October 22 Mortgage Rates and National Real Estate News

Mortgage rates continued their streak of small fluctuations. This time, all 10 of the programs in our Mortgage Rate Tracker either fell or stayed the same (for the October 22 rates, go HERE). Remember: don’t get bogged down in day-to-day changes. The larger picture is that rates are at the lowest end of the spectrum, near record lows.

There will be plenty of housing and economic data released later in the week, including the FHFA Home Price Index, New Home Sales, Durable Good Orders, q3 U.S. GDP and a Consumer Sentiment survey. For now, we have a few news items:

Caterpillar has reported that its third quarter earnings beat expectations, but outlook for the recovery is for more of the slow, plodding growth we have seen over the past year. Doug Oberhelman, CEO of Caterpillar, the world’s largest construction and mining equipment maker, addressed the housing market:

“The bubble that we went through is being worked off, [and] there’s no question in my mind that housing starts will inch up… It’s contingent on the unemployment rate, how many people are working, and when that’s solved we’ll see housing starts back over a million.”

A report by real estate statistics research firm RealtyTrac reminds us that although home prices have shown a broad nationwide improvement, the recovery still has a ways to go. RealtyTrac studied 919 U.S. counties, grading them on five metrics: average home prices, unemployment, foreclosure inventory, foreclosure starts and distressed sales. In total, 65 percent of the markets had at least three of the five metrics below 2008 levels. Said RealtyTrac Vice President:

“The U.S. housing market has shown strong signs of life in recent months, but many local markets continue to struggle with high levels of negative equity as the result of home prices that are well off their peaks. In addition, persistently high unemployment rates are hobbling a robust real estate recovery in most areas.”

Diana Olick’s latest column on CNBC points out that small improvements on the market have distracted us from just how far we have left to go. Housing starts (43 percent) and permits (27 percent) are up from a year ago, but still at half the healthy level. About 15 million mortgage holders – 31 percent – are still underwater.

We would also like to add that we have started a series of article called “The Mortgage Process Explained” in which we profile the lending process. The guide is easy-to-use and for all levels of familiarity with mortgages. Here are the first three installments:

Cambria-CCSD Retrofit Upon Resale of Residential Property

At the time of change of ownership, all residential properties require low water-use plumbing fixtures.  The new owner has 30 days after close of escrow to show compliance.

The latest change in Cambria is for toilets to have a maximum of 1.28 gallons per flush – down from the previously required 1.6 gallons.  In addition- kitchen faucet aerators are to have a maximum flow of 1.8 gallons per minute, down from 2.0.

These new changes were adopted August 28th of 2012 when SLO County adopted Title 19, which included water conserving measures of the 2010 California Green Building Standards Code (CAL Green).  As of Monday, October 22, 2012,  these new requirements will be enforced.

There is also a  mandatory pre- inspection fee of $99.50 for the inspection of the current water conservation fixture of the structure. These changes are in line with Cambria’s  goal to better track the water retrofitting that is being done and to build up retrofit credits.


Cal Poly Homecoming Weekend 2012

Get ready SLO, this weekend is action packed with student celebration. You have three options:

1. Enjoy a weekend away

2. Stock up on earplugs

3. Join the Party

Being Cal Poly Alumni, I typically embrace the culture and soak up the energy that student life offers the community. If you choose to stay in town, there are several ways for you to do the same. This weekends schedule of events includes an Honored Alumni Awards Dinner and Reception, A Tailgate BBQ and Wine Tasting pre-game hosted by the Cal Poly Alumni Association, and of course, the highlight game. For details on all happenings: http://homecoming.calpoly.edu/

Go Green and Gold!

Cal Poly Mustangs

Harvest is here……and Paso weather is perfect!

Paso Robles Wineries are gearing up for a beautiful fall celebration of the harvest.  Foodies and wine lovers, there is something special going on at over 120 wineries this weekend (October 19th thru 21st) including tours, special releases, winemaker dinners.  Enthusiasts can find blending seminars or that special experience of the grape stomp!  For an event schedule go to www.pasowine.com.

Two mortgage tax deductions may be in danger

The 30-year fixed and 15-year fixed mortgage rates improved slightly from last week, but most programs on our 10-loan rate tracker showed little movement. For the complete set of rates, see HERE. We keep the rate news to a minimum this week to give us room to discuss two mortgage tax deductions that may be in jeopardy for the coming election cycle. We have reprinted sections from our October 15 article: “Attention Homeowners: Two Mortgage Tax Deductions at Risk.”

Taxation, regulation, and the national debt are at the forefront of the 2012 election cycle, as the nation decides how to build a solid platform for economic growth. Two well-known tax cuts will be at the center of the tax code reform discussion: the home mortgage interest tax deduction and the Mortgage Forgiveness Debt Relief Act, the latter of which is due to expire at the end of the year. The elimination of either tax break would increase the tax bill for effected homeowners, and – in the case of the Mortgage Forgiveness Debt Relief Act – hurt the short sale market.

Recently, presidential candidate Mitt Romney addressed speculation that his tax clan would close the mortgage interest tax deduction, telling CNN’s Wolf Blitzer that he would give “preference” to the popular programs, especially for the middle class. The loophole is expected to give homeowners $84 billion of deductions in 2012, and we don’t expect this to be challenged.

The tax deductions passed under Congress’ 2007 bill Mortgage Forgiveness Debt Relief Act and Debt Reduction Cancellation, are out on a much longer limb, putting pressure on distressed homeowners and the short sale market. With the expiration of the Bush-era tax cuts on December 31, 2012, this program will vanish unless Congress can put together an extension.

In the past, cancelled or forgiven debt was reported as taxable income, which included short sales or mortgage principal deduction. The Mortgage Forgiveness Debt Relief Act helped struggling homeowners by canceling that particular tax obligation, as the nation grappled with the massive housing market collapse. Without the debt-forgiveness tax deduction, home sellers participating in a short sale would find a significant increase in their tax bill. Should this deduction expire, short sale activity will likely drop sharply and foreclosures will again increase. Homeowners benefitting from principal reduction programs will also receive higher tax payments under such a situation.

So far we know that a Senate panel backs the extension of mortgage debt relief law and has approved a bipartisan bill to extend in through 2013, but we recommend all people who face this dilemma to consider acting sooner than later, the gamble that the act will be extended could prove to have an expensive downside.