On June 27th the Chairman of the Senate Finance Committee, Max Baucus (D-MT) and Ranking
Member Orrin Hatch (R-UT) announced their plan for tax reform legislation in the United States
Senate. A letter to all Senators announced their intention to “mark-up” (create legislation in the
committee) a tax reform bill this fall and that they would be starting with a “blank slate.” This
proposal mirrors the path outlined by Ways and Means Chairman Dave Camp (R-MI) in the House
What is the blank slate?
A “blank slate” means that as a starting point, all tax expenditures (including tax deductions such as
the mortgage interest deduction, tax exemptions such as the capital gains exemption on the sale of a
primary residence, and tax credits such as energy efficiency tax credits) will be removed from the tax
code. Senators will have to request tax expenditures be added to the reform legislation. Using the
“blank slate” approach allows the Senate Finance Committee to highlight just how much tax rates
could be reduced by eliminating all the tax expenditures. Adding any tax expenditures back into the
code would ratchet the rates up.
Each Senator has been asked to submit, in writing, any tax expenditures they wish to see kept in the
code. Senators have until July 26th to submit the requests to the Finance Committee. Once all
submissions are received, we believe, the professional staff of Senate Finance Committee will begin
drafting a tax reform package. The drafting of the package will occur during the August
congressional recess. The expected goal is for the Committee to present a completed draft for
review and possible legislative action in September.
How will this process affect REALTORS®
There are a wide range of provisions in the tax code that affect residential, investment, and
commercial real estate. NAR will be taking the lead in ensuring that each of those tax provisions is
defended. In the coming days we will work with our friends in the United States Senate, as well our
allies in other real estate associations to identify champions for each provision. Additionally, we will
be on offense working to improve certain provisions or make some temporary provisions
In the coming days there will be a lot of chatter in the media, social media, blogs and commentary
that provisions like the mortgage interest deduction are being eliminated. REALTORS® should
know that NAR is working hard to make sure that real estate tax provisions are maintained
in any rewrite of the tax code. Passage of tax reform is far from certain. Many of the reports you
see will be attempts to predict what might happen. There will be lots of speculation and it is
important to remember that it is just speculation. That being said, NAR is not taking anything
about tax reform for granted.
May sales were 595 in Ada County, a decrease of 4.9% compared to May 2010.
Historically May sales increase somewhere between 2% and 28% (2006). May 2011 had 11% more sales than April 2011.
Year-to-date 2011 sales are within 3% of YTD 2010.
Of our total sales in May… 53% were distressed….down 3% from April 2011. (Short sales 16% and REO’s 37%). Distressed sales continue to dominate the market…but have show modest decreases each month in 2011.
Pending sales at the end of May were 1002; and increase of 5% from the end of April. This is five consecutive monthly increases. The percentage of pending sales in distress decreased 5% from April 2011 totaling 43% overall. This is our third consecutive month’s decrease. We are now at two consecutive months below 50%.
Last month I wrote that “pending sales at the end of May would be a true “test of our recovery”. Based on that, we are continuing to move forward.
The number of houses available for sale at the end of May was 2,629; unchanged from April and 30% less than last year at this time. Currently available inventory compares to February 2006.
At the same time, the percentage of active inventory that is distressed dropped almost 1% from April to 36%. This is the third consecutive monthly decline and keeps us below the 40% levels set last spring….when we were on the increase.
In Ada County we have 4 months of inventory on hand…historically this number defines a strong “seller’s market”. The price category in shortest supply is <$100,000 with 2.4 months available. This is closely followed by the $100,000 to $120,000 with 2.6 months and $120,000 to $159,000 with 4.3 months. These are the lowest numbers in more than a year!
There is also positive news on some of the higher priced inventory; $500,000 to $699,999 inventory dropped for a second month in a row to 12.
May median home price jumped $11,000 to $144,000; down 7% from May 2010.
New Homes median price for April 2011 was $223,500, an increase of almost 40% from April 2010.
We continue to “benefit” from inventory levels much lower than national average.
We still have a long way to go…but at least we are farther down the path and making progress every day. Coming out of this market is like climbing Mt. Borah; its steep and taxing, but as long as we keep doing the right things and putting one foot in front of the other, it’s doable.
There continue to be “squalls” around us threatening bad weather at any minute.
We’ve had six weeks of Wall Street declines; private employment is not generating the number of jobs we need and gasoline costs, although less than a month ago are nearly a dollar more than a year ago.
I appeared on Mike Turner’s radio show last Friday and he compared his outlook for the rest of 2011 to mine…Mike is more energetically optimistic. I like that. Check out his Real Estate Radio show on Fridays from 12-1 on Boise Community radio 89.9 FM and you’ll catch some of that optimism…and we all need it.
NAR announced last week that we have more than 150 legislators signed on to oppose the more onerous portions of Dodd Frank (20% down; QRM’s and more).
Have you done your part to help?Read Full Post | Make a Comment ( None so far )
Today the Idaho Legislature convenes for the 2010 legislative session. Governor Otter presented his State of the State speech which outlined a no-growth budget for next year, the same revenue figure as last year calling for no salary increases for state employees; and spending all but $32.8 million of the state’s reserve funds by the end of fiscal year 2011.
The theme of the legislature will be the budget. With a major budget shortfall sales tax exemptions are looked to for sources of revenue, and we will defend your hard earned commissions vigorously. We will also face new fees that ultimately increase the cost of housing at a time when costs have become much more affordable. We will face new regulations that harm future development. We will promote issues that benefit the economy of the state and attract new business to Idaho in the future.
One of the primary roles of the REALTOR® Associations is to protect the real estate industry from undue burden and further issues important to REALTORS®. As one of the most prominent lobbyist organizations in Idaho and the country, we work against poorly designed small business and real estate issues and legislation and create new laws to promote quality of life and the industry.
Special thanks to all of you who invested in RPAC during the dues renewals, the money is critical in keeping our voice strong. We will be at the Capitol to ensure the voice of the real estate industry is heard.Read Full Post | Make a Comment ( None so far )