Changes To The Market

Great News to share re: Real Estate!

This past week, HUD and the FHA have lowered the annual mortgage insurance premium on FHA loans by 30-basis points which will help increase homeownership opportunities throughout California, especially for first-time homebuyers and working Californians who rely on FHA financing,” said California Association of Realtors President Jennifer Branchini. “HUD and FHA play a pivotal role in providing housing opportunities for families throughout California, and for years, C.A.R. and NAR have asked the FHA to lower the mortgage insurance premium to ensure that homebuyers using FHA loans are not overpaying for their mortgages.”    

 The FHA’s premiums and reserves have been very high for many years, which many believed was necessary due to the pandemic; however, now that the COVID crisis is waning, reducing the FHA mortgage insurance premium is the right decision.

 In 2022, California originated the third highest number of FHA loans in the nation. Last year, 1 in 10 California homebuyers used an FHA loan, and 16 percent of first-time buyers in the state purchased their home with an FHA loan. Additionally, more than 1 in 5 Black and Hispanic/Latino homebuyers (first-time and repeat buyers) used an FHA loan in 2022 to purchase a California home. Therefore, the reduction in the premium will result in tens of thousands of California homebuyers saving money when purchasing a home. Also, “More Homes on the Market Act,” reintroduced by House Representatives Jimmy Panetta (D-CA) and Mike Kelly (R-PA). The bipartisan bill increases the capital gain exclusion amounts on the sale of a principal residence to $500,000 for single filers and $1 million for joint filers and indexes the exclusion for inflation. 

 We thank Congressman Panetta for reintroducing the ‘More Homes on the Market Act.’ This bill will provide necessary tax relief for California homeowners, particularly senior citizens, who have been unable to move because of the tax burden that could result if they were to sell.

 For working Californians, a home is their biggest and most important investment. However, because the capital gains exclusion was passed 25 years ago with no indexing for inflation, fewer and fewer families have been able to downsize and access the equity built up in their homes. This has resulted in fewer homes being available for younger and first-time homebuyers to move into, which has driven up demand and home prices even more. A great reminder to VOTE.

 The National Association of REALTORS ®  estimates that in California, as many as 95 percent of single homeowners and 68 percent of married homeowners who purchased their homes before 2000 could face capital gains tax if they sold their home this year.