The weekend of June 4^th & 5^th is the 2011 REALTOR® Nationwide Open House Weekend. Our agents will be taking part in this national event, holding properties open throughout the entire Bay Area. Remember to visit open.apr.com to start your open home search, and find the most complete listing of open homes available online.

Wishing everyone a relaxing Memorial Day weekend!

Following up on our post a few weeks ago about the "Real Estate Tax" rumors that are currently circulating, recent explanation from the National Association of Realtors gives an in depth explanation of the tax that is included in the new health care bill.

Proclamations that the new health care bill will make all real estate transactions subject to a 3.8% sales tax or real estate tax are untrue. While the health care legislation does contain a variety of new taxes, and one of them (Section 1402) can be influenced, in certain circumstances, by a sale of real estate, it is not a sales tax.

** This is a general summary of this tax and does not constitute tax or legal advice for any particular situation. As always, it is important that you consult with your tax or financial advisor.

The Commerce Department has released new home sales data for September 2010 showing sales of new, single-family homes rose more than expected in September. Sales increased 6.6%, exceeding expectations of a 4.2% increase. Through September, sales have increased 8.9% from the historic low posted in May.

There are currently many chain emails circulating proclaiming that the new health care bill will make all real estate transactions subject to a 3.8% sales tax or real estate tax.

It is important to know that it isn't true.

While the health care legislation does contain a variety of new taxes, and one of them (Section 1402) can be influenced, in certain circumstances, by a sale of real estate, it is not a sales tax.

The new tax in question is often called a Medicare tax, because that is where the money will go. The tax only applies to singles whose Adjusted Gross Income (AGI), your combined regular income and investment income, is more than $200,000 and couples whose AGI exceeds $250,000.

Capital gains from real estate sales, if you had any, contribute as investment income to your AGI. If your AGI exceeds the $200,000 as a single or $250,000 as a couple limit, then the Medicare tax is applied. The tax is 3.8 percent of the lesser of (1) net investment income or (2) the excess of AGI over the above-mentioned limits.

This special Medicare tax does not go into effect until Jan. 1, 2013.

** This is a general summary of this tax and does not constitute tax or legal advice for any particular situation. As always, it is important that you consult with your tax or financial advisor.

Check out Forbes list of Most Expensive ZIP Codes in America. We have three listings featured as properties - #2 Atherton, #15 Los Altos Hills and #20 Hillsborough!

House prices in the US edged higher in July, with a 0.8% average rise between June and July, and a 4.1% rise year-on-year in July, according to new figures from the S&P/Case-Shiller 10-city index.West Coast cities appear to be supporting the market, with San Fransico recording the biggest rise, at 11.2%, followed by San Diego, up 9.3%, and Los Angeles, up 7.5%.

Despite recent bad news coming out of the housing industry, home prices are showing signs of stabilizing.

National home prices jumped a substantial 4.4% in the second quarter, for a total of 3.6% in the past year, according to the S&P/Case-Shiller Home Price Index released on Tuesday.

20 metro areas tracked showed that prices gained in all markets but one. Fifteen of the 20 cities recorded 12-month price rises, with San Francisco leading the way. Its 14.3% increase was one of three cities posting double-digit gains.

By now you have probably heard the news that existing home sales sank 27.2% nationally in July, attributed in large part to the end of the homebuyer tax credit.

While the U.S. forecast isn't great, California and the Bay Area are doing better than the national averages, especially at APR where we are up over 2008, which was generally considered a stronger year for real estate. Currently, we have year-to-date closed dollars 5.5% above 2008, and are 28% above 2009.

So remember that all real estate is local, and the national forecast doesn't necessarily indicate what is going on where we live.

Short sales, sales of homes for less than the amount of their outstanding mortgage debt, have tripled since 2008, particularly in California, according to a recent article in the Los Angeles Times.

The number of transactions had risen to more than 160,000 in 2009 from roughly 96,000 the year before, with more than a quarter of the transactions occurring in California.

The increasingly common transactions are projected to rise to 400,000 in 2010, and such sales will likely remain routine as the mortgage industry attempts to stabilize.

The median value of homes in Santa Clara County was up 7.3 percent to $600,800 from April through June, and San Mateo County was up 2.5 percent to $655,800, according to a recent article in the San Jose Mercury News. Other local market news includes:

• Median home values in Santa Clara County have increased every quarter for the past year
• Median home values in San Mateo County have increased for the past two quarters
• Median home values in Santa Clara, San Jose, Mountain View and Redwood City were up over the year

On the national level, CNBC is reporting a rise in home prices in nearly two-thirds of U.S. cities this spring as buyers took advantage of tax incentives. The national median price in the second quarter was $176,900, up from $174,200 in the same quarter last year and up from $166,400 in the first quarter of this year.

New home sales rebounded in June, increasing 23.6% to a seasonally adjusted annual rate of 330,000 last month. Economists had anticipated an annual rate of 310,000, making the June sales pace better than expected.

Home sales also surged in March and April, due in large part to homebuyers taking advantage of federal and state tax incentives.

We've been voted Best Real Estate Company in the Silicon Valley, once again, by the readers of the Mercury News!

A new article in the San Jose Mercury News reports an interesting contrast between the national, state and local real estate markets.

• May reports on the national level were a mixed bag with home sales down from April but up year-over-year.
• The California market continued to show consistent improvement with sales up from April and median house prices continuing to climb.
• Locally things are looking very good, with Santa Clara County boasting the highest median house price in the state at $630,000, and the SF Bay Area as a whole at $592,930.

Take a look at the entire article for more details.

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The California legislature has passed, and Governor Schwarzenegger has signed, a new law conforming California law to the federal law so that homeowners who lost their home in a foreclosure, or who completed a short sale, deed-in-lieu of foreclosure or loan modification during calendar 2009, or after, will not have to pay taxes on the forgiveness of indebtedness, if specified criteria are met.

When there is a forgiveness of indebtedness as a result of a short sale or foreclosure, the amount forgiven is considered income. The federal government has a provision in the Internal Revenue Code which states that, if certain criteria are met, the taxpayer will not have to pay tax on that income.

California had a law which mirrored that federal law, but it expired at the end of 2008.  This new law will provide that, if certain criteria are met, there will be no taxation for California income tax purposes either for closings, or other taxable event, in calendar 2009 through calendar 2012, when the law again is set to expire.

There are limitations, however, and as always you should contact your tax advisor to see whether this law applies to your situation. This is a general summary of this law and does not constitute tax or legal advice for any particular situation. You must discuss your individual situation with your tax advisor before taking action.