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Market L o ve !

Homeowner Tax Benefits Affordability Hits New Records

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GGAR Market Overview

While the national economy struggles to its feet, South Carolina is making news with strong pockets of recovery. Families are on the move

compared to the U.S. rate

again, and according to

of 8.2%.

Allied Van Lines, South Carolina was the third

Greenville Mayor Knox

most popular destination

White was quoted saying,

for relocations behind

“In Greenville there is

Texas and Florida in 2011.

more of an air of optimism and that things are on the

South Carolina offers job

right track locally.”

growth in many areas, affordable housing prices,

In January, several

coastal and mountain

companies showed their

living, some of the most

love for Greater

beautiful cities in the

Greenville.

South. BMW announced plans to

is already building the

Crown Casting Industries,

A recent MarketWatch

invest $900 million and

X3, X5 and X6 models.

a modern iron and bronze

story by Washington-

hire 300 people in the

Production will be

foundry, plans to invest

based correspondent Ruth

Spartanburg plant to

boosted to 350,000 cars

$16 million into a new

Mantell found that the

produce a new X4 sports

annually. BMW is already

Greenwood County plant,

Greenville-Mauldin-Easley

utility vehicle. The upstate

the number one luxury

bringing 50 new jobs.

metropolitan area had a

plant added a new

car producer in the U.S.

7.7% jobless rate,

assembly line in 2010 and

Greater Greenville Housing Market As the economy improves, so does housing. In November 2011, South Carolina had the second-highest increase in home prices in the U.S., up 2.8% over October. Excluding distressed sales – foreclosures, short sales – home prices appreciated 4.9%. [GGAR ctd pg 14]

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Contents

Market

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FEBRUARY 2012

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Fall in Love with the Right House! When you go shopping for homes this month, remember that love is in the air. Cupid may strike with his bow when you least expect it, causing you to fall in love - with the wrong house. "Oh, that won’t happen to me!" you say. But it can, if you don’t do your homework.

Get prequalified for a loan One of the best ways to make sure you’re buying the right home is to shop in an affordable price range. Your lender will give you a price limit that you can comfortably afford based on your income and debts. These are time-tested formulas that allow some wiggle room in your finances in case your circumstances change. You want to be able to put money aside, in case you change jobs, have a baby, or fall ill.

Work with a real estate professional Share your wish list with a real estate professional, and let him or her preview homes for you. She knows many homes and neighborhoods firsthand. You’re welcome to look at homes online, but stay in your price range. If you look at homes that are more expensive than you can afford, you’re bound to fall in love with more luxuries and space than you can comfortably afford. If you ask your real estate professional why she didn’t show you a particular home, she may be willing to do so or she may have a good reason for eliminating it from the list. 4

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Fall In Love With The Right House! Shop for the right size home, not the biggest While conventional wisdom says buy the most home that you can for the money, buying the biggest home you can isn’t necessarily the best idea. Think about the operating costs of heating and cooling space you’ll rarely use. This is money wasted that could be spent on other things you may need such as a new car or furniture. Instead, think about how you actually use a home. One guest room may be plenty, while two may go unused unless you need a home office or you’re planning to add to your family.

Think about your lifestyle Most people buy a home because they want a new lifestyle, and certain types of housing are more compatible. If you’re single or travel a lot, you may consider a condominium, or gated community. If you have kids, you may be more interested in the neighborhood amenities, such as nearby schools, playgrounds, and swimming pools.

Consider the commute Many of the newest homes offer the most amenities, but they’re also far from city centers. How long would you spend commuting to your job every day to live in that particular community?

Look at the bones of the home Appliances, wall colors, and flooring can easily be updated, but the basic floorplan has to flow well for the way you live. Look at the traffic flow in the home. Is it easy to let the dog outside and clean muddy paws when he comes back in? Where do the kids put their backpacks when they come home from school? Do you have the space you need for your home office or art studio? Are there enough bathrooms for the morning rush?

Be willing to update Many homes are affordable because they’re older and need work. Many times, cosmetic updates can turn a so-so home into a treasure. No home is perfect.

Fall in love with the right house

Love FEBRUARY 2012

The right house may not be the prettiest, biggest or the newest, but it will be the one that most suits the various needs of your household. When you’re comparing homes think about your wish list and which home comes closest to meeting your price, number of bedrooms, condition, space, features and the amenities of the neighborhood. Once you move in, there’s no falling in love like knowing you made the right choice.

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.................................................... Affordability Hits New Records.........................................................

People who were per a home, or who believ may find themselves much home they can

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........................................................................................................................................................................................ .

Affordability Hits New Records Homes are more affordable to buy

Association of REALTORS® (NAR).

monthly payment closer to $626.75

than they’ve been since 1971,

Qualifying income was only

or lower on a $131,280 mortgage.

according to the U.S. Department

$31,296.

of Housing and Urban

Low prices are stimulating the

Development. Homebuyers are

To put these figures into

market. The NAR reported that

making close to double the median

perspective, Federal Housing

seasonally-adjusted housing sales

income needed to buy an average

Administration qualifying averages

were up 12.2% for the year in

home.

are recommended to be no higher

November.

than 28% or 29% of gross annual In November, 2012, the median

income.

But one thing that is constant is

priced home was $164,100. With a

change. Record lows and record

median family income of $60,876, a According to Freddie Mac, annual

affordability don’t last long.

fixed rate loan at 4.33%, and a

fixed mortgage rates in 2011 were

down payment of 20%, the median

4.55% - the lowest on record since By January 6, the Mortgage

monthly principle and interest

1971.

Bankers Association reported that

payment on a $131,280 mortgage

mortgage applications rose 4.5% ,

was only $652 – a low 12.9% of

Since then, mortgage interest rates

with requests for home purchase

income, charts the National

dipped below 4%, making the

loans up 8.1%. This was despite a slow climb in mortgage interest rates from record lows to a weekly

rhaps unable to afford to buy ve it’s not a good time to buy pleasantly surprised by how actually afford to buy.

average of 4.11%, up from 4.07% the last week of December 2011. The good news in these figures is timing. People who were perhaps unable to afford to buy a home, or who believe it’s not a good time to buy may find themselves pleasantly surprised by how much home they can actually afford to buy. To learn more, talk to your real estate professional and mortgage lender. Your real estate professional can show you which homes are in your income qualifying range. Your mortgage professional can help you determine what income and documentation you will need to qualify for a mortgage loan. [AFFORDABILITY ctd pg 14]

FEBRUARY 2012

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Should You Give Square Footage?

Wh me

Should You Give Square Footage? The square footage of a home can work for or against sellers. Buyers tend to think bigger is

What you don’t want to do is

one means to determine value. A

better, but your smaller home may

measure your home yourself.

buyer is interested in getting the

actually feel more spacious than

most home for the money

one that has a bigger footprint. How One reason is that there is no

compared to other similar homes.

do you get that across to your

standard way to measure a home –

They also want to know if their

buyers?

a laser or a measuring tape may

furniture will fit, or how much

yield different numbers for different

replacement carpet they need to

There are a couple of ways. You can people, which could open you to supply both exterior and interior

buy.

liability.

footage through a third party, such

Living space is defined as space

as a bank appraisal, or through tax

Another is that the purposes for

that is roofed, enclosed and

records. And you can showcase

knowing square footage vary

finished for human occupancy;

your floorplan to advantage through greatly. A lender or an appraiser is

heated and cooled; and directly

photos, staging and lighting.

accessible from another living

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interested in living space, as only

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hat you don't want to do is easure your home yourself. space. It is actually measured

living, such as empty space

larger than dark closed spaces,

from the exterior of the home,

beneath stairwells, or the

so open the curtains and let the

length times width.

access space required around

light in. Keep the lights on for

water heaters and other

showings.

systems required by code.

That’s why the interior may

Clear out all clutter. Clutter

seem much smaller than exterior square footage. Living

If you don’t think your square

takes up room and a messy

space measurements do not

footage measures up, talk to

room is distracting. Remove

subtract the thickness of the

your real estate professional

and store excess furniture and

exterior walls, insulation and

about ways to make what you

belongings, so that each room

wall boards or for the floorplan.

have more attractive to buyers.

functions well with a minimum of furniture and accessories.

Further, a lot of living space is Bright, sunny spaces appear

simply unusable for actual

! FEBRUARY 2012

[SQ FOOTAGE ctd pg 14]

&

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Don't Miss These Homeowner Tax Benefits Tax deductions are a welcome gift from the government, but they’re only as useful as the records you keep.

If you’re ready to prepare your income tax filing for 2012, it’s best to save your previous tax records up to seven years, says Dr. Jerrold Stern, professor of accounting in the Kelley School of Business at Indiana University and a fellow at the Texas A & M Real Estate Center. “Expenses need to be documented to support deductions in the event of an IRS audit,” says Stern. “Documentation can be in the form of a cash receipt, credit card statement or cancelled check. Interest and penalties may be levied if deductions are disallowed for lack of records.” He adds. “For most people, tax records other than those pertaining to assets, such as real estate and securities, could be discarded after three years,” says Stern. “Even so, a longer period— seven or more years — is prudent.” One area where you want to keep meticulous records is any tax deduction that relates to your home. Keep good records and you can put your hands on what you need when you need it. 10

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Don't Miss These Homeowner Tax Benefits

Your records for 2012 might include: Property sales deductions: If you sold a home in 2011, you may be eligible for some capital gains exclusions up to $250,000 if you’re single, $500,000 if you’re married and lived in the home at least two years out of five years of ownership. Some allowances and special circumstances apply, so before taking this exclusion, talk to your tax professional.

Property tax deduction: Any money you paid during 2011 to local state, county and city property tax assessors is deductible. You should be able to go online and print your receipt from the local taxing authority to put with your tax records, or it will come in the mail.

Mortgage interest deduction: Your mortgage interest on both first and second liens is tax deductible. Private mortgage insurance is also deductible. Advance interest that you paid on your home at closing is also deductable. Your lender will provide your accounting online or

through the mail. Closing costs: Some fees to the mortgage lender are sometimes deductible. Ask your tax professional for guidance. You can deduct some moving expenses, such as items for home offices. Save your Hud-1 form and show it to your tax professional.

Home office deductions: If your home is your principle place of business, and you meet other IRS guidelines for home businesses, you can take a deduction on workspace dedicated to your business and no other purpose. You can also depreciate that portion of your home over 39 years. All improvements to the workspace are tax deductible. In addition, your security expenses, phones, internet, computers, insurance, and utilities can be deducted or depreciated according to IRS allowances. Percentages and limits apply, so talk to your tax professional.

Energy Star: If you purchased an energy efficient system or appliance for your home and it meets government Energy Star standards, you may deduct a portion of your expenses. Save your receipts. See: http://www.energystar.gov/index.cfm?c=tax_credits.tx_index There may be many other deductions out there for you to take advantage of that are associated with your home. Make sure you take deductions and depreciation only for legitimate items. For more information, talk to your tax preparer.

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No More Flipping

According to researchers at the

homebuyers more than doubled. At

In a typical market, historical

Federal Reserve Bank of New York,

the peak of the housing boom in

appreciation for homes is closer to

real estate investors known as

2006, over a third of all U.S. home

1 or 2 percent above inflation, not

“flippers” were more responsible for

purchases were made to people who enough of a margin to attract

the collapse of the 2004-2006

already owned at least one house.

“flippers” – investors who buy

housing market than previously

In the four states with the most

homes with the intention of putting

thought.

severe housing correction,

them back on the market quickly to

California, Nevada, Florida and

sell at a profit.

Lax credit standards including the

Arizona, investors were as many as

housing boom, home prices rose in

notorious “no-doc” and “no-down-

45% of homebuyers.

the double and triple digits in many

payment” loans of the day allowed

But during the

areas.

many investors to buy homes

What attracted these types of

without investing much of their own

investors was the abnormal

In California, according to

money, pushing home values up.

appreciation of homes during the

VisualizingEconomics.com, home

period, which allowed them to

prices between 2000 and 2006 rose

Between 2000 and 2006, the

capture quick percentages of profit

an astonishing 120% to 160%,

percentage of investors as

without investing their own capital.

depending on the area. Since then

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No More Flipping prices dropped 40% to 60%

home buyer. An underwater loan is

number 19% of the market,

between 2006 and 2010.

one in which the value of the home

according to the NAR, are “buy and

is below the amount the borrower

hold” investors. They’re taking

owes the lender.

advantage of record low rates,

Yet the correction spread like a flu across all states, including those

distressed sellers, low prices, record

that skipped the housing boom.

In 2006, Arizona, California, Florida, affordability and a tight lending

South Carolina, for example, saw

and Nevada investors originated

zero to 40% price gains between

nearly 20% of mortgages – triple

2000 and 2006, yet the state has

the share they had in 2000. By

market for ordinary homebuyers. In addition, lenders are tying

been punished along with the rest of 2007-09, investors were responsible occupancy to mortgage interest the country with zero to 20% in

for more than a quarter of seriously

rates. Non-occupying homebuyers

price declines between 2006 and

delinquent mortgage balances

are required to put as much as 25%

2010, again depending on the area.

nationwide, and more than a third in down, or to have 25% equity to the “boom” states.

When prices began to fall, those

refinance. Their interest rates may be a point or two higher than an

who leveraged mortgage credit to

What makes this report so

purchase multiple properties simply

interesting is that investors have

walked away from their

come back, but they’re no longer

When they put their own skin in the

investments, making the housing

intent upon “flipping” homes.

game, investors are more likely to

collapse deeper and longer and more painful for the entire nation.

Ownership rates for homes in 2006 averaged six years. In 2010, the

occupying borrower’s rate.

hold for the long term, and that’s good for all homeowners.

average rose to nine years. The Fed researchers found that nonoccupying home buyers are more

With home price appreciation

likely to default on an underwater

expected to be below historical

mortgage loan than an occupying

FEBRUARY 2012

averages, today’s investors, who

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GGAR ctd from pg 2 To put the improvements into context, U.S. home prices dropped 1.4% for the same period. Housing sales volume and prices improve with the economy, but they are a lagging indicator. Year over year, sales volume in Greater Greenville was over 2% lower than in 2010, but prices held firmly. Average prices and median prices were 0% and 0.6%. Improvements in both transaction volume and prices

AFFORDABILITY ctd from pg7 SQ FOOTAGE ctd from pg 9

were noticeably stronger in

In addition, they may also know

November and December 2011. of national and local programs that can help you qualify to buy From December 10, 2011 to

Stage the home for optimum traffic flow around uncrowded tables and chairs.

January 10, 2012, sales volume a home. Help your real estate professional

was up 7.6% over the previous year. The median price of a

For example, you may not have

home was $132,000 a year ago, 20% to put down on a home, but your income and credit and today it stands at history may qualify you to buy a $135,000. HUD foreclosed home with zero Sellers are less anxious as sales percent down. You may also volumes rise, causing a nearly qualify for special incentives 16% drop in the number of

such as those for workforce

active listings year-over-year.

home buyers - police, firemen,

stage your home for all photos that will appear online. Take the computer off the dining room table. Clear off countertops and tabletops, make sure furniture and lamps are right-sized for each room, and that each room is represented as advertised.

The median price for homes for and teachers.

Last, put a disclaimer in your

sale is 1.3% higher than a year

mandated seller’s disclosure. “All

ago.

Explore all options, and you

third-party measurements are

may find that 2012 is your year

approximate. Buyers must rely

Take advantage of this

solely on their own investigation

improving market. With

of the property and satisfy

mortgage interest rates at all-

themselves that this property is

time lows, it’s a great time to

suitable for their needs.”

buy a home.

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