Time to Challenge Assessed Home Values in ABQ

Bernalillo County Assessor Karen Montoya will mail out Notice of Valuations for Real Property and Mobile Homes on Thursday, March 1, 2012.The Assessor’s Office will also begin its annual protest period for Real Property and Mobile Homes on March 1st. Subsequent to the mail out of the Notices of Values, property owners will have the opportunity to file a valuation protest within 30 days of the actual date of mailing.




How do you know if you should file a protest? I can check for you or you can estimate based on market value trends. The statistics for yearend show that the values went down about 6% last year. It varies by area but that is a rule of thumb you can use to compare last year's assessment with the one you get for 2011.



If you want me to help you decide give me a call and I will do a free market analysis for you. Also, you can go to my website and click on Market Snapshot to see what the values were for similar homes sold in 2011. If you decide to protest, I can provide you with three comparable homes that have sold which you will need for the protest. If that doesn't work, a good friend of mine is an attorney who specializes in protests. Give me a call and let me know how I can help you save money on taxes.

FORECAST OF ABQ REAL ESTATE FOR 2009

"It is the worst or times and the best of times". So what do we see for 2009 in terms of home sales? David Murphy who heads up SalesTraq shared his predictions which I would like to share. The question is will 2009 bring a bottoming out of home prices in ABQ? Certainly, interest rates are at all time lows, but the new hurdles of higher credit scores and more money down is keeping buyers on the sidelines. People are worried about their jobs so unwilling to take a chance to buy. He raises the issue of affordability too. The average wage earner in ABQ made $37,352 in 2008 which qualifies them for a home of $112,000; a two-earner family would qualify for $224,000. And those homes are selling better. It's the homes above that amount that are languishing on the market and may continue to do so until the economy strengthens and confidence in it increases. So 2009 certainly for the first half, will see a glut of homes perceived as too expensive by nervous buyers. Each deal done is a struggle but doable. As David's father told him, "The sun will come up tomorrow."

GOOD REAL ESTATE NEWS IN ALBUQUERQUE

Smart Money magazine last month rated our fine city as one of the top cities in the nation ready to rebound in the housing market. We sure are seeing more showings in the last week with interest rates down.

Housing Predictor forecasts our city as one of the Top 10 Most Promising Housing Markets too. They base that on our healthy economy and strong potential for increasing prosperity. We are affordable compared to the average earnings which has been a positive for our market.

So let's go Buyers!!!!

ALBUQUERQUE, NM REAL ESTATE UPDATE

Our news isn't as bad as elsewhere in the US and that's the good news! If activity on our website is any indicator which it usually is, we are seeing up to 3-4 inquiries a day. Granted some are related to out-of-state investors wondering about selling their investment rental homes and others are looking for good deals on foreclosed properties. Our foreclosure rate is still very low at less than 5% although that may get worse.
What we do see are people moving here for one reason or another. HP is starting to ramp up in Rio Rancho in anticipation of their new site there so we are seeing some early movers. People are just wanting to move here and who can blame them.
Our housing market has seen some decline in listings to below 7000 at the end of October so that is increasing the activity on those that are still listed. We still have about a 10 month supply, but compare that to 2-3 years elsewhere. Our median home value has gone down about 6% year to day compared to over 25% elsewhere. What we do expect to decrease is the number of realtors who have to quit by year end or pay large association dues. Many thought real estate was an easy game and rushed in two years ago. Those of us who have been in the business awhile know better and we will still be here. Our business, in fact is up 5% since last year so guess we will be staying. Of course we will!

ALBUQUERQUE AVOIDS REAL ESTATE ROLLERCOASTER

The stories are plentiful: A California home listed at $7 million finally sells for $3.5. A Florida developer auctions off his completed but vacant condominiums at cost. Family homes sit on the market for months, bearing unrealistic bubble-era price tags.
But according to research done by Avi Shama, a professor at the Anderson School of Management at the University of New Mexico, in the Albuquerque residential market, the highs are not so high, nor the lows so low.
"We have not gone through the yo-yo years of 2005 to 2007," says Shama, the Rutledge Professor Emeritus of Management. "In keeping with the nature of Albuquerque, things go very slowly up and rather slowly down. So, compared to the nation, it's a market without a lot of overhang of houses and, relatively speaking, a healthy demand."
Shama, a real estate afficionado - in his spare time, he's studied real estate law, appraisals and management, as well as tested to become a broker - recently decided to apply several national research techniques to the local residential market.
All four approaches he employed revealed homes in the city are currently overpriced by only about 15 percent (or $36,000 for the average priced home) as compared to their affordability before the real estate bubble and the ensuing housing crisis. This compares to estimates of more than 30 percent for home prices in Phoenix and Las Vegas.
Shama's research was based on approaches used by Columbia University's School of Business and Moody's Economy, using home prices, supply of homes, demand for homes, mortgage rates, income and home rental prices, during the past eight years.
"Even though I used different methods, they all revealed the Albuquerque market was overpriced by the same amount [14 to 17 percent]," says Shama, "which was reassuring that things are not out of hand."
The methodology and results were as follows:Mortgage rates approach = Overpriced by: 16 percent
Historically, the rate for a 30-year first mortgage loan for 80 percent of the purchase price has been 1.6 percent above the prevailing rate of a 10-year U.S. Treasury note. By this standard, today's mortgage rate should be 5.6 percent instead of 6.5 percent, which prospective home buyers are now charged by lenders. (Lenders charge the extra .9 percent to reduce the risk they are taking to make loans in uncertain times.)
This difference translates to an increase of 16 percent in the mortgage rate. Put simply, a buyer buying an average home priced at $240,000, who qualified to get a mortgage for 80 percent ($192,000) before the financial crisis began in 2007, would now qualify for a loan of only $161,280.
Ratio of home prices to per capita income approach = Overpriced by: 17 percent
This ratio results in the number of years of work it takes to earn as much as the cost of a home. The ratio was calculated using home price data from the Greater Albuquerque Assn. of Realtors, and per capita income from census data. In the pre-bubble years of 2000-2003 this ratio was 5.42. During the bubble years of 2004-2007 this ratio averaged 6.36. The difference between the two ratios is .94 years, and means that the average Albuquerque home now costs an additional 11.28 months of work. This means, on average, an Albuquerque home now costs 17 percent more than it did before the bubble.
Ratio of home prices to rent approach = Overpriced by 14 percent
Owner-occupied homes and comparable rented homes are close substitutes. As a result, this ratio shows the number of years of rent money that it takes to recoup the price paid for a home. The smaller the ratio, the more attractive it is to buy rather than rent.
According to RealtyTrac.net, the home price-rent ratio in Albuquerque averaged 12.5 in 2000-2003. It went up to an average of 14.2 in 2004-2007. The difference of 1.7 between the ratios means that home prices in Albuquerque in 2004-2007 were higher by about 14 percent than prices in 2000-2003; a 5 percent decline in home prices in the first two quarters of 2008 did not change this picture, because the ratio was coming down from a high of 15.7 in 2007. In fact, in the peak year of 2007, Albuquerque homes were overpriced by 25.6 percent, compared to home prices in the pre-bubble years.
Supply-demand ratio approach =Time to sale: +2.02 months
This ratio is an indicator of the balance between sellers and buyers. It is widely accepted that a ratio of six, indicating a six month supply of homes, reflects a balance between supply and demand. Any number higher than six suggests oversupply.
According to the Greater Albuquerque Assn. of Realtors, in July, 2007 this supply-demand ratio was 5.36 months, compared with 7.38 months in July, 2008. The difference of 2.02 months means that in 2008, on average, sellers have to wait an additional 2.02 months to sell their homes. To move inventories faster, sellers must reduce prices; so far this year home prices in Albuquerque declined by about 5 percent. By comparison, nationwide the supply-demand ratio is 11 months, suggesting much larger declines may be coming.
"If there's any burst of the bubble here, it will not be severe," Shama says, "because the bubble years were so moderate."
cseidman@bizjournals.com 348-8322 Story provided from newmexico.bizjournals.com

NEW CAPITAL GAINS TAX EXEMPTIONS

From an attorney friend of mine:
You know the tax law that says your home is exempted from capital gains taxes when it serves as your personal residence two out of the five years prior to a sale? It looks like that has been changed.
The "Housing and Economic Recovery Act of 2008" eliminates the capital gains exclusion for the portion of gain that comes while a home serves as a vacation or rental property. The provision is effective Jan. 1, 2009.
That means for houses sold after 1/1/2009 you would have to pay capital gains taxes on a portion of the gains. If you lived in it for 2 years and rented it out for 2 years you would pay capital gains on 50% of the gain you made! Under current law, you would not.

SUMMARY OF HOUSING STIMULUS BILL

National Association of REALTORS®Summary of Key Provisions of H.R. 3221 - The Housing Stimulus Bill (as of 7/30/08)
H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:
GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.For more information, visit http://www.realtor.org/governmentaffairs

RIO RANCHO THIRD LARGEST CITY IN NM

Rio Rancho is now New Mexico’s third largest city beating out Santa Fe. Since 2000, Rio Rancho has grown from 51,765 to 70,493 at a rate of 36%. The pace accelerated until 2007 and has now slowed some allowing the growth to prepare for the next growth spurt. The growth will come from the re-hiring at Intel, the new HP center to open in 2009 and movie studio activity. The housing activity is picking up some although there are still more houses for sale than buyers in the market now. As the new home inventory has been absorbed, the resale sector has picked up. For the forward looking buyer, it's an area with a long term upside.

MORTGAGE FRAUD ON THE RISE

This just in from my favorite lender, Jason Pike from Countrywide.
Arresting Times: Law Enforcement Agencies Cracking Down on Mortgage Fraud Fort Worth Business Press (07/07/08); Howe, Aleshia The FBI has seen its mortgage fraud caseload double to more than 1,400 pending cases over the past three years, and the agency expects the number to rise in the years to come. In fiscal 2007, the bureau pursued 1,204 cases, which produced 321 indictments and 260 convictions of mortgage fraud perpetrators. Appraisers are seen as key figures in mortgage fraud; and the FBI will continue to focus its efforts on industry insiders and schemes that involve inflated appraisals, fake buyers also known as "straw buyers" and loans impacted by identity theft. "The problem is going to get worse before it gets better and just because there's a downturn in the housing market doesn't mean the problem will go away," says Michael Anderson, an assistant special agent in charge of the Dallas division that oversees the FBI's white collar crime program.

ALBUQUERQUE RANKS 86TH NATIONALLY

The performance of ABQ's real estate market ranked 86th out of 292 cities nationally from the first quarter of 2007 to the first quarter of 2008. For the year, our metro's average home prices were up 3.2%. Prices were flat for the first quarter however. Prices have increased 55% in the last five years here. The median price is $190,500 up to the end of the first quarter in 2008.

Buyers seem to be back in the market as the lenders have made more loans available. The homes under $250,000 have not been problems to sell. First time homebuyers have the best opportunities. Investors are around scooping up the foreclosures and many homes are marketed as short sales, which means the bank is considering taking less than is owed. The issue is that the seller also needs to get the lender to agree not to report the pre-foreclosure situation to the creditors and not to pursue compensation of the difference from the seller. There may be tax implications on the money "forgiven" as the IRS considers that "profit". Complicated.

For higher priced houses except for those involved in Relocations, the issue is coming up with 20% or even 10% cash now required by the lender. There are no more loans for that amount and PMI insurance has to be paid. SEllers are carryingnotes. Well, it's challenging, but houses are moving.

HIGH COST OF ROOFING

Of course we all knew this, but roofing materials are petroleum-based so of course the price of roofing will go skyhigh this year. Here in New Mexico we constantly watch and worry about our roofs, and our stucco. Flat roofs are the most worrisome as the heat destroys them. A few years ago one of our heavy hail storms ripped up flat and shingle and tile roofs so no one was immune to the destruction.

Our home is 13 years old so in a couple of years we will need to put a whole new surface on or re-roof. Here re-roofing is when they scrape off the gravel and re-tar so it's not taking off the roof as is done else where. You can re-roof about 4 times, so they say before the weight forces you to take off the whole bloody thing. I have had three roofing estimates this month with three different answers. One gave me an estimate of $14,000 and said the roof had holes in it. I think he thought I was a rich sucker living in High Desert and a woman at that so thought I was gullible. He was just hungry! At the other extreme was an estimate by Right Way Roofing, John Sanchez, who said the roof was in great shape for it's age and just needed a yearly maintenance for $1500. One has to be so careful. Of course, John got the job and yes, I do know that I am prolonging the inevitable re-roofing but I also have to re-do my stucco this year, but that's another story!

RIO RANCHO A DECLINING MARKET

The Albuquerque MSA which includes Rio Rancho has been designated as a Category II for declining market. This has been the case for the past six months. As far as financing is concerned, it is business as usual UNLESS the appraiser indicates the property is in a declining market OR oversupplied OR the marketing time is over six months. IF the appraiser identifies the property as such, then the loan-to-value must be reduced by 5%. Again, SOME lenders require additional information. This does NOT mean that the borrower cannot buy the home. If the borrower is putting 10% or more down, it does not make any difference !!!! IF the borrower is only putting 5% down, we would require an additional 5% down. To date I have not had one issue.

CONSUMER REPORTS SAYS BUY NOW!

With regard to homes, Consumer Reports’ has three possible buying opportunities.
Homes – Prices are down and few expect a sharp rise anytime soon. Most markets seem to have stabilized so holding off for more declines is probably a failed strategy unless you want to take the risk of buying foreclosures.

Mortgages – They report accurately that interest rates are relatively low, averaging 5.5% for 30 year mortgages. Credit standards have been tightening though so expect to go through some documentation hoops, but it will be worth it. Lenders are anxious to loan having seen a decline in their business volume too.

Home Remodeling – CR suggests that will lower demand that it could mean room to bargain for those remodels you want. Contractors are easier to get a hold of and have little to no wait times before getting started on a job.

FORECLOSURES LOW IN NEW MEXICO

Forbes rated New Mexico one of the state's where you can get the best deal on foreclosures. There will not be as many here and the economy is strong so buying low and selling high is a real possiblity.

The New York Times last week analyzed where the high foreclosures are occurring and we didn’t make the cut. In some States, like Nevada, the number of foreclosures exceeds the number of sales. In CA in 2007 a quarter million homes were subject to some legal action. I spoke today with another realtor friend in Santa Fe who said there are few foreclosures. Everyday I get an investor who calls and wants me to look for good foreclosure deals where they can pay 40% off the list price. It’s just not happening here. Maybe it will, but we aren’t seeing it yet.

OUR MARKET IS NOT SOUTHERN CALIFORNIA’S

Every Friday night my husband, who works in LA, comes back to our home in ABQ with the Los Angeles Times. The headline this Friday was Southland Home Prices Tumble Fast as the region sees a 19% decline from the peak in less than a year and experts expect a continuing slide. Just to put it in perspective, in 1991 the average home price was $200,000 and by 2007 it jumped up to $505,000. So call me crazy, but a 19% decrease isn’t so bad given the outrageous growth. I mean it was unreal. Certainly, if one had bought at that peak and need to sell soon, it will be a shock. I remember when I lived in LA our house value made great swings and I just lucked out in buying and selling at the right points in the cycles. For us here in NM, we have no idea what this kind of market is like. And we don’t have to worry about earthquakes and mudslides either. All and all, I am glad to be here!

New Mexico First in Venture Capital Growth

Another first for us. According to an national survey, New Mexico ranks number 1 for growth in venture capital over the last decade. This is due in part to aggressive government and community efforts to attract and provide incentives for new ventures. We are on the move!

No one can believe it when I tell them that our Albuquerque foreclosure rate is still very low and our home values are still appreciating. It's economic growth like our venture capital funded companies that is fueling our economy and keeping the housing market strong. Good time to Buy!

HOUSING RECOVERY LATE 2009

Forecast Positive for Second Half of 2008Thursday, March 06, 2008 National Realty News

WASHINGTON, D.C. - The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery during the second half of the year as the mortgage situation improves in high-cost areas, according to the latest forecast by the National Association of Realtors®. Lawrence Yun, NAR chief economist, said many buyers have been waiting for higher mortgage loan limits. “The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions,” he said. “Therefore, a notable rise in home sales can be anticipated in the second half of the year." Realtors locally report that calls off of signs and activity has picked up in since the start of March.
In ABQ, the number of sales is off by 35% from last year this month, but the average sales price has increase about 1% a month so far this year. A pattern of disparate price performance continues around the country with a roughly even split between up and down markets. Many areas that have lost jobs are showing price declines which might be why ABQ looks good. We are gaining jobs.
“New-home sales nationally should decline 23.7 percent to 590,000 this year before rising 7.2 percent to 633,000 in 2009. Locally, KB Homes has announced that they are leaving ABQ. For years they successfully built for starter-homes at the low end, but their last move to higher priced homes here has proven to be a poor strategic move.
The 30-year fixed-rate mortgage, which has moved erratically in recent weeks, is expected to hover around 5.8 percent most of the year, and then rise to an average of 6.3 percent in 2009. Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.4 percent in 2009. The unemployment rate is projected to average 5.4 percent in 2008 and 5.5 percent next year. Inflation, as measured by the Consumer Price Index, will probably be 3.2 percent this year and 1.5 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.4 percent in 2008 and 3.1 percent next year.

NEW HOME SALES PICK UP

The demand for lower priced homes was there all along, but the builders targeted a higher income group in subdivisions at the far edges of the city. That marketing strategy did not work for them. I've been saying that the builders were not building for the right target market for two years, but who listens to me! Anyway, my favorite wizard on builders, David Murphy of SalesTraq, reports that the price of new homes has declined as builders get back to that first time homebuyer market. And guess what? Sales have picked up with the absorption of the new home inventory happening rapidly.

Our own stats show that the resale market is off by about 30% from last year even though the prices have stayed steady. The only area that has the same number of sales volume is the high end area of High Desert and the Far Northeast Heights.

Buyers should buy now. The rates are great and the inventory is fantastic. Ya'all come on. Call me 505-220-9193.

This Weeks Real Estate Update

Here is a link to my weekly "REAL ESTATE NEWS CHANNEL":Click Here This week's segments are full of interesting and useful information that I think you will enjoy whether you are a buyer, seller, homeowner, or renter.Some of the topics covered this week are:Real Estate Outlook - Every week, it seems, there's a battle of conflicting numbers when it comes to housing. The latest existing home sales survey from the National Association of Realtors is a perfect example.Mortgage Moment - Jan Demas discusses "Stated Income Loans"Market Condition - Local market expert Realtor Craig Martin, reports Greenville, South Carolina, is one of the few cities bucking the national trends.Ask the Expert - "Can anyone steer me to a report that will tell me the U.S Real Estate Appreciation Rates by state for the last 15 to 20 years?" Video of the Week - This week's amazing video.You can also tour my latest listing as well as view some of my personal favorites.I hope you enjoy this week's show. If you have any comments, please e-mail them to me.If you do not wish to receive this each week, please reply to this e-mail with the word 'REMOVE' in the subject line.Sincerely,Judy Pierson

REAL ESTATE NEWSLETTER

Here is a link to my "March Real Estate Update":http://realtytimes.com/112/JudyPierson

This Newsletter is full of interesting and useful information that I think you will enjoy whether you are a buyer, seller, homeowner, or renter.This month's issue includes topics such as: "When Selling Your Home, Using Scents Makes Sense!";"Condos Pay Off As Second Homes";"Timing Is Everything: When And How To Move"; "How To Stop ID Theft Cold";"Use Home Equity Protection"; Plus a roundup of February real estate activity as well as much more advice and information.I hope you enjoy this monthly newsletter. If you have any comments, please e-mail them to me. Or, if you would like to see a certain topic covered in future months, let me know that too! If you do not wish to receive this Newsletter each month, please reply to this e-mail with the word 'REMOVE' in the subject line.Sincerely,Judy Pierson