Bubbles are swelling in pockets of the U.S. housing sector, especially in those areas that fell the hardest and are soaring back in part due to speculative demand, said Kathy Fettke, founder and CEO of Real Wealth Network, a California real estate services and consulting company.

“When inventory levels are so low, that has everybody kind of in a panic and diving in to buy, and that is driving up prices in some areas that I think personally is creating another bubble,” Fettke told Newsmax TV in an exclusive interview.

As a nation, the housing sector is showing signs of life after the Great Recession.

Watch our exclusive video. Story continues below.

U.S. homebuilding permits touched their highest level in more than four years in November, pointing to strength in the housing market, even though groundbreaking activity dropped 3 percent last month.

Home prices have shown signs of life as well, though some areas of the country in particular may be overheating.

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

Areas hit the hardest after the housing bubble burst in 2007 are shooting back the hardest, as many investors have scooped in to buy cheap and distressed properties.

“In Phoenix, Las Vegas we are seeing prices rise so rapidly, and we really believe that a lot of it is speculative, with investors all over the world coming in and buying up those properties. That makes me nervous,” she said.

“But other areas that are more stable — let’s say Dallas, Houston, Atlanta — these are the fastest growing population areas in the country, with the fastest job creation. So there really are fundamentals there to support the housing market.”

Metropolitan areas with little land are seeing prices shoot up as well, including the San Francisco bay area.

“We work with a lot of teams there selling real estate and just in the last few months they have bumped up their prices in some areas up 30 percent from last year,” Fettke explained.

“That feels like bubble market to me. Our salaries haven’t increased by 30 percent,” she added.

“So really what that reflects to me is very low interest rates that could cause a bubble in some of these markets where people think they are going to see a rise in prices.”

Turning to fiscal matters, successful aversion to the year-end fiscal cliff could affect the housing sector, whose recovery is tied heavily to improvements taking place in the labor market.

The White House and Congressional Republicans are debating a fiscal framework for 2013, with the Obama administration’s proposal calling for tax hikes on those with incomes over $400,000 a year, with Republican countering with a proposed hike on those with incomes of over $1 million a year.

Should wealthier Americans get hit with tax hikes to the point that they cannot hire, the housing sector could feel the fallout.

“The housing market depends so much on job creation so if employers are going to be facing massive taxes, is that going to create more jobs or not?” Fettke asked.

“What we do know is that places like Texas where taxes are very low for employers — they are high on property taxes, but have low employer taxes and no state taxes — we are seeing a very strong economy there, and I do believe that when you tax companies they can’t hire.”

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

© 2012 Moneynews. All rights reserved.

Article source: http://www.moneynews.com/Markets/Fettke-housing-bubble-swelling/2012/12/28/id/469314

Bubbles are swelling in pockets of the U.S. housing sector, especially in those areas that fell the hardest and are soaring back in part due to speculative demand, said Kathy Fettke, founder and CEO of Real Wealth Network, a California real estate services and consulting company.

“When inventory levels are so low, that has everybody kind of in a panic and diving in to buy, and that is driving up prices in some areas that I think personally is creating another bubble,” Fettke told Newsmax TV in an exclusive interview.

As a nation, the housing sector is showing signs of life after the Great Recession.

Watch our exclusive video. Story continues below.

U.S. homebuilding permits touched their highest level in more than four years in November, pointing to strength in the housing market, even though groundbreaking activity dropped 3 percent last month.

Home prices have shown signs of life as well, though some areas of the country in particular may be overheating.

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

Areas hit the hardest after the housing bubble burst in 2007 are shooting back the hardest, as many investors have scooped in to buy cheap and distressed properties.

“In Phoenix, Las Vegas we are seeing prices rise so rapidly, and we really believe that a lot of it is speculative, with investors all over the world coming in and buying up those properties. That makes me nervous,” she said.

“But other areas that are more stable — let’s say Dallas, Houston, Atlanta — these are the fastest growing population areas in the country, with the fastest job creation. So there really are fundamentals there to support the housing market.”

Metropolitan areas with little land are seeing prices shoot up as well, including the San Francisco bay area.

“We work with a lot of teams there selling real estate and just in the last few months they have bumped up their prices in some areas up 30 percent from last year,” Fettke explained.

“That feels like bubble market to me. Our salaries haven’t increased by 30 percent,” she added.

“So really what that reflects to me is very low interest rates that could cause a bubble in some of these markets where people think they are going to see a rise in prices.”

Turning to fiscal matters, successful aversion to the year-end fiscal cliff could affect the housing sector, whose recovery is tied heavily to improvements taking place in the labor market.

The White House and Congressional Republicans are debating a fiscal framework for 2013, with the Obama administration’s proposal calling for tax hikes on those with incomes over $400,000 a year, with Republican countering with a proposed hike on those with incomes of over $1 million a year.

Should wealthier Americans get hit with tax hikes to the point that they cannot hire, the housing sector could feel the fallout.

“The housing market depends so much on job creation so if employers are going to be facing massive taxes, is that going to create more jobs or not?” Fettke asked.

“What we do know is that places like Texas where taxes are very low for employers — they are high on property taxes, but have low employer taxes and no state taxes — we are seeing a very strong economy there, and I do believe that when you tax companies they can’t hire.”

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

© 2012 Moneynews. All rights reserved.

Article source: http://www.moneynews.com/Markets/Fettke-housing-bubble-swelling/2012/12/28/id/469314

For the past two legislative sessions, Mr. Ammiano has sought to close what he and many others see as a loophole in Proposition 13’s treatment of commercial property. Even if an owner sells his entire interest in a piece of commercial real estate, the property is not reassessed if no single entity acquires more than a half-ownership stake. It is easy for corporations to structure deals to avoid a tax increase.

Mr. Ammiano thinks it’s an outrage that companies can skirt the intentions of the law when properties change hands.

“You have very large commercial enterprises, Wells Fargo, Wachovia, with this little sleight of hand in the way they structure ownership,” he said Wednesday in an interview. “It is very, very dishonest.”

Yet the feisty Mr. Ammiano is quiet as a church mouse about altering the residential protections of Proposition 13 — of which he is a signal beneficiary.

Mr. Ammiano, who is also a comedian, pays just $530 a year in taxes on the Bernal Heights home he has owned since 1974. As far as the city and Proposition 13 are concerned, his house is worth $45,600. Zillow estimates its current worth at $645,000. At that value, the tax would be about $7,500.

How good a deal is this? Imagine for a moment that Mr. Ammiano’s house was a car. If he parked the car at a metered space near his Civic Center office, the amount he now contributes each day to the commonweal in the form of property tax would buy just a hair less than 29 minutes, curbside.

Perhaps his next stand-up routine could be built around this theme: San Francisco on $1.45 a Day.

There is nothing illegal about Mr. Ammiano’s good fortune. As long as a property does not change hands, Proposition 13 limits annual increases to 2 percent or the rate of inflation, whichever is less.

And he is hardly alone. The latest Case-Schiller survey for home sales in San Francisco reports a median market price of $760,000. Yet 23,059 of the 139,918 single-family homes in San Francisco are currently assessed at less than $100,000. If these properties were valued at the median, that would yield about $184 million in additional revenues; even valued at $500,000, they would generate an extra $114 million.

Of course, many people simply cannot afford to have their property taxes jump to market rates. Proposition 13 has delivered just what Howard Jarvis, its crusty champion, wanted: Older residents are not getting squeezed out of their homes by rapidly escalating taxes.

But you can make the case that the cost of that benefit has escalated out of all proportion to reason. It certainly looks that way to Anthony Costa, Mr. Ammiano’s next-door neighbor.

Mr. Costa, a City College librarian, bought his house — a mirror image of Mr. Ammiano’s — in 2004. He pays $8,300 in annual property taxes.

While he says he bears his neighbor no ill-will, what Mr. Costa does object to — strenuously — is the reduction in government services he attributes squarely to Proposition 13.

“Prop 13 is a tragedy which has made things in California worse every year since it was passed,” Mr. Costa wrote in an e-mail. “The people of California have to settle for inferior schools, libraries, transit, roads, sewers, parks and other services. I don’t object as much to my personal tax bill, as I do the obscene discrepancy between the great wealth of this state and the relative poverty of our government and public institutions.”

Even Mr. Ammiano agrees that it is unfair that he pays one-sixteenth the property tax of Mr. Costa. “My feeling is, there’s a need for reform, absolutely,” he said.

But that isn’t where he’s expending his energy in Sacramento.

A little defensively, Mr. Ammiano, 69, noted that he had not availed himself of every opportunity to whittle down his property tax bill. “There is a senior-citizen exemption for homeowners tax in San Francisco,” he said, “and I do not take advantage of that.”

Actually, there used to be such a tax break. It was suspended in 2009, according to the city assessor’s office — a victim of state budget cuts.

estevens@baycitizen.org

Article source: http://www.nytimes.com/2011/07/03/us/03bcstevens.html