Summer Desert Market Report – Mediam home prices rose for the 8th straight month. Up 9.6% from last year. The hottest cities for sales by volume were Palm Desert (233), Palm Springs (213), La Quinta (156), Indio (131), Rancho Mirage (97). Each city and each community has its own story some communities have seen huge growth, while others are relatively flat. The cities that had the largest price increases, have seen the number of sales flatten, which tells us that prices were getting ahead of the market.
Inventories are down again putting upward pressure on pricing. Overall the desert has seen a decline in the time it’s taking to sell, nicely presented homes in a good location and priced well are selling quickly. Currently there is a 3 month supply of homes for sale in the desert, which puts us in a “Sellers Market” as we head into season.
The Fed has indicated there will likely be two more interest rate increases before the end of the year, which could start to weigh on the market and slow sales until the shock is absorbed.
Southern California and specifically, the Coachella Valley continues to be a sought after destination for a second home get a way.
As we head into our “Season”, we expect to see continued strong home sales and price appreciation valley-wide.
How’s your neighborhood doing? Send me an email, I’ve got the details!
What is a 1031 Exchange and can it work for you?
Thanks to IRC Section 1031, a properly structured 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property, and to defer capital gain taxes.
1031 EXCHANGE FOR REAL ESTATE INVESTORS – THE BENEFITS
Whether an investor’s property is owned free and clear or encumbered, the benefits of a tax deferred exchange can be significant. The tax dollars saved by doing an exchange can be used to buy additional investment property.
An investor who exchanges is able to defer the capital gain tax and buy a replacement property worth more than the investor who simply sells and reinvests with after tax dollars.
1031 Exchange for real estate investors provides one of the best tax strategies for preserving the value of an investment portfolio. By using an exchange, the investor is able to defer the recognition of capital gain taxes that would otherwise be due with the sale of an investment property. To qualify as an exchange the relinquished and replacement properties must be qualified “like-kind” properties and the transaction must be structured as an exchange.
1031 EXCHANGE FOR REAL ESTATE INVESTORS – NON TAX BENEFITS
In addition to deferring the capital gain tax, tax deferred exchanges provide the investor with a wide range of non-tax opportunities that may suit an investor’s portfolio
- Reposition assets
- Change property types
- Increase leverage
- Increase depreciation deduction
- Reduce management obligations
- Provide for estate and retirement planning
- Allow for relocation
- Improve cash flow
- Achieve property consolidation or diversification
- Eliminate or create joint ownership
THE EXCHANGE PROCESS
Most exchanges, involve three parties: the investor, (exchanger), who is doing the exchange, the buyer who is buying the exchanger’s old (relinquished) property, and the seller who is selling the exchanger a new (replacement) property. To create the exchange of assets and to obtain the benefit of the “Safe Harbor” protections of the tax code, it is wise to employ an Exchange Accomodator, or Exchange Facilitator. This qualified intermediary becomes a fourth party principal in both simultaneous and delayed exchanges.
The steps for completing an exchange are relatively simple with qualified intermediary:
- The exchanger signs a contract to sell a relinquished property to the buyer.
- Exchanger enters into an exchange agreement with a Qualified Intermediary and assigns rights in the sale contract to the intermediary, including the right to receive the exchange funds.
- At the closing of the relinquished property, the exchange funds are wired to the intermediary and the intermediary instructs the settlement officer to transfer the deed directly from the exchanger to the buyer.
- The exchanger has a maximum of 180 days in the exchange period to acquire all replacement property.
- Unless the exchanger can acquire all replacement property within the first 45 days from the close of the relinquished property, the exchanger must identify possible replacement properties in writing to the intermediary within the 45 day identification period.
- The exchanger signs a contract to buy the replacement property with the seller and the exchanger assigns the exchanger’s rights in the purchase contract to the intermediary.
- At the closing of the replacement property, the intermediary wires the exchange funds to complete the exchange and the intermediary instructs the settlement officer to transfer the deed directly from the seller to the exchanger.
As a general rule of thumb, to avoid paying capital gain taxes in an exchange, the investor should always attempt to:
- Buy a property of equal or greater value, (net sales price).
- Reinvest all of the net equity in replacement property
- Obtain equal or greater debt on replacement property.
*Exceptions: A reduction in debt can be offset with additional cash from exchanger, but increasing debt cannot offset a reduction in exchange equity.
Do you own an investment property and thinking about selling it to buy another that might have more cash flow or less management headaches? We can help. Give me a call or send me an email, let’s talk about what’s possible for your situation.
Cathi and Ben Walter
(760) 218 – 5752
Ever wonder how much income you need to buy an average home in other areas of the country?
@HowMuch.net just published a map showing How much income you need to buy the average home in each state in the U.S.
They collected average home prices for every state from Zillow and then plugged that information into a mortgage calculator to figure out monthly payments. The interest rates used varied from 4 to 5% depending on the market, a 10% down payment, and total cost of housing not exceeding more than 30% of gross income. Using this rule as the benchmark, they calculated the minimum salary required to afford the average home in each state.
The Top Three Places Where You Need the Highest Salaries to Afford the Average Home 1. Hawaii: $153,520 for a house worth $610,000 2. Washington, DC: $138,440 for a house worth $549,000 3. California: $120,120 for a house worth $499,900 Here’s a quick snapshot of housing affordability across the United States.
Home much income do you need to buy the average home in each state; Check it out!
Home Design Trends for 2018 – Each year Fixr conducts a national survey of home industry influencers in the US; those who are building, designing, manufacturing and publishing content relevant to the field, revealing single family home design and construction trends.
Gen X’ers are the most likely group to buy a single family home with Millennials representing the second largest group in the 2018 Fixr Survey. There are many reports that show Millennials are driving the current market.
In 2018 more home buyers are looking for single story homes with more than 2,000 sq ft with an open floor plan and they want to live in urban areas.
Smart home features and automation are gaining traction at an incredible rate and is the number one choice for popular home design trends going forward.
Green and Energy Efficient Design is important to both Gen X and Millennials, but more so for the Millennials with Smart Thermostats, Home Automation Security, Lighting Control Systems, Smart Appliances.
Artificial intelligence and voice control systems will start showing up in homes in 2018.
The open floor plan has been the most popular layout since 2013 and will continue to grow going forward.
For current homeowners, when it comes to affordable upgrades, energy efficient upgrades and style enhancements were popular.
Dimmable lighting allows the homeowner to influence the mood of a room at all times of the day and night. Wireless hubs and concealed components are considered to be integral in nearly every home.
Adding energy efficient windows were another popular trend for homeowners.
Adding outdoor living spaces will be a popular addition in 2018 with more Millennials looking for indoor / outdoor living.
Home Buyers are beginning to expect both function and aesthetics, while function is the primary goal, aesthetics go a long way toward providing comfort and personal expression.
There is a delicate balancing act for home builders between homes that are aesthetically pleasing to the eye vs energy efficient homes that may feel cold or impersonal.
Most designers agree that form should always follow function and the most successful home design blends the two attributes creating a cohesive design, enhancing the homeowners experience in the space.
Get more information about what today’s home buyers are looking for before you put your home on the market. Give me a ring, I’m happy to share my knowledge and experience to help elevate your home above the competition (760) 218 – 5752.
What the Dodd-Frank Rollback Means for Real Estate
On May 22nd, Congress passed reforms to the Dodd-Frank Act, the massive financial reform bill enacted in July of 2010 in the wake of the 2008 US financial crisis.
The current bill could have a big impact on the real estate and mortgage lending. Economists believe the rollback of the Dodd-Frank regulations could lend a hand toward partially solving the industry’s inventory crisis.
“This is a win for the financial industry,” said Chief Economist Nela Richardson, who worked on the bill as an economist for the Commodity Futures Trading Commission. “These are community banks, credit unions, a lot of them are in rural areas. They do a lot of mortgage lending. This will help consumers in that the banks will be able to free up some credit.”
National Association of Realtors Chief Economist Lawrence Yun echoed Richardson, adding that a loosening of Dodd-Frank rules may lead to a rise in regional construction.
“The regulations placed on small-size community banks were terrible because it hindered small-sized homebuilders from obtaining construction loans,” he said. “As the homebuilding industry has become more dominated by large corporations, now we have this relief, which means that, small-time homebuilders will have better access to capital to build homes.”
Economists seem to agree, that the economy is not on track to repeat the financial crisis of 2008, since big banks were at the center of the collapse a decade ago. Richardson explained that the only way to eliminate all risk is to make everything as onerous as possible.
The legislation will also require Fannie Mae and Freddie Mac to consider the use of alternative credit scoring models, which could help borrowers with thin credit files receive a mortgage. But Gardner said he’s concerned, ultimately, we need to remain aware of looser credit restrictions so the country does not repeat the acts of the last financial crisis, where homeowners were given loans they could not pay back.
Enjoy Cool Summer Evenings in Palm Desert – Music in the Park We’re kicking off the Summer Season in the Desert with Live Concerts on the Terraced Lawn at Palm Desert Civic Center Park.
Every Thursday throughout the month of May
Music Lovers can look forward to a sampling of musical genres that range from Reggae, R & B, Jazz, Country to Indie.
Grab your friends, a blanket and have a picnic while you sit back, relax and enjoy live music under the stars. Food trucks are also on standby with a wide variety of culinary creations.
May 3, 2018 Ambrosia
Ken Stacy – Acoustic Guitar / Vocals
Joe Puerta – Bass / Vocals
Mary Harris – Keyboard / Vocals
Christopher North – B3/ Keys / Vocals
Burleigh Drummond – Drums / Vocals
Doug Jackson – Suitars / Vocals
May 10, 2018 The PettyBreakers – Tom Petty Tribute Band
May 17, 2018 Dead Winter Carpenters – Americana / Roots / Bluegrass
Jesse Dunn – Acoustic and Electric Guitars / Vocals
Jenni Charles – Fiddle / Vocals
Dave Lockhart – upright and Electric Bass / Vocals
Nick Swimley – Lead Telecaster Guitar / Vocals
Brendan Smith – Drums / Vocals
May 24, 2018 The Blue Breeze Band – Motown and R & B
Harold Wherry – Electric and Acoustic Guitar
Laia Jones – Vocals
Bob Henley iii – Vocals
Richard Moorings – Keyboards, Trombone, Vocals
Darryl Bomar – Electric and Bass Guitar and Vocals
Tim Anderson – Tenor Sax and Vocals
Tyrone Griffin – Trumpet, Flugelhorn and Vocals
May 31, 2018 All Our Exes Live in Texas – Indie / Folk Harmonies
Hannah Crofts – vocal and Ukulele
Georgia Mooney – Vocal and Mandolin
Elana Stone – Vocal and Accordion
Katie Wighton – Vocal and Guitar
Palm Desert is known as the Cultural and Retail Center of the Desert Communities. Insiders know Palm Desert as the “Heart of the Coachella Valley” a small city feel with a big city vibe. Check out this exceptional home in Palm Desert! Call Me Today for a
Showing (760) 218 5752
Palm Desert’s Civic Center Park Amphitheater is once again the hot spot for live music in May! Residents and visitors alike flock to the Palm Desert Civic Center Park every Thursday evening in May for the City’s free Concerts in the Park.
Held on the terraced lawn of the Civic Center Park Amphitheater, music lovers can look forward to diverse musical offerings from reggae to R&B, country to indie and more. Concertgoers are encouraged to bring picnic baskets, blankets, and lawn chairs.
The season will kick off in a big way on May 3 with a performance by Ambrosia, the Grammy nominated band known for its hit singles “How Much I Feel,” “Biggest Part of Me,” and “You’re the Only Woman (You & I).”
The full schedule promises to continue to delight fans throughout the rest of the month:
- May 3: Ambrosia
- May 10: The PettyBreakers, Tom Petty Tribute Band
- May 17: Dead Winter Carpenters, Americana/Roots/Bluegrass
- May 24: The Blue Breeze Band, Motown and R&B
- May 31: All Our Exes Live in Texas, Indie/Folk Harmonies
The Family YMCA of the Desert will conduct children activities prior to each concert and food trucks will be onsite with tasty food options, beverages and snacks for purchase.
El Paseo Fashion Week 2018 hits the catwalk March 17-26 to showcase the latest fashions from some of the biggest designer brands in the world, featuring star-studded runway shows, exclusive trunk shows, and more. Now in its 13th year, this highly-regarded event consistently draws tens-of-thousands of people and accounts for an economic boost for charity each year!
This premier fashion event offers a platform for both renowned and emerging designers to showcase their work and connect with an audience through one of the most individualistic and expressive art forms: style. After all, we are what we wear.
El Paseo Fashion Week attracts audiences from all walks of life. Here, the local business man or woman, the stay at home, the jet-setter, and even the fashion-savvy college student can explore the world of fashion in one place. The cocktail receptions, trunk shows, meet and greets, and more are meant to further inspire and transform participants while also highlighting the sophistication and luxury of the desert.
The Gardens on El Paseo
West side upper level parking deck
73-545 El Paseo, Palm Desert, CA 92260
(Note: The Gardens on El Paseo is located on El Paseo, between Larkspur and Lupine)
Coachella Valley opens the Kim Nicols Trail, the first new major hiking trail in 10 years.
After a four year effort to create the trail with over $150,000 in funding from the Coachella Valley Mountains Conservancy and help from volunteers with Friends of the Desert Mountains, the new Kim Nicol Trail is now open.
Kim spent 35 years in the Coachella Valley devoted to protecting the area’s endangered species and open spaces, she was passionate about opening access to people so they could learn more about the plants and animals that are unique to the desert. Kim ultimately became Fish and Game Regional Manager and passed away from cancer before she could see her dream come to fruition.
The Kim Nicol Trail is a 5.6-mile loop, located at the intersection of 20th Ave and Corkhill Rd in Desert Edge, just outside Desert Hot Springs. It’s mostly a gentle hike with a steep climb at the beginning with mild elevation gains as you go. A lot of the hike is in a sand dune so the most challenging part is that its hard walk in the sand, you get really tired easily. But the beauty is worth the hike, ringed by mountains on three sides and beautiful Vistas of the Valley in the distance.
More and more, the Coachella Valley has become the destination for nature enthusiasts; younger generations want to enjoy the beauty and nature of our valley and the new Kim Nicols Trail is the newest addition to all that the beauty the Coachella Valley has to offer.
February 16 – 25, 2018 The 72nd annual Riverside County and National Date Festival 2018 opens for 10 amazing days of fun for all at the Riverside County Fair Grounds in Indio.
The 72nd annual Fair and Date Festival is about to light up the Desert and packed with fun for everyone including Camel and Ostrich Races, Carnival Rides, Arabian Nights Music Festival, Parade, Pageant and live concerts with star-studded headliners
Friday, February 16th at 7:30 p.m.
Saturday, February 17 at 7:30 p.m.
Los Rieleros del Norte
Sunday, February 18th at 7:30 p.m.
Lou Gramm, founding member of Foreigner, with Foghat
Saturday, February 24th at 7:00 p.m.
Super Fiesta Sunday featuring
Los Tequileros de Ramon Jimenez, Banda Pachuco, and Carmen Jara
Sunday, February 25th at 3:00 p.m.
After the Fair, stop by to see these exceptional homes
Want more information about one of these exceptional homes?
Give us a ring, (760) 218 – 5752