According to a recent Commerce Department report, the US economy shifted into a higher gear in the second quarter of this year. Our gross domestic product (GDP) increased at a 3.3% annual rate. (The GDP measures the value of all goods and services produced within the U.S.) Economists had predicted 1.9% growth in the GDP and were surprised by the additional growth of 2.7%.

How does that growth relate to real estate? Existing home sales rose 3.1% in July, the highest level in five months. Lawrence Yun, National Association of Realtors (NAR) Chief Economist, expects home prices in some regions to increase even more in the near future. “Sales have picked up significantly in several Florida and California markets.” NAR President Richard Gaylord attributes this to the recently enacted housing stimulus package and predicts a sustained sales uptrend in the months ahead.

I am still seeing well-priced, well-staged homes sell within weeks or months, sometimes with multiple offers. The old adage: “Price it high, watch it die; Price it low, watch it go” has proven itself again. It is interesting to note that savvy real estate owners are selling to leap frog into another home. When all is said and done, knowing how to leverage your real estate asset may bring you the best long-term financial security. Call me if you want to explore the opportunities.

 

Q: If I sell my home, will I benefit from Capital Gains Tax rules?

A: When asked this question, I always answer by recommending that you talk with your accountant. But doing a Google search can give you a lot of information too. Currently, individuals can exclude up to $250,000 in profits from the sale of their main home (or $500,000 for married couples).

In the five years prior to selling though, you need to have lived in the house for at least two of those years. Generally, you can claim this deduction only once every two years, assuming you sold your home and made a profit.

Here are some good Internet sites for more information:

·         Get a complete definition of the Capital Gains Tax on www.wikipedia.com

·         Learn more about the exceptions to the tax at http://taxes.about.com/od/taxplanning/qt/home_sale_tax.htm

·         Check out what the IRS reports at www.irs.gov and add key words

It’s important to note that these rules and benefits may change soon with a new Congress.

 

 The Notices of Defaults actually fell for the second month in a row but the important factor is the actual Foreclosure outpaced the Notices. What does that mean? It means the total amount of Foreclosres in the next few months will decline. We will have to see the Notices of Default continue to decrease and then the actual Foreclosures will follow. If the inventory continues to be absorbed, we should hit some stabiliazation point. Only time will tell. In the meantime, we should continue to watch and see how the market will react to the Governments recent laws. I will keep you posted.