March 2009

Arizona’s Luxury Real Estate Market

The real estate market in Arizona has been in limbo since 2006; however, a luxury home developer in Prescott, Arizona has decided to resume building Enchanted Canyon. The development will include 72 custom lots on 67 acres.

At this point I am unsure how to interpret this, but at the very least it provides some indication that the Arizona real estate market may see a bottom soon. We of course will have to wait.

Here are the current available lots.

For more information about Enchanted Canyon at Thumb Butte, contact Richard De Mauro of Keller Williams Realty at (928) 499-9198 or rdemauro@cableone.net, or visit www.enchantedcanyon.net.

The Real Estate tax deduction

One of the biggest benefits to owning real estate is that you can deduct the tax and interest you pay on your home loan. This can substantially lower your tax obligation.

Here is an example. Lets say you pay $10,000 in interest on your home loan and $1,500 in real estate taxes. You would be able to deduct $11,500 from your taxable income. So for an individual who makes $60,000 a year their AGI(adjusted gross income) would be $48,500, saving $2,875 in federal taxes. This doesn’t include any local or state income taxes you would pay, so it would most likely save even more.

All things considered you wouldn’t want to buy a home just based on the tax benefit, but it surely is value added. Make sure you speak with your accountant or a tax professional to verify how much savings you would recieve.

Real Property vs. Personal Property

In a previous post I wrote about the differences in real property vs. personal property. I think it would be useful to delve into this a bit further.

Real property not only includes the tenements, which is/are the building(s) that are attached to the property itself, but the actual surface as well as the air above the ground. Real property can be broken down even more into corporeal and incorporeal. The main difference here is that corporeal is the tangible property, where as incorporeal is not physical. Incorporeal could be a right-of-way or some other hereditaments. One interesting face about real property is that an owner does not always own all the rights to it. A common example would be mineral rights. You may own the land and home, but another entity could own the rights to the minerals that exist on it. So in theory if you had a property that had a valuable mineral, you could sell the rights to the mineral, but maintain property use rights.

A commonly controversial part of an Arizona home sale or purchase is the personal property attached to the real property. One simple way to determine this is the method of attachment. An example of this would be ceiling fans. These are affixed to the real property, so in a standard purchase the seller should disclose if they intend to remove or replace them. Another, more recent one, is a plasma or LCD TV that is attached to the wall. If the sellers agent didn’t note that the TV is not included in the sale it would be debatable as to what liability the sellers would have in this.

Anyway, this all goes back to what I always say, “make sure you have good representation by a seasoned real estate professional” when buying or selling real estate. Your cousin who just graduated real estate school, does not count. It goes a long way.

A few Arizona facts

Arizona is the sixth largest state in the union

Arizona has roughly 6.3 million residents, about a 23% change from 2000 to 2007

Arizona has roughly 2.6 million homes

Arizona’s median household income is about 50,000 per year

To view the latest Arizona census information, click here.

Do mortgages exsist anymore?

Not in Arizona, but we just can’t shake the use of “mortgages” to describe the type of note used to secure a property loan. Arizona uses something called a Trust Deed, hence that when a home loan is defaulted on it goes to a trustee sale. To foreclose on a mortgage the lender must go through the courts in order to repossess the property. This is not only time consuming, but is very expensive. The Trust Deed is actually good for the homeowner too as the trustor(person who took out the loan) has a 90-day reinstatement period in the event of default.

Whats the value of your Arizona home?

Trying to evaluate the current value of your Arizona home is challenging. The Arizona real estate market has seen one of the worst downturns in history; however, Zillow.com is a great, free, service to help you determine the value of your home. Zillow.com will show a Zestimate, which uses recent home sales and your home’s specs to determine a value. This should not be considered 100% accurate, but it can be used for some guidance on your home’s value. You should always consult a real estate professional if you are considering selling your home and determining fair market value.