California's Tax-Free Ride

For everyone in our great state who filed a foreclosure or short sale last year, Gov. Schwarzenegger signed a bill into existence a mere 24 hours prior to Tax Day...giving people who could no longer afford their homes the opportunity to avoid a big tax bill from California. This puts California in alignment with the current Federal approach to those who foreclose or short-sale their property.

There are people on both sides of the fence regarding this decision. For the fiscally responsible - our state is already in a serious debt situation and this bill removes another possible flow of revenue to our very dry state coffers. For the socially conscious - the people who suffered through job loss and other hardships resulting in losing their homes, don't need to have another painful burden placed on them: a tax bill for "income" that they didn't really earn.

What are your thoughts about this?

Housing Real Estate Recovery On The Way

According to the Wall Street Journal, the U.S. housing market is poised to recover and begin a rebound during 2010. Economists are expecting 6% increase in home sales this year. “I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” said Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts. The famous Case-Shiller Home Price Index is used to help measure the progress in home prices.

As a result, interest rates may start to creep back up sometime in the middle of 2010. “They’re going to be tightening credit sooner than people expect,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. He forecasts that the Fed’s first increase since 2006 may come as soon as June.

California is the fourth ranked state in the Union in terms of foreclosures, and there are still many Americans who are delinquent in their house payments who may end up losing their homes. The Obama administration efforts to encourage banks to work out financing arrangements with homeowners has yet to make a significant dent in the number of people who are delinquent.