Simply Junior

Real Estate Trends in 2010 have followed a pattern that was expected: as mortgage rates and homes sales have dropped, inventories of unsold properties have risen. The inventory currently on the market is only a portion of a larger inventory of REO (Real Estate Owned) by banks, which is held back and released slowly over a period of time, in order not to cause an even greater decline in housing values.

As we approach the end of the year, trends of 2010 will continue into 2011, following the same general pattern, with a slow recovery expected towards the end of 2011.

Some speculations predicted that the recovery would have started towards the end of 2010, but with new problems in the international economic markets, it looked like we took a double dip into the current recession. However, economists state that a double dip recession is unlikely, although spending and investments in the established economies have been challenged by emerging economies, like India and China.

Real Estate Trends are following the larger economic picture: the mortgage crisis has indeed caused a lot of turmoil and scars, which have created a domino effect with high unemployment, low consumer spending, consumer credit slow down and weak housing markets.

The large number of homeowners, who have lost their house in foreclosure, are not going to buy another property in the near future, because of the impact of the foreclosure on their credit (banks will not even consider a mortgage for a borrower for 4 years, if he/she had a foreclosure, 3 years for FHA loans,) therefore there is a new population of renters.

Investors, who have access to capital, can acquire homes for 60 cents on the dollar or less, via short sales and REO. They in turn keep these properties as rentals and investments, waiting on an inevitable economic recovery and increase in values.

Other Real Estate Trends worth mention are in the arena of commercial properties: commercial properties have followed a different pattern than residential properties, holding on to the market value longer and only in this last year have started to lose their balance, as large mortgage notes have become due and refinancing has become harder. Some great deals are available in commercial investments, from larger apartment buildings to shopping centers.

This is definitely the time to buy and it will continue for another couple of years. Inventory in residential and now commercial properties is abundant, seller’s contributions as allowed are more available and the Government (especially HUD) is providing grants and incentives not only to homeowners, but also investors, in an attempt to expedite the housing recovery.

It’s that time of year. You know, when people like myself peer into our hazy crystal balls and predict the future with amazing accuracy. In this article, we take a look at where taxes are headed in 2011.

As I write this, the effort to extend the Bush Tax Cuts looks like a sure thing, but is still winding its way through Congress. Still, I feel fairly confident predicting they will make their way through and give us another year or two of low, low tax rates as the government tries to revive the economy. Of course, another $700 billion tacked on to the national deficit will probably kill any impetus, but we’ll worry about that down the road. Let’s just pray it isn’t a very short road!

2011 will not be the year of significant movement at the federal level. So, does that mean you are home free? Not a chance, my friend. You are going to get hit with the tax stick till you beg for relief. While the feds may not be doing it, the state and local governments will.

Let’s be blunt. The vast majority of states are flat broke and they can’t borrow money. This creates a unique situation. While the federal government falls all over itself to save Wall Street bankers, the political scuttlebutt is they may be unwilling to bailout states like California and Illinois when the come to Washington, D.C. with hat in hand.

This will lead to the states looking for help from another source. In this case, “help” will consist of new and higher taxes. I probably don’t have to tell you that the “source” will be you and me. The states have already been taxing like mad in 2010. Expect it to continue in 2011 as it becomes apparent that the government claims of an economic recovery are simply false. The economy is stagnant at best, which means tax revenues are as well. With states so far upside down, they are going to have to find a way to fund their shortfalls. There is only one way to do that – more taxes.

Where are taxes headed in 2011? It should be more of the same at the federal level, but keep an eye on your state government. All indications are they are going to try to tax you blind.

There has been a great deal of talk recently about “green shoots” and a pending economic recovery.