WASHINGTON -- Two Washington insiders, speaking during the National Association of Realtors midyear conference last week, said the debate over changes to the mortgage interest deduction is largely for show, and that major changes are unlikely.
The mortgage interest deduction is a "sacred cow that has been under attack for years," but support for housing and the MID remains strong on Capitol Hill, said Paul Equale of Equale & Associates.
NAR strongly opposes any changes to the mortgage interest deduction, saying such changes could further depress home prices by up to 15 percent.
"Controversial issues have a tendency to get teed up in election years," the political consultant and former Democratic Party official said, and sometimes issues are put into play "for purely political purposes."
But support for changing the MID is mostly confined to the far right and far left, Equale said, with those in the center wary of the claimed benefits of scaling it back.
"If you take away the MID, or change it dramatically, that would have an even more Draconian effect on housing markets," Equale said. "I would argue that, like in the supply-side economics debate, you'd be creating a situation where the government would be getting less tax revenue, because the pie would be shrinking."
David Horne, senior counsel for Washington lobbying firm Russ Reid and former chief of staff at the Department of Housing and Urban Development under the Bush administration, agreed.
In 2005, a Tax Reform Panel recommended converting the mortgage interest deduction to a 15 percent tax credit on mortgage debt of up to $400,000. The Congressional Budget Office (CBO) estimated that change would have generated $418.5 billion in tax revenue between 2008 and 2017.
"What you have is a savings that is in Washington only, with OMB (the Office of Management and Budget) and the CBO telling you it's going to save the federal government trillions, when the reality is it's going to cause the real estate market to go further into recession," Horne said.
"This is not the time for Congress to mess with one stable factor in the housing marketplace that the average consumer understands as a very good reason to get into the market," Equale said.
For now, Congress and the Obama administration have been leery of raising taxes, with President Obama signing into law December legislation that extended Bush-era tax breaks for two years.
A recent report by a bipartisan deficit reduction commission, the National Commission on Fiscal Responsibility and Reform, projects that by 2025, federal tax revenue will only pay the interest on the national debt. The commission recommended returning spending to 2008 levels by 2013, and eliminating hundreds of tax breaks that reduce tax revenue by more than $1 trillion a year.
The commission's final report recommended that the mortgage interest deduction be changed to a 12 percent nonrefundable tax credit, with only the interest paid on debt of up to $500,000 on a principal residence eligible. Homeowners are currently allowed to claim an itemized deduction for interest paid on total mortgage debt of up to $1 million on both their principal and second homes.
Speaking of the commission's recommendations during a separate NAR conference session that focused on commercial real estate, Charles Achilles, chief legislative and research officer for the Institute of Real Estate Management, said that though the report was not adopted by the full commission, "it has some legs" in Congress.
Article from the CAR website
Having a focal point is critical if you want to create a room that feels comfortable and useable. And when you're selling your house, you'll make the room more attractive to buyers because they'll feel more at home when there's a focal point for them to rest their eyes on.
Some rooms have natural focal points, such as a fireplace, architectural details or a picture window with a view.
But if your room has none of these, you could try placing a large piece of furniture such as an armoire or a tall bookcase along one wall, using an ornate mirror or large painting, or adding a table with your favorite ornaments or mementoes arranged on it.
If you have a large, flat-screen television, this might make a suitable focal point, but many people prefer not to make a TV the center of attention, as it can look unattractive when switched off.
The focal point doesn't have to be on the wall — a large area rug placed under a coffee table can also work well.
A fireplace is perhaps the best focal point in a living room. To accent it further, place a painting or mirror above the hearth.
In a bedroom, place the bed along the longest wall; add attractive bedding and a well-designed headboard.
All furniture in a room should be arranged around the focal point, helping draw your eyes to the right place. It's almost as if you are "framing" your focal point with the furniture and other decorations in your room.
A home office is on its way to becoming an essential item on a house buyer's wish list. After all, many people work at least part of the time at home — and even if they don't, they still want somewhere to store the computer and their household papers.
Here are some tips to help you create an attractive home office that you'll actually want to spend time in.
An attractive place to work- A home office doesn't have to be just functional — it can be attractive, too. So take as much care with the décor as you would in the other rooms in your house, making sure office furniture and accessories coordinate with wall and floor coverings.
Good lighting- If you don't have a lot of natural light (or you'll be working mainly in the evenings), make sure you have good lighting, particularly task lights for illuminating your desk. Include other types of lighting too, so you'll make the room feel comfortable.
Choose good furniture- It's essential that your desk and chair are comfortable to work at, so take time choosing them. Make sure the seat and backrest of your chair are adjustable and that the height of your desk is comfortable.
Power and the Internet- Make sure there are plenty of power outlets in the room and easy Internet access. Avoid a "rat's nest" of cables by bundling them together and tucking them out of sight.
Include good storage- Think carefully about the kind of storage you'll need and make sure there's enough of it. Consider stackable boxes to store paperwork efficiently, and an attractive filing cabinet. Put shelves on the walls and use them to store books; add wire baskets to the shelves for documents.
Bulletin board- Put up a bulletin board for reminders and other essential information you use every day. Then you'll avoid ugly sticky notes all over your computer.
It's the biggest month-over-month decline for previously owned homes since the National Assn. of Realtors began tracking sales 42 years ago. California fares better than the rest of the nation.
Sales of previously owned homes nationwide plunged steeply in December, raising concerns that the housing recovery could lose steam after government policies intended to support it expire in the spring. For now, California appears to be bucking the downward trend.U.S. sales in December fell to a seasonally adjusted annual rate of 5.45 million units, down 16.7% from November, the National Assn. of Realtors said Monday. It was the biggest drop in the 42 years that the group has been measuring home sales and comes after first-time home buyers raced to close on their purchases before a federal tax credit of up to $8,000 for first-time purchasers was set to expire Nov. 30.Congress in early November extended the deadline to April 30 and expanded the credit to include up to $6,500 for some buyers who already own homes. The renewal didn't pull in as many buyers in December, with first-time buyers declining to 43% of all buyers in December from 51% in November, according to a survey by the Realtors group."People bought homes in October and November thinking that the tax credit would expire at the end of November, and therefore the decline in December is just a reflection of that," said Mark Zandi, chief economist at Moody's Economy.com. "It does highlight a broader point that the housing market is on government life support, and when it is taken off that support, it weakens."A slew of federal policies -- including the tax incentives for buyers, low interest rates driven down by Federal Reserve actions and increased access to mortgages backed by the Federal Housing Administration -- bolstered the nation's housing recovery last year.But those props eventually will end: The tax credits expire in April, many economists expect interest rates to rise again this year and the FHA is tightening its lending standards. The question remains whether home sales and prices will fall without the government's help.Lawrence Yun, chief economist of the Realtors association, said home sales were likely to pick up again in April once the new deadline approached, but the outlook beyond that was unclear as a potential new wave of foreclosures and stubborn unemployment could stymie any recovery."By early summer, the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010," Yun said in a statement. "However, the job market remains a concern and could dampen the housing recovery -- job creation is key to a continued recovery in the second half of the year."The national median price for all previously owned homes was $178,300 in December, 1.5% higher than in December 2008. The median is the point at which half the homes sold for more and half for less.Sales for the full year increased 4.9% to 5.16 million compared with 2008, the first annual gain since 2005.Housing in California appears to be faring better than the rest of the nation despite higher unemployment. Sales of previously owned homes in the West fell 4.8% in December from November, compared with a decline of 19.5% in the Northeast, a 25.8% drop in the Midwest and a decline of 16.3% in the South, the national group said.In California, resales rose 4% from the previous month, according to figures released last week by the California Assn. of Realtors. A separate report by the research firm MDA DataQuick of San Diego, which tracks sales of all homes, also showed the Southern California, San Francisco Bay Area and statewide housing markets gaining ground in December."Particularly in California, there is a lot of investor demand for a lot of the foreclosed properties and short sales," or homes sold for less than the value of their mortgages, Zandi of Moody's Economy.com said."It goes to a different psychology in much of the California market," he said, "where I think home buyers are conditioned to believe that if they buy in times like these, when prices are low, they will be rewarded in the long run."Glenn Kelman, chief executive of the online brokerage Redfin, said the Los Angeles area posted strong sales in December as well as the first two weeks of January."The December uptick in rates freaked out buyers a little bit and got them moving again," he wrote in an e-mail. "If rates keep going up, at some point buyers won't be motivated; they'll just be scared off. But at least for the first half of January, we saw more people than we ever have ask to go on their first home tours with us, which is an early but fairly reliable indicator of strong demand."Robert Kleinhenz, deputy chief economist for the state Realtors group, said another reason for the state's progress was that buying a home has become increasingly affordable relative to household income in the state over the last few years. According to the group's affordability index, 64% of households could afford to buy a home at the end of the third quarter of last year compared with a historic low of only 26% in the second quarter of 2006."We had much steeper price declines than what occurred nationally, and I think that has been continuing to drive sales," he said. "Our affordability factors are much, much better than just a few years ago, and, relatively speaking, that improvement was far more dramatic here in California."
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.
Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.
Breaking news: HUD: Home Buyer Tax Credit Loans Still on Track (REALTOR® Magazine)
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:
The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.
The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.
Yes, some buyers may still be eligible for the credit.The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.
Easy Storage Ideas to De-Clutter Your Home
A key element in staging a home for sale is to make it look clean, spacious, and presentable.
Learn how to clear the clutter with these quick and easy storage solutions that keep your home looking its best and make moving day a breeze at the same time.
Storage Bench or Seat: Buy an attractive storage bench or seat to store toys, pet items, and garden tools in a great looking container that adds a decorative element to the space. Outdoor PVC garden benches are an easy alternative to keep a patio or porch tidy, while a toy box in each bedroom makes quick work of preparing bedrooms to be shown on short notice. Best of all, storage benches make light work of packing when moving day arrives.
Bright Boxes: Purchase bright colored storage boxes to use on shelves or inside cabinets to reduce the appearance of clutter.
Overhead Storage Systems: Add inexpensive overhead storage systems to the garage, shed, or even bedrooms. Sturdy and easy-to- install ceiling mounted storage systems keep walkways free of debris, especially in cluttered spaces like the garage. Add colorful ribbons or bright decorations to create the perfect place for stuffed animals, games, or other infrequently used toys in bedrooms.
Racks: From bikes to hats, there is a rack for every reason, so chances are your home could benefit from a few well positioned and inexpensive racks too. Some of the more popular racks include bike racks, multimedia racks, coat and hat rack, laundry racks and of course – spice racks. Remember, potential buyers are likely to search every inch of your home including closet space, cabinets, and storage sheds to determine if their own belongings will fit. Stay prepared by presenting your home in the best light possible by putting everything in its place.
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