“No!” you say.  “Impossible!”  Well, apparently, it can be done.  Even if you haven’t missed payments or aren’t in financial trouble.  If you are one of the millions of people who are both underwater and have a really unattractive loan, the HARP program may be able to help.  I know just a few of the details (like your loan must be owned by Fannie Mae or Freddie Mac), but Eric Nelson of Silicon Valley Funding knows them all.  If you or a loved one find yourself in this situation, shoot him an email and see if he can help.  If you just want to read up on it, click here.


California lawmakers have voted to extend a $10,000 tax credit for first-time homebuyers.

The bill allocates $100 million for qualified first time home buyers of existing homes and $100 million for purchasers of new, or previously unoccupied, homes. The eligible taxpayer who closes escrow on a qualified principal residence between May 1, 2010 and December, 31, 2010, or who closes escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit. This credit is equal to the lesser of 5% of the purchase price or $10,000, taken in equal installments over three consecutive years. Under AB 183 purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state).”

The bill received bipartisan support in the Assembly and Senate on Monday and was signed by Governor Arnold Schwarzenegger on Thursday. California had recently passed a tax break that capped the total credit available at $100 million on new homes purchased between March 1, 2009, and March 1, 2010. This bill extended that coverage to include “used” homes and also doubled the funding.
To read more, click here.

First-Time Homebuyer
As long as you haven’t owned your primary residence in the last three years, you are considered a first-time homebuyer. If you did own your primary residence, but it was outside the United States, you still qualify. For married couples, each spouse must meet this criterion. For two unmarried individuals purchasing a home, only one need qualify (and that one should claim the credit). The credit is worth 10% of the purchase price, up to a maximum of $8,000.

Long-Time Homeowner
Because of changes to the homebuyer tax credit made in November 2009, long-time homeowners can now qualify for a tax credit as well. Homeowners who have lived in the same home as their principal residence for five consecutive years out of the last eight years can claim a tax credit of $6,500, if they choose to buy another home.

Some married couples are not eligible for the long-time homebuyer credit because the credit only applies to married couples where both spouses have lived in the same house together for five consecutive years out of the last eight years.

Long-time homeowners do not have to sell their current residence to qualify for the credit. They could buy a new home and keep the old home as long as the new home was used as their principal residence. They could then rent out the old home or use it as a second home.

Buy New Construction
Under both programs, as a first-time buyer or long-time owner you do not have to purchase an existing home to qualify for the credit. You can claim the credit on the purchase of a new home, as long as you have signed a legally binding construction contract by April 30, 2010, and occupy the home by June 30, 2010. The date of purchase for a new home is considered to be the date the homebuyer occupies the new home.

Make Sure You Qualify
Whether you’re a first-time homebuyer or long-time homeowner, you’ll have to meet the following criteria to claim the credit.

  • You must be at least 18 and you must not be claimed as a dependent on anyone else’s tax return to qualify for the credit.
  • You can’t purchase the home from a close relative, which the IRS defines as a parent, grandparent, spouse or child.
  • The home’s purchase price cannot be higher than $800,000.
  • Your income can’t be too high. This credit applies to single taxpayers with modified adjusted gross incomes (MAGI) up to $125,000 and married taxpayers with MAGI up to $225,000. Single taxpayers with income between $125,000 and $145,000 and married taxpayers with income between $225,000 and $245,000 are eligible for a reduced credit. (Just because you are in love doesn’t mean that a joint return is best for both of you. Check out Happily Married? File Separately!)
  • Houses, condos, townhomes, co-ops, house trailers and houseboats are eligible as long as they will be used as the buyer’s primary residence. Thus, vacation homes, second homes and investment properties are not eligible for the credit.
  • Some government employees serving overseas, such as members of the armed forces, have an additional year to qualify for the credit.

Claim the Credit
You’ll have to attach form 5405 to your return and you must file a paper return (no e-filing allowed). The IRS also requires you to attach your HUD-1 or other settlement statement (if one of these forms wasn’t involved in your purchase transaction, for mobile homes, a detailed retail sales agreement will suffice, and for new construction, a detailed certificate of occupancy will work). Make sure to sign whichever document you submit if it doesn’t already contain your signature.

Long-time homeowners must also attach their proof of long-term homeownership in the form of five consecutive years’ worth of property tax statements, mortgage interest statements or homeowner’s insurance statements.

For homes purchased in 2010 (before the 2010 deadline), homebuyers can claim the credit on either their 2009 or 2010 tax returns. Someone who purchased a home on April 30, 2010, would not have to wait until 2011 to claim the tax credit on her 2010 tax return; instead, she could file an amended 2009 tax return to get the credit sooner.

Unlike the 2008 tax credit of up to $7,500, which has to be repaid in 15 equal installments starting with the taxpayer’s 2010 tax return, the 2009 and 2010 tax credits do not have to be repaid unless you sell the home within 36 months of purchase. In that case, you would have to repay the entire credit.

Be sure to check with your own specifics with yur tax preparer!

Provided by Susan Reber of Mission Hills Mortgage Bankers.

As I mention in my article on volume, more activity puts pressure on prices. As you can see in the table below, the number of transactions where the property is selling for more than the asking price, is sharply up from earlier this year, where even for single family homes, under 20% of transactions were yeilding a sales price over asking. We’re at a whopping 54% of single family home transactions closed in the last two weeks coming in over asking price.  To see more about earlier in the year, click see “Have we found the Floor?” from July 31, 2009

Last 2 weeks’ home sales in SF:      
  Over Ask Under Ask At Ask Total 
SFD 39 20 13 72
% of sales 54% 28% 18%  
Condos/TICs 17 41 13 71
% of sales 24% 58% 18%  
2-4 Unit Buildings 2 9 1 12
% of sales 17% 75% 8%  
Total 58 70 27 155
% of sales 37% 45% 17%  

I’m sure we all have that gut check moment on our commitment to being San Franciscans every month when we pay our mortgages or when we visit friends out of state with really big, nice, cheap houses. Ditto that when you go out to eat or take a taxi. Why does it cost so much to live here, and why are we willing to put up with it? Well, if you believe University of Michigan economist David Albouy, it’s because it’s actually a “good deal.”

Here’s what a recent article in US News & World Report had to say about San Francisco:

“With the fourth-highest quality of life and the highest trade productivity on Albouy’s list, the San Francisco area — which includes Silicon Valley — comes in first on the list of most valuable cities. There are high wages, but even higher housing costs. Albouy found that housing costs are pushed so much above the wage level because San Francisco residents enjoy a premium beyond income, such as great weather, a thriving local arts community, and lively neighborhoods. But the business aspects of San Francisco outshine even the quality of life. Albouy says it’s often thought that small cities where workers earn lower wages, like Boise, Idaho, are where businesses should start because costs like hiring and renting a building are so low there, relative to cities like San Francisco. But low prices also mean low quality. “Boise is a terrible place to do business, and the low wages are a sign of that,” he says. Compared to Boise, “San Francisco has a highly productive workforce,” he says.”

Does this ring true to you? It does to me. I am just not Boise material.  To read the whole article, click here.

Tax Credit Chart

June 13, 2009

Many of you have asked me about the implications of the Federal Tax Credits as well as the California Tax Credits for first time homebuyers. I have sent this out as a separate email, but I thought I’d include it in this newsletter as a refresher because it’s such pertinent information if you are currently thinking of buying your first home. Also, there is a movement among lenders to allow buyers to use part or all of these credits toward downpayment and/or closing costs. This is not actually in effect yet, but it may be soon, and I’ll keep you posted!

Amount of Tax Credit 10% of purchase price not to exceed $8,000. 5% of purchase price, not to exceed $10,000. Maximum tax credit for all taxpayers is $100 million to be allocated on a first come, first served basis.
Principal Residence Yes.  Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121). Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes (Cal. Tax & Rev. Code § 218).
Type of Property House, condominium, townhome, manufactured home, apartment cooperative, houseboat, house trailer, or other type of property located in the U.S. Single-family residence, whether detached or attached, condominium, cooperative project unit, houseboat, manufactured home, or mobile home.
First-time Homebuyer Yes. The buyer (and buyer’s spouse if any) must not have owned a principal residence during the three-year period before date of purchase. No. The buyer need not be a first-time homebuyer.
Unoccupied Property No.  Property may have been previously occupied or not. Yes. Property must have never been previously occupied as certified by the seller.
Minimum Occupancy Requirement Must be the buyer’s principal residence for 36 months after purchase, otherwise credit must be repaid. Must be the buyer’s principal residence for 2 years after purchase, otherwise credit must be repaid.
Income Restriction Yes. Tax credit begins to phase out if modified adjusted gross income is over $75,000 (or $150,000 for joint filers). No tax credit at all if modified adjusted gross income is over $95,000 (or $170,000 for joint filers). No.
Date of Purchase January 1, 2009 to November 30, 2009, inclusive.(Note: A repayable $7,500 tax credit is available for purchases from April 9, 2008 to December 31, 2008.) March 1, 2009 to February 28, 2010, unless $100 million funding runs out.
Refundable Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check. No.
Repayment The buyer need not repay the tax credit if the buyer owns and occupies the property for at least 36 months after the purchase. The buyer need not repay the tax credit if the buyer owns and occupies the property for at least two years immediately following the purchase.
Multiple Buyers(not married to each other) The $8,000 tax credit may be allocated between eligible taxpayers in any reasonable manner. The $10,000 tax credit may be allocated between eligible taxpayers based on their percentage of ownership.
Maximum Credit for All Taxpayers N/A $100 million.
When to Claim Full tax credit may be claimed on 2008 or 2009 tax returns. 1/3 of total tax credit may be claimed each year for 3 successive years (e.g. $3,333 for 2009, $3,333 for 2010, and $3,333 for 2011).
Tax Agency Internal Revenue Service (IRS). Franchise Tax Board (FTB).
How to File First-Time Homebuyer Credit(IRS Form 5405) to be filed with 2008 or 2009 tax returns Specific procedure for claiming credit includes completing an Application for New Home Credit (FTB Form 3528-A).
When to File Form Form 5405 must be filed with 2008 or 2009 tax returns. FTB Form 3528-A must be faxed by escrow to the FTB within one week after close of escrow and filed with the buyer’s 2009 or 2010 tax returns.
Exceptions Acquisitions by gift or inheritance, acquisitions from related persons as defined, and buyers who are nonresident aliens. Credit allowed is not a business credit under Cal. Tax & Rev. Code § 17039.2.
Legal Authority 26 U.S.C. section 36. Cal. Rev. & Tax Code section 17059 (as amended by Senate Bill 15).
Date of Enactment February 17, 2009. February 20, 2009.
More Information IRS website at http://www.irs.gov/newsroom/article/0,,id=204671,00.html. FTB website at http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml which includes a tally of the $100 million original funding that is still available.
California Association of REALTORS®

Copyright ã 2009 CALIFORNIA ASSOCIATION OF REALTORS â (C.A.R.). Permission is granted to C.A.R. members only to reprint and use this material for non-commercial purposes provided credit is given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited without the express written permission of the C.A.R. Legal Department. All rights reserved.

The information contained herein is believed accurate as of April 13, 2009. It is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney.



A burning question for most of us, to be sure.  The below analysis should help to shed some light.  However, a friend of mine says that statistics are like bikinis (they can cover up the crucial bits while exposing only what they intend to expose) and I couldn’t agree more.  If you want a detailed analysis of the value of your home, don’t be shy about asking.  Your situation is likely a bit different than the “big picture.”

This analysis of San Francisco neighborhoods compares dollar per square foot ($/sq.ft.) at what is estimated to be the time when peak value was reached, to what the $/sq.ft. was for sales occurring 10/15/08 – 1/30/09. (Sales occurring after 10/15/08 reflect the impact of the 9/15/08 financial meltdown on the SF market.)

The neighborhoods below were chosen because enough sales occurred in the comparison periods to generate what appeared to be reliable statistical results. (Many areas of the city did not have sufficient sales.) We have chosen $/sq.ft. because it is more trustworthy than median prices when trying to assess changes in value for specific properties.  Indeed, median prices have dropped significantly more than $/sq.ft. because less expensive homes now make up a much larger proportion of sales than they did previously (for a variety of reasons, especially financing conditions).

Different areas reached peak values at different times – in 2006, 2007 or 2008 – and the asterisked notes denote the estimated peak value period that pertains. The price ranges of the sales included were chosen because we felt them to be in a standard range of value for the area and property type specified – thus attempting to eliminate both the ultra high end and the ultra low end, which often distort averages.

Important note: the changes delineated probably understate the actual decline in values for 3 reasons:

  1. In a declining market, sales data – which typically shows up 30 to 45 days after acceptance of offers – will always be a step behind current activity, i.e. offers being accepted right now.
  2. The market has definitely shifted to smaller, less expensive homes (less expensive as to total sales price). All things being equal, a smaller home will have a higher dollar per square foot value than a larger one, therefore skewing current values higher than they ought to be in an apples-to-apples comparison.
  3. In a sellers’ market, virtually everything sells, but in a buyers’ market, typically just the best homes sell – best appearing, best condition and/or best value. So the $/sq.ft. for the recent period applies to the “best homes” while the $/sq.ft. for the peak period applies to homes of a much wider range of quality.

Key to Estimated Peak-Value Period for the Chart Below:

*             Peak values estimated to have been reached 1/1/06 – 6/30/06
**           Peak values estimated to have been reached 1/1/07 – 6/30/07
***        Peak values estimated to have been reached 1/1/08 – 6/30/08

Only homes with parking were included in the below analysis. SFD = single family dwelling (house)

or District
Property Type
Price Range
Avg $/sq.ft. at Peak of Market $/sq.ft. for Sales
10/15/08 – 01/09
Change in Avg $/sq.ft. Value
(District 10)*
SFD (House)
$400 – 800k
$554/sq.ft. $416/sq.ft. – 25%
Ingleside/ Oceanview* SFD
$400k – 800k
$572 $459 – 20%
Potrero Hill/ Bernal Hghts** SFD
$700k – 1.6m
$678 $610 – 10%
Richmond District** SFD
$700k – 1.6m
$582 $547 – 6%
Parkside/ Outer & Central Sunset** SFD
$550 – 1.1m
$608 $542 – 11%
Miraloma/ Sunnyside** SFD
$600k – 1.2m
$667 $611 – 8.4%
SOMA** Condo
$500k – 900k
$689 $534 – 22.5%
Noe & Eureka Valleys*** SFD
$800k – 2m
$856 $770 – 10%
Noe & Eureka Valleys*** Condo
$500k – 1.2m
$759 $704 – 7%
Pacific Hghts/ Marina (Dist 7)*** Condo
$600k – 1.2m
$818 $762 – 7%
South Beach*** Condo
$500k – 1m
$785 $713 – 9%
Hayes Valley/ Alamo/ NOPA*** Condo
$500k – 900k
$684 $612 – 10.5%

Averages are generalities and cannot account for the varieties in location, condition and amenities found in SF homes. Averages may be affected by unusual events or anomalous short-term trends, and do not necessarily reflect values for specific properties.  

All data from sources deemed reliable, but not guaranteed and may contain errors and omissions. Sales not reported to MLS – such as many new condo-development sales – are not included in this analysis. February 3, 2009