If you’re underwater on your mortgage, you might want to consider a short sale, asking the bank to take less that what you owe. Some real estate experts thought a boom in short sales might appear at the end of 2012. But the National Association of Realtors says that hasn’t happened.
Why? It all comes down to the fiscal cliff. In addition to tax cuts and stimulus spending, something that might also go away is the Mortgage Forgiveness Debt Relief Act.
It expires at year’s end and if Congress doesn't extend it, short sellers could face an IRS tax bill for the forgiven portion of their mortgage. But on Thursday, the president of the National Association of Realtors, Gary Thomas, pointed out that there’s been no short sale boom. Short-sellers haven't been rushing to beat a possible fall off the cliff.
This point of view contrasts with what's happening in California. Earlier this month, RealtyTrac, a real estate analysis firm that specializes in foreclosures, pointed out that short sales have been on the rise in the state.
So, at least as far as the National Association of Realtors sees it, the national story is different. In a statement, Gary Thomas said that short sales aren’t outpacing the rest of the housing market - and that they’re still taking three months to change owners, a long time by real estate standards. Short sales are complex because a seller needs to find a buyer and then present the deal to a lender. That can take a while.
Meanwhile, the nation’s supply of housing for sale dropped to levels not seen since 2005. That’s driving up prices, especially in Southern California. The Realtors say the Western region had the highest median home price in the country in November: $248,300.