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How Much Time Should You Spend Viewing Homes?

by Jeffrey Corman

Figuring out how much time you should spend viewing properties for sale is
a little like asking, “How long should I spend trying on shoes?”
The answer seems obvious: As long as it takes to make a decision!
Buying a home is significantly more complex than purchasing shoes – and
the stakes are higher too! You need to make sure you have all the
information necessary to confidently make the best decision.
There are basically three stages to viewing a property:
1. Macro
2. Micro
3. Professional
When you view a home on a macro basis, you’re looking at it from an
overall perspective. For example, you may do a general walk-through to get
a first impression and determine if the property has the basic features you
need, such as the number of bedrooms and the size of the backyard.
Macro viewing is often the fastest stage in the viewing process and can
sometimes take just a few minutes.
If you like what you see, then it’s onto the micro stage. At this stage you
take a closer look at the details of the property. You might, for example,
spend extra time in the master bedroom imagining how your furniture would
look and fit.
The micro stage takes longer simply because the home is now on your
shortlist. You’re interested and are considering making an offer.
Finally, the professional stage involves getting a qualified home inspector to
go over the property with a fine tooth comb. That typically occurs after
you’ve made an offer.
As your REALTOR®, I will guide you through a viewing so you’ll know what
to look for and can make a smart, informed decision. Call today

RENO - TAHOE ECONOMIC OVERVIEW

by Jeffrey Corman

After the announcement of Tesla’s gigafactory in September,
2014, the Greater Reno-Tahoe area has experienced a major
economic boom and the ramifications are far reaching. As the
relocation announcements of large and well-known companies
are publicized, other businesses, investors and developers from
all over the country are moving quickly to position themselves
to take advantage of this unprecedented growth. The ease of
doing business, coupled with favorable taxes and incentives, is
creating an unparalleled environment for both business leaders
and developers. With the dual benefits of having no corporate
or personal income tax and an unsurpassed quality of life, Reno
tops the list for many companies who are looking to relocate.
In addition to Tesla, Apple recently chose Reno as the site for their
massive iCloud data facility, making the largest land purchase
in its history. In addition, the Las Vegas based tech company,
Switch, plans to invest $5BB in an 8 million square foot data
center. It is projected that the above companies alone will create
over 55,000 direct and indirect jobs.

Greater Reno-Tahoe is a diverse region of eight distinct counties
located in the northwestern portion of Nevada. A meaningful sense
of community binds the region. Included in these counties is the
third largest city in Nevada; Reno. Reno has become commonly
known as “The Biggest Little City in the World” with its diverse
variety of activities, ranging from outdoor recreation to a vibrant
nightlife. Located just east of Reno is the growing city of Sparks.
With the combination of four vibrant seasons of recreation, arts
and culture, this region provides a very attractive place for a wide
variety of companies and individuals alike.
Housing Market

Since the announcement of Tesla’s Gigafactory landing in Northern
Nevada, the local real estate market has experienced nothing
short of a new boom. With the expectation of unprecedented job
growth from multiple entities which are relocating, the Northern
Nevada housing market will be faced with massive shortages
over the next several years.

The Economic Development Authority of Western Nevada
(EDAWN) has projected that approximately 5,000 new housing
units will need to be built each year over the next five years
to meet the unprecedented demand for new homes in Nevada.

EDAWN is projecting that by 2020 Reno will have:

52,000 NEW JOBS

INCREASED POPULATION OF 64,500 PEOPLE

45,000 NEW HOMES BUILT – 9,000 PER YEAR FOR THE
NEXT FIVE YEARS

As of today, Reno has approximately 2,000 finished lots with
only an additional 1,000 in the planning stages. If all 1,000 lots
come online, this provides just over one year’s supply of finished
lots based on 2016 projected sales and permits and obviously
falls far short of what will be needed on a yearly basis for the
foreseeable future. Given the significant demand, the following
factors seem to be in play:
• Limited supply and growing demand will continue to
drive home prices up
• Quality locations will command higher prices as in-fill
land is disappearing quickly; and
• New builders and developers will continue to attempt to
secure a presence in this market

Tax Benefits of Owning a Home – Save on Taxes

by Jeffrey Corman

Buying a new home is a dream that most of us cherish but we keep postponing the decision to do so as it poses a tremendous financial challenge. However if you look at the various tax benefits attached to investing in a home you would rather feel incentivised than challenged. The attractiveness of tax benefits will push you to seriously weigh your decision of renting a house and giving your landlord monthly sums of money against owning a house by leveraging.

 

Tax advantages associated to buying a home

The tax benefits associated with owning a home can be broadly classified as tax deduction and tax credits.

The most basic tax deduction benefit that comes with owning a home being that both the property tax, the mortgage insurance and interest payments you make on the mortgage are deductible from your taxable income. Not just that event the imputed rentals that you may earn from the property you buy are not to be included in your taxable income.

Tax credit is an incentive that allows one to deduct the amount of credit from the taxes owed to the government. There are many different examples of tax credit provided by the government. One well-known tax credit that is available to homeowners is the tax advantage that is provided to encourage people to promote energy efficiency in their homes. By opting for this, homeowners can enjoy tax benefits of up to 30% of the cost of installation. However, there are usually discrepancies from one state to another.

Tax deductibles, on the other hand, reduce your taxable liability by reducing your taxable income. There are various tax deductions available for homeowners on closing costs. However, there are sometimes fixed requirements that you may have to meet in order to avail the tax deductibles. Some of the many tax deductions that are available to homeowners are mentioned below.

Main Tax Benefits for Homeowners

1) Tax Benefits When Selling Your Home

There are tax benefits that you can claim at the time of selling the place. These can go as far as to exclude either a part or the whole profit that you obtain when you sell the house. Although there are plenty of criteria that need to be met to avail of these tax deductions too, there is a high possibility that you won’t be paying taxes on the profits you make.

  • Capital Gains Exclusion – This is considered the most considerable tax benefit that homeowners can enjoy. When you are looking to sell your home, you get a benefit of upto $500,000 if you are married and if you are single, you get a benefit of $ 250,000. This means that all profits up to that point can be kept by the homeowner. Considering that other investments are usually taxed at about 15%, this deduction helps you save about half a million dollars in the process.
  • Tax Saving on Home Improvements  While repair work may not have any tax benefits, works that are considered as improvements, like replacing countertops or putting in a new heating system, do come with some benefits. These costs can be added to the purchase price of your home when you plan on selling it. After all, home improvements add value to a house so keeping receipts of this kind of work when it is done will help.

2) Tax Benefits When Buying A Home

Although buying a home may be a hard choice, as you need a significant amount of cash input, there are numerous deductions that one can obtain when buying a home. Some of which are:

  • Mortgage Interest – Most people buy a house by taking a mortgage. The interest you pay on the mortgage is an allowable expense and you may deduct you’re your taxable income. With regard to the quantum of interest income that is deductible there is an upper limit. You are allowed to deduct interest expense on your mortgage until you have cumulatively deducted $1 million in interest costs. The ceiling is $500,000 if you are married and file your tax return separately from your spouse. The amount of deduction you stand to claim is usually higher in the first few years of the mortgage term as your monthly installments then carry a larger commitment towards interest. The interest component within the monthly payment comes down with time.
  • Discount Points – If you have purchased discount points when applying for a home loan, you will be able to enjoy a lower rate of interest on your home as well as lower monthly payments. This is because a point equals one percent of the loan amount thus getting points could save you more than $500 on your tax bill, in the first year after buying your home. If you plan on staying in the home for a long period of time, then purchasing discount points is a good option however, if you do not plan on living there long then you should opt out as the difference in payment would not be enough to offset the cost savings.
  • Real Estate Taxes  Depending on where you plan on buying your home, your property taxes will accordingly be steep or normal. However, the best part is that these taxes can be deducted from your yearly taxes. Your accountant will inform you on the amount you can deduct yearly but it can easily go up to $4000 to $5000.
  • Mortgage Insurance  Although most people choose to mortgage their homes, putting a 20% down payment may not always be possible. So you will need mortgage insurance. The good part is that, if you make less than $100,000 a year, you can deduct this amount from your tax bill. If you make more than that but less than $109999, it may still be possible for you to get a deduction for part of your mortgage insurance payment. This deduction ends up being quite sizeable, averaging around $1000.

Other Tax Benefits

  • Home Office Deduction  If you intend to use part of your home exclusively for running a business, you are allowed additional deductions on your taxes. The additional deductions may pertain to depreciation, utilities, repairs and insurance. However it is imperative that the space for which deduction is claimed is being principally used for business. It is a useful deduction, but you need to be prudent and honest as the audit rate is very high so you wouldn’t want to avail of it unless you really meet the criteria.
  • Home Equity Loans – When taking a home equity loan, homeowners are allowed to deduct the interest on the loan. You can take out an equity loan to cover home improvements. The interest from the loan can be used to deduct your taxes to up to $100,000 of mortgage debt.

These deductions and exclusions that are available to homeowners are more useful for those falling in a higher tax brackets. This is because, not only do they have higher marginal tax rates but they will also take most opportunity of itemized deductions on their tax returns.

Incline Village, on Lake Tahoe’s northeast shore, was relatively slow to develop. While visitors flocked to Lucky Baldwin’s 100-room hotel and casino in South Lake Tahoe in 1899 or the Bliss family’s renowned Tahoe Tavern in Tahoe City in 1901, Incline Village was still mostly a timber and milling town at the end of the nineteenth century, its timber sent via flume to Nevada’s Comstock mines. 

Even by the late 1930s, few people lived in Incline Village full time. Most of the land was owned by George Whittell Jr., of Thunderbird Lodge fame, who bought more than 40,000 acres and 20 miles of shoreline from lumber companies and other shareholders that had done poorly in the stock market crash. 

In the late 1950s, the Crystal Bay Development Company, spearheaded by president Art Wood, paid Whittell $5.3 million for 9,000 acres, establishing what today is Incline Village. In the 1960s, development finally took off in this corner of Lake Tahoe. 

Sierra Tahoe Hotel

Incline Village’s first hotel, located where the Hyatt Lake Tahoe stands today, was the 100-room Sierra Tahoe Hotel, which opened in 1964 and played host to tourists or people looking to spend six weeks in a more scenic location than Reno while waiting out their divorce. The hotel was built by the Pacific Bridge Company, the main builder for San Francisco’s Golden Gate Bridge. 

In 1966, after an addition of 100 rooms and a casino, the hotel was sold to Miami Beach builder Calvin Kovens. Kovens had previously been convicted of a $25 million union pension fraud with the notorious Jimmy Hoffa; he purchased the Sierra Tahoe Hotel using Teamster union pension funds. 

The Nevada Gaming Commission was uneasy with Kovens’ connections (a March 1966 Reno Evening Gazette article says commissioners cited Kovens’ “unsuitable background”) and denied Sierra Tahoe’s gaming license. 

Wood took over the hotel and renamed it the Incline Village Casino and Lake Tahoe Hotel. Kovens stayed on as manager, though not long after, in 1967, the Nevada State Gaming Control Board temporarily revoked Wood’s gaming license, according to information from the Incline Village & Crystal Bay Historical Society, after charges that a casino croupier used loaded dice. 

 

Kings Castle

The property switched hands again in 1969, when it was purchased by Nathan Jacobson, a Baltimore insurance executive who was a partner at Caesar’s in Las Vegas when it opened in 1966. 

At Jacobson’s wife’s request, he invested some $20 million into the building, revamping it into a Camelot-themed hotel and casino. It reopened in July 1970 as the 470-room Kings Castle Hotel and Casino. 

A Chicago Tribune article from August 2, 1970, describes the building as such: “The new Kings Castle has to be seen to be believed, and even then you’ll have problems. It’s an 11-story neo-Tudor structure crowned by a battlemented parapet from which medieval pennants wave in the mountain breezes.

“[Jacobson] predicted that it would become a hotel and entertainment complex to rival Las Vegas, a forecast that very well might please the boomsters but will drive conservationists even closer to suicide.” 

A large model of Lady Godiva—naked astride her horse—stood near the entrance, as did figures of lancers and varlets. Nearby was a sign reading “Thy kingdom come.” 

The same article continues, “Similar figures—probably of papier-mâché—of a king, queen and lady-in-waiting occupying the Royal Box of the 900-seat Camelot Theater helps create the strong impression that the décor is by Mme. Tussaud.” 

Doormen in medieval, velveteen garb welcomed guests, where inside, the staff wore similarly inspired outfits—table captains in jesters’ tunics and bartenders in Robin Hood–style jerkins. When the staff addressed a guest, it was as sir or lady. Jacobson, for example, was known as Sir Nathan of Jacobson.

The casino floor included five craps tables, a roulette wheel, 15 blackjack tables, a 35-seat Keno lounge, slot machines and a baccarat table; hotel room rates ran from $24 to $32, or $45 to $110 for a suite. 

Kings Castle held its grand opening in 1970, where celebrities such as Groucho Marx, Lana Turner, Barbara Stanwyck, Bob Hope and Chuck Connors were in attendance. Buddy Hackett gave a provocative performance, about which the Chicago Tribune, on July 6, 1970, in a piece titled “Buddy’s Bomb,” wrote “Sir Nathan of Jacobson, founder of Caesar’s Palace, has built a castle to put all other palaces in their place… A 16th century pleasure kingdom in the Tahoe woods that Sir Nathan says [in his eye-catching brochure] is the world’s most opulent hotel, casino and vacation resort. Kings Castle does indeed have quite a bit going for it, in spite of part-owner, Sir Buddy of Hackett, who bombed out on opening night with a new low in verbal orgy-lams and a nude scene that no one found funny. Sir Buddy of the billowing belly romped onstage clad only in a G-string and a couple of souvenir ersatz-gold medallions. So who needs a refresher course in human anatomy, especially his?” 

Of Kings Castle’s very brief run, not many accounts remain. There are secondhand stories, rumors of mob ties and of unsuspecting bellhops used to ferry bags of money that higher-ups skimmed from the casino, or tidbits about the ceilings being extra high as to accommodate showgirl headpieces. But these rumors are minor compared to the trouble the casino was about to hit. 

 

Casino Kidnapping

Ray Landucci worked as a keno manager at the Kings Castle casino. According to court records from 1973, the casino had been open less than two years when Landucci decided to test the honesty of an employee, James Martin, before promoting him. “With this purpose,” records state, “he told Martin of a fraudulent keno plan, solicited his cooperation to carry it through, and advised Martin that he would telephone him later that evening to explain the plan in further detail.” That plan, Landucci later admitted, was to rig a machine. Martin was going to “blow his nose and comb his hair to signal OK,” then a third man, identified only as “Norm,” was going to take $4,500 on a fraudulent keno card. 

Martin was—rightly—suspect of this plan. Landucci’s role was not to test an employee and, in fact, if he suspected dishonesty, his role was to report it to Forrest Paull, then–vice president of Kings Castle. As it was, Martin reported the conversation to Paull, who monitored the telephone conversation between Martin and Landucci that night. Paull reported to Jacobson. Though others in the know wanted to let Landucci attempt to carry out his plan, Jacobson wanted to confront the keno manager immediately. 

Jacobson got his way. At about midnight on September 1, 1970, Paull called Landucci into his upstairs office, where he interrogated him, allegedly saying at one point to give him the right answers or “Nate [Jacobson] would get them his way.” Landucci stuck to his story, however, that he was testing an employee’s honesty and didn’t intend to commit any actual fraud. Finally, after about 40 minutes, Paull left the room while Jacobson entered with his bodyguard, Thomas Bruno. 

Jacobson was furious with Landucci and began calling him obscenities, but Landucci insisted he hadn’t planned to defraud the casino. According to court records, Jacobson and Bruno both struck Landucci several times in the head. Then the bodyguard took a revolver from a desk drawer and threw it at Landucci’s feet while also drawing out his own pistol. Bruno loaded and cocked the pistol and told Landucci to pick up the revolver. Landucci refused. Bruno pointed the pistol at the keno manager and told Jacobson to call an ambulance.

Landucci began pleading. He told the two men he’d give them whatever they wanted. Jacobson called Paull back to the office, and had him write a confession for Landucci to sign. Landucci signed at about 3:10 a.m. on September 2, then Jacobson had him taken to another room, where he remained under guard until about 4 p.m. that day. Jacobson waited to see if the unidentified man, “Norm,” would enter the casino, but no one came. Landucci’s wife was called and told that Landucci was working an extra shift. 

After Landucci was released, law officials eventually became aware of the events. “Landucci was never a willing complainant,” then–chief criminal deputy district attorney Larry R. Hicks told the Reno Evening Gazette in a December 1, 1971, story. “The information of this case came from a leak in Incline Village, which I do not know myself.” 

It would appear that Landucci himself would have preferred to stay in Kings Castle’s good graces. On several occasions, he met with Paull at a gas station away from the casino in an attempt to have the vice president put in a favorable report so Landucci could receive unemployment benefits. His efforts were consistently denied. 

Jacobson and Bruno were charged with kidnapping, coercion and false imprisonment. Jacobson, in a 1973 interview, denied ever striking Landucci or seeing any display of guns. “I didn’t believe the days of witch-burning would still exist,” Jacobson said. In another report, Jacobson called Bruno “an innocent bystander.” 

The trial lasted five weeks, though after eight hours of deliberations, the jury acquitted both men. 

Despite beating the charges, the casino was bankrupt. Jacobson announced he was retiring and in 1972 sold Kings Castle to two Californians for $23 million. 

The hotel reopened briefly (with the caveat that Jacobson stay off the premises), but failed again; the property was forfeited back to the Teamsters union pension fund. 

 

Success at Last

The Hyatt Corporation bought Kings Castle in 1975. In the subsequent remodel, the banners and flags were removed, the velveteen costumes and jester’s tunics hung up, and Lady Godiva and the other medieval figures discarded. For the past five decades, the hotel has remained within the Hyatt, the property undertaking the occasional remodel and adding restaurants, a spa and various programs. While today’s Hyatt Regency Lake Tahoe Resort, Spa and Casino may not be the castle it was in the early 1970s, guests can still stay in the luxurious rooms or sit on the pristine beach, Lake Tahoe lapping at their feet, and feel like royalty.  

Home prices are skyrocketing faster than inflation. Bidding wars are breaking out. Shacks in the nation’s most scorching real estate markets are selling for over a million bucks. Things seem to be heading up, up, up. Sound familiar?

Déjà vu can be a spooky thing. Some folks these days are beginning to wonder whether the U.S. is seeing another housing bubble, like the one we suffered through beginning in 2007—and a reprise of the bloody financial carnage that followed when it burst.

Well, let’s get this out of the way right now, Chicken Littles of America: The sky isn’t falling, and the real estate market isn’t crashing. There are indeed a few warning clouds on the horizon (more on that below), but things in the world of residential housing are generally safe and steady and continuing to grow. Got that?

Those sky-high prices and ultracompetitive bids we at realtor.com® report on daily are mostly the result of a housing shortage rather than ominous signs of another real estate meltdown. The factors that led to the historic bust—easy-peasy credit for all, rampant flipping, frantic overbuilding—simply aren’t happening today.

In fact, the opposite is true these days.

“Only the most qualified buyers are able to get financing” for mortgages, says our chief economist, Jonathan Smoke.  “Flipping is back to normal. And we’re building about half as many homes as we need.”

As it turns out, not a single big metropolis in the good ol’ USA—that’s right, not even San Francisco or New York—appears to be “bubblicious,” says Smoke, who carried out an analysis of the 50 largest metropolitan markets in the country. During the bubble, home values were dramatically inflated, making the high prices unsustainable.

There are, however, a few super-duper expensive cities (San Jose, we’re looking at you) where the real estate market is showing signs of overheating, according to Smoke’s analysis. That means the high prices can’t be sustained—because as we all learned from high school (grade school?) science class, what heats up must eventually cool down.

In those smoking-hot markets, Smoke expects the relentless rate of price increases to eventually slow, or even dip, when prices hit a point that buyers can no longer afford.

“There are places that have risks,” Smoke says. “But even those places do not resemble what they looked like in their actual bubble years.”

overheating markets bubbles

To reach this conclusion, Smoke and the realtor.com data team analyzed 50 major housing markets from 2001 through 2015, using 2001 as a baseline year.

(Critics will be quick to point out that the country was just coming out of the dot-com bust in 2001, and then there were the terrorist attacks of 9/11. But despite those factors, housing experts consider 2001 to be the most normal, recent year before the bust, when homes were considered fairly valued. It is also the earliest year for which all the data were available.)

Smoke and his team then created an index of the six factors that create a housing bubble to assess whether any of these 50 markets were overheating. Here are the criteria:

  • Price appreciation: Are home values shooting up to abnormally high levels, outpacing inflation?
  • Home flipping: Are more homes being bought and sold for a profit within a year?
  • Mortgages: Is there a larger share of buyers getting mortgages, which they potentially could default on? Or are they paying in cash?
  • Home prices compared with wages: Are homes more expensive now for locals earning the local median income than they were in the past?
  • Home prices compared with rent prices: How do the costs of buying today compare with the costs of renting historically?
  • Construction: Are too many homes being built to meet the needs of the area’s population? If so, that could spell trouble.

 

We’ll say it again: None of the cities below is in a bubble. However, the top six cities—San Jose and San Francisco, CA; Austin, TX; Salt Lake City; Dallas; and Los Angelesdo show signs of overheating as prices continue to zoom up. The next four on the list—Fresno, CA; Buffalo, NY; Charleston, SC; and Portland, OR—show some elevated risk, but they seem to still have plenty of room to grow.

Incline Village and Lake Tahoe - 2016 First Half Sales

by Jeffrey Corman

http://tahoerealestatediary.com/wp-content/uploads/2016/07/North-West-Shore-MidYear-MMR-2016.pdf

 

Tahoe Real Estate market performs quite differently than the national average. Even in an area the size of Lake Tahoe, market trends can vary dramatically from neighborhood to neighborhood. When you are contemplating a large financial commitment such as the purchase or sale of a home, your neighborhood’s micro-market data can make a big difference in your financial decisions.

Sierra Sotheby’s International Realty compiles quarterly and year-end reports of micro-market statistics to help you make better real estate decisions where it matters to you. If your community is not listed, or if you’re unsure what the data means for your transaction, simply contact one of our local associates —they will be happy to pull a report for you and help you interpret the results.

 

Lake Tahoe Sales
$ Volume 2015 $ Volume 2016 % Change
$768,781,381 $1,001,751,844
30%
 
The Lake Tahoe real estate market boasted a 30% increase in sales volume with a big jump in sales in Truckee and a moderate increase in South Lake, plus a $25 Million lakefront sale in Incline Village that boosted totals there. With median prices dipping in some areas and increasing 5-10% in the busier locals, the overall Tahoe-Truckee market is still seeing a steady growth in pricing and sales.
 
Click below to view detailed sales reports for Incline Village, East Shore, South Lake, West Shore, Ski Resorts, Truckee & SW Reno markets:
 
 
Incline Village Market Insight 
 
Overall, condo sales jumped the most this spring, as did homes under $2 Million. Single family homes are taking longer to sell averaging over 300 days on market, while condos are selling more quickly than in 2015. The bulk of home sales are in the $1M- $2M price range, with larger inventory in this range. There are fewer lakefront homes on the market in Incline Village, although pricing for shared HOA lakefront properties is attractive. With a strong start to the summer selling period, we look for a jump in sales through our 3rd quarter which is typically the busiest time for sales at the Lake. The weather has been beautiful with Lake levels making boat launching easier, and lots of residents and visitors alike enjoying summer at Lake Tahoe.

Incline Village 2016 Sales 1st Half

Incline Village 2015 Sales 1st Half

Sales $ volume increased slightly for Incline Village single family non-lakefront home sales for first half of the year, and median sales price increased 13% from $872,500 to $983,750. The increase in sales occurred mainly in the $1M- $2M price range, with 27 sales this year as compared to just 14 for the same period last year. Sales priced under $1M and sales priced $2M- $3M remained steady for the period, yet $3M and above home sales slowed for the first half with just 1 sale over $3M in 2016 as compared to 4 sales in the first half of last year, and 14 sales over $3M for all of 2015. With 27 homes currently in escrow, we should see increased sales activity moving into the third quarter.

Condo sales were steady with 98 units sold in the first half of 2015 and 2016, although there was a 16% increase in $ volume for the first half of 2016. Average sales priced increased 15% to $525,147, and days on market decreased from 229 to 153, on average.

The Lakefront market jumped for condo sales, with 5 lakefront condo sales averaging just over $2 Million, with no sales recorded for the same period in 2015. There was one lakefront estate that sold, the notable “Sierra Star” for just over $25 Million with 3 lakefront homes and a 60 car underground garage with guest apartment above. There were 2 lakefront home sales for the same period in 2015. It is notable that only 5 direct lakefront homes are still on the market in Incline Village, and just 7 in Crystal Bay. There are a few HOA lakefront homes available, notably 1565 and 1580 Vivian Lane with access to a private HOA beach, pier and boat buoys.

Homebuilder Confidence High

by Jeffrey Corman

Homebuilder confidence in June reached its highest since January 2016, according to the National Association of Home Builders Housing Market Index. Their outlook on current sales conditions, sales expectations in the next six months, and buyer traffic were all positive.

The reason might be groundbreaking on single-family homes. The Commerce Department reported May Housing Starts on single-family homes, the largest segment of the market, rose 0.3 percent. Housing Starts on multifamily units declined. Building Permits, a sign of future construction, also rose 0.7 percent in May.

Home prices also continue to heat up. Data analytics firm CoreLogic reported that home prices rose 6.2 percent from April 2015 to April 2016, while month-over-month saw a 1.8 percent gain. This trend may level out with more homes available on the market.

Fed Doubles Down on Dovish Stance
Although housing continues to be a bright spot in the economy, other aspects have not consistently faired so well.

After weeks of talking up the economy, Fed Chair Janet Yellen was dovish following June's Federal Open Market Committee (FOMC) meeting. She noted economic growth was "relatively weak" in late 2015 and early 2016, job creation had slowed markedly, and household spending slowed despite increased household income and consumer sentiment.

And if that weren't enough, speculation and uncertainty leading up to Britain's June 23 vote to exit or remain in the European Union caused volatility in markets around the world.

On a positive economic note, Retail Sales grew for the second straight month, rising 0.5 percent in May, above expectations. Sales at clothing stores, online retailers, restaurants and bars all grew solidly. And Retail Sales were up 2.5 percent from a year ago.

The Bottom Line
The economy is important for homebuyers and homeowners. When the economy is doing well, investment dollars usually move into the more risky Stock markets, so investors can take advantage of gains. When the economy is not doing well, investment dollars typically are moved to the less risky Bond markets. Mortgage Backed Securities are a type of Bond tied to home loan rates. When Bond prices improve, home loan rates can as well. The reverse is also true.

For now, home loan rates remain near historic lows. If you have any questions about loan rates or products, please contact me.

For the week ending 6/24

by Jeffrey Corman

After months of divisive rhetoric about Britain's exit from the European Union, voters took to the polls and said "no" to staying with the 28-country economic and political partnership.

 

Investors had been playing it safe for weeks, moving their dollars into less risky Bond markets as speculation over the potential economic fallout amped up. Why is this important? Home loan rates are tied to a type of Bond called Mortgage Backed Securities. When Bond prices improve, home loan rates tend to improve as well, like they have in recent weeks. The reverse is also true. Markets around the world will likely be volatile for some time as they digest this news, and Bonds and home loan rates could continue to benefit from the uncertainty .

May home sales were a mixed bag. Existing Home Sales remained solid while New Home Sales suffered quite the setback.

The National Association of REALTORS® reported that May Existing Home Sales rose by 1.8 percent to an annual rate of 5.53 million, above the 5.50 million expected. The median home price jumped 4.7 percent from a year ago to $239,700. Existing Home Sales also were up 4.7 percent from May of 2015.

On the other hand, May New Home Sales fell from an eight-month high due to weakness in the South, Northeast and West, the Commerce Department reported. New Home Sales fell 6 percent from April to an annual rate of 551,000 units, below the 560,000 expected. April's figure was revised lower to 586,000 from the 619,000 originally reported, but was still the highest amount since February 2008.

Incline Village and Crystal Bay real estate sales have been moving along at a solid pace this year. Sales of single family homes in particular have been unusually strong.

During the first 5 months of 2016, sales of houses in units are up nearly 30%. Sales of condos and freestanding condos are about even with the pace of 2015, and that was an exceptionally big year for those 2 categories.

As of this writing, a total of 63 houses have closed escrow as compared to 52 in 2015. The median price of houses that have sold this year is $980,000.

The sweet spot in 2016 is for houses priced between $750,000 and $1.7 million. The inventory for lower-priced single-family homes is rapidly disappearing.

We have seen 20 sales of houses priced under $800,000, and there are only 16 homes in that price range currently listed for sale on the MLS.

In 2015, there were 54 sales of houses under $800,000. With demand remaining strong and lower-priced homes getting snapped up, it is becoming increasingly difficult for bargain-hunting buyers to find anything that meets their criteria.

Long-time owners of houses less than 2,000 sq. ft. may wish to consider putting their properties on the market while demand is high and the supply is low.

The condo market is also suffering from a relative shortage of inventory. There have already been 72 sales of condos in 2016 and there are just 78 condos for sale at the present time.

Prices continue to march slowly but steadily upward for this segment of our market. Half of the condos that have sold this year had final sale prices between $280,000 and $485,000. We anticipate seeing more activity for condos in the $500,000 to $800,000 price range as we get further into summertime.

There is still a shortage of 3 bedroom condos with a garage at low elevation. While we have seen a couple of properties come on the market in Skylake and Third Creek, a few of these sellers have been testing the waters at prices that are above where we thought we might see sales at this point in time.

However, a beautifully remodeled condo in Third Creek came on the market at 789K and got an accepted offer fairly quickly. Whether more units in the complex will follow suit is yet to be determined.

With over 60 properties currently in escrow and sales activity continuing at a solid pace, we feel the market will continue to show strength during the busy summer season.

Lake Tahoe is finally above the natural rim, which means the boat ramps that were closed last summer will be in full swing this year. Vacation rental bookings are excellent and we expect to see a larger numbers of visitors this year than at any time since 2012.

If you are considering purchasing a property in Incline Village or Crystal Bay, it’s to your advantage to write an offer during the month of June rather than waiting until the crowds arrive in July and August.

As a buyer, you will have less competition during the next couple of weeks. We are seeing more multiple offer situations in 2016 than at any time since we came out of the recession. This trend is likely to accelerate as we move into the peak season for real estate sales this summer.

15 Things that WON'T affect your credit.

by Jeffrey Corman

15 Things that WON'T affect your credit.

 

We spend a lot of time scrutinizing the factors and financial decisions that affect our credit scores, but we realize it’s important to educate consumers what WON’T hurt their credit scores. But as you go down this list, remember that there are different credit agencies and scoring models that treat things differently, and we always advocate paying all of your bills and debts on time. That being said, here are 15 things that WON’T hurt your credit score:

 

1. Debit cards

Some people get confused because debit cards might have a Visa or MasterCard logo on them, but in fact they have nothing to do with loans and therefore don’t affect your credit score.

 

2. Income

While you may be asked how much money you make every time you fill out a loan or credit card application to determine your debt-to-income ratio, your income is not reported to the credit bureaus and has no bearing on your score.

 

3. Where you live or work

Where you live, where you work, and for whom is not a factor in your credit scoring, although you will find that information on your credit report.

 

4. Your age, race, religion, marital status, or sex

It’s against federal law to consider age, race, religion, marital status, or sex when making lending decisions – and that includes all credit scoring models. One distinction is that the federal CARD Act of 2009 does make it harder for people less than 21 years of age to obtain a credit card, as they were trying to curb rampant advertising and targeting of college kids.

 

5. Checking your credit report

So many people are reticent to check their own credit report because they’re worried about their score going down, but that’s an absolute myth. In fact, an inquiry made by the consumer is a soft inquiry, and doesn’t factor into their score at all. Side note – you also don’t have to pay for your credit report, as each of the three big credit bureaus, TransUnion, Experian and Equifax, allow you to access a free credit report once a year.

 

6. Your taxes

How much you owe the Internal Revenue service - and even if you pay your taxes late - won't damage your credit. However, if you are so delinquent that the IRS files a tax lien, it will wreak havoc on your credit score (and probably your life!)

 

7. Going to jail

We certainly hope you don’t land behind bars, but it’s worth noting that incarceration has no affect on credit scoring. But remember that civil judgments of any kind – including bankruptcies, judgments, and other liens do show up on your credit report.

 

8. Public assistance and welfare

Receiving food stamps, disability, welfare, or any other form of public assistance is not reported to the credit bureaus and won’t impact your scores.

 

9. Paying rent

Sending a big check to your landlord on time the first of every month makes you a responsible tenant – but it doesn’t make your credit score better. However, like many of the items on this list, if you fail to pay your rent and get sued by a landlord or creditor, or the debt is sent to collections, it will show up on your report and sink your score.

 

10. Utility payments

The same applies for utility payments of electricity, heat, water, etc. – they don’t report to the credit bureaus unless you don’t pay and they go to collections.

 

The same is true for cell phones, insurance premiums, and other common bills.

 

11. Your net worth

Your income isn’t reported to the bureaus, and neither is your net worth. That means that you could hypothetically have a million dollars cash in the bank but it makes no difference at all to your credit score (but it will help you immeasurably when applying for new loans!)

 

12. Shopping for a loan in a short time frame

The credit bureaus realize that when consumers are looking to buy a home, car, applying for student loans, etc. they will most likely “shop around,” filling out applications with multiple lenders to get the best rate and terms. But as long as you do this responsible in short time frames, it won’t hurt your score. That window is reportedly 45-days for the new FICO scoring model, but only 14 days for VantageScore.

 

13. Small debts

The latest version of FICO doesn’t factor in debts less than $100, and with VantageScore 3.0, even collections less than $250 won’t hurt your score.

 

14. Bank account overdrafts

Did you bounce a check or overdraft your bank account? Don’t panic because it typically doesn’t affect your credit score at all (unless you were making a loan payment with that bank account, in which case you’ll have a late payment!)

 

15. Child support and alimony

According to both FICO and VantageScore, any obligation reporting as child or family support does not factor into credit score calculations. But of course you have to pay on time to avoid liens, collections, and your score dropping accordingly.

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