Tuesday, April 21, 2009

We Need Your Help to Stop the Minnesota House of Representatives

Below is a press release sent to Minnesota Realtors regarding some important tax law modifications that will negatively impact homeowners in our state. Please take the time to read the below information and take action via the link below. All of us need to come together to protect our real estate market.

From the Minnesota Association of Realtors:

"On Monday, the Minnesota House of Representatives Tax Committee released a "delete all amendment" to HF2323 and added provisions that are negative for real estate in the Omnibus Tax Bill. Authored by DFL Representative Ann Lenczewski, it contains a number of tax law modifications that hurt all Minnesota home owners. We need you to review and distribute this "Call to Action" to your clients, customers, and friends.

BACKGROUND: The Minnesota legislature and many other state governments find themselves in a situation familiar to many Minnesota households – their expenses have outpaced their revenue. Whether it is your family budget, a business budget or government budget, when expenses are higher than income you have to make choices. Since 1992, even with all of the Budget Shortfalls Minnesota has faced, the spending has increased each and every year. In fact, Minnesota State spending has gone from $14.5 billion in 1992/93 to $34.6 billion in 2008/09 – that’s a whopping 138 percent increase.

To resolve the budget shortfall, legislators have a number of options: 1) raise taxes to cover the government spending; 2) reduce spending to equalize the revenue projected; 3) raise revenue and reduce spending. The House/Senate DFL plans focus on option 3 – raise taxes and reduce spending. Governor Pawlenty has proposed a plan focused on reducing spending and raising revenue without raising taxes.

HOUSE TAX BILL HURTS REAL ESTATE. The DFL House Tax Plan raises revenue by cutting a number of income tax deductions. Of significant concern to Minnesota REALTORS® and homeowners, the DFL House plan eliminates two major real estate tax deductions: the Mortgage Interest Deduction and Real Estate Property Taxes. The bill also eliminates provisions of the Relative Homestead Tax.

Elimination of Mortgage Interest Deduction (MID)– a feature of the tax code since 1933, the MID has helped numerous generations achieve the American Dream of owning a home. A significant public policy objective for decades, homeownership stabilizes families, neighborhoods and communities. The House DFL Tax Bill eliminates the MID for homeowners and replaces it with a "housing credit" for qualified homeowners. The maximum credit is $420, which is equal to 7 percent (7%) of up to $6,000 of mortgage interest paid during the taxable year. However, no credit is applied to the first $4,000 of interest paid. Therefore, a homeowner must pay at least $10,000 in MID in order to receive the full $420 credit. As an example, if a homeowner has mortgage interest of $8,000 in the tax year, the credit equals $280. ($8,000 - $4,000 = $4,000 x 7% = $280).

This provision hurts young families disproportionately because mortgage debt loads are highest when people are establishing their households. This provision changes the financial plans numerous families have made when purchasing a home and increases the financial difficulties many are facing during this economic downturn. At a time when housing is finally getting a financial foothold why eliminate a tax provision that has helped millions of families achieve the "American Dream?"

Real Estate Property Tax Deductibility –This public policy provision has been included in the tax code since 1933 and allows taxpayers to deduct property taxes paid from their income. The House DFL Tax Bill eliminates the deductibility of real estate property taxes at a time when local property taxes continue to increase faster than Minnesotan’s income.

Relative Homestead – If you own identical houses, with identical values, with identical tax rates you would assume you would pay identical taxes – Right? Not if the House DFL Tax Bill becomes law. In a provision of the bill, authored by a DFL legislator, families that provide housing to other family members will pay more taxes on the second home. The goal of the provision, as stated by the legislator, is to stop parents from buying homes for their college students. MNAR pointed out that this is a small piece of the overall program and instead the proposal will be hurting families trying to assist other family members who may have gone through job loss, divorce or other financial difficulties. Isn’t it better to have families provide for families instead of government?

These provisions have been designed according to the author to make the Minnesota tax system more progressive and to raise revenue to fill the state’s pending budget shortfall. Because real estate related public policy provisions of the tax code benefit the upper 50% of tax payers – Top 50% begins at $40,061 according to the Tax Incidence Study (http://www.taxes.state.mn.us/legal_policy/other_supporting_content/2009_tax_incidence_study_links.pdf ). At a time when the housing market is beginning to stabilize, this House DFL sponsored proposal sends the wrong message to struggling Minnesota households.

The Minnesota Association of REALTORS® has a long and respected position that government, at all levels, needs to "Live Within Your Means." Just like families sitting around the kitchen table trying to make ends, Minnesota's legislative body should not be adding to the long-term financial burden of Minnesota homeowners. The House DFL Tax Bill penalizes families who have invested in the American Dream and provide for the backbone for stable communities.

ACTION REQUEST: To fight this unbelievable proposal we are asking that you take three steps:

  1. Please contact your legislator and let them know how you feel about this proposal. Please find attached a list with legislator contact information or use this link: http://www.leg.state.mn.us/leg/Districtfinder.asp
  2. Forward this email to your clients, customers and friends. Let them know what is being proposed and give them the web address above to review the bill.
  3. Go the extra mile and CALL your legislator about this tax bill. Let him/her know your concerns and how it will impact your clients, your family and your business. Let your Representative know that it is time for our elected officials to "LIVE WITHIN YOUR MEANS" by prioritizing spending and not raising taxes.
    You can access the bill summary (48 pages) at: http://www.house.leg.state.mn.us/hrd/bs/86/HF2323.html

Monday, April 20, 2009

Newly Released Market Report from Minneapolis Area Association of Realtors

The newest update is in from the Realtor Association, who actively tracks real estate market statistics like none I have ever seen.

"Hopeful signs of a Twin Cities housing market recovery carry on thanks to a combination of no growth in the spring supply of homes for sale and still-improving sales figures.

Helping to keep inventory down is slow new listing activity, a metric that has been sluggish all year. For the week ending April 11, there were 20.7 percent fewer new listings than there were during the same week in 2008. Pending sales are still trending in the opposite direction, up 21.9 percent in year-over-year numbers to 1,046 for the week. That's only the second week of 1,000-plus pending sales or more since May 2007. If these two metrics persist, the market could be in for some serious re-balancing.

With the Housing Affordability Index reaching 218—an increase of 40.8 percent over last year—it seems to be an awfully good time for buyers to get off the wall and on the dance floor...being mindful that 29.1 percent of the dance partners are lender-mediated."

Don't forget the Monthly Skinny Report video below:

Sunday, April 19, 2009

Spring is Finally Here

I planted some pansies last week, as they are the first real flowers you can plant in the Spring that survive the cooler temps. Over on my garden blog, I have started writing on what is peaking out of the ground. Hopefully this drizzle rain of the last two will help them grow a little higher.

Thursday, April 16, 2009

Tea Parties and the Media Discrace

I have to say, it is really disappointing that in today's society, only certain people are allowed to voice their opinions in opposition. After watching the news clip I have included below, of a CNN reporter cutting off a demonstrator who is just trying to point out why he is there, I have to say that I am just sick and tired of the media bias.

Journalism is dead. What we have instead are airways and channels of editorial reporting, where so called "reporters" give us their opinion and political beliefs on topics. Kind of like bloggers. We give our opinions and beliefs in matters, but we don't hide behind the belief of being professional journalists. Heck, I'm a Chemistry major for goodness sakes. English writing was never one of my best subjects, but blogging has helped me get better.

But back to the reporter. If there is one thing I have learned when working as a professional, it is that you NEVER cut someone off when they are speaking. And the second thing you never do is become condescending to that person when their beliefs are different than yours. Obviously, this reporter, needs to go back to etiquette school and learn some manners. Not that I do already, but I won't be clicking the remote to CNN anytime soon.

The last thing I will say is that I am very proud of those that made it out yesterday to show their disappointment and anger over the growing government and increasing taxes. I spoke with numerous family members and friends across the nation who went to their local Tea Parties, and everyone of them said the demonstrations were peaceful. Nothing like what was being reported by the likes of CNN.

Wednesday, April 15, 2009

Where Have I Been?

Well, to answer it, very busy.

Birthday Party
Sick with the Flu for a week
Closings and new Listings
Volunteer Work
Reading Books that have been on my shelf for a Year
Visiting Family
Waiting for Spring

But now I think I am back. Has anyone even missed me?

Friday, April 3, 2009

Minneapolis Advantage Loan Program up for Round Two

To all you home buyers out there looking to buy a home in Minneapolis, listen up, as you might be able to take advantage of the Minneapolis Advantage Program. It helps potential buyers purchase a home in neighborhoods beseeched with foreclosures. Last year was the pilot program and it went very well (see more below), and this year will most likely prove to be another huge success.

Two hundred loans at $10,000 each will be provided on a first come, first serve basis as of April 1, 2009. The funds can be used for closing costs, down payment assistance, or small repairs to the home, and if you keep the house for five years, the loan is forgivable. As with last year, only certain areas of Minneapolis apply, so you will have to be purchasing a home in one of these neighborhoods to qualify.

Income Requirements and Program Guidelines

If your income is less than $64,720 (less than 80% of the area median income), you may qualify for the following program:

  • Minneapolis Advantage Program – Federal Home Loan Bank, Guidelines

If your income is less than $97,080 (less than 120% of the area median income), you may qualify for the following program:

  • Minneapolis Advantage Program – City of Minneapolis, Guidelines

2008 Results for the Minneapolis Advantage Pilot Program

Last year, every real estate agent in town was excited to see the loan program offered by the City of Minneapolis. However the program was such a success, that before anyone knew it, the funds were all used up. Only $500,000 was available at the time, so 50 lucky home buyers were able to qualify for the $10,000 (just a quarter of what is now being offered). Here are some of the statistics for the Advantage Program in 2008:

  • 62% of the homes purchased were foreclosures
  • 50% of the homes were sold for under $100,000, and 82% were under $150,000
  • 80% of the homes bought were located in North Minneapolis
  • 78% of purchases were from first time home buyers

You can even see where each home is located by viewing this map.