Archive for May, 2011
By admin in
bathroom design
May
31
Q: Are there ways for investors to invest in real estate using the popular Case-Shiller Home Price indexes?
By Paul Sakuma, AP
A new price sign hangs near a home for sale in Palo Alto, Calif.
By Paul Sakuma, AP
A new price sign hangs near a home for sale in Palo Alto, Calif.
A: Investors who are wondering how housing prices are doing often pay close attention to the Case-Shiller Home Price indexes.
These indexes tell investors and others interested in home prices what’s going on in 20 major cities in the U.S. There are also composite indexes that examine the broad nationwide trends in home prices. Chances are when you hear that home prices have risen or fallen, you’re probably seeing data based on these indexes.
When the indexes first debuted, they weren’t the easiest financial instruments for investors to buy and sell. Since these indexes, created with the help of Standard Poor’s, were created as futures investments, investors needed to have a futures account and familiarity with this less mainstream market to bet for and against real estate. You can still invest in these indexes using the futures market.
Things got easier, but only briefly. MacroMarkets, a provider of exchange-traded funds, created two Case Shiller index ETFs, which allowed investors to bet for or against the real estate market by just buying an ETF. An ETF is a stock that moves up and down along with the value of underlying assets or indexes. But these ETFs didn’t last long and were closed down in 2009 after only being around for a year.
You can still invest in real estate in your brokerage account. There are a variety of mutual funds and ETFs that invest in real-estate investment trusts, or REITs. These investments can be a great addition to most investors’ portfolios.
But as you’re probably aware, REITs are not a perfect substitute for investing in the Case Shiller indexes.
The Case Shiller indexes monitor the direction of the housing market. REITs, on the other hand, monitor the value largely of commercial real estate like apartment buildings, offices and shopping centers.
But until the time someone else tries to create Case Shiller ETFs, you are left either investing in REITs or playing the futures market.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz
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By admin in
bathroom design
May
28
By Arden Dale
When someone gives a relative something big, the gift is often real estate. Perhaps nearly as often, no one reports that gift to the Internal Revenue Service.
The agency has a low-profile but sweeping effort under way to change that, using land-transfer records from at least 15 states for evidence of omissions. It is seeking the records of more states, including the high-priced property mecca of California.
Between 60% and 90% of transactions that appear to be gifts of property to family members may go unreported to the IRS, according to an agency estimate. In at least one state, Ohio, 100% may evade IRS radar, the agency suspects.
Beth Shapiro Kaufman, a partner in the private-client group at law firm Caplin Drysdale in Washington, D.C., said many tax advisers may not be aware of the IRS effort. She added that as the agency gets more records from states, “we can expect additional examinations.”
New tax rules have made big gifts to family popular this year, as Congress decided a person can give up to $5 million in his or her lifetime without having to pay gift tax. Nonetheless, any time a gift to one person exceeds $13,000, the giver is supposed to let the federal tax agency know in a filing.
A significant amount of unpaid tax may be involved, according to Scott Michel, another partner at Caplin Drysdale. Even if a particular gift did not trigger a tax when made, the transaction could reduce a lifetime gift-tax credit for the taxpayer, so that more gift or estate tax could be due later.
The IRS effort has the look of a stealth operation. Some details were revealed in a John Doe summons for data the IRS issued to the California State Board of Equalization, a taxing body. The summons was required because the state’s Proposition 58 and Proposition 193 complicate the data it maintains about real-estate transfers.
A court document with the summons describes efforts by Josephine Bonaffini, the coordinator of an IRS state and federal gift-and-estate tax program, to find people who have not filed Form 709, used to report U.S. gift and generation-skipping transfer taxes to the IRS.
The document, dated Dec. 21, said 323 taxpayers in the previous two years had been examined for failing to report possible gifts. Another 217 were still being examined and 250 more were being considered for review. So far, Bonaffini said, 97 had failed to report gifts on Form 709. Twelve cases resulted in taxes or penalties because a gift had put the donor over the $1 million lifetime gift credit that applied at the time.
States that have handed over information on gift-like transactions are Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin, the document revealed. Bonaffini examined a sampling of data from these states and it showed “an extremely high failure-to-report rate,” the document said.
A chart in the document indicated noncompliance rates of 60% in Connecticut, 90% in Florida, 60% Nebraska, 100% in Ohio, 90% in Virginia, 80% in Washington, and 50% in Wisconsin.
The IRS did not immediately comment.
Kaufman said taxpayers need to be aware that there is no special exception to the rules when making a transfer to a family member. If the property is valued at more than $13,000, a gift-tax return must be filed. Even if the transfer falls within a lifetime exemption amount–currently $5 million–there is a reporting requirement.
For anyone who has already made a gift but has not filed a federal gift-tax return, it is better to file late than not at all. Voluntary disclosure typically works out better than having the gap discovered in an IRS audit. Also, even if the person who gave the property has died, the IRS still can collect tax from his or her estate, the person who got the gift, and in some cases, the executor.
Arden Dale is a Dow Jones columnist who writes about tax and estate planning. Her columns are available to Dow Jones Adviser subscribers.
By admin in
bathroom design
May
25
BY ROBBIE WHELAN
Sales of new homes posted a 7.1% gain in April from March, raising expectations that the downturn in residential construction could be near a bottom.
New homes sold in April at a seasonally adjusted annual rate of 323,000 units. That was an increase from March, but still down 23% from the sales pace of April 2010.
In February, new homes were selling at an annual pace of 278,000 units, tying the slowest rate since the Census Bureau began tracking the data in 1963, but sales have risen in the past two months.
The median sales price of a new home …
By admin in
bathroom design
May
22
Burlingame, CA (Vocus/PRWEB) May 21, 2011
According to Millbrae real estate agent Wayne Gomes, many people are not familiar with the term “cap rate” (short for capitalization rate). The cap rate is the annual net income realized by a property owner divided by the purchase price. For example, if a buyer purchases investment property / commercial real estate for $3,000,000 and the net rental income for the property is $180,000 annually, the cap rate is 6% [$180,000/$3,000,000]. Cap rates are always calculated as if the buyer had paid cash for the property, even though most investment real estate and commercial real estate is purchased with loans. Gomes has observed the cap rate for Peninsula investment properties rising recently, indicating that now is a good time for investors to purchase property.
“When cap rates are rising, as they are now, buyers can get better returns on their investments,” says Millbrae real estate agent Wayne Gomes. He explains that a rise in cap rates means property values are moving down, which is what market trends are indicating in today’s economy, in a gradual fashion. Gomes recommends securing a property soon, explaining, “One never knows when the cap rate will turn the other way, and when it does, it means sales prices are inching higher.”
Gomes says that while market trends are important, they are just one of the factors that affect a property’s cap rate. Cap rates also vary with the amount of risk investors are taking on from the property’s tenants. The risk to a buyer is very low if a chain store with a corporate guaranty is their tenant, whereas a local mom-and-pop business runs a higher risk of missing their rent payment or going out of business. “The cap rate for a national brand tenant, like a Walgreens or an Apple Store, will be lower, as there is little risk. The cap rate for the mom-and-pop tenant is higher,” says Gomes.
Locations are also key with cap rates: the better the location, the greater chance the tenant will succeed. The cap rate can be a useful and telling indicator of a property’s value, but there are many factors that influence the cap rate. Gomes recommends consulting with a professional investment property agent to analyze how various factors are influencing the cap rate on a given property.
With over thirty years of experience under his belt, Wayne Gomes has learned the ins and outs of real estate after successfully selling homes, condos, apartment buildings and commercial real estate which include retail and industrial properties since 1978. Located in the heart of Burlingame, Wayne also serves Millbrae, San Bruno, as well as all peninsula communities ranging from San Francisco to Redwood City.
For precise information regarding cap rates and how they are currently affecting property values, or inquiries regarding buying or selling a home, apartment building, or investment property, contact Wayne Gomes, Broker Associate at Coldwell Banker at (650) 288-0061. To learn more about Wayne Gomes and his expertise, visit his website at www.waynegomes.com or connect on Facebook at www.facebook.com/waynegomes2.
About Millbrae REALTOR® Wayne Gomes
With over thirty years of experience under his belt, Wayne Gomes has learned the ins and outs of real estate after successfully selling homes, condos, apartment buildings and commercial real estate, which include retail and industrial properties, since 1978. Located in the heart of Burlingame, Wayne helps people buy and sell real estate in Burlingame, San Bruno, Millbrae, and all other Peninsula communities ranging from San Francisco to Redwood City.
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For the original version on PRWeb visit: www.prweb.com/releases/prwebreal-estate/Millbrae/prweb8465013.htm
By admin in
bathroom design
May
19
By Kathleen Madigan
For U.S. homeowners, the family moving in next door could be Canadian. Or Chinese.
Bloomberg News
U.S. real estate, especially on the high end, is getting support from international buyers. If U.S. buyers find homes attractively priced, global buyers are finding a fire sale once exchange rates are figured in.
According to a report released Wednesday by the National Association of Realtors, foreign clients spent about $41 billion in U.S. housing in the 12 months ended in March 2011. Individuals with visas to stay for more than 6 months purchased an additional $41 billion. Taken together, that’s about 8% of the total U.S. housing market.
Foreign buyers are more likely to buy on the high end of the market. The report notes that the average purchase price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000. (Read related Journal coverage.)
International buyers are also more likely to pay cash, in part because they face difficulties getting U.S.-based financing. The report said 62% of foreign buyers used all cash. In recent months, about one-third of existing-home sales were all cash.
What is interesting is that more international buyers are going downmarket. The NAR says in the latest year 45% of the international sales were under $200,000. That share is up from 28% in 2007.
“Almost 80% of realtors reported that the value of the dollar had an impact on international sales” the NAR says.
“When the dollar depreciates against the euro it also tends to depreciate against other currencies, so overall the U.S. home buying market has become increasingly attractive to international purchasers, ” the report says.
Prices of new and existing U.S. homes have fallen by about 5% in the year ended in March (the latest data available) according to data from the NAR and Census Bureau. That means a U.S. buyer could enjoy a 5% price cut.
Most foreign buyers got a better bargain when the price is viewed from local currency. A European buyer saw a price drop of 8%. A Chinese house hunter had an 8.6% discount. And a Canadian buyer got a 9.3% price chop.
U.S. real estate is more enticing given that real estate prices have stabilized or even soared in other parts of the world.
According to data from global property consultancy Knight Frank LLP, home prices are soaring in many Asian and emerging nations, to the point where the governments are trying to clamp down in housing inflation.
During 2010, home prices jumped 20.1% in Hong Kong, 16.9% in Latvia, and 16.2% in Israel. (Price changes are in local currencies.)
Prices in the U.S., by Knight Frank’s measure, fell 4.1%, with the drop accelerating in the second half of 2010. Overall global prices rose 2.8% for the year.
How much more will the weak dollar help U.S. real estate?
Over the next year, the impact may be uneven, since analysts are about split whether the dollar will strengthen or weaken against specific currencies.
The consensus view on U.S. home prices, however, is for more declines. Expect foreign buyers to remain important players in the U.S. real estate market.
