Here’s the final draft of our announcement on the Mortgage Forgiveness Debt Relief Act release:
Washington, DC
Short Sale Tax Extension Protects Distressed Homeowners from $8.1 billion in “phantom income” taxation; Congressional action sets stage for passage of permanent break in 2015 to expand utilization of short sales.
Today, the U.S. House of Representatives approved a package of tax extension measures that included the Mortgage Forgiveness Debt Relief Act, a measure that prevents the IRS from taxing distressed homeowners on “phantom income” forgiven when utilizing a short sale. The bill is retroactive through all of 2014 and saves distressed homeowners from paying taxes on $8.1 billion in forgiven debt. The U.S. Senate is expected to take swift action on the measure and President Obama is expected to sign the measure upon passage in the Senate.
Congressional delay on this measure has dramatically reduced the use of short sales, so today’s success is an important step toward reinvigorating the short sale market for the residential investing community. As part of National REIA’s ambitious government relations agenda for 2015, we plan to pursue permanent relief for our members by calling for permanent relief for distressed homeowners who use a short sale. Additionally, National REIA plans to work with FHA on the seasoning requirements for flipping a home rehab property and a number of other important provisions directly relevant to helping our members grow their business.
National REIA would like to thank Senator Dean Heller and Senator Debbie Stabenow for their leadership in pushing for the Mortgage Forgiveness Debt Relief Act. National REIA would also like to recognize the work of House Leadership and the White House for reaching a deal on this critical tax extension. National REIA’s lobbyist in Washington DC, John Grant, issued the following statement on today’s developments:
“Residential investors need and deserve certainty in the marketplace, and today is an important step toward delivering that for this community. We will build on the relationships developed this year and strive toward making the short sale tax break permanent in 2015. This effort involved over three dozen meetings on the Hill, countless phone calls and a media push to get us across the finish line. While pleased with these results, we now look forward to completing the 2015 goals National REIA has established. I would like to personally thank National REIA for the opportunity to shepherd this effort and I am happy to report that our industry has a firm seat at the table in the establishment of national housing policy. I expect to build on our numerous prior victories for many years to come in service to National REIA’s President, Board of Directors and membership.”
President of National REIA, Scott Whaley stated, ”A roman proverb is ‘everything is worth what its purchaser will pay for it’ and the Mortgage Forgiveness Debt Relief Act realigns tax policy with that basic rule of economics. In addition, National REIA would like to thank our DC Lobbyist, John Grant who in the course of the past several years has delivered a number of key victories for the industry including the creation of the National Standard Short Sale Program, previous extensions of the Mortgage Debt Relief Act, and extensions for the FHA anti-flipping waiver.”
National REIA plans to issue a comprehensive legislative agenda to members in early 2015. We remain committed to providing the highest level of service to our members and intend to utilize the reinvigorated government affairs program to expand investment opportunities for our membership in the coming year. Finally, National REIA would like to express our appreciation and thanks to our members and sponsors without whom today’s victory would not have been possible.
2015 Residential Real Estate Lobbying Agenda
While discussions are still going on internally, I would like to provide thoughts on possible goals for National’s government affairs program in 2015. Among the topics currently on the table for consideration are:
1. Permanent extension of the Mortgage Forgiveness Debt Relief Act;
2. Eliminate FHA’s seasoning requirements via either another anti-flipping provision waiver or a permanent reversal of the policy;
3. Seller finance/Dodd Frank issue;
4. HUD lead-based paint issues.
Existing Home Sales Data: November 2014
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 6.1 percent to a seasonally adjusted annual rate of 4.93 million in November from a downwardly-revised 5.25 million in October. Sales dropped to their lowest annual pace since May (4.91 million) but are above year-over-year levels (up 2.1 percent from last November) for the second straight month.
The median existing-home price for all housing types in November was $205,300, which is 5.0 percent above November 2013. This marks the 33rd consecutive month of year-over-year price gains.
Total housing inventory at the end of November fell 6.7 percent to 2.09 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace – unchanged from last month. Despite the tightening in supply, unsold inventory remains 2.0 percent higher than a year ago, when there were 2.05 million existing homes available for sale.
All-cash sales were 25 percent of transactions in November, down from 27 percent in October and 32 percent in November of last year.
Individual investors, who account for many cash sales, purchased 15 percent of homes in November, unchanged from last month and below November 2013 (19 percent). Sixty-one percent of investors paid cash in November.
The percent share of first-time buyers in November climbed to 31 percent, up from October (29 percent) and is the highest share since October 2012 (also 31 percent). First-time buyers have represented an average of 29 percent of buyers through November of this year.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in November dropped to 4.00 percent, its lowest level since May 2013 (3.54 percent), and down from 4.04 percent in October.
Distressed sales – foreclosures and short sales – were unchanged in November from October (9 percent) and remained in the single digits for the fourth month this year; they were 14 percent a year ago. Six percent of November sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in November (15 percent in October), while short sales were discounted 13 percent (10 percent in October).
Properties typically stayed on the market in November longer (65 days) than last month (63 days) and a year ago (56 days). Short sales were on the market the longest at a median of 116 days in November, while foreclosures sold in 65 days and non-distressed homes took 63 days. Thirty-two percent of homes sold in November were on the market for less than a month.
Single-family and Condo/Co-op Sales
Single-family home sales dropped 6.3 percent to a seasonally adjusted annual rate of 4.33 million in November from 4.62 million in October, but remain 2.4 percent above the 4.23 million pace a year ago. The median existing single-family home price was $206,200 in November, up 5.6 percent from November 2013.
Existing condominium and co-op sales declined 4.8 percent to a seasonally adjusted annual rate of 600,000 units in November from 630,000 in October, and are unchanged from a year ago. The median existing condo price was $199,000 in November, which is 1.2 percent higher than a year ago.
Regional Breakdown
November existing-home sales in the Northeast declined 4.2 percent to an annual rate of 680,000, but are still 4.6 percent above a year ago. The median price in the Northeast was $246,100, which is 1.3 percent above a year ago.
In the Midwest, existing-home sales fell 8.9 percent to an annual level of 1.13 million in November, and are now 1.7 percent below November 2013. The median price in the Midwest was $160,500, up 7.0 percent from a year ago.
Existing-home sales in the South decreased 3.2 percent to an annual rate of 2.09 million in November, but remain 5.0 percent above November 2013. The median price in the South was $176,500, up 5.2 percent from a year ago.
Existing-home sales in the West dropped 9.6 percent to an annual rate of 1.03 million in November, and remain 1.0 percent below a year ago. The median price in the West was $292,700, which is 3.5 percent above November 2013.
