Jim Guido's Blog

It was reported today that the number of homes listed for sale has continued to decline in July, falling by 1.2% from June and nearly 18% from one year ago.

The Data from Realtor.com shows that there were 2.31 million homes listed for sale at the end of July. This is the lowest level for July since the series began in 2007. Most inventories tend to decline in July as the spring sales rush gives way to summer vacations. Zelman & Associates, a research firm, says July listings have typically fallen by 0.8% from June over the past 28 years.

The info from Realtor.com includes sale listings from more than 900 multiple-listing services across the country.

Since 2007 housing inventory has only been lower in five months: the first four months of this year, and in January 2010. Housing demand has been noticeably weaker than expected for most of the year which brings new worries about the strength of the U.S. economy that could push the market into another stall.

Inventory levels might be even higher—putting more pressure on prices—were it not for banks holding foreclosures off the market as they revamp their foreclosure-processing infrastructure.

San Jose, 95123 Summary

The median sales price for homes in ZIP code 95123 for Mar 11 to May 11 was $340,000. This represents a decline of 7.5%, or $27,500, compared to the prior quarter and a decrease of 9% compared to the prior year. Sales prices have depreciated 47.7% over the last 5 years in 95123, San Jose. The median sales price of $340,000 for 95123 is 14.85% lower than the median sales price for San Jose CA. Average listing price for homes on Trulia in ZIP code 95123 was $350,315 for the week ending Jun 08, which represents an increase of 0.1%, or $485 compared to the prior week and a decline of 2.3%, or $8,302, compared to the week ending May 18. Average price per square foot for homes in 95123 was $251 in the most recent quarter, which is 93.88% lower than the average price per square foot for homes in San Jose.

95123, San Jose Recently Sold Homes

95123, San Jose Homes For Sale

1031 Exchange Frequently Asked Questions:
Q: Can I sell my duplex and purchase raw land?
A: Certainly. Properties involved in an exchange need to be  held for either productive use in trade or business or for investment. Holding land for its future appreciation would be considered held for investment. Don’t get confused by the “like kind” requirement. “Like kind” can be any real property used for business or investment purposes within the U.S.

Q: Can I buy my replacement property first?
A: Yes. This requires that you do a reverse exchange. The reverse exchange may be an option provided it is structured according to the safe harbor guidelines.

Q: Can I move into a rental property that was originally purchased as part of a 1031 Exchange?
A: Yes. However, please keep in mind that the IRS will look at your “intent” in determining if your 1031 exchange is valid. If the IRS feels your original intent when the property was initially acquired was to use it as a primary residence, you may have your exchange disqualified.

Q: Do I have to reinvest ALL of my cash (equity)?
A: No. However, any cash (equity) that is not reinvested in real estate will be taxable (and is known as cash boot). The general rule of thumb if you don’t want to pay any taxes, is to reinvest all of your cash and purchase a property equal or greater in value.

Q: How long do I have to complete my exchange?
A: 180 days. However, also keep in mind you will be required to identify your potential replacement properties on day 45 of your exchange. Your time-line starts when you close escrow on the property you are selling.

Q: I am flipping properties, can I defer my taxes through a 1031 Exchange?
A: In most cases, no.  The unofficial rule of thumb is that a property should be held for at least 12 months before it is eligible for a 1031 Exchange, but the longer the better.  If you are flipping properties, be prepared to pay your taxes.

Q: Do second homes qualify for 1031 Exchange?
A: It depends.  If the second home has not been rented it will likely not qualify for a 1031 Exchange.  Unfortunately there are no special tax breaks available on the sale of a second home that has not been rented.

Q: Can I purchase a foreclosure in a 1031 Exchange?
A: Yes.  Acquiring a foreclosure via 1031 Exchange requires that you work closely with your Accommodator, but is certainly possible.

Q: Can I purchase my replacement property in a different state?
A: Yes.  Replacement property can be purchased anywhere in the United States.  Foreign property, however, is not like-kind to domestic property, so properties outside the United States won’t qualify.

Q: Can I purchase multiple replacement properties?
A: Absolutely.  One of our clients recently sold one property and acquired seven.

Q: Does my Realtor need to do anything special since I am exchanging?
A: Your Realtor needs to make sure the sales contract is assignable and includes the appropriate 1031 Exchange language. Asset Exchange Company can provide the necessary language.