Annapolis Maryland Luxury Real Estate

The S&P/Case-Shiller Home Price Indexes were released on Tuesday.  Prices in the Metro-Washington DC area fell 15.7% in June 2008 versus the same period last year while only falling 0.9% from May 2008.  In Anne Arundel County the home price index (caluclated using a similar methodology to the Case-Shiller index) for June 2008 was down 2.3% was down from June 2007 and the index was up 3.0% in June from May.  In Annapolis the home-price index (again, caluclated using a similar methodology to the Case-Shiller index) was up 6.8% in June 2008 over one year ago while the the index was up 11.0% in June over May.

Although the Washington DC Metro S&P/Case-Shiller Home Price Index is not yet out for July 2008, the Anne Arundel County home price index is down 5.1% in July 2008 from July 2007 and is down 0.1% from July 2008 from June 2008.  The July 2008 Annapolis home price index was up 1.6% from July 2007 and was up 1.3 from June 2007.

S&P/Case-Shiller Home Price Index

Since November of 2007 the Annapolis home price index has been higher than the Metro Washington DC home price index.  The Anne Arundel County home price index has now been higher than the Washington metro index since July 2008.  This suggests that while metro area prices continue to decline, Anne Arundel County and Annapolis prices remain more stable.

While no one can predict the future with any certainty, one thing is certain - it remains a buyer's market. Buyers have large numbers of desirable properties from which to choose and sellers have lots of competition. A firm understanding of the market trends and forces is necessary for making the best real estate decisions.

So, if you are serious about buying or selling a home in today's real estate market, for a no-obligation confidential and professional consultation contact Stephen Howell, Associate Broker, REALTOR^®, Coldwell Banker Residential Brokerage, 410-923-3217.

After the short sales comes Form 1099C - Cancellation of Debt.  A lender who cancels a debt will file a 1099C with the IRS.  This form reports the amount of debt that was cancel.  And, according to IRS instructions accompanying the form, the debtor must include all canceled amounts on the "Other Income" line of Form 1040.

Furthermore, if the debtor was foreclosed upon, a creditor may be required to file Form 1099A - Acquisition or Abandonment of Secured Property.  On the 1099A, the Creditor reports the Fair Market Value of the property in additional to any outstanding principal balance.

Sellers finding themselves in short sale or foreclosure situations may want to refer to IRS Publication 523 - Selling Your Home for tax information.

On December 20, 2007 President Bush signed into law HR 3648 - Mortgage Forgiveness Debt Relief Act of 2007 and to quote The President - to help "by ensuring that refinancing a mortgage does not result in a higher tax bill.  Under current law, if the value of your house declines and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as money that can be taxed."  The President went on to say "...this bill will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive." (Note 1).

According to Robert Dietz, an economicst for the National Association of Home Builders ("NAHB"), "The Internal Revenue Service treats all debt amounts that are reduced, forgiven or eliminated as part of a mortgage restructuring or foreclosure as taxable income ..." (Note 2) (Note 3)

What remains unclear is when a seller sells their home and it sells for less than they owe on their mortgage and the lender forgives the outstanding balance of the loan, will the seller have a taxable consequence?  The question is open because HR 3648 seems only to address "refinancing" and does not appear to address when sellers sell and the loan is discharged.

In any event, IRS tax code is very complicated, when and if a 1099 will be filled with the IRS should be clarified by the debtor as they complete the short sale negotiations with the lender.

Will the Cancellation of Debt be reported to the credit bureaus?  My research indicates "yes".  According to Maxine Sweet, Vice President of Public Education, she states "In the vast majority of instances ... a short sales is reported as 'settled' ..." and "... like charged off accounts, are very negative, particularly because a mortgage is involved." (Note 4)

So, if you are serious about buying or selling a home in today's real estate market, for a no-obligation confidential and professional consultation contact Stephen Howell, Associate Broker, REALTOR^®, Coldwell Banker Residential Brokerage, 410-923-3217.

Notice: This information is provided for informational proposes only and is not intended to provide tax advice.   You should seek tax advice from your attorney or qualified tax professional.

For the fourth month in a row, inventory levels were above the 4,500 level. In July the number of active units in Anne Arundel County trended down 0.6% but was up 9.1% from last year. The average sold price dropped below $400,000 and was down 8.5% from last year. The pending transaction to active listings ratio was 9.8% - about the same as last month but down 30.8% from last year. So, how much worse will it get? Well, that's anyone's guess.

In Anne Arundel County in July the total sold volume was down 20.0% from June. The average sold price in July was down 7.1% from June. The number of homes sold in July was down 13.8% from June.  And, the average days on market in July was unchanged from June.

There were 411 units sold in Anne Arundel County in July, up from 411 units sold in June. The number of active listings was 4,699 in July, down from 4,729 in June. The number of new listings taken in July was 959, down from 993 in June. The number of listings with pending contracts in July was 462, up slightly from 452 in June. The average sold price was $397,081 in July, down from $427,655 in June. The average number of days on market was 125 in July, unchanged from June. The average list price to sold price ratio was 90.86% in July, up slightly from 90.46% in June. Total sales volume for July was $163.2 million in July, down from $204.0 million in June.

In Annapolis the total sold volume in July was down 17.1% from June. The average sold price in July was down 16.0% from June. And, the number of homes sold in July was down 1.3% from June. And, the average days on market in July was down7.9% from June.

There were 76 units sold in Annapolis in July, down slight from 77 units sold in June. The number of active listings was 997 in July, up from 967 in June. The number of new listings taken in July was 195, up slight from 190 taken in June. The number of listings with pending contracts in July was 104, down slightly from 125 in June. The average sold price was $527,212 in July, down from $627,710 in June. The average number of days on market was 147 in July, down from 160 in June. The average list price to sold price ratio was 95.10% in July, up slight from 94.37% in June. Total sales volume was $40.1 million in July, down from $48.3 million in June.

So what can we expect for the third quarter of 2008? Inventory will continue to increase. New listings may decline. Pending sales may decline. The ratio of pending sales to active listings may decline and prices may drop further. There's no tipping point on the horizon when sales might improve. What has to happen? While the number of buyers in the market remains relatively constant at any time and they believe that homes are overpriced. Sellers must lower their asking price and do so before their competition. Sellers should take all competition seriously and must price below properties under contract. When the buyers' perception is homes are overpriced, sellers must price their homes to look like a bargain. The lowest price and most favorable terms will result in the fastest sale!

While no one can predict the future with any certainty, one thing is certain; it's a buyer's market. A firm understanding of the market trends and forces is needed to make the best real estate decisions. So, if you are serious about buying or selling a home in today's real estate market, call Stephen Howell, Associate Broker, REALTOR^®, Coldwell Banker Residential Brokerage, at 410-923-3217.

On July 30^th the President signed into effect the "Housing and Economic Recovery Act of 2008" without much fanfare from the Whitehouse or the Press. I don't even remember hearing anything about it on CNN or any other network news shows. So, what's the big deal? Well, maybe there is no big deal for homeowners or elected officials. What provisions of the Housing Stimulus Bill might impact you whether selling or buying?

First there is GSE (Government Sponsored Enterprises like Fannie Mae and Freddie Mac) and FHA Reform making permanent conforming loan limits up to $417,000 or 115% local area median home price, capped at $656,500.  For Anne Arundel County, the HUD median home price is calculated at $448,000, setting the GSE and FHA limits for 2009 at $515,200.  Although the effective date is immediate, the loan limits will not go into effect until 2009.

Second there is the Homebuyer Tax Credit. This is a $7,500 tax credit available to buyers on qualified purchases between April 8, 2008 and June 30, 2009. Homebuyers qualifying for the tax credit will get a dollar for dollar reduction on the tax they owe equal to ten percent of the purchase price of a home up to a maximum of $7,500. But beware, this is a loan disguised as a tax credit. Homebuyers will be required to repay the government over 15 years in equal installments for the tax credit amount received. So let's say you qualify for the full credit of $7,500. That means that the homebuyer will have a yearly loan payment of $500 for 15 years or $41.67 per month. The first repayment is due in the second tax year.  And if the homebuyer sells before full repayment, then the balance is due immediately with the caveat that if the gain on the sale is less than the balance due the loan balance will be reduced.

There are other provisions of the Act that affect FHA foreclosures, seller-funded down payment assistance programs, and VA loan limits among others. It will be awhile before we know if this will stimulate the market.

In Conclusion

If you are thinking about buying or selling a home or know someone who is, for a confidential, private, professional consultation without any obligation to discuss today's real estate market, please contact Stephen Howell, Coldwell Banker Residential Brokerage, at 410-923-3217 or visit www.LiveInAnnapolis.com.