Mortgage Interest Deduction Threatened

The mortgage interest tax deduction is also on the chopping block. This doesn't concern me as much, even though I am a beneficiary of it. The federal government subsidizes home ownership in dozens of ways, but I don't think this should be one of them.

Suppose a person with a $150,000 mortgage at 5% interest loses his mortgage interest deduction. So what if he can't deduct $7,500 from his taxable income? If he's in the 25% tax bracket, he won't save $1,875 on his taxes. This is going to stop him from buying a house?

The current proposal the Obama administration has on the table will reduce the limit on mortgage principal eligible for a deduction to $500,000 from the current $1 million. The tax deduction will be replaced by a tax credit capped at 12% of interest paid. Mortgage interest on second homes will no longer be tax deductible.

The National Association of Realtors says the mortgage interest deduction is sacred, and changes to the tax code will cause home prices to plummet. Critics of the tax reform say people will no longer be unable to afford to pay as much for homes without the tax subsidy. This is nonsense. When a person applies for a mortgage, the mortgage broker does not count the amount the buyer will save on his taxes as income.  

Amazing West University Rental

Beautiful rental in West University, minutes to the U of A and downtown. Right around the corner from Time Market at 438 E 2nd Street.

Beautiful cactus gardens out front, big porch front and back, two bedrooms, one full bathroom. An extra room at the back of the house with French doors to the spacious backyard. Washer and dryer. The kitchen has lots of space, plus a big walk in pantry.

Fireplace, built-in bookshelves and cabinets. Large living and dining rooms in this historic West University home, built in 1910.

This house is now rented.

December Residential Sale Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for November. Average sale price increased 3.8% from October to $182,539, and increased 15.2% from a year ago. There were 994 sales, a 2.1% decline from a year ago. We are in the seasonal sales slump, and should see more motivated buyers in January.  Number of active listings declined 14.7% since November 2011 to 4,430, but has been increasing since reaching a low of 3,474 in June.

While only 8% of the active listings as of today are short sales, they accounted for 15% of the sales in November. Foreclosures account for 12% of the listings on the market today, but 25% of the sales in November were foreclosures.

Of the 583 listings that sold for under $150,000 in November, 20% were short sales and 35% were foreclosures. Today, only 5% of the active listings are short sales, and 8% are foreclosures. Foreclosures generally sell for considerably under market value, but short sales tend to sell close to market value, so the predominance of distressed sales is sort of baffling.

I don't know about everyone else, but December is looking like the best month I have had since 2005.

Think Globally, Act Locally: Rain Water Harvesting in Tucson

This nicely-done video has the startling news that the volume of rain water that falls on Tucson is greater than the volume of water we currently consume from municipal suppliers. Check it out here. The project is at 813 North 9th Avenue, in the extremely groovy neighborhood of Dunbar-Spring, southwest of Stone and Speedway.

Flood Insurance Becoming More Expensive

Private insurance companies do not offer flood insurance for properties that are in the flood plain. Using tax payer funds, the National Flood Insurance Program provides subsidized flood insurance. The program borrowed $18 billion to pay claims from the Katrina hurricane, and had just $3 billion in borrowing power left prior to the Sandy super storm, which could require $6 to $12 billion in payouts.

Flood insurance premiums will increase an average of 20% in January on second homes and businesses. Houses built before there was a NFIP have rates that are half those of new construction. The discounted policies will be gradually eliminated through annual 25% premium increases.

Read more in this New York Times article.

1307 S Harmon Lane

You've got it made in the shade on your private patio.

The lodge pole ramada with corrogated metal roof and big old mesquite tree create your serenity space.

Lots of trees in the common area near the community pool complete your desert oasis.

Just outside Starr Pass Resort, and only 10 minutes from downtown.
Close to hiking and mountain biking in Tucson Mountain Park.

Check out the interactive floor plan here. A bedroom wall was removed to make a family room with French doors, a fireplace and dining area open to the kitchen. The original living room is still in the front of the house. Potential third bedroom?

Perfect for first time buyers, investors, or your vacation hideaway.

Homeowner's association fee is $132 per month and covers common area, building exterior and front yard maintenance, roof, termite control, water, and trash collection. Sold for $100,000 March 15, 2013.

October Residential Sales Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for October. Average sale price decreased 3.4% from September to October, but is still 16% higher than a year ago. 1,074 properties were sold in October, a 9.37% increase from a year ago. As the holidays approach, I expect we will see the usual decline in sales activity until the market gets lively again in January.