All of this, of course, is happening as demand from buyers heats up. Foot traffic through homes is higher than it’s been in more than 3 years, say the builders — a time period that includes the duration of the 2010 home buyer tax credit.

It’s no surprise, therefore, that agents expect a strong 2012 and a rise in new home prices.
Jobs data is improving, mortgage rates remain low, and housing momentum is building. For home buyers in Arizona , however, it may spell higher new home prices ahead. Big demand and small supply creates scarcity and scarcity correlates to rising prices.

If you are looking to sell your home, there hasn’t been a better time for quite some time now!

We have also seen a drop over 30% in the average days on market. This means homes are selling for more and they are selling quicker. Finally some great news if you are an Arizona home owner.

However, if you already have money in your retirement accounts, you might be able to use it to speed up the process. We’ll discuss which accounts don’t penalize you when you use the money to buy a first home as well as strategies for saving on penalties and taxes.

Using Your IRA for a Home Down Payment

The IRS discourages you from withdrawing money from your retirement accounts early by charging a 10% penalty on withdrawals before you turn 59 1/2.

There’s no specific penalty exemption for home purchases when you pull money out of a 401k, so any money you take out will be classified as a “hardship exemption.” You’ll be assessed a penalty of 10% on the amount withdrawn and you’ll have to pay income tax on it as well.

If possible, roll over the amount you want to withdraw to an IRA, so you can avoid paying the penalty. However, you can’t roll over a 401k that’s with an employer for whom you are still working. If you have an old 401k from a former employer, roll that. Since a rollover can take time to process, fill out the necessary paperwork as soon as possible.

Borrowing from Your 401k

Another option with a 401k is to take out a loan. Your loan can be up to $50,000 or half the value of the account, whichever is less. As long as you can handle the payments (yes, you have to pay back this loan), this is usually a less expensive option than a straight withdrawal. Though you will pay interest, you won’t pay taxes or penalties on the loan amount.

A few things to know about 401k loans:

• Since you’re incurring debt and will need to make monthly payments on the loan, your ability to get a mortgage may be affected.
• The interest rate on 401k loans is generally about two points above the prime rate. The interest you pay, however, isn’t paid to the company – it goes into your 401k account.
• Many plans give you only five years to repay the loan. In other words, if you borrow a large amount, the payments could be substantial.
• If you leave your company, you may be required to pay back the outstanding balance within 60 to 90 days or be forced to take it as a hardship withdrawal. This means you’ll be hit with taxes and penalties on the amount you still owe.
• If payments are deducted from your paycheck, the principal payments will not be taxed but the interest payments will. Since you’ll be taxed again on withdrawals during retirement, the interest payments will end up being double-taxed.

Sometimes it makes sense to take a loan from your 401k to cover the down payment, like if you’re getting an FHA loan and only need a small down payment. However, a large loan payment could have a big effect on your mortgage qualification.

Consider that a $5,000 401k loan will have a payment of $93 per month (at a 6% interest rate) over five years, while a $25,000 loan will have a payment of $483 per month. The latter payment could seriously hinder your ability to pay the mortgage every month, and the bank will take this into consideration when figuring what you qualify for.

Therefore, it’s wise to run numbers and ask your mortgage broker how such a loan will affect your qualification before you take one out. Conversely, if the amount you need will have too adverse an affect on your qualification, it might make sense to withdraw the down payment amount and pay the taxes and penalties.

Mortgage Interest Tax Strategy

Keep in mind that you’ll be deducting mortgage interest on your taxes after you purchase your home. This may actually “wash” with some or all of the income you report from a retirement account withdrawal.

For example, let’s say you withdrew $25,000 from your 401k and paid $25,000 in mortgage interest the same year. The $25,000 you’ll report in additional income (from the 401k withdrawal) will “wash” with the $25,000 mortgage interest deduction. In other words, your taxable income won’t be increased by the withdrawal, and you will effectively pay no tax on it.

However, you will still be liable for the 10% penalty, which is $2,500 in this case. This type of strategy can work for IRA, SIMPLE, and SEP withdrawals as well, but you won’t be liable for the 10% penalty unless you withdraw more than $10,000.

Retirement Account Withdrawal Comparison

So which is best? This depends on what accounts you have and how much you have contributed to them. But in general, you’ll be assessed fewer taxes and penalties if you withdraw money for your down payment from a Roth before a traditional IRA, and from either of those before a 401k. Whether a 401k loan is better than an IRA withdrawal depends on how large it is and whether it will affect your ability to qualify for the amount and type of mortgage you want.

• Contributions in your Roth IRA: No income tax due, will not owe 10% penalty.
• Earnings in your Roth IRA up to $10,000 for the purchase of a first home: No income tax due, will not owe 10% penalty.
• Small 401k loan: Will not owe income tax or penalty. Monthly payments will be small and will have a minimal affect on mortgage qualification.
• Any withdrawal from a traditional IRA, SEP-IRA, or SIMPLE IRA up to $10,000 for the purchase of a first home: Income tax due, will not owe 10% penalty
• Earnings in your Roth IRA over $10,000 for the purchase of a first home: Income tax due, will owe 10% penalty.
• Any withdrawal from a traditional IRA, SEP-IRA, or SIMPLE IRA over $10,000: Income tax due, will owe 10% penalty
• Large 401k loan (limited to half of balance or $50,000, whichever is smaller): Will not owe income tax or penalty. Monthly payments can be large and substantially affect mortgage qualification.
• 401k withdrawal of any amount: Will owe income tax and 10% penalty.

Final Word

Saving up for a down payment can take quite a while. The sooner you get into a home, the sooner you can start saving money on rent and deducting the mortgage interest on your taxes every year. You can also withdraw up to $10,000 without penalty from these accounts for the remodel or repair of a first home.

Are you planning to purchase a home soon? What is your source for the down payment? Comment below!

Hire a Team

When you are not in the location of the home you are selling, you must get yourself a good team. Let’s face it – a house needs continual upkeep, repairs and care.  Do not leave this type of activity to friends or relatives — those situations almost always end badly.  Find true professionals in your area because this is a business arrangement, not something to do for fun, or on the side. You want to be sure that everyone on your “sales” team treats this as a business transaction, not a “nice-thing-to-do.” A single agent typically does not have the resources to maintain your home, hire a team with experience selling homes from out of state.

Find A HandyMan

If you hire a team with connections they should already have a handyman to refer you too.  They need to be reliable and dependable. Keep in mind, this handyman needs to be accessible! Ideally you want someone who you can email or consistently reach over the phone at a defined time daily, and can accept checks or credit card payments, since sending cash may not be an option.

Staging

Have your team refer you to a home stager, especially if you are looking to sell an empty house or condo.  Homes sell faster staged, as over 85 percent of people can’t visualize furniture in empty rooms.  A home stager who specializes in vacant homes would be a great asset on your team. Like the handyman, the home stager should be easily accessible and able to accept payments virtually.  He/she can provide, or advise, on the presentation of your property, especially important when you are not in town. Home stagers can make it look as if the homeowners are still in town and ready to sell!  Home stagers can help you utilize current  furniture or else secure furniture and accents to warm up an otherwise empty house.  Also, the stager can act as an impartial party to review the work of the handyman/contractor, help be your eyes and ears on site. In some cases, home stagers may also have handyman/contractors they work with or even on their team. Your real estate agent can help you identify a home stager to help you sell your property.

Hope the advice was helpful. Best of luck with a long-distance sell – they aren’t easy! But they can be successful – with the right team!

The construction is planned for land 2 miles from Mesa Airport’s eastern border and would be part of the 15,000 dwelling units envisioned in a plan for the DMB land that the City Council approved in 2008.

The former GM property is scheduled for high end luxury homes to be build by a company called DMB.  The DMB project narrative did not list a prospective developer for the site.

It notes that according to the community plan for DMB’s Mesa Proving Grounds development, the property “will form the basis of the social fabric of the community and will be designed as intimate neighborhoods that encourage walking and social interaction.”

The document promises small neighborhood parks, narrow streets to encourage slower traffic and strong connections to other portions of the DMB property, including what has been called the Great Park in the center of the 5-square-mile development.

DMB and Mesa believe the GM site will develop in stages over the next few decades and has the potential for future high-rise business centers at, for example, the intersection of Ellsworth and Elliot roads.

DMB spokeswoman Cassidy Campana said the company is talking with several homebuilders about the newly approved tract but no deals have been made and there is no timetable for construction.

It will take a while to lay infrastructure and the development might not be ready to launch until 2013.

The inaugural project for DMB’s property was supposed to have been a ritzy Gaylord resort and conference center, another upscale resort, a championship golf course and high-end shopping about a mile east of the Ellsworth-Elliot intersection.

Mesa granted Gaylord a three-year extension for its groundbreaking deadline. The Nashville-based company has told the city its project here is still alive and will proceed when the economics pencil out.

Building/Dwelling Coverage

Most important is usually the building/dwelling/property that covers the cost to rebuild your property for covered perils like fire, wind damage, vandalism, etc. The coverage is based on your selected estimate of the cost to rebuild the structure, not the land value as land rarely gets destroyed and regardless is not covered by insurance. Additionally, your normal policy does not cover earthquakes or floods, either, but you can get separate policies for these if you are in earthquake or flood-prone areas. Policies for these perils can be expensive, but you decide if it’s worth it. Other items are also not covered like wear and tear, so talk to your agent about what is and what isn’t covered.

While your agent can help you estimate how much coverage you need for one of the line items like building/dwelling (e.g., $400,000 coverage for a 2,500 square foot house based on the size, quality of building materials, age of property, etc), you ultimately pick the dollar amount of coverage. Don’t under-insure, but don’t over-insure, either. Most important is to make sure to review your policy each year and increase your coverage to an appropriate amount if local building costs increase.

Liability Coverage

Many people don’t know this but you also have liability coverage with your homeowner’s policy. For example, if your dog bites someone or if someone slips on your property and gets hurt and you get sued, the insurance provider will step in and pay for a lawyer to defend you and/or pay any settlement or judgment against you. But that coverage has a limit of how much they will pay, usually about $300,000. If you have net worth above that, you can buy additional liability coverage called an umbrella policy in increments of $1,000,000 of additional coverage. It’s dirt cheap too, like $350 per year for an additional million dollars in coverage, so go for it if you think you need it.

Deductibles

The deductible amount is chosen by you. A deductible is how much you pay out of pocket for a loss. If you have a $500 deductible, and there is a $7,500 loss, you pay the first $500 and the insurance carrier pays the other $7,000 up to your maximum covered loss. The higher the deductible you choose, the lower the annual insurance premium you pay. Likewise, the lower the deductible, the higher the annual insurance premium you pay. Discuss this with your insurance professional and decide what makes sense for you.

HOA/Common Interest Development Properties

If you own a unit in a condominium, townhome, co-op, PUD or any other common interest development, whether a personal residence or an investment property, make sure you have an interiorHO-6 policy that covers you for damage to the inside of your unit, PLUS for liability. This isn’t covered by most homeowners association’s master insurance policy.

You don’t want to wait until you or your tenant accidentally floods the nine units below you and every one of those nine owners is looking to you to reimburse them for their losses. Your HO-6 policy should cover this liability and damage – discuss the coverage with your agent. You should also get a copy of your HOA’s master insurance policy and meet with your personal insurance agent to determine if there are any gaps in coverage.

Specialty Items

Additionally, normal policies don’t cover expensive jewelry, artwork, firearms, precious metals, etc. If you have expensive “other” items, make sure to discuss these with your agent and get the proper coverage in place.

The last item to note is that insurance is for major financial losses that will cause a disruption to your life and livelihood if you did not have the coverage in place to pay for all the damage. You generally should not make small claims because the insurance carriers will raise your rates and/or eventually if you make enough minor claims they may drop you from coverage. Reserve making claims for when everything hits the fan.

Having the proper type and amount of insurance in place is vital in today’s world. Pull out your policy and schedule a talk with your agent to discuss what you have and what you need. This should help you sleep better at night by knowing if there is a big loss, you’ve got some help on your side.

Clean out your closet

Have a few dresses that you haven’t worn for a while? Some jeans that are two sizes too small? Time to purge! If your “stuff” is in good or better condition, charities will be happy to take it, and you get a tax break. All you need to do is determine the item(s) “fair market value” – what it would sell for in a thrift store. And get receipts for donations over $250.

Upgrade your home

If you haven’t already maxed out your home energy tax credits in previous years, you have until Dec. 31st to do it. After all, that’s when the credit, which is worth 10% of the cost of new windows, doors, skylights, insulation, and heating and air conditioning systems (up to a maximum $500 credit), expires. For more specifics, including various restrictions, caps, and other details, go to www.energystar.gov.

Prepay January Mortgage Payment…

Your January 1 mortgage statement represents interest for the month of December. Paying it early – by the end of the year – boosts your deductions for 2011, and is something to think about it, particularly if you anticipate being in a lower tax bracket in 2012. Just make sure you get the check in the mail in plenty of time for it to arrive to your lender by the 31st. The added interest will show up on the annual statement that you’ll get from your lender in late January, detailing your deductible mortgage activity.

…and your property taxes

While we’re on the subject of homeowner payments and accelerating deductions, you may also want to consider prepaying your property taxes by December 31st and taking the deduction for 2011. Contact your county assessor’s office with any questions.

Be Generous

Want to help your newly married son and his wife buy a new home? You and your spouse should consider taking advantage of generous estate and gift tax exclusions! Together, you can give the love birds up to $52,000 this year (or $26,000 per recipient), tax-free. And, if you’re so inclined, (perhaps you need to move assets out of your estate?), you can do it all over again on January 1, 2012.

Arizona’s real estate market will continue its slow recovery in 2012, which is likely to be better than 2011. Keep in mind you don’t go from having a heart attack to running a marathon overnight. The problem is on its way to being resolved, but it’s not resolved yet.

One of the roots of the problem in the housing market is excess inventory — and the solution will come from a depletion of that excess inventory. Think of what’s going on in the housing market as what would be going on at any manufacturer or retailer who found themselves with a substantial oversupply of a product (in this case, 50-55,000 housing units in Greater Phoenix). The product would be put on sale. If it didn’t sell at a certain price, the price would then be lowered until the seller found a market clearing price.

That’s exactly what’s going on in the housing market at the moment. Think about what happens, though, once the excess supply is sold. If there is a normal demand for the product, prices would jump up rapidly and new production would increase. That’s exactly what will happen to the housing market. This should happen sometime in 2015.

Moving from single-family housing, the apartment market the brightest spot we’ve had in many years. Vacancy rates fell from 14 percent in 2010 to 10 percent in 2011. And while there are a lot of apartments in the planning stage, there are only 1,177 under construction at the moment. Thus, vacancy rates are likely to decline farther, putting significant upward pressure on rents. This will bring forth new construction.

Commercial is not looking as good, roughly one out of every four square feet of office space in the metro area is vacant. Given the outlook for employment (slow growth), there will be no serious improvement in 2012 or 2013 and a full recovery will probably not take place until about 2016.

The market for industrial space looks better than for office space, but only by a bit. Vacancy rates fell to 12.2 percent in the third quarter from 12.8 percent at the end of 2010. Build-to-suit projects make up 87.5 percent of industrial construction activity.

The retail real estate market is having problems, too given low population growth and the relatively modest recovery in retail sales. At the end of the third quarter the retail vacancy rate was 12.4 percent, up a bit from the end of 2010. The recovery will be slow here too, extending to the middle of the decade.

Like the housing market, the commercial real estate markets are in the process of getting better. The good news is that they’re not getting worse.

Foreclosures and short sales have been dragging down existing-home prices. In the third quarter of this year, 25 percent of the existing-home transactions were foreclosures, and another 29 percent were short sales. Also, more than 40 percent of the homes being sold are going to investors and other owners who won’t actually live there.

On the positive side, the number of units going into foreclosure is declining, and housing prices appear to have stabilized. Depending on population growth, job growth and other factors, we could see full housing recovery in three to four years.

At the national level, experts expect 2012 to bring an increase in gross domestic product (GDP) of somewhere between just under 2 percent to 3 percent.

Here are a few tips we’ve compiled, with some input from our Facebook fans, to make hosting a little less stressful.

1. Turn ‘em loose in town

Provide your guests with a list of local area attractions, maps, and ideas to get your guests out of the house for a few hours. This clears the space for you to clean and prepare meals and it also gives everyone a change a scenery each day as well as creating memories.

2. Food at the ready

Just because you’re the host doesn’t mean you are tied to the kitchen 24 hours a day and on duty as a short-order cook. Instead, pick up items for sandwiches, or other easily assembled snacks and ask guests to fix their own meals when they are hungry. Have plenty of snacks and fruit around so they can just pick it up and go!

3. Make them feel at home

Even if your home is small, carve out a space for them to relax. Set up a basket with books, magazines and other activities. Put out extra towels, soap and other little toiletries your guests may need.

4. Put them to work

Chances are, your guests will insist on helping — either in the kitchen or elsewhere, so take them up on the offer! Give them tasks such as dicing vegetables, washing dishes, or running to the store for provisions.

5. Games, movies, and cards

Many of our Facebook guests suggested having a puzzle, board games or cards out with plenty of snacks as great evening activities. Show them how to connect to the Internet, or watch a movie.

Market Headlines

· In every price range, sales prices in dollars per square foot are now higher than a year ago.

· Inventory is still falling below $200,000 and constraining sales volumes.

· Above $200,000, supply is rising and demand remains relatively weak.

· After a noticeable weak patch during the summer, prices have regained strength.

· Lender-owned inventory is falling fast, especially at the lower price levels.

· Short sales are overtaking foreclosures as the primary mechanism to resolve mortgage debt problems.

1. Homes under $100,000
Supply getting tight and now constraining the market. Prices are rising and are now 2.7% higher than last year. Home buyers and investors who are looking for the “great deal” are finding they are a bit late to the race. As we’ve mentioned in past articles, the below 100K market is extremely competitive with multiple offers common and final sales prices often above asking.

2. Homes Between $100,000 and $200,000
Supply lower and demand holding. Pricing is on a firm upward trend. Its amazing how supply and demand is often played out in the market… no wonder we base a lot of our opinions on this factor.

3. Homes Between $200,000 and $400,000
Summary: Supply is higher and demand is still unimpressive. Nevertheless, pricing remains extremely stable. We expect some rise in demand now that Fannie Mae has announced an increase in lending limits.

4. Homes Between $400,000 and $800,000
Supply is up only slightly and demand is stronger. Prices regaining ground lost in August and September. This is another price range we expect demand to increase as we move into our traditional buying season. Out of state buyers often purchase 2nd home or retirement homes in this higher price bracket.

5. Homes over $800,000
Supply is growing while demand remains below par. However prices remain remarkably stable.

Final Conclusions for November real estate market in Arizona

We can expect a slight downturn in market activity during the holidays… Traditionally, we should see an up-tick in sales as we approach mid-January and onward to June. If the Midwest has a particularly bad winter we can expect to see even more demand for Arizona homes.
If you’ve been thinking about selling your home, you may want to start getting your ducks in a row to take advantage of higher demand while interest rates remain at an impressive low… rates under 5% can’t go on forever.
If you’d like to know more about the market, have questions about buying or selling a home in the South East Valley we would love to be on your team. We bring over 30 years of experience to the table and simply love helping people have the most incredible real estate experience imaginable.