It's Getting Cheaper to Buy than Rent

For the last several years, renting has been the primary choice for many U.S. residents. Between the volatile housing market and challenges getting financing, many people turned to renting homes or apartments. However, a recent CNN Money article cites rising rental costs while housing prices remain steady.

According to the article, rents have risen approximately 5% while housing prices have declined .7% in the last 12 months. In fact, Trulia economist Jed Kolko says that buying has now become more affordable then renting in nearly every part of the U.S. The cities that have seen the largest rent increases include Sarasota, FL; Miami, FL; San Francisco, CA; Middlesex County, MA; and Edison, NJ. The average home rented for $1285 monthly one year ago and these days costs nearly $100 more at $1350 a month. Some areas have seen nearly double digit rent increases such as Indianapolis where rents rose 9.7% and Columbus, Ohio where they increased 9.3%.

Fortunately, federally-backed programs, record low interest rates and a housing market flooded with motivated sellers offers buyers an ideal opportunity to segue into home ownership. In the Lansing area alone, we have witnessed a noteworthy bounce-back as houses sell faster than we can list them. In the past week, I have twice contacted real estate agents for showings only to discover that the homes were already under contract.

I was so curious about these perceived increases that I asked a fellow Tomie Raines staff member to run a report  comparing our sales in March 2012 to 2011. Sure enough the market activity in the Greater Lansing area reveals a 3.2 increase in sales and a whopping 17% increase in average home sale price for 2012.

I personally am working with a lot of current buyers who are searching for everything from homes with acreage to modern condominiums. If you're thinking about selling and would information about your home's market value or the sales activity in your area, please contact me at MyRealtorRob or through email.

Mortgage Relief: Cancellation of Mortgage Debt

Before the Mortgage Forgiveness Debt Relief Act of 2007, borrowers who had some portion of their mortgage forgiven by their lenders were required to pay taxes on the forgiven debt. This meant that individuals who had debt forgiven through a short sale, foreclosure or other arrangement with their lender, were responsible for paying tax, usually considered income, on the amount that was cancelled. The Mortgage Forgiveness Debt Relief Act gives homeowners the opportunity to avoid paying this tax so long as the mortgage is for their principal residence; it does not apply to second homes.

It is also important to note that the total outstanding debt may not exceed the original mortgage cost plus the price of any home improvements. This provision does not usually apply to home refinances or lines of credit; however, in the case of a home refinance, the provision may apply for the amount of the original loan plus improvements. The limit on the total amount of forgivable debt is $2 million or $1 million if you are married and filing separately.

How to Take Advantage of the Debt Relief Act
When a debt is forgiven, the lender is required to provide both the homeowner and the IRS with a 1099 Form stating the total debt forgiven. The homeowner then completes a Form 982, which reflects the cancelled debt and why the debt was forgiven.

The Debt Relief Act is Set to Expire in 2012
The Mortgage Forgiveness Debt Relief Act expires on December 31st, 2012; however, it is possible that an extension will occur.

For more information regarding the the Cancellation of Mortgage Debt, visit IRS.gov.

If you are considering a debt forgiveness option in East Lansing or Lansing, please feel free to contact me with any questions that you may have. As a seasoned East Lansing realtor, I have years of experience assisting homeowners with mortgage debt related issues. If you are interested in buying or selling property in East Lansing, Okemos and the surrounding areas, visit MyRealtorRob.