 / April 06-47

Average Days on Market- April 07-36 / April 06- 23

Dublin

Median Sales Price- April 07- $702,475 / April 06- $747,000

Units Sold- April 07-20 / April 06-24

Average Days on Market- April 07-22 / April 06-26

Hayward

Median Sales Price- April 07-$553,000 / April 06-$590,000

Units Sold- April 07-37 / April 06-82

Average Days on Market- April 07-44 / April 06-25

Livermore

Median Sales Price- April 07-$772,978 / April 06-$784,595

Units Sold- April 07-72 / April 06-84

Average Days on Market- April 07-32 / April 06-28

Pleasanton

Median Sales Price- April 07-$884,000 / April 06-$965,000

Units Sold- April 07-45 / April 06-37

Average Days on Market- April 07-23 / April 06-23

San Leandro

Median Sales Price- April 07-$545,000 / April 06-$592,500

Units Sold- April 07-35 / April 06- 58

Average Days on Market- April 07-34 / April 06- 24

San Lorenzo

Median Sales Price- April 07-$525,000 / April 06- $564,500

Units Sold- April 07-11 / April 06- 12

Average Days on Market- April 07-34 / April 06-24

I hope you find the above information helpful, and of course this is just a tiny sample. If you need information about townhomes/condo’s let me know. Also, this is only comparing April 2007 to April 2006. If you would like information for other months, or full year, please let me know. As always your comments are welcome, until next time…

Welcome to the Tuesday edition of your East Bay Real Estate Blog. To be honest with you there are some weeks when I get stumped as to what I should write about. If you keep up with my blog, you’ll see that over the last month and a half, I’ve covered a variety of real estate topics. If there is a topic I have not touched upon and you would like to discuss, please drop me a line.

So today I thought a good topic would be to highlight some of my favorite parts of the East Bay. As a life long resident I am very familiar with the East Bay, but I know there are places I will miss and cities I will not cover. This is because of course I don’t know every great place in the East Bay and I have a limited amount of time. If I were to write about all of the great places in this area, I would have to rename my blog as it is a whole topic in itself. Enough said, here are some places worth checking out:

Livermore- This city is growing quickly, and improvements, especially in the downtown area, are in full swing. Recently we had Fire & Ice, a Korean BBQ open in the downtown area, also a recent addition is Uncle Yu’s, gourmet Chinese food. Simply Fondue will be opening next month, and the new movie theater with the plushest seats in the East Bay is now open. Last week we went wine tasting at the First Street Wine Company, great place to get some expert wine advice, and on the topic of wines, the wineries in Livermore are fantastic. Did you know that Livermore has 35 different wineries?!?!

Pleasanton- Pleasanton is a wonderful city with many highlights including the picturesque downtown. The downtown area is a great place to stroll on a summer evening with many great restaurants and concerts in the park. The first Wednesday of every month the downtown area is closed to cars and opened to foot traffic. Booths are set up and a kind of festival takes place. Two new restaurants just opened up in my favorite mall, Stoneridge. They are P.F. Changs which offers some tasty Chinese food and The Cheesecake Factory which highlights American Cuisine. Pleasanton is one of my favorite places in the East Bay.

Dublin- Wow, talk about growing, and fast, that’s Dublin. For anyone driving through Dublin on I580, it is easy to see what I’m talking about. New townhome/condo developments are going up close to the Dublin Bart Station. These properties are tastefully built, most by Toll Brothers. Many new restaurants and night life locals are moving into Dublin, which make it a highly desirable place to live. The proximity to BART also makes it perfect for morning commuters into San Francisco and surrounding communities. The Regal Cinema movie theater anchors the Hacienda Crossing Shopping center filled with stores and restaurants.

Ok my faithful blog reader, it is time to admit that I don’t have time to go into every city in the East Bay today. I’ve missed some of my favorite spots including Hayward, Castro Valley, San Ramon, Oakland, San Lorenzo, San Leandro, etc… So I will have to save them for my future blogs. If you have some input for my blog, don’t be shy, drop me a line. Until next time…

Happy Cinco de Mayo to you. Did you know that Cinco de Mayo, or 5^th of May, celebrates the Mexican Militia victory over the French Army at The Battle of Puebla in 1862? Most people in the U.S. think it is Mexico’s Independence Day.

Well enough trivia let me get into my topic today on the East Bay Real Estate Blog. Today I am going to give you my opinion regarding a few of the different mortgages that I am seeing in the marketplace. Please remember that these are my opinions, and this is a blog, so feel free to post your own comments if you do or don’t agree with me. I appreciate other points of view. So here is what I think:

Option-ARM’s- These are adjustable rate mortgages that give you several options on how you choose to pay every month. I’ll be clear, I hate these loans. The biggest negative about this loan is that if you pick the wrong option, you will have negative amortization which will cause your loan balance to increase. If given the option, most people choose to make the smallest payment per month that they can. With this type of loan your payments could be tiny, but your loan balance is going up quickly. After a certain amount of time, or after your balance has gone up a certain amount, you may no longer have an option, and that is when the pain will begin. These types of loans usually only makes sense for savvy investors who know how to make a higher than market return on their money, and are willing to take the risk of paying market rate for an increasing loan balance every month. These loans became very popular over the last couple of years because people could qualify for the loan at the start rate (usually 1%) and mortgage brokers could advertise that they were offering you a 1% home loan. For most of us, this is a bad idea.

No Cost Loans- These loans sound great, and are easy for mortgage brokers to sell because people think that if the loan has “no cost” it must be free. Come on now, no one works for free, and these loans are not “no cost”, it’s just that instead of paying the costs up front, you are paying them every month in the form of a higher interest rate. These types of loans are ok, if you are planning to sell or refinance quickly. The way these loans work is that the lending institution pays the mortgage broker a certain amount of money for making a loan to you. The higher the interest rate, the more the broker gets paid. If the interest rate is high enough, the broker has enough money to pay all of your costs and still keep money for his paycheck. So instead of you paying for the closing costs, your broker pays them, but the interest rate you are being charged is a lot higher, because the lending institution had to give the broker money to pay for your costs and his paycheck… Make sure this option make sense for you before you get one of these loans. Compare the rate on this loan, to the rate you would get if you paid your own closing costs.

30 Year Fixed- This type of loan is great for those of you planning to stay put in your home for a very long time. It provides stability because your rate will never change, so you have the security of knowing your payments won’t go up. This is a good loan, however not the best option for everyone. If you are planning on selling or refinancing in say 3 to 5 years, you don’t need to have a rate that is fixed for 30.

There are many other loan options that I don’t have time to write about today, but if you are looking at buying or refinancing soon, feel free to give me a call, even if you are not using me as your agent. I don’t originate loans, so I have nothing to gain by telling you to choose one loan over another. Every loan is different, and depending on your situation, one type of loan will benefit you more than another.