Real Estate Week: Fiscal Cliff Fast Approaching

Road sign warning of a dangerous cliff
A road sign takes on a new meaning  as budget talks bog down in Washington.

Here’s a look at news this week of interest to homebuyers, home sellers, and the home-curious:

It’s looking increasingly unlikely that President Obama and Congress will reach an agreement on budget cuts and tax policy by a Jan. 1 deadline, bringing America to the brink of the so-called fiscal cliff.

The cliff is more like a slope, with few taxpayers feeling an immediate sting from the steep budget cuts and tax increases that are coming. “Underwater” homeowners are among the unlucky few, however, as a recent Washington Post article explains, although Congress could amend the tax code retroactively.

Assuming budget talks will take place eventually, one benefit at risk is the mortgage-interest tax deduction. A recent article in the San Francisco Chronicle helps explain what’s at stake.

In the meantime, a report released Thursday makes clear that Americans are bracing for the worst, with U.S. consumer confidence tumbling as the fiscal cliff approaches.

Home prices in the San Francisco metro area rose 8.9 percent in October from a year earlier, according to the latest Case-Shiller home price index, more than double the U.S. average of 4.3 percent.

San Francisco’s metro area includes Alameda, Contra Costa, Marin, San Francisco, and San Mateo counties. Home prices here have been rising for eight straight months, the longest continuous run since 2005.

Sales of new single-family homes were up 15.3 percent in November from a year earlier, according to the latest numbers from the U.S. Census Bureau, and the median sales price rose 14.9 percent.

Home sales were up 68.8 percent in the U.S. Northeast, followed by the South, up 17.2 percent; the West, up 13.7 percent; and the Midwest, down 5.8 percent.

Our final news item of 2012 concerns a certain commercial real estate property in New York City that gets a lot of attention at this time of the year: One Times Square.

The 25-story office building at 42nd Street and Broadway is almost entirely vacant yet generates more than $23 million a year from the brightly lit advertising signs plastered on its sides, according to The Wall Street Journal. And once a year it takes on another role: the site of New York’s annual ball drop on New Year’s Eve.

Times Square, by the way, was named Longacre Square until The New York Times moved its headquarters to One Times Square in 1904. The newspaper quickly ran out of room, however, and moved to new offices nearby in 1913.

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