December 2019 Newsblog

December, 2019 NewsBlog

“Ho! Ho! ‘Tis the Season.”
What gifts are you looking for under your tree?

WHAT ARE FRIENDS AND FAMILY FOR?

In this season of Thanksgiving, what are friends and family for? They bring us joy, they bring us love, sometimes food, and more than that, for some lucky ones, they bring us monetary help that allows us to forge ahead. NAR, in their report here, gives us stats that a good 30% of first time homebuyers are additionally lucky in that they get financial help from family and friends to buy that home. The percentage of those being able to purchase is still low, in large part due to the age old quandary of supply and demand. So in this time of gift giving and cheer, wouldn’t it be lovely to get a big bundle of cash tied with a red ribbon? 

APPLE’S $2.5 BILLION RED BOW GIFT

When it comes to gift giving there is nothing better than cold hard cash, or maybe an IOU, or even better, a public announcement which everyone will remember. By this press release, Apple has committed $2.5 billion to helping California claw its way out of the housing crisis. This commitment comes from their realization that they may have a civic responsibility to help because in many ways they are a part of the problem, particularly in the Silicon Valley and Bay Area. They and other tech companies overwhelmed the areas with their hires and caused the corresponding housing shortage. My brother threw out an example of his friend who was willing to pay $5,000 a month just to rent an SFR and still could not find anything. Well, here’s to hoping his friend works for Apple because they are trying to help. Hopefully, Apple and our Governor extends the monetary commitment statewide and not just to the communities in those areas. Amazon, Google, Facebook? Are you reading this? Could you all cough up some billions to help a poor State here?  

OPENDOOR’S NICE GIFT TO L.A. (AND THEMSELVES)

Opendoor, the iBuyer company that buys real estate from existing owners, is increasing their purchase price ceiling in Los Angeles County from $600,000 to $800,000. This is based on their algorithm that what works in other parts of the country may not work in L.A., given the higher real estate values here. So the additional $200,000 will help those owners in a higher property value bracket who want to do a quick sale of their existing home and take advantage of their next purchase on the horizon. Opendoor, in turn, sells it at a nice profit and may even help the owner find that new home from their inventory. Win! Win! Gift! Gift!

FANNIE AND FREDDIE’S CHRISTMAS GIFT

Good ole Auntie Fannie (Mae) and Uncle Freddie (Mac) have stepped up to the spirit of the season and have blessed us all with an increase in their conforming loan limits, now raised to more than $510,000! This is a bit of a gift giving that will make a lot of Borrowers happy in this rapidly increasing housing value market. Go to this article to read how calculations are made and a breakdown of limits across the U.S. Good information for those of you in the mortgage industry! Happy New Year!

GIFT TO SELF: THE €1 EUROPEAN FIXER UPPER 

In my efforts to find a nice gift for myself (because, you know, I really worked hard this year!) my eyes lit up as I read this featured story here – I could purchase a home in Europe for €1! Dreaming of a sunny Christmas…. lazy days in the sun, quaint shops, afternoons drinking tea by the local boulangerie. Of course, nothing is that easy; what comes after the purchase may involve years of remodeling and renovating, but surely the claim of having a European vacation home is the top-of-the-top! Forget U.S. housing difficulties, jet off to Italy or Sicily and live on U.S. dollars!

KICKBACKS – AN ILLEGAL GIFT GIVING

It’s not often that a kickback scheme gets thrown into the light, even though it is practiced more often than we can imagine. Under the Real Estate Settlement Procedures Act (RESPA)  it is a crime to offer payment for business (see my article on this issue here). This recent short article brings into light all the kickback schemes in the financial and real estate industry that we are plagued with. In our industry we call it “Pay to Play?”. It should not be taken lightly because all it takes is one well placed complaint to the right regulators and the ball (or heads) start rolling. This particular financial company is lucky; the fine to settle was only $1.35 million but the financial institution agreed to pay the penalty without admitting or denying in perpetuating the violations. The CEO alleges that “the actions the bank was accused of are commonplace in the industry.” Unfortunately that is a true statement.

MANHATTAN MANSION TAX – A HALLOWEEN STORY INSTEAD

Back to more serious stuff. This is more like a story for Halloween. Those of us who live in certain parts of California know about the pain of paying real estate transfer tax upon the sale of a property. Those purchasing in certain cities like Berkeley, San Francisco, Oakland – have felt the pay of pain of paying $15.00 or so for every $1,000 of the sales price when they go to sell the property (here is my article on this tax).

Apparently, Manhattan has had a similar tax on the books which they call a “mansion tax” and this tax was raised in July of this year to $12.50 for every $1,000 on properties sold over $2 million and $39.00 for every $1,000 on properties sold over $25 million. If you want to do the math, a property worth $25 million (not unusual in Manhattan, right?) would generate a transfer tax of $975,000. Gaaaahhhh! And this is separate from their Transfer Tax of $6.50 per $1,000! Someone there needs a really nice Christmas gift to swallow this. So there you are, maybe I should label this article “How taxes can correct the real estate market” as this Manhattan tax turned the Manhattan real estate sales market sideways. So for those of you in Berkeley, San Francisco and Oakland, Merry Christmas! You have no cause to complain.  

MY GIFT TO ALL – PUBLIC SERVICE ANNOUNCEMENTS

Medicare Scam  – For those of us who have just received a new Medicare card, a new identification number has been assigned in lieu of our social security number. This has caused some concern, necessitating the FTC to come out with an article about scammers who are targeting the elderly by getting their new I.D. number through nefarious means. You have elderly friends and family? It is important that they are made aware they could be targeted. For many of the elderly, life used to be so simple. Today, living in this tech world is not easy for them to navigate.

IRS Tax Tip – And for those of you who have foreign clients who have an Individual Tax Identification Number (ITIN) issued by the IRS, here is a timely tax tip: It is time to renew! Please forward this article to them so that there is no break in their being able to use their ITIN for income tax purposes in the upcoming year. Renewing takes time, apparently.

FOR A BEAUTIFUL SEASON

I usually end my newsblog with a funny, but this month I was inspired by my favorite a capella group. They do Christmas harmonies, but for me, this uplifting song hits the spot. Here is my contribution for the month – Pentatonix – The Sounds of Silence – https://www.youtube.com/watch?v=gdVjVtpr55M

In the spirit of the Season and all the millions of Christmas cards that get sent out, my quote of the month:

The most amazing thing about the Postal Service is their ability to read everyone’s handwriting. – Author Unknown but so, so true!

Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”

The opinions expressed in this blog are solely the author’s.

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