Mortgage Forgiveness Debt Relief Act Extension:
National REIA’s lobbying arm in Washington, D.C. along with National REIA Board Member Tom Zeeb continued meetings with Congressional leadership staff in Washington during the month of September. The meetings concentrated on restoring the short sale tax break, raising the profile of National REIA as a partner with members of Congress and staff, and discussing the Congressional housing agenda for 2015.
Based upon more than three dozen meetings over the course of the last several months, National REIA’s lobbyist in Washington believes there is a very high probability that the short sale tax break will be extended when Congress returns after the election. Potential obstacles to passage would be an international crisis or a “poison pill” amendment to the legislation, but other than that the package of tax extenders which includes the Mortgage Forgiveness Debt Relief Act will be scheduled for votes in both the House and Senate and the votes are there for passage.
Passage would mean all homeowners who utilized short sales in 2014 would not be subject to taxation on “phantom income” from the debt forgiveness involved in the transaction, and that relief would extend through 2015. We would expect to see improved numbers on short sale utilization when the January 2015 existing home sales report is released in late February 2015.
Existing Home Sales Data: August 2014
- Existing home sales declined 1.8% in August 2014 after four consecutive months of growth;
- 05 million existing homes were sold in August 2014 v. 5.14 million in July 2014; 5.33 existing homes were sold in August 2013;
- The decline is attributed to a decline in investor activity;
- Median existing home prices in August 2014 were $219,800, 4.8% higher than August 2013;
- All cash purchases: 23% of purchases in August 2014 were all cash, down from 29% in July 2014 and the lowest since December 2009;
- Individual Investors: Individual investors purchased 12% of existing homes in August 2014, down from 16% in July 2014 and 17% from August 2013. 64% of these purchases were all cash;
- Distressed Sales: Foreclosures and short sales comprised 8% of all existing home sales in August 2014, down from 12% from August 2013. 6% were foreclosures and 2% were short sales.
- Distressed Sales Discounts: Foreclosure discounts for August 2014 were 14% (down from 20% in July 2014). Short sale discounts for August 2014 were 10% (down from 14% in July 2014).