Archive for July 5th, 2011

“For Sale, Bring Cash”

July 5, 2011

Punch line: USA Today reports that “cash buyers are kings in weak home-sales market.”

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According to the National Association of Realtors, in May 2011, all-cash buyers, who are mostly investors, accounted for 30% of existing home sales, up from 12% two years ago.

The cash buyers are enticed by low prices and potential rental income.

Cash buyers are especially prevalent in markets where prices have fallen the most, often areas hard hit by foreclosures.

  • In Las Vegas, the foreclosure capitol of the U.S. for the past four years, cash buyers accounted for 49% of first-quarter sales
  • In the Miami-Fort Lauderdale area, 63% of first-quarter buyers paid in cash.
  • In Phoenix,  44% are cash buyers.

Cash buyers often get better deals because sellers know their offers won’t fall through for lack of financing. A 5% cash discount is typical.

Source: USA Today

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Posted in Housing - Mortgages | Leave a Comment »

More re: Corp Jets … new nums and a touch of irony

July 5, 2011

Last week, we analyzed Pres Obama’s new target: corporate jet owners.

We said that the “loophole” was that corporate jets get depreciated over 5 years, whereas commercial aircraft (like Southwest’s) get depreciated over 7 years. So, the “loophole” is 2 years of accelerated depreciation … which is monetarily equivalent to about a 1% discount on the purchase price of of the jet. See the original post for the analysis.

But. a loyal HomaFiles reader quickly corrected my tax facts.

Turns out that in December, HR 4853 — the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 – was passed.

HR4853 allows businesses 100 percent accelerated depreciation of investments in capital assets — including new aircraft — through December 31, 2011, retroactive to September 4, 2010.

That changes the numbers …

The difference between depreciating a jet 100% in the first year and depreciating it over 7 years is monetarily equivalent to about a 3.3% discount on the purchase price of of the jet.

Example (table below): Assuming a million dollar capital expenditure, the NPV of the tax benefit of 100% accelerated depreciation is about $250,000 (@ an average corporate  tax rate of 25%) …  the NPV of the tax benefit depreciating the capital asset over 7 years is $214,489 … the difference is $33,011, which is 3.3% of the purchase price.

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Here’s the irony …

HR 4853–  the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 – was initiated in the lame duck Pelosi-controlled Democratic House, passed by the Reid-controlled Democratic lame duck Senate, and signed by President Obama – ostensibly to create J-O-B-S.

Six months later, the President turns around and starts attacking a tax law that he and fellow Democrats enacted.

Then, they wonder why corporate America is sitting on $2 trillion in cash.

It goes beyond corporate jets.

They can’t keep changing the rules every couple of months just to score some cheap political points.

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Posted in Obama, Taxes | 1 Comment »

Gotta be more to the story …

July 5, 2011

If these are true, they’re a sad commentary on the state of the American justice system …

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Thanks to SMH for feeding the lead

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Posted in Crime | Leave a Comment »