Sun Apr 06, 2008
The Stock Market vs Palos Verdes, California Real Estate Investment
Five Reasons Houses Beat Stocks: Citation Realty Times
Despite what Wall Street wants you to believe, owning a home isn't the same kind of investment as stocks or bonds. What you get is a USE asset that depreciates over time, while it grows in market value. All you have to do is keep the home in good repair to max out your take.
Here are five reasons why you get more for your money with a house than a worthless sock puppet.
Leverage: with stocks, you put in all your money for a little piece of a company. With a house, you put in a little money to get all of the house.
Tax benefits: Uncle Sam knows that owning a home is a pain in the neck, that's why you get subsidies. These are basically government bribes to get you to buy. What other investment can you put in 5 percent of the cost of the asset, reap all the appreciation and pay no capital gains? That's right: live in your home two years, rent it for three, sell it, and pay no tax on capital gains up to 250,000 for singles, $500,000 for married couples. And you're worried about paying too much?
And that's not all - think about the benefits of fixed-rate mortgages, property tax write-offs, interest rate deductions, depreciation. Is this a great country or what?
Control: When you buy stocks, you're paying some CEO 500 times the average worker's salary for results you'd lose your job for. With a home, you have control - what you buy, how much you pay, and where you live. You can improve the value with repairs and updates. Compare that to getting heard at the next shareholders' meeting.
Lifestyle: Do you want to look at a dumpsite or your children playing in their own back yard? With a home, you're purchasing a vantage point for yourself and your family. The neighborhood you want to be in, the size and style home that fits your needs. And the more wisely you choose, the better off you are.
Value: Unlike our little sock puppet friend, your house will seldom become worthless. Barring a catastrophe, your home will retain a major portion of its value, even in the worst of times. So don't freak out about a losing a few percent this year. You'll make it up. Housing has lost value only one year out of the last 35. It's more normal to beat inflation by one to two percent.
Let's get a little perspective here. You lost a greater percentage on the stock market this year than if you owned a house. You lost more on your SUV. And you sure lost more on your iPhone.
And keep this in mind -- when it rains, which would you rather have over your head, a roof or a stock certificate?
Written by Blanche Evans
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What are your thoughts?
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Sat Apr 05, 2008
The Economic Stimulus Package and You~What does it mean?
What Does The Economic Stimulus Package Mean To You?
Since passed by overwhelming Capitol Hill majorities in January, there has been much talk regarding the economic stimulus package. Yes, it will cost $168 billion, but what does it actually do for individuals?
The stimulus package is designed to help the country moderate the worst effects of a slowing economy and perhaps even avoid a recession. The idea is to encourage spending and with more spending to increase economic activity. While the theory looks good on paper, it will likely take months or years to know if it actually works.
From a personal perspective the January stimulus package has five major components that will immediately impact individuals with an interest in real estate.
1. Checks from Uncle Sam: According to the White House, taxpayers can receive rebates of up to $600 for individuals and $1,200 for couples. A minimum of $300 per person and $600 per couple will be available to those with at least $3,000 of earned income. This relief will be available to everyone with adjusted gross income less than $75,000 for singles and $150,000 for married couples filing jointly. The rebates will be phased out for taxpayers above those income thresholds.
2. Additional rebates will be mailed out for those with children. Everyone eligible for a rebate would also receive an additional $300 per child. For example, this would mean up to $1,800 of tax relief for an eligible couple with two children.
3. Reduced Income Taxes for Low-Income Wage Earners: The legislation says that 2008 taxes will be eliminated on the first $6,000 of taxable income for individual taxpayers and the first $12,000 of taxable income for couples. The tax rate used to be 10 percent on such income.
4. FHA mortgage loan limits will more than double in some cases. The usual limit in high-cost areas in the lower 48 states will rise from $362,790 to $729,750. Such financing allows buyer to purchase homes with 3 percent down.
5. Conventional loan limits will increase. The maximum size of a "conforming" loan will go from $417,000 to $729,750.
While the benefits for individuals look good, there are some caveats to consider.
First, those rebate checks are a one-time deal. While the government hopes that individuals will use the money for spending, many recipients will use the cash to pay down debts. Paying off bills can be a good use of your cash because it can mean lower monthly costs and better credit scores, thus lowering interest costs when you borrow to finance a home or car.
Second, if you want to buy or refinance with the new class of "conventional jumbo" mortgages, be aware that the FHA and conventional loan limits have only been raised for 2008. It's possible that the old limits will be reinstated in January 2009, so if you want a larger mortgage start planning now.
Third, while the conventional loan limit applies nationwide, the maximum amount you can borrow under the FHA program varies by location. In other words, the biggest loans will not be available everywhere. For specifics regarding your area, please speak with a mortgage counselor.
Written by Peter G. Miller
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Thu Mar 27, 2008
Regarding FHA Loan Limits and Congress
Dear Mr. Davis:
Thank you for contacting me regarding homeownership assistance programs. I appreciate the time you took to write and welcome the opportunity to respond.
The Federal Housing Administration (FHA) plays an important role in insuring home mortgages for those in underserved communities. It is critical that FHA programs be reformed to provide more homebuyers and borrowers looking to refinance with the opportunity to obtain an FHA loan. These opportunities are especially important in states, such as California, where the cost of housing is high. For homebuyers faced with jumbo loans subject to high interest rates, raising the government-sponsored enterprise (GSE) conforming loan limit will bring more liquidity to the market and lower monthly interest rate costs.
On February 13, 2008, the President signed the Economic Stimulus Act of 2008 (H.R. 5140) into law. I strongly supported the provision of this bill which temporarily increases the FHA loan limit and GSE conforming loan limit to 125 percent of an area's median home price, up to a maximum of $729,750. On February 5th, the U.S. Department of Housing and Urban Development published these revised limits for California. Please know that I will carefully monitor the FHA, Freddie Mac, and Fannie Mae as they implement these new loan limits. You may review the newly published FHA loan limits at http://www.HUD.gov The GSE loan limits can be viewed at http://www.ofheo.gov
You may be interested to know that conference negotiations to resolve the differences between the House-passed version of the FHA reform bill (H.R. 1852) and the Senate-passed version (S. 2338) are ongoing. These two bills would permanently increase the FHA loan limit, lower down payments, and increase the availability of FHA's reverse mortgage program, among other reforms. I understand that this issue is of major importance to Californians facing high home prices and the threat of losing their home to foreclosure. Please know that I will continue to do everything I can to help on this critical issue.
Once again, thank you for writing. I hope you will continue to keep me informed on issues of importance to you. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.
Sincerely yours,
Dianne Feinstein
United States Senator
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Tue Feb 19, 2008
Tax Cuts and Wealth Perspective "Cited"
Suppose that every day, ten men go out for beer. The bill for all ten
comes to $100. If they paid their bill the way we pay our taxes,
it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the
arrangement until one day the owner threw them a curve ball.
"Because you are all such good customers," he said,
"I'm going to reduce the cost of your daily beer by $20."
Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected. They would still drink for free.
But what about the other six men - the paying customers? How could they
divide the $20 windfall so that everyone would get his 'fair share'?
They realized that $20 divided by six is $3.33. But, if they subtracted
that from everybody's share, then the fifth man and the sixth man would
each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each
man's bill by roughly the same amount, and he proceeded to work out the
amounts each should pay. Like this:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now paid $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 ( 16% savings).
Each of the six was better off than before. And the first four continued to
drink for free. But once outside the restaurant the men began to
compare their savings.
"I only got a dollar out of the $20," declared the sixth man.
He pointed to the tenth man, "but he got $10!"
"Yeah, that's right," exclaimed the fifth man.
"I only saved a dollar too. It's unfair that he got ten times more than I!"
"That's true!!" shouted the seventh man.
"Why should he get $10 back when I got only two?
The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison.
"We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth man and beat him up. The next
night the tenth man didn't show up for drinks, so the nine sat down and had
beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our Tax System works.
The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just may not show up anymore.
In fact, they might start drinking overseas where the atmosphere is friendlier.
David R Kamerschen, Ph.D.
Professor of Economics
University of Georgia
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Thu Jul 19, 2007
Real estate market dynamics.
It is quite sometime since our first posting in this Blog. We are overwhelmed with the response we got for that posting .
In this dynamic, ever changing real estate market, it becomes increasingly important to utilize all of our resources for our clients.
At Davis & Davis, we pull together as a team and bring to the table the following marketing and sales resource to you, our client. Your home listed with us receives:
Brokers Open: Agents and brokers view your home and its appointments personally at point of listing, it gives them an opportunity to add your home to their base of homes to sell.
Internet Marketing: Much like this email you are reading now, we have a massive base of clients linked up to our email manager and web site. They are signed up to know what is happening in Palos Verdes real estate. So, when we list your properties, they know we have listed your property, quickly and privately.
Luxury Home Marketing: Our group sustains ongoing contracts with the finest magazines in California. We have contracts to serve our luxury home listings in: "Distinctive Homes Magazine", "Homes and Land Magazine", "Luxury, Life and Style Magazine", "RE/MAX Palos Verdes Showcase Magazine" and the "LA Times" and its different components.
The real estate market has changed for most agents and companies, sales have dropped. Our sales have increased! We are currently ranked in the TOP 5 GROUPS at RE/MAX Palos Verdes. I think if i was asked, i would have to say "It is this time now that the best real estate groups shine".
Lastly, we would like to welcome Rubin Mendoza to our group. He is a business minded, focused individual who has worked with some of the biggest names in entertainment today. He brings to the table a remarkable background in business and contract negotiation. You will be seeing him a lot on the hill.
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Tue Jan 16, 2007
Real estate technology and our new website
We have been a reasonably successful realtor group for last few years in the Palos Verdes region. We had been hiring services from various real estate technology solution providers to set up and maintain our website e-markethomes.com (also findingluxuryhomes.com) and manage our business through the Internet.
But somehow, recurring monthly and yearly costs without attaining meaningful returns made us think differently. We wanted to take our website and the technology driving our Internet marketing, to the next level. This meant thinking from a customer’s standpoint regarding what is the best way to use the technology driven solutions and accordingly build some services that really are compelling and can improve our overall performance. It was time to research and evaluate the best technology match for our business strategy and ensure that the decision we take puts our future business on a solid foundation.
We decided to develop all these high tech components of a realtor website on our own. On hindsight, it was an enriching and satisfying experience as building the newer version of any technology is a challenging and time consuming job. We ensured that our solution is a delight for our customers and at the same time we could administrate the website in an easy and effortless manner.
With all our humility we have now come up with a website that boasts of some of the most intriguing and customer friendly realtor solutions. These include a new website with a customized look and feel, Listings Player (with Virtual Earth viewing facility), Listings Management System, Lead Management System, Live Help, Blog and many other basic components which are perhaps the best available in the marketplace today.
We sincerely hope that as a customer and as a friend, you will enjoy your stay in our website. We will be delighted to have your comments on real estate technology and solutions and also our new website.
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