Thursday, January 31, 2008
Wednesday, January 30, 2008
WASHINGTON – The U.S. Department of Housing and Urban Development, the U.S. Environmental Protection Agency, and the U.S. Attorney’s Office for the District of Minnesota today announced a legal settlement with nine Minneapolis-St. Paul area property owners and one property management company. The government alleges these landlords failed to inform tenants that their homes might contain potentially dangerous levels of lead in violation of the federal disclosure rules.
This settlement will result in the complete elimination of all lead-based paint hazards in 179 apartments in the Minneapolis and St. Paul region, with those units containing children six years of age or under or pregnant women being completed first. Two properties, containing 113 units, tested under this settlement were found to be free of any lead-based paint (see attached list).
In addition to paying substantial funds to make these rental units lead-safe, the landlords will pay a civil fine of $7,500 for violating the federal disclosure law and will spend another $50,000 working on a Child Health Improvement Project (CHIP) to replace windows in at least 35 low- and very-low income, owner-occupied homes with children under age six in the Thomasdale, Rice Street, and Lower East Side of St. Paul. The landlords will also notify tenants of lead hazards immediately and comply with the Lead Disclosure Rule in the future.
“This agreement is another important step toward eliminating childhood lead poisoning by reminding all landlords that they have a responsibility to disclose possible lead hazards to their tenants,” said HUD Deputy Secretary Roy A. Bernardi. “Working closely with the U.S. Attorney’s Office in Minneapolis and our partners at the EPA, HUD can be a force to end this completely preventable disease.”
“EPA has the ambitious goal of eliminating childhood lead poisoning by 2010,” said EPA Region 5 Administrator Mary A. Gade. “Today’s agreement brings that goal closer to reality for the children of Minnesota.”
The settlement announced today is the seventh such agreement in Minnesota that requires landlords to eliminate all lead-based paint or lead-based paint hazards in their rental units. As a result of these agreements, more than 5,000 rental units in Minneapolis and St. Paul, including some units in Wisconsin, South Dakota, and Indiana, will be made lead-safe for tenants. Moreover, the landlords involved in these seven settlements will have spent nearly $4 million to make their rental units lead-safe, paid civil fines of $44,500 and provided $220,000 for local CHIP projects, including funding a mobile lead poisoning screening vehicle called the “Leadie Eddie Van.” The “Leadie Eddie Van” is now fully equipped and being used to screen children for lead poisoning throughout Minnesota.
Read the full article...
Tuesday, January 29, 2008
Monday, January 28, 2008
Sunday, January 27, 2008
Thursday, January 24, 2008
Wednesday, January 23, 2008
Tuesday, January 22, 2008
One of the pitfalls of a short sale or foreclosure is that any debt amount forgiven or discharged by the lender is recognized as taxable income by the IRS, and then taxed at ordinary income rates for the home owner, even though no actual cash changes hands. The taxation of "fake" money was just another kick in the pants to homeowners who just lost their home to foreclosure, only to find a huge tax bill in the mail that most could not afford to pay. The Act was given a boost of support with the number of foreclosures and the mortgage/financial crisis, not to mention the decreasing home values happening across the country.
So now, with the passage of the H.R. 3648, individuals who are relieved of their obligation to pay some portion of a mortgage debt on a principal residence between January 1, 2007 and December 31, 2009 will not be required to pay income tax on any amount that is forgiven.
Here are some details that might apply to you:
- No Income Limitation: All borrowers receive the relief, no matter what their income.
- Dollar Limitation: No more than $2 million of mortgage debt is eligible for the exclusion ($1 million of debt for a married filing separately return).
- Relief applies only to an individuals principal residence and the forgiven mortgage debt must have been secured by that residence.
- No relief is available for cash-outs, whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, home equity line of credit or similar arrangement.
- Eligible debt is what is called "acquisition indebtedness." This is debt used to acquire, construct or rehabilitate a residence.
1) Refinanced debt qualifies, so long as the debt does not exceed the original amount of the debt. (Same rule as Mortgage Interest Deduction)
2) Home equity debt (or second mortgages) qualifies if the funds were used to improve the home. (Borrower must have adequate records, as under current law.)
3) See cash-outs, above. No amount of a cash-out may be treated as acquisition debt.
Here are a few points of clarification as supplied by the Minnesota Association of Realtors:
- Refinanced Mortgages: The relief does apply to refinanced debt in some circumstances. The rules seek to assure that any debt eligible for the relief is directly related to the acquisition or improvement (such as rehabilitation, expansion, renovation, reconstruction) of the principal residence. Debt used for furnishings (i.e., any movable property) in the home is not eligible for the relief. When the proceeds of any refinanced debt is used for any purpose other than acquisition or improvement, those proceeds are not eligible for the relief.
- Principal Residence: A principal residence is defined in the same manner as the rules that apply to the capital gains exclusion on the sale of a principal residence. An individual may not have more than one principal residence at any given time.
- Second Homes: As a general matter, the relief does not apply to any debt forgiveness on any mortgage for any second home of the taxpayer. However, if a taxpayer uses a residence (other than his principal residence) solely as an income-producing rental property, already-existing relief provisions might apply, depending on the taxpayer's situation. if the second home property was acquired as a speculative investment (such as for resale rather than rental), relief provisions are unlikely to be available. In all events an individual who is in a short sale, foreclosure, workout or similar situation on a residence (including condos) other than his principal residence should consult a tax adviser to determine what, if any, relief provisions might be available.
Some other points of interest that are tacked on to the Mortgage Debt Cancellation Relief Act are the following:
Mortgage Insurance Premiums: The deduction for mortgage insurance premiums is extended through tax year 2010. Income limitations on the deduction will continue to apply.
Surviving Spouses/$500,000 Exclusion: In some circumstances, a surviving spouse is denied eligibility for the full $500,000 exclusion on the sale of his/her principal residence. This most frequently occurs when the residence is not held in joint ownership at the time the spouse who is not on the title dies. In that case, the deceased spouse had no ownership interest, so there is no basis step-up on that half of the property. the surviving spouse is thus eligible only for an exclusion of $250,000. (Had the home been sold during the deceased spouse's lifetime, the full $500,000 exclusion would have applied, so long as they filed a joint return.) Challenges for the surviving spouse are compounded when this circumstance occurs late in the year. The surviving spouse is often unable to sell the property within the same year that the spouse died. This legislation provides that a surviving spouse may claim the full $500,000 exclusion not only in the year of the deceased spouse's death, but also during the two years after the spouse's death.
Second Homes Converted to Principal Residence: The original House-passed version of this legislation included a provision that would have limited the application of the $250,000/$500,000 exclusion when a second home is converted to a principal residence and later sold. Thankfully, this change was not included in the final legislation that the President signed, as it would have hurt those that own second homes with huge capital gain taxes.
Monday, January 21, 2008
2007 saw an increase in the amount of time homes stayed on the market before selling. Some areas of Minneapolis take longer to sell than others. Downtown, for instance, is filled with condominiums that aren't selling so the recorded Days on the Market are higher than say, the Nokomis area, which is a highly desirable area for its beauty and affordability.
Sunday, January 20, 2008
I say this not because of the market correction, but because many really need to prepare for a serious purchase. A few things buyers will need to do:
- With mortgage companies now requiring larger down payments, first time home buyers will need to start putting aside money years ahead of time. When we bought our first home, we had saved a enough for a 10% down payment. Buyers should have at least this much real equity into the home when they move in , as a "safety" cushion.
- Credit FICO scores are now even more important. Buyers will need to spend the next few years correcting everything they can to improve their score. Get as close to 700 and above as you can.
- Think seriously about where they want to live. With ever increasing prices for gas and food, buyers should think about the cost to commute to work, and pick an area to live that will have less impact on the pocket book in regards to the current cost of living in the Twin Cities. Unfortunately, incomes have not kept pace with rising costs and spending extra money on gas and goods could effect your overall ability to afford a home.
While the urge to achieve the American dream of home ownership is very real, buyers need to be realistic about their ability to purchase. Yes, there are tons of deals out there via builders and foreclosure, but only those that can afford them should be the ones buying.
Some took offense to the first post about the subject, saying I had no business saying that now is a great time to buy. Later this week I will further the discussion by again saying why now is a great time to buy and for whom.
Saturday, January 19, 2008
If you have any questions about your particular neighborhood, feel free to let me know. I will be posting this week market stats for the Minneapolis area so be sure to check back in a few days to see what has been happening by neighborhoods.
Thursday, January 17, 2008
Wednesday, January 16, 2008
I am of the opinion that there has never been a better time to buy then now. Prices throughout the Twin Cities have dropped and there are tons of deals out there just waiting for a buyer. In fact the housing affordability index is back to 2003 levels, meaning homes are even more affordable then ever.
- Builders - many have over built and are looking to dump inventory to recoup any remaining profit, or to halt any further losses. I have seen some homes with a $50,000 - 100,000 price drop, with closing costs paid by the builder, just waiting for buyers to come along.
- Foreclosures - there are thousands of homes in foreclosure and as 2008 proceeds, banks are going to begin dropping prices lower, realizing that the losses they will be taking are necessary in order to rid the properties from their books.
As a buyer, what you need to understand is that you have never been in a better position to negotiate. If a builder is promoting discounts, don't be afraid to ask for MORE! If a property is in foreclosure, don't be afraid to offer less. If the listing agent tries to talk you out of doing so, ignore him. The final decision lies with the bank. If you can show you are a serious buyer, pre-approved, and ready to close, you have a better chance of making a real deal in today's market.
Saturday, January 12, 2008
(By JIM BUCHTA, Star Tribune)
Friday, January 11, 2008
Thursday, January 10, 2008
Wednesday, January 9, 2008
According to their website, "Lefroy Brooks manufactures a full range of shower systems, bathroom faucets and accessories, kitchen faucets, and towel warmers. All of the company's faucets are produced from solid brass, and each component is cast, polished, and assembled entirely by hand with 12 separate inspections throughout the manufacturing process to ensure superior product quality."
Tuesday, January 8, 2008
Monday, January 7, 2008
"Activity in the Twin Cities housing market saw a Valley Fair-esque drop for the week ending December 29, compared to the week before. Blame Santa Claus. New listings, pending sales and total inventory all fell at least several hundred units as Twin Citizens focused on celebrating the holiday season during the 12th snowiest December on record. Due to the unique weather and the vagaries of the Christmas holiday, little meaningful context can be gleaned from the decreased numbers."
However, we can utilize some updated figures :
- The Days on Market Before Sale increased to 158. Although this is higher than December 2006 by 4.6 percent, the figure will likely start to decrease as 2008 begins and the holiday season ends.
- The Percent of Original List Price Received at Sale fell slightly to 91.2 as buyers exerted their seasonal power during the slow December sales month.
- Supply-Demand Ratio for January fell to 10.46, which means there will be roughly 10.46 homes for sale for each buyer in January.
Sunday, January 6, 2008
The result: Hennepin and Ramsey counties are now in sync with the rest of Minnesota counties in charging $3.30/1,000 for State Deed Tax and $2.30/1,000 for Mortgage Registration Tax.
Don't be surprised when they try to reinstate it sometime in the future, but for now, home owners can save some additional money when they go to sell their home in 2008.
Friday, January 4, 2008
Thursday, January 3, 2008
- “Builders continue to do what they absolutely have to do in this market downturn. They are repositioning themselves for the market’s eventual recovery by cutting back on production and working down their inventories.” ~ Brian Catalde, NAHB President
- “The progressive tightening of mortgage lending conditions during 2007 has been the major factor behind the setback in home sales this year. NAHB expects home sales to begin a gradual recovery in the early part of 2008. For this pattern to materialize,
the U.S. economy must avoid recession and conditions in the mortgage finance system must improve. We are looking to the Federal Reserve to implement at least two more cuts in short-term interest rates to ensure that those conditions are met.” ~ David Seiders, NAHB Chief Economist
Wednesday, January 2, 2008
Yes, I am a little behind in the series. The foundation to our new house was poured in late October, before the first hard frost hit. Building a home in the winter can be a little nerve racking in Minnesota because you never know when the ground is going to freeze or when the first big snow will fall. Since we actually have basements here in the Midwest, things like freeze depth have to be taken into consideration when building.
Around the Twin Cities, the minimum foundation footing in most areas is 42 inches. This means that above 42 inches, the ground could freeze and cause damage to the foundation should you pour a footing for less. A good example to describe what happens is old home porches. If you have ever lived in an older home that has a front porch, at least in Minnesota, you might be sleeping soundly one night only to be woken up by some major creaking of your home. What is happening is the porch is actually moving because the footings usually only go down anywhere from 12-24 inches. When the ground freezes, these footings freeze as well, causing the porch to become fixed. When the ground thaws in the Spring, the porch is released from it's winter hold and moves back to an original position.
To alleviate this problem and create a stronger foundation, footings are now required to be at least 42 inches into the ground, the current accepted ground frost depth. If you build below the frozen ground in the winter, then you won't have to worry about those late night creaks, or your porch separating from the rest of the house.
Read previous posts from the series below:
Part 5, Digging the Foundation
Part 4, Staking the Lot
Part 3, Shopping Day
Part 2, Picking the Lot, and Part 2.1,
Part 1, Picking the Builder
If you want to learn more about the luxury side of real estate in Minneapolis, check out my other blog.