Prices are Down and Sales are Up in Southern California

"While sales from September 2007 through last summer were at the lowest in
at least two-decades, they've been up off the bottom ever since."

That's this month's news from Dataquick: in December '08, sales were up over 32% from one year before. An indicator of who is buying is shown by the current typical mortgage payment: $1239 in December, down from $2060 one year previous (remember these Dataquick figures combine condo and single family sales). Many more first-time buyers are now able to buy, and the opportunity is there through the bank-owned properties, short sales and overall price decline. But when the reports show that the residential market in Southern California, even with much market distress, has been "up off the bottom" since last summer, isn't it time for buyers to sit up and take notice? Most recent info from California Association of Realtors (as of end of 3rd quarter, 2008) shows the buyer affordability index is now up to 53% (it was 24% one year before), and their stats on California's existing home sales, up over 84% in December from one year ago. Statewide, the median home price is $281,100 (contact me for local median home prices in your neighborhood).

For a more specific and free market snapshot report for your zip code or city (including Long Beach, Cerritos, Cypress, Anaheim, Seal Beach, Huntington Beach, Yorba Linda, Bellflower, Whittier, Lakewood, Costa Mesa and 21 other cities in Southern California, contact me or visit my web site at http://www.juliahuntsman.com/.

Converting Your Property From Rental To Residence

We haven't been thinking of 1031 exchanges so much in the recent past, but even now, properties ARE selling, so if you've got a move underway, here are 2009 1031 exchange laws you should know about if you're considering moving into your income property and later taking the capital gains exemption as a principal residence.

The Housing Assistance Tax Act of 2008 changed what is known as Section 121 of the Tax Code:
As of January 1, 2009, exclusion must be allocated between the period the principal residence was used as an investment property or second home, and the period of time the residence was used as your principal residence. Any portion of the exclusion amount allocated to the period the property is not used as your principal residence is eliminated.

Suppose you exchange into a rental property which is rented for four (4) years, and then move into this former property and live in it for two (2) years as a principal residence. Then you sell the principal residence and realize $300,000 of gain. Under prior tax law, the you would be eligible for the full $250,000 exclusion and would pay tax on the $50,000 remainder.

Under the new law, the exclusion is prorated as follows (Note: This example does not take into account depreciation taken after May 1997, taxable at 25%):

Two-thirds (4 out of 6 years) of the gain, or $200,000, is ineligible for the $250,000 exclusion.
One-third (2 out of 6 years) of the gain, or $100,000, is eligible for exclusion. [This example was changed to show that the allocation formula takes into account years before the 5 year lookback period in §121(a).]

But, suppose you exchanged into the property in 2007, and rented for 3 years until 2010 prior to the conversion to a principal residence. If you sell the residence in 2013, after three years as a principal residence, only the 2009 rental period would be considered in the allocation for the non-qualified use. Thus, only one-sixth (1 out of 6 years) of the gain would be ineligible for §121 tax exclusion.

So, if you're thinking of property conversion, be sure to check with your accountant or tax preparer about your actual exclusions allowed on your return!

Bay Harbour, Long Beach--Finding Your Next Home

Bay Harbour's private residential area near Alamitos Bay was developed by Warmington Homes in the 1980's. If you're looking for larger single family homes near the cool ocean breezes and great association amenities, this could be for you--plenty of opportunity for exercise with lovely greenbelts, three tennis courts, two pools and spas, and a 24-hour "guard shack" at the gated entry.

Of 198 homes, five are currently on the market and range in size from about 2500-3000 sq. ft., depending on the plans, and range in asking price from $675,000 to $2,500,000. Click on the top photo for listing information. Some sellers are offering incentives on closing costs, so contact me for additional opportunities.

One single story plan is in escrow: 2400 sq. ft.; one single story plan sold for $1,000,000 since October, 2008. Three properties expired from asking price of $998,000 to $2,800,000 since 10/1/2008.

These three- and four-bedroom plans in contemporary Tudor and Mediterranean architecture are open and contemporary layouts designed for gracious living and entertaining. Many features include: cathedral ceilings and crown molding, central air and heat, open family rooms, double-side fireplaces, laundry room, walk-in closets, patios for outdoor dining, direct access from garage and many more individual upgrades with specific properties.
Low HOA fees are another great feature of the association. (Compare to the much higher $400-$500/month fees for luxury condos along Ocean Blvd.)

For current listings, please contact me by phone or e-mail. Asking prices currently range from the higher $900,000s to about $1,500,000, a great price range when comparing to other properties of that size and general location! Or,  see current listings now at my site for Long Beach Condos, Lofts and Association Homes for Bay Harbour.

Where Are the Buying Opportunities for You?

Just a few points about the 2008-2009 California housing market overall:

Key findings from C.A.R.’s “2008-2009 State of the Housing Market” report include:

Approximately one in five home sales was due to foreclosure, short sale, or default.

Consistent with the increasing trend of distressed sales, almost one of five (19.8 percent) sellers sold their property because the property was in foreclosure, short sales, or default, an increase of 6 percent from 2007.

Distressed properties sold during 2008 had a median sales price of $330,000, a median price per square foot of $197, and a median size of 1,600 square feet.

More than half of the distressed properties sold were Real Estate Owned (REO) (54.8 percent), almost one-third were short sales (31.2 percent) and the remainder were foreclosures (14.1 percent).

Non-distressed properties had a median price of $541,000, a median price per square foot of $315, and a median size of 1,766 square feet.