Tucson Kent's World: December 2009

Living through a Tucson Winter can be pretty delightful - especially when you are getting a fat check from Uncle Sam for buying a home! 

Sure - folks have probably already heard about the extended tax credit for homebuyers...but lets get one thing very clear:  it isn't just for first time homebuyers anymore.  With Tucson's home prices making the real estate market virtually "ON SALE" - and getting up to $8000, first time homebuyers can really give themselves a nice present.

Current homeowners looking to upsize or downsize can get up to $6500...and you don't have to sell your current home (but you do have to move into the new purchase).  Perhaps that's the way to give yourself an investment property and the home you want at the same time?!?

Anyhow, for details, give me a call or shoot me an email.  Lets enjoy a dip in the pool or a round of golf while discussing your needs - yes, even in winter.

Merry Christmas to everyone!

Could repeal of FIRPTA help the recovery of this nation's real estate market?  In this morning's Globe St. News, the subject was FIRPTA (Foreign Investment in Real Property Tax Act), the 1980 measure that adds a layer of tax on the sale of any real estate owned by a non-citizen of the U.S.

The article cites a study by two economists that calls for a reform of FIRPTA to encourage more foreign investment in the United States real estate market.

Would it be so bad, since the U.S. real estate market is basically "on sale," to encourage investment groups from abroad to buy our distressed properties?  Do we put an extra tax that is 10% or more on gold, sugar, wheat, etc?

In my opinion, the 1980 provision was reactionary, imposed at a time when we had a nation reeling from financial crisis and seeing large real estate assets being purchased right & left by foreign investors - primarily Japanese interests.  Protecting national interests is one thing...technology, software, certain industrial products, etcetera, but to slap a huge tax on property is anti-market - going against the very grain of what we espouse when expecting other countries' markets to be open to us.

There are those who will cry that foreign investment will drive prices up, or shut locals out of the market - but my feeling is that open markets are better for everyone in the long run...and we have properties that need to move instead of languishing vacant or uncompleted.

Dale Baker is a home inspector par excellence (now if only we could get him to move to Tucson, huh?).

He writes very informative and helpful articles for people - not only about home inspecting, but maintenance and safety issues.  This is the first of a 12-part series on Fire Safety.  It is written with 1st Time Homebuyers in mind, but anyone can get good info from this series.

FHA is going to make it easier to finance the purchase of a condo - at least temporarily.

In an article by Marilyn Alva, Investors Business Daily reported today that the new loan guidelines released by the Federal Housing Administration on Monday will relax the restrictions that have kept condos from being purchased by buyers with low down payments.

While FHA's new guidelines will ease back to 30% of units sold (from 50%) before the possibility of approving loans in condo projects, there is also a new clause that will allow condo associations to have "right of first refusal" to turn down an offer they might deem too low - as long as it doesn't violate anti-discrimination rules.

While Tucson doesn't have a very large amount of condominiums, there are several complexes in highly desired locations at good prices - especially near the University of Arizona.  It will be interesting to see if this measure helps to get the condo market moving again - especially while there is still a tax credit available as an incentive to buyers!

HOA fees in Tucson are rising (as well as other places).

Working with some first time homebuyers lately, we were comparing the rates that a few different homeowner associations were charging for similar benefits in the same general part of town.  After a little discussion and some serious digging, it was found that one HOA had more than doubled their fees in the past 24 months - from $17 to $44, while others had risen a little and a few had no increase yet...but they will be.

Why the differences?

Could be a bunch of different reasons, but the general consensus was that HOA increases are like the old adage about termites:

• If your HOA fees haven't risen, it just hasn't happened YET - maintenance costs never go down.

The other common factor to the associations with the highest increases was the proportion of short sales and foreclosures in the neighborhood - the more there were, the more dues that hadn't been paid.  When people have to tighten their budgets, the HOA fees take a backseat to putting food on the table or taking Jr. to the doctor, but the dues don't stop accumulating.  The association can put a lien on your home for non-payment of dues, which gets wiped out during foreclosure, leaving the rest of the homeowners to take up the slack.

This is true whether you're buying a luxury home, resort condo, townhouse on a golf course or a regular single family home.

Always make sure you get the most recent copy of the Homeowner Association's financial statement & operating budget when purchasing in a neighborhood that has an association.  Also make sure the HOA's reserve studies are in the packet you receive - and read them, don't just stash 'em in a file for "someday."  You are entitled to this information as part of the homebuying process for a reason. 

Typically, you will get all of the Homeowner Association information "packet" on a CD, while a few are being sent via email (the documents on paper can be the size of a small phonebook sometimes, so a CD is usually easier).  Once in a while, the title company will still send the documentation printed out, but that is becoming more rare...especially as postal rates rise.  I don't get a copy of these - just you, so if you haven't gotten them from the title company, please let me know.