TAX BREAK FOR MORTGAGE DEBT FORGIVENESS

President Bush signed into law today a new measure giving tax breaks to homeowners who have mortgage debt forgiven. Under preexisting law, the debt forgiven by a lender, such as for short sales and refinances, was generally taxable to the borrower as debt discharge income. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.

This tax break applies to debts discharged from January 1, 2007 to December 31, 2009. Qualified principal residence indebtedness is debt incurred in acquiring, constructing, or substantially improving the residence (up to $2 million for refinances).

For purposes of calculating capital gains, any debts discharged excluded from income under the new law must be subtracted from the basis of the taxpayer's principal residence (but not below zero). However, taxpayers may generally exclude from capital gains income up to $250,000 (or $500,000 for married couples filing jointly) for properties owned and used as their principal residence for at least two of the last five years.

For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to http://www.govtrack.us/congress/bill.xpd?bill=h110-3648.

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

INFORMATION FOR TAXPAYERS IN FORECLOSURE

Provided courtesy of the Internal Revenue Service

The IRS has developed information and Web resources to assist taxpayers with the tax issues presented by foreclosure.

Key Points:

*The Internal Revenue Service unveiled a special new section on www.IRS.gov for people who have lost their homes due to foreclosure.

*The IRS also reassured homeowners that although mortgage workouts and foreclosures can have tax consequences, special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes.

Resources:

*IRS 2007-159 – The news release IR 2007-159 provides additional background. The
news release and FAQs can also be found at http://www.irs.gov/newsroom/article/0,,id=174022,00.html

The direct link to the FAQ’s is http://www.irs.gov/newsroom/article/0,,id=174034,00.html

Santa Cruz Ballet Theatre presents The Nutcracker!

2008 California Market Forecast & Statistics Galore!

That's right! On October 10, California Association of Realtor (CAR)'s Vice President and Chief Economist, Leslie Appleton-Young, released the 2008 Real Estate Market Forecast for all of California.

Click HERE to access regional and state-wide statistics, detailed charts and graphs, a 2008 forecast and 2008 market opportunities!

For more information on taking advantage of this forecast and more, be sure to call me at 831-457-5550 or shoot me an email at frank@frankmurphy.net!

Pin the Tail on the Bottom of the Market!

All of us Realtors have been working with would be home buyers here in Santa Cruz. It seems all of them feel that they should wait until the housing market is at the bottom before they buy a home. Let’s look at an interesting take on "the bottom of the market" and how it will effect your buying decision....









This is a graph that represents the Santa Cruz housing market. The left side of the V represents the market going down, the right side represents the market going up, and of course the bottom of the V represents the bottom of the housing market.





If I asked you to plot on this

graph where you thought the housing

market was right now ...












... would you pick this spot or something close?



So you think that the market is going towards the bottom. If the market isn't at the bottom yet, how will you know when it does hit the bottom?

How will you know when the housing market hits the bottom?

Experience tells us you won't know that the housing market has hit the bottom until prices start to go back up. It will be difficult to be sure that the market has hit bottom for a few months. It’s not a sudden shift, it’s a gradual shift. You'll be able to tell that the market has turned when prices reach this point (green arrow).




What is the difference in housing prices between the red arrow and the green arrow?

Not much... but there is another difference: a major difference.

If you buy a home on the left side of the graph, it is considered a buyers market. You would be more likely to get concessions from a seller including price reductions, repairs, upgrades, closing costs, maybe even personal property.

If you wait until the market turns and you buy on the upswing, you and every other buyer that has been waiting for the market to hit bottom will be bidding on the same house.

There really is no better time to buy a house than now, and here are some reasons why:

1. There is a wonderful selection of homes to choose from right now.
2. Sellers are very willing to negotiate on price, terms and perks.
3. Interest rates are still at a historical low.

I'm suggesting we take a good look at the above examples and decide what percentage the prices will have to drop before a buyer thinks housing prices have hit bottom, and then offer that price. For example, if you think that prices will go down another 5%, then submit an offer at 5% below the asking price. Sellers will either counter, accept or decline. Then look at a loan payment based on current low interest rates. On an $875,000 home with an accepted offer 5% below asking, you'd end up at $831,250. Putting 20% down ($166,250) your loan would be $665,000. At 6% payments would run $3,325. If interest rates were to go up only half a point to 6.5%, the same home with the same $166,250 down would have to sell for $797,000 to end up with a similar loan payment.

The message here is to take advantage of the market today! Opportunity is knocking now!

Fed Cuts Interest Rates by A Quarter Point

Interest rates have indeed been cut again, moving down from 4.75% to 4.5%.

While the cut was expected, it is now thought to be unlikely that rates will be cut again for quite sometime.

Fed Chairman Ben Bernanke was forced to make a decision in light of both a "faster-than-expected" growth in the economy and the threat of falling home prices and a falling dollar. And now, of course, the argument arises over whether Bernanke and the Fed are truly able to keep inflation under control.

To read about the Fed's decision in more detail and the controversy that surrounds it, go to the Wall Street Journal's article: Fed's Rate Cut Could Be Last For a While

24-Hour Hotline Available to Help Avoid Foreclosure

According to Sentinel Staff Writer Jondi Gumz, "A national survey released Monday by the AFL-CIO reports that 49 percent of homeowners with adjustable rate mortgages admit they do not know how their mortgage adjusts and 73 percent do not know how much their mortgage payment will be after the adjustment.

"'This survey shows that many homeowners simply are not prepared for the steep rise in mortgage payments that this market inflicts on ARM [adjustable-rate mortgage] holders,' said AFL-CIO President John Sweeney.

"To help union members, their parents and their children who are trying to avoid foreclosure, AFL-CIO officials have opened a 24-hour hotline staffed by Money Management International, a HUD-certified counseling agency."

The "Save My Home" hotline is at 1-866-490-5361

To read Jondi's article in its entirety, go to Union Homeowners Know Too Little About Their Mortgage Payment

Fall 2007 Horticulture Lecture Series at Cabrillo College

Don't miss this five lecture series on Water Use in the Landscape, hosted by the Cabrillo College Environmental Horticulture Center.

Water is a critical natural resource that must be protected and used wisely. We will follow water's flow into our environment and see how it is used. Who is using the water and what are they using it for? Can you garden with limited water? Can you harvest the water that naturally falls on your property and use it later? What are the tools we can use to reduce your water application? And can this be done and still have all the coolest plants in your yard?

The series of five lectures is $40 when purchased as a group; or $10 per lecture if attended individually.

For more information go to http://www.cabrillo.edu/academics/horticulture/lectureseries.html

WHY YOU SHOULD PRICE YOUR HOME REALISTICALLY

TIME Chances are that your home will sell at its fair market value. Pricing it realistically at the outset simply increases the likelihood of a timely sale with less inconvenience and greater monetary return.

COMPETITION Buyers educate themselves by viewing many homes. They know what is a fair price. If your home is not competitive in value with those they have already seen, it will not sell. Buyers typically look at homes within a $10,000 price range. If your home is not priced within the correct range, it very likely will not be exposed to its potential or targeted buyers.

REPUTATION Overpricing causes most homes to remain on the market for too long. Buyers who are aware of a long exposure period are often hesitant to make an offer because they fear "something is wrong" with the house. It often happens that homes that are on the market for a long time eventually sell for less than their fair market value.

INCONVENIENCE If overpricing keeps your home from selling promptly, you can end up owning two homes - the one you've already purchased and the one you're trying to sell. This can prove costly and worrisome, as well as inconvenient.

EIGHTY PERCENT OF THE MARKETING OF YOUR HOME IS DONE THE NIGHT WE DECIDE AT WHAT PRICE WE WILL LIST YOUR HOME.

IF YOU ARE UNWILLING TO LIST YOUR HOME AT, OR JUST BELOW, THE

CURRENT MARKET VALUE YOU ARE BETTER SERVED NOT PUTTING IT ON

THE MARKET AT ALL.

FRANK MURPHY
831-457-5550

email Frank@FrankMurphy.net www.LiveInSantaCruz.com

Foreclosure Tax Relief Now Available to Many Through IRS Website!

Special Web Section Unveiled for Homeowners Who Lose Homes; Foreclosure Tax Relief Available to Many

IR-2007-159, Sept. 17, 2007

WASHINGTON — The Internal Revenue Service unveiled a special new section today on IRS.gov for people who have lost their homes due to foreclosure. The IRS also reassured homeowners that, although mortgage workouts and foreclosures can have tax consequences, special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes.

The new section of IRS.gov includes a variety of information, including a worksheet designed to help borrowers determine whether any of the foreclosure-related relief provisions apply to them. For those taxpayers who find they owe additional tax, it also includes a form they can use to request a payment agreement with the IRS. . In some cases, eligible taxpayers may qualify to settle their tax debt for less than the full amount due using an offer-in-compromise.

The IRS urges struggling homeowners to consider their options carefully before giving up their homes through foreclosure.

For more information visit the Internal Revenue Service website at www.irs.gov.

This article is courtesy of the Santa Cruz Association of Realtors.

7 FAST FIXES FOR YOUR CREDIT SCORE!

By Liz Pulliam Weston

So you've had a few problems getting the bills paid lately, and you're wondering what you can do to repair the damage.

You've got plenty of company. There are more than 30 million people in the United States with credit blemishes severe enough (and credit scores under 620) to make obtaining loans and credit cards with reasonable terms difficult.

Or maybe your credit is OK, but you'd like to make it better. After all, the better your credit, the lower the interest rates you can secure on mortgages, car loans and credit cards.
Know the score In order to improve your credit score, it's important to know where you stand currently. Despite all the media attention given to free credit reports, you still have to pay to find out your credit score, the three-digit number ranging from 300 to 850 that is the key to your borrowing costs. You can obtain your FICO credit scores, the ones lenders use, from MyFico.com. Or you can get Experian's "consumer education" version here.

Now you're ready to take the seven steps to speedy credit repair:

1) Pay down your credit cards. Paying off your installment loans (mortgage, auto, student, etc.) can help your score, but typically not as dramatically as paying down -- or paying off -- revolving accounts like credit cards. The credit-scoring formulas like to see a nice, big gap between the amount of credit you're using and your available credit limits. Getting your balances below 30% of the credit limit on each card can really help. While most debt gurus recommend paying off the highest-rate card first, a better strategy here is to pay down the cards that are closest to their limits.

2) Use your cards lightly. Racking up big balances can hurt your score, regardless of whether you pay your bill in full each month. What's typically reported to the credit bureaus, and thus calculated into your score, is the balance reported on your last statement. (That doesn't mean paying off your balances each month isn't financially smart -- it is -- just that the credit score doesn't care.) You typically can increase your score by limiting your charges to 30% or less of a card's limit. If you're having trouble keeping track, consider using a check register to track your spending, logging into your account frequently at the issuer's Web site, or using personal finance software like Microsoft Money or Quicken, which can download your transactions and balances automatically.

3) Check your limits. Your score might be artificially depressed if your lender is showing a lower limit than you've actually got. Most credit-card issuers will quickly update this information if you ask. If your issuer makes it a policy not to report consumers' limits, however -- as is the usual case with American Express cards and those issued by Capital One -- the bureaus typically use your highest balance as a proxy for your credit limit. You may see the problem here: If you consistently charge the same amount each month -- say $2,000 to $2,500 -- it may look to the credit-scoring formula like you're regularly maxing out that card.
You could go on a wild spending spree to raise the limit, but a more sober solution would simply be to pay your balance down or off before your statement period closes. Check your last statement to see which day of the month that typically is, then go to the issuer's Web site about a week in advance of closing and pay off what you owe. It won't raise your reported limit, but it will widen the gap between that limit and your closing balance, which should boost your score.

4) Dust off an old card. The older your credit history, the better. But if you stop using your oldest cards, the issuers may stop updating those accounts at the credit bureaus. The accounts will still appear, but they won't be given as much weight in the credit-scoring formula as your active accounts, said Craig Watts, an executive at Fair Isaac & Co., one of the leading credit scorers. That's why Ferguson often recommends to her clients that they use their oldest cards every few months to charge a small amount, paying it off in full when the statement arrives.

5) Get some goodwill. If you've been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a "goodwill adjustment" improve the better your record with the company (and the better your credit in general). But it can't hurt to ask. A longer-term solution for more-troubled accounts is to ask that they be "re-aged." If the account is still open, the lender might erase previous delinquencies if you make a series of 12 or so on-time payments.

6) Dispute old negatives. Say that fight with your phone company over an unfair bill a few years ago resulted in a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as "not mine." The older and smaller a collection account, the more likely the collection agency won't bother to verify it when the credit bureau investigates your dispute. Some consumers also have had luck disputing old items with a lender that has merged with another company, which can leave lender records a real mess.

7) Blitz significant errors. Your credit score is calculated based on the information in your credit report, so certain errors there can really cost you. But not everything that's reported in your file matters to your score. Here's the stuff that's usually worth the effort of correcting with the bureaus:

-Late payments, charge-offs, collections or other negative items that aren't yours. -Credit limits reported as lower than they actually are
-Accounts listed as "settled," "paid derogatory," "paid charge-off" or anything other than "current" or "paid as agreed" if you paid on time and in full.
-Accounts that are still listed as unpaid that were included in a bankruptcy.
-Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your report.

You actually have to be a bit careful with this last one, because sometimes scores actually go down when bad items fall off your report. It's a quirk in the FICO credit-scoring software, and the potential effect of eliminating old negative items is difficult to predict in advance.

Some of the stuff that you typically shouldn't worry about includes:
-Various misspellings of your name.
-Outdated or incorrect address information.
-An old employer listed as current.
-Most inquiries.
-If the misspelled name or incorrect address is because of identity theft or because your file has been mixed with someone else's, that should be obvious when you look at your accounts. You'll see delinquencies or accounts that aren't yours and should report that immediately. However, if it's just a goof by the credit bureau or one of the companies reporting to it, it's usually not much to sweat about.

Two more items you don't need to correct:
-Accounts you closed listed as being open.
-Accounts you closed that don't say "closed by consumer."

Closing accounts can't help your score, and may hurt it. If your goal is boosting your score, leave these alone. Once an account has been closed, though, it doesn't matter to the scoring formulas who did it -- you or the lender. If you messed up the account, it will be obvious from the late payments and other derogatory information included in the file.

4 other credit mistakes Other actions to beware when you're trying to improve your score:

-Asking a creditor to lower your credit limits. This will reduce that all-important gap between your balances and your available credit, which could hurt your score. If a lender asks you to close an account or get a limit lowered as a condition for getting a loan, you might have to do it -- but don't do so without being asked.
-Making a late payment. The irony here is that a late or missed payment will hurt a good score more than a bad one, dropping a 700-plus score by 100 points or more. If you've already got a string of negative items on your credit report, one more won't have a big impact, but it's still something you want to avoid if you're trying to improve your score.
-Consolidating your accounts. Applying for a new account can ding your score. So, too, can transferring balances from a high-limit card to a lower-limit one, or concentrating all or most of your credit-card balances onto a single card. In general, it's better to have smaller balances on a few cards than a big balance on one.
-Applying for new credit if you've already got plenty. On the other hand, applying for and getting an installment loan can help your score if you don't have any installment accounts, or you're trying to recover from a credit disaster like bankruptcy.

By the way, all these suggestions work best if you have poor or mediocre scores to begin with. Once you've hit the 700 mark, any tweaking you do will tend to have less of a positive impact.
And if your scores are in the "excellent" category, 760 or above, you'll probably be able to eke out only a few extra points despite your best efforts. There's really no point, anyway, since you're already qualified for the best rates and terms. Here's one area where it's really OK to rest on your laurels and worry about something else.

Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.

Prop 60 Tax Base Transfers

While Santa Cruz County allows Prop 60 transfers of a qualifying property tax basis from one Santa Cruz County property to another, it does not accept transfers from outside the county. For example, you can not transfer your basis from San Mateo County into Santa Cruz County. You can however transfer it within San Mateo County or into one of the other counties which accept inter-county transfers. Please contact me at frank@frankmurphy.net if you would like to receive the "Prop 60 Tax Base" brochure prepared by the Santa Cruz County Assessor's Office for a list of counties which accepted transfers when this brochure was prepared. You need to check the current status with any county you intend to transfer into to be sure they still accept transfers.

I hope this information proves helpful for you.

And remember, if you need any information about any real estate issues I will be glad to help provide resources for that info.

ON PREDICTING THE REAL ESTATE MARKET

Jeff Schoenfield, my colleague and fellow member of the invitation only Allen Hainge CyberStars, offers this opinion about predicting the real estate market. I couldn’t agree more!

"The real question (whether you are a potential buyer or seller) of course is when will the market turn? While I don't have a crystal ball you can be assured of one thing: The turn of the market will NOT be announced by headlines in USA Today and other national and local publications stating 'Real Estate Market Bottom Reached - Now Time to Invest!'. Rather, the news reported will still be mainly negative even as the market turns. We also do know that prices are the best they've been in some time and there are bargains available. By the time the market actually turns and everybody knows about it the best values will be behind us and buyers will have missed their opportunity to get a true bargain."

Jeff Schoenfield
Broker/Owner
RE/MAX All Pro, Realtors, Inc.
Gatlinburg, TN
Jeff@Gatlinburg-Homes.com

Show Your Support: Please Join Us in the FLY THE FLAG Campaign

On Tuesday, September 11th, 2007, an American flag should be displayed outside every home, apartment, office, and store in the United States.

Every individual should make it their duty to display an American flag on this sixth anniversary of our country's worst tragedy. We do this in honor of those who lost their lives on 9/11, their families, friends, and loved ones who continue to endure the pain, and those who today are fighting at home and abroad to preserve our cherished freedoms.

In the days, weeks and months following 9/11, our country was bathed in American flags as citizens mourned the incredible losses and stood shoulder-to-shoulder against terrorism. Sadly, those flags have all but disappeared. Our patriotism pulled us through some tough times and it shouldn't take another attack to galvanize us in solidarity. Our American flag is the fabric of our country and together we can prevail over terrorism of all kinds.

Thank you for your participation.

WEEKLY STATS FOR SANTA CRUZ COUNTY SINCE JANUARY 1, 2007

COUNTRYWIDE ACKNOWLEDGES HOUSING MARKET WOES

On July 24th Countrywide Financial acknowledged that the housing market "might not begin recovering until 2009 because of a decline in house prices," and that even borrowers with good credit are starting to fall behind on their loans. This announcement triggered a sell-off in the stock market, and signals a shift toward a more skeptical view of the future of the housing market than that to which many executives have previously held. According to Vikas Bajaj of the New York Times, Angelo Mozilo, Countrywide's chairman and chief executive, said that "because of a large number of homes on the market, the housing sector would continue to suffer until sometime in 2008 and not begin recovering until 2009."

As a result of the downturn, major lenders such as Countrywide, Wells Fargo, and others have stopped offering risky sub-prime mortgages. But it isn't just sub-prime borrowers who are struggling with payments. Even "credit-worthy" customers are showing the potential to default as home prices fall. "Countrywide said about 5.4 percent of the home equity loans to customers with good credit that it held an interest in were past due at the end of June, up from 2.2 percent at the end of June 2006."

To read the article in its entirety and see detailed statistics, go to Top Lender Sees Mortgage Woes for ‘Good’ Risks

SANTA CRUZ COUNTY HOME SALES STATS

Santa Cruz County's median home price $757,000 in June
By JONDI GUMZ, Sentinel staff writer

SANTA CRUZ — Despite a real estate slowdown nationwide and the growing numbers of county homeowners missing their mortgage payments, one segment of the Santa Cruz housing market is buoyant: high-end homes.
Six homes in Santa Cruz County sold for more than $2 million in June, matching the number of $2 million-plus sales in April.

View a map of the six homes sold for more than $2 million in June.

Case in point: a 4,250-square-foot home with an ocean view and a wine cellar in the gated community of Monte Fiore in Scotts Valley sold for the listed price: $2.25 million. "There were three interested parties and it was more of a race," said Mark Oliverez, a real estate agent with Alain Pinel who represented the seller and the buyer.

In fact, of the 164 sales in June, 40 were for $1 million or more, a higher percentage than in May. The high-end market phenomenon gained attention last week in The New York Times, which reported that sales of homes priced at more than $1 million are up in Boston, New York and Miami.

In Santa Cruz County, affluent buyers are willing to pay higher prices for ocean-view homes.

June statistics

Single family homes
Sales: 164
Listings: 1,292
Unsold inventory index: 7.9 months
Median price: $757,000

Condos
Sales: 32
Listings: 289
Unsold inventory index: 9 months
Median price: $560,000

Source: Real Options Realty

The increasing number of high-end sales in Santa Cruz County is keeping the median home price high, at $757,000 in June, a barely perceptible dip from $760,000 in May. But the number of overall sales is down in comparison to the red-hot market of three years ago, when more than 250 homes sold in June. This year's June sales, 164, are the fewest since 2001, according to Gary Gangnes of Real Options Realty, who compiled the monthly statistics. The current housing inventory is at a 10-year high with 1,292 listings.

For those hoping more for-sale signs saying "reduced" would mean the median sales price would fall into the $600,000 range, it's just not happening. In many parts of the county, asking prices are high. The average listing price is more than $1 million in Aptos, Capitola, Davenport, Santa Cruz, Scotts Valley, Soquel, according to Gangnes, although he cautioned that listing prices do not reflect sales prices.

Sales of pricey homes rebound

April
Median sale price: $774,375
Number of sales: 128
Sales over $1 million: 35

May
Median sale price: $760,000
Number of sales: 147
Sales over $1 million: 27

June
Median sale price: $757,000
Number of sales: 164
Sales over $1 million: 40

Source: Real Options Realty

Ocean-view homes, and those within walking distance of the ocean are selling for more than $1 million, longtime agent Tony Aprile said. Patti Boe of American Dream Realty said she was too busy showing homes to have an extended conversation Friday. "I have seven escrows," said Boe, who was involved in two of the six $2 million-plus sales in June.

Kelley Trousdale, who sold a Rio del Mar home in June for $4.5 million, said high-end buyers tend to be people from the Central Valley with disposable income and a yen for a second home with a beachfront. Other agents said high-end buyers include local residents. The buyer of the Scotts Valley home was trading up from a property in Felton, but one of the other prospects was a New Yorker who had sold a business and wanted to move back to Santa Cruz.

Frank Murphy, who represented a buyer who paid $2.5 million for an ocean-view home on the Santa Cruz Westside on Refugio Road, said his clients lived in Santa Cruz but wanted acreage close to the city. Murphy also had a San Mateo prospect who has sold a business and was looking for the right location for a family compound. Two deals fell out of escrow when flaws in the property came to light, and the client ended up buying in Sebastopol.
That's typical for a high-end shopper.

"People can afford these homes and they don't want to settle or compromise," said Oliverez, using the word "cherry-picking" to describe the market. That's why Aprile went to the trouble of bringing in Erin Blackburn to "stage" the Refugio Road home, which was otherwise vacant.
"It's almost a requirement in this market," Aprile said. "When they see the furniture they tend to slow down"

Victoria Pendorf represented the Napa Valley buyer of 302 Cherry Ave. in Capitola, which sold for $3 million. She called the ocean view "amazing — you don't want to leave" The Napa Valley buyer is in the "pre-retirement" crowd, a demographic that could generate more high-end buyers.

The Silicon Valley tech rebound is another factor in the high-end market.
Oliverez mentioned a client who came from Arizona to work in high-tech and bought a $2.6 million home in Los Gatos. "You're not seeing layoffs, you're seeing hiring," he said. "Relocation buyers are out there"

Contact Jondi Gumz at jgumz@santacruzsentinel.com.
Copyright © Santa Cruz Sentinel. All rights reserved.

MEDIAN HOME PRICE FALLS BUT HIGH-END HOMES ARE STILL SELLING

While it may be good news to hear that the median home price for a single-family residence in Santa Cruz County dropped by 2% to $760,000 in May, the truth is that this price is still not affordable for most first-time buyers. Compounding the problem is the fact that an increase in foreclosures has led to no-income-verification, no-down payment mortgage options being "taken off the shelves."

Those who have the money "to pay cash or leverage their existing properties" are still in the game in Santa Cruz County, however. According to Gary Gangnes of Real Options Realty, 27 homes sold for more than $1 million in May and 6 of those sold for more than $2 million.

While the dip in median home price seems too little for those who need a mortgage, the news shines a ray of hope in unexpected places. According to Jondi Gumz of the Santa Cruz Sentinel, UCSC welcomes the price drop as it finds its junior faculty leaving town for more affordable housing. Faye Crosby, the chair of UCSC's academic senate, says the new median is great news for the university's recruiting efforts.

To read Jondi Gumz' article in its entirety and to see market statistics for Santa Cruz County for the month of May, go to Median Home Price Dips to $760,000.

SCAM WARNING: "DEED" MAILERS

District attorney: Discard deed mailers

By Jennifer Squires, Sentinel staff writer

The District Attorney's Office is advising homeowners that a rash of mailings to county residents this week offering deeds at a price is not a government-sanctioned solicitation.

The mailers, sent by the Washington, D.C.-based National Deed Service, offer homeowners a chance to buy copies of their property deeds for $59.50. The solicitation is not illegal, but could be deceptive, said Robin Gysin, the consumer affairs coordinator at the District Attorney's Office, adding the company is not affiliated with any governmental agency.

A property deed is the document that transfers ownership in a real estate transaction. Gysin suggests people who receive the mailer simply throw it away. "I'd probably rip it up or shred it," Gysin said.

Gysin said 15-20 people have contacted her this week reporting the mailing. None of them sent the company any money, she said. "I actually got one at home. They sent one to my house," Gysin said. The mailers have been reported across the country.

The company has collected property title information from the county Recorder's Office, which has all recorded documents on file. However, anyone can obtain copies of the documents at any time for about $12 at the county Recorder's Office and it's unnecessary to pay someone else for the information, according to the District Attorney's Office.

Gysin warned county residents to be wary of solicitations that arrive in the mail and asked they call her office at 454-2050 with questions.

Contact Jennifer Squires at mailto:jsquires@santacruzsentinel.com?subject=District.

HOPEFUL FED WON'T CUT RATES

The Dow Jones fell more than 80 points on June 5th after a widespread realization that there is "almost no chance" that the Fed will cut interest rates by the end of the year.

The Fed chairman, Ben Bernanke, said "that the Fed expected the economy to pull out of its current funk and weather the slowdown in the housing market."

While investors have recently been expecting a rate cut by the end of the year, leading economists are noting that the slowly strengthening economy gives the Fed little reason to buffer against "a worse-than-expected slowdown" for now.

To read Jeremy Peters' article in its entirety, go to Fed Dims Hopes For A Rate Cut

5th ANNUAL BONNY DOON ART & WINE FESTIVAL @ THE BONNY DOON AIRPORT, THIS SATURDAY!

Saturday, June 2 1:00 PM to 4:30 PM

The Bonny Doon Community School Foundation invites you to the 5th Annual

Bonny Doon Art & Wine Festival

Proudly sponsored by:

State Farm Agent, Aleene Althouse;

Farmer's Insurance Agent Doug Banks;

Tristar Home Loan Services, Inc. Stacy Theilen

New location!!! Bonny Doon Airport Gardens

8647 Empire Grade

Plenty of free on-site parking

Enjoy wine tasting from dozens of our world class local wineries,

live entertainment, delicious appetizers and non-alcohol beverages,

live and silent auctions with amazing items!

Renowned Local Artist, Joao de Brito is featured this year and will be there to discuss his work

Other local artists whose work will be available at auction include:

Mattie Leeds * Therese Basinger * Janet Lever-Wood * Musi * Kate Nolan

Advance Tickets are $25 before May 28th, $35 at the gate

Includes souvenir wine glass. Ticketing is limited, so order tickets now.

School age childcare is available for a nominal fee at BD Elementary, but you need to sign up.

All proceeds benefit the Bonny Doon Community School Foundation which supports the Bonny Doon School through special program funding.

Send check with attendee name, phone and address to:

BDCSF, PO Box 8089, Santa Cruz, CA 95061

Or call 831-457-8098 for credit card purchase or more info.

Effective Real Estate Sales for Web 2.0

Reality Magazine recently published an article describing the benefits of a group to which I belong called the Allen F. Hainge CyberStars. CyberStars includes 201 Realtors, both here in the States and abroad, who are at the top of their market and interested in conversing about the very latest technology that will help sell homes for the most amount of money in the least amount of time.

In the midst of Web 2.0--"the Internet’s progression of social-networking and media-sharing sites"--staying web-savvy for a Realtor no longer means simply having a website. Allen Hainge and his group are committed to finding the latest "technology tools," including the incorporation of digital video, podcasts, blogs and MySpace pages.

Because my fellow CyberStar members are "market leaders—the higher-power group" who are necessarily willing "to share ideas on how technology increases profit, and how we can make our Web sites better to contact buyers and sellers," my clients are truly the ones who benefit from this association.

To read more about how CyberStars got started and hear what other members have to say about the group, go to Techie Supernovae Explode in Real Estate Market

To take a look at my own website, go to www.LiveInSantaCruz.com

MEDIAN SANTA CRUZ SALES PRICE FOR APRIL NEARS RECORD: HIGH-END HOMES ARE ALL THE RAGE

While some say that the real estate "bubble" has burst and the number of foreclosures in Santa Cruz County continue to be relatively high, multi-million dollar homes continue to sell. The median sales price for April was $774,375--that's just 2% off of the record $789,250 from November of 2005 according to Jondi Gumz of the Santa Cruz Sentinel.

Six different residential properties sold for more than $2 million in April, demonstrating that "the money is out there" (Margaret Julien of David Lyng Real Estate) and people are still very willing to pay.

Bernadine Brumfield, a Santa Cruz real estate agent, believes that these high-end homes that have been appreciating for many years will continue to sell easily as baby boomers move into retirement.

To read the article in its entirety and to see which homes sold for more than $2 million, go to Buyers Snap Up $2 Million Homes

FED REFUSES TO LOWER INTEREST RATES FOR NOW

Almost one year ago the Fed set the interest rate on overnight loans at 5.25% in response to rising inflation rates. Today, not much has changed.

As of May 9th, the Fed has decided to keep the same interest rate of 5.25%, saying that inflation is still a "predominant policy concern." While many note that lack of job creation and the "meltdowns" of the housing and auto markets signal slow economic growth, the Fed contends that overall the economy is growing at a rate that continues to create inflation pressures.

Because of these mixed signals, and due to a lack of long-term evidence, the Fed has made it clear that it wants to keep its options open and maintain flexibility.

To read the New York Times article in its entirety, go to Fed Gives No Signal of Rate Shift.

HOUSES IN UNUSUAL PLACES!

GOVERNMENT PROGRAM HELPS FAMILIES STAY IN THEIR HOMES

WASHINGTON - More than 36,500 families have been able to stay in their homes and avoid foreclosure this year thanks to the U.S. Department of Housing and Urban Development's Federal Housing Administration (FHA) comprehensive lending relief measures. The FHA's Loss Mitigation Program gives lenders who provide FHA-insured mortgages the authority and responsibility to assist homeowners who have fallen into financial difficulties with their home mortgages.

"Owning a home is the American Dream, and the last thing we want is for families to see their dream turned into a nightmare. FHA lending relief measures continues to help families around the nation work through difficult times, stay in their homes and avoid foreclosure," said HUD Secretary Alphonso Jackson.

Since last October, the FHA Loss Mitigation Program has helped 36,512 families, who are behind on their mortgage payments, keep their homes. In Fiscal Year 2006, this program helped 75,000 families with FHA-insured loans continue to enjoy the benefits of homeownership. In total, there are currently nearly 4 million homeowners in FHA homes.

The potential loss of a home, due to unexpected events such as unemployment or illness, can be financially and personally devastating. But it can be avoided by taking the right steps. Under the FHA Loss Mitigation Program, lenders have the ability to offer borrowers a number of HUD-approved options for avoiding foreclosure, including:

• Special Forbearance: This option can include a temporary reduction or suspension of a mortgage payment until the borrower can reestablish financial stability, or a permanent revision in the payment amount to reflect a borrower's new and reduced financial status.
• Modifications: The lender can rewrite the mortgage note in order to roll delinquent amounts into the principal or extend the term of the loan to reduce monthly payments.
• Partial Claim: FHA's insurance fund makes a one-time payment to bring the mortgage current, which becomes an interest-free subordinate mortgage due when the insurance is terminated.
• Pre-Foreclosure Sale: The borrower avoids foreclosure by selling the property for its appraised value even if the proceeds are not enough to pay off the mortgage.
• Deed-in-Lieu of Foreclosure: This option is a negotiated settlement where the borrower deeds the house back to the lender, saving the borrower all of the credit ramifications of a foreclosure while also saving the government some legal costs.
  

For more information on how families with FHA-insured mortgages can avoid foreclosure, visit www.hud.gov/foreclosure/ or call 1-800-CALL-FHA.

Article courtesy of the Santa Cruz Association of Realtors.

THE DRAWBACKS OF MULTITASKING REVEALED

Although checking email while listening to your iPod and trying to study or talking on you cellphone with a hands-free headset and driving at the same time might seem save you valuable minutes throughout the day, New York Times columnist Steve Lohr says that recent studies reveal the opposite effect.

Vanderbilt University published findings last December that show the brain's ultimate loss of efficiency when trying to handle two tasks at once. Though the delays may be only seconds long, the difference is crucial when considering response time while driving at high speeds.

Oxford University recently completed a study demonstrating that young people have equal difficulty to older adults when it comes to remaining efficient while multitasking.

While there is a point at which multitasking creates an optimum work efficiency, more intense multitasking--constantly checking emails, answering every phone call--will ultimately lead to a loss in productivity.

To read the article in its entirety, please go to Slow Down, Brave Multitasker.

IS GOOGLE'S SHUTTLE SYSTEM AFFECTING REAL ESTATE DECISIONS?

Unlimited and free chef-prepared food, on-site car washes and haircuts, a climbing wall, two lap-pools and a volleyball court--these are the perks of working at Google. Now employees can add the most important benefit of all to the list: a free shuttle to and from work, complete with leather seats, Internet access and bike racks.

The shuttles make 132 trips every day, traveling from Google's headquarters in Mountain View to some 40 pick-up and drop-off locations as far away as Concord or Santa Cruz. Not only are the shuttle terribly convenient--they're also environmentally friendly. All of the buses run on biodiesel.

Aside from being a nice perk, the shuttle service gives Google that much more edge in the competitive world of Silicon Valley job recruiting. Some employees have admitted to turning down jobs at other major high-tech firms in favor of Google's transportation benefits.

Most interesting is the affect these shuttles are potentially having on the real estate market. Employees are actually finding housing in the Bay Area based on shuttle stop locations; entire Google communities seem to be springing up around these pick-up and drop-off points.

To read the article in its entirety, please go to Google's Buses Help Its Workers Beat the Rush.

IN CELEBRATION OF SHERRY McDERMOTT

Sherry McDermott, Bonny Doon resident and founder of Jordan House, passed away peacefully on February 28th after a seven year battle with cancer.

Sherry was a faithful member of the Bonny Doon Church, a Bible study leader, and a lover of all God's creation. She remains beloved by her family and many friends.

All of us who knew her both mourn our loss and celebrate her passing. We lost a dear friend from this life who went on to a better place.

For more information on Jordan House, a Christian care-giving organization for the terminally ill, please go here.

To read the entire article celebrating Sherry's life, please go here.

HIDDEN TAX BREAKS & THE PHONE-TAX REBATE

By Kevin McCormally

You can count on getting at least a $30 to $40 fatter tax refund this spring – or you'll owe that much less when you file – thanks to the government's effort to redress an error that has its roots in the 19th century.

At issue is a levy on long-distance telephone calls born in 1898 as a 1% luxury tax to help finance the Spanish-American War. Last year, the government conceded that collecting the tax was, well, illegal.

The problem was that tax applied to charges based on the time and distance of the call. Although your grandkids might not remember, you know that's the way things used to work. The farther away you called, the more you paid for each minute you talked. In recent years, though, the distance part of the equation has disappeared. And that's the rub.

Over the past few years, some big companies, including Home Depot and Hewlett-Packard, challenged the government and won case after case. Finally, the government gave up and hung up on the long-distance tax effective August 1, 2006. Uncle Sam promised refunds of money collected since March 1, 2003. (The IRS says the statute of limitations won't let it refund taxes collected before that date.)

How to Get Your Money

The IRS has come up with an easy way for most of us to claim a refund. You'll find a line in the payment sections of your tax return to claim your credit, so you get the benefit even if you don't itemize deductions. For those of you who don't file a return, the IRS has created a special form, the 1040EZ-T, to request a tax refund.

Don't want to plow through 41 months' worth of old phone bills? You can claim a standard credit based on the number of exemptions you take. A single person who claims one exemption gets $30, while a couple gets $40. A couple with one dependent child gets a $50 credit and couples with two or more children get $60 – the top credit allowed. The IRS says it came up with the figures based on telephone usage data, and that the amounts include interest back to the time the money was collected.

If you spent an average of more than $25 a month for long-distance service during the refund period, you can seek more than the standard credit. But you might decide it's not the worth the effort once you see the new Form 8913. Basically, you need to tote up the federal tax you paid on long-distance calls between March 2003 and August 2006, group the payments in three-month increments and then figure the interest you're due on each quarter's tax.

There's no one-size-fits-all refund for business owners. Businesses can use a formula that bases their credit on total phone charges during the refund period rather than the actual tax paid. For more details, visit the Telephone Tax Refunds section of the IRS website.

Hidden Tax Breaks

Although the telephone tax credit is easy to find on the tax forms, that's not the case for three tax savers that Congress revived in December – after the IRS sent the forms to the printer. These tax breaks were set to expire without action by lawmakers. You're affected if:

• You qualify to deduct state sales taxes (which you surely do if you itemize and live in a state that does not have its own income tax).
  
• You qualify to deduct college tuition paid during 2006.
  
• You qualify to claim the special $250 deduction for expenses paid for classroom materials by teachers and teachers' aides.

Although none of these breaks is mentioned on the forms, all are available for 2006. You can find information on how to claim your deductions at www.irs.gov or by calling 800-829-1040.

Reprinted with permission. All contents © 2007 The Kiplinger Washington Editors, Inc.

HOW TO CHOOSE ENERGY-EFFICIENT WINDOWS

Curious about the benefits of energy-efficient windows?

Learn all you need to know by going to http://frankmurphy.blogspot.com and clicking on the link for the Efficient Windows Collaboration.

CRUCIAL INFORMATION ABOUT THE NEW DAYLIGHT SAVINGS TIME

You may have heard about the change in Daylight Savings starting this year: DST will start three weeks earlier on March 11, 2007, and end one week later on November 4, 2007.

This could affect machines & computer programs that are set to coordinate time/date using Daylight Savings.

The first step is to ensure that your computer is prepared. For Windows XP users, click the below link to download and install the Daylight Savings patch:

http://www.microsoft.com/downloads/details.aspx?familyid=66F1420C-DF2D-400B-A8A9-EF9061A9A3CA&displaylang=en

Scheduling software, such as Microsoft Outlook, could also be affected.
If you use the calendar feature in Outlook, and have version 2000, 2002, or 2003, you will want to download and install the Time Zone Data Update Tool by using the below link:

http://www.microsoft.com/downloads/details.aspx?FamilyId=E343A233-B9C8-4652-9DD8-AE0F1AF62568&displaylang=en

You will also want to ensure that any fax machines that you use are changed to the correct time, as well as your digital phone at home, mobile phone, PDA, portable music player, programmable thermostat, digital camera, DVR, etc.

For other scheduling software, Smartphone's, & PDA's, check with the manufacturer to determine if you need to install updates to prepare for the new Daylight Savings rules.

To access accurate time and date information for anywhere in the world, add The World Clock to your list of "Favorites."

FORECLOSURES RISE IN SANTA CRUZ COUNTY

According to Jondi Gumz of the Santa Cruz Sentinel, foreclosures for 2007 have more than tripled from the same time period one year ago (from 11 to 41). Even local publications covering foreclosure activity have had to expand their page numbers in order to cover all the foreclosure-related activity! Training for real estate agents covering the handling of foreclosure transactions is a hot commodity in Santa Cruz now, too.

This new jump in foreclosure activity is not necessarily due to traditional causes such as personal, outside crises, however. Some investors who were planning to sell their homes have been caught in a cooling market unable to sell their property or cover the mortgage and taxes with rent payments. In other cases, people are involved in mortgages that require a rising income; and some bought houses they simply couldn't afford.

Whatever the cause, homeowners considering foreclosure are recommended to consult a tax professional; and County prosecutor William Atkinson warns people to watch out for foreclosure fraud operators.

To read the entire article, go to Foreclosures Jump In County

NATIONWIDE MARKET UPDATE: PRICES DROP AT THE END OF 2006

The last three months of 2006 saw home prices fall in over half of the country's biggest metropolitan areas, according to the National Association of Realtors (NAR). In addition, the number of homes sold fell in 40 states plus the District of Colombia. As prices and sales drop, the number of homes on the market rises. Is there any hope for the market in the near future?

NAR believes so, saying that it expects sales and prices to rise in the Spring. David Lereah, NAR's chief economist, says that "home sales are leveling at historically high levels." Data from the Office of Federal Housing Enterprise Oversight shows that prices were in fact rising overall in the third quarter of 2006.

To read the full article by Vikas Bajaj, go to Home Prices Fall In More Than Half of Nation's Biggest Markets

To find out more about specific market trends in Santa Cruz County and what you can do to get your home sold for the most money in the least amount of time, please contact me at 831-457-5550 or frank@frankmurphy.net

THE NEW FACE OF SURFING

Once the sport of "beach bums and bohemians," surfing has grown into as much of a venue for networking as golf or tennis. Surf schools worldwide are catering to the corporate elite. Even the real estate market has felt the effect of the surfing boom, with land that surrounds prime surf breaks quickly being bought up and developed.

Santa Cruz residents will remember well the days when being a surfer and having a career were incompatible. Now, surfing is not only a status symbol in the work place but an ideal sport for making business connections due to its long periods of downtime. Richard Schmidt used to give surf lessons in Santa Cruz on a part-time basis while he worked as a lifeguard. Now, his surf school takes trips to Costa Rica where his clients also enjoy yoga classes and an in-house masseuse. Surf Divas, a school based in La Jolla, hosts corporate clinics throughout the year; many of their clients are from Wall Street or the New York fashion industry.

To find out more about surfing's new image, international surf schools and vacation packages, read the full article by Matt Higgins: Surf's Up, and Upscale, as Sport Reverses Its Beach Bum Image

Year-End Real Estate Market Update

2006 v. 2005

Statistics shown are for Single Family Homes in Santa Cruz County

FED CONTINUES TO DEBATE INFLATION TARGET

This week marks one year since Ben Bernanke took over as chairman of the Federal Reserve Board, but the Fed has yet to act on his main proposal: "an explicit target for inflation."

Mr. Bernanke argues that a public commitment to an inflation target of 1 to 2 percent a year would be helpful to investors and boost consumer confidence.

His opponents, however, are wary of making changes while things are going well: despite a slight economic slowdown over the last year, wages have increased and unemployment continues to be low. There is also a concern that Mr. Bernanke's policy is too rigid and that a focus on inflation will overshadow the issue of unemployment.

Based on the cautious attitudes of the Fed's governors and staff, and the objections of Congress, Edmund Andrews of the New York Times predicts that "the Fed is unlikely to change gears this year."

To read the full article, go to: Fed Has Yet to Set Target on Inflation

MORTGAGE DEFAULTS RISE IN SANTA CRUZ COUNTY

According to Santa Cruz Sentinel staff writer Jondi Gumz, "mortgage defaults have been on the rise statewide since Fall 2005." Santa Cruz County is no exception. And as home appreciation slows down, homeowners in default will find it difficult to sell.

Gumz includes some interesting statistics:

• 452 default notices were sent to homeowners in Santa Cruz County in 2006, compared to 333 in 2005.
• 29 default notices have been mailed out to Santa Cruz County homeowners already this year, compared to 20 at this time in 2006.
• In 2006, 151 foreclosure sales took place in Santa Cruz and Monterey Counties. In 2005, the number was 39.
• 16 foreclosures have already taken place in Santa Cruz and Monterey Counties during the first two weeks of 2007

To read the full article, go to: "Mortgage Defaults Spike"

Some analysts predict that the large number of adjustable rate mortgages with artificially low introductory rates issued in the past few years will add significant numbers to the default rolls. Some borrowers will need to refinance to protect their property. Some will need to sell. If you are considering a sale to protect your equity or your credit, contact me at Frank@FrankMurphy.net for help with the selling process.

YOUR CELLPHONE'S SUPER SECRET POWERS

Most cellphone users have experienced the harsh reality of "you get what you pay for." The excitement of receiving your dirt-cheap, or even free, phone when you sign up for service wears off when you see the person sitting next to you at the meeting taking notes or checking e-mail on their new BlackBerry or Treo. Well, it turns out your little flip phone may be capable of more than meets the eye.

As Larry Magid of the New York Times discovered, the average cellphone user doesn't need to shell out hundreds of dollars in order to enjoy the benefits of a smartphone. Many inexpensive cellphones come with exciting built-in features such as note-taking applications, instant messaging and MP3 players. Make sure to ask your cellular carrier about the additional programs and services they can provide for your phone.

Your options go beyond your cellular carrier, too. It's now possible to access Gmail, get GPS navigation tools and even subscribe to blog feeds--all through your very own cellphone!

For more detailed information on these specialized (and often free) cellphone services, read the full article: Plain Cellphones Can Overachieve, With A Little Help