Real estate took some whacks in the new 3.8 trillion dollar Obama budget presented to Congress last week, but there were some helpful proposals for housing as well.

On the negative side, the White House renewed its efforts, which were unsuccessful last year, to rein in mortgage interest writeoffs by high income homeowners, and to raise capital gains rates.

The budget proposes to limit the value of deductions for mortgage interest and charitable contributions for single taxpayers earning more than $200,000 and married couples earning more than $250,000. It also would allow the top federal brackets to move to 36 percent -up from 33 percent – and 39.6 percent, up from the current 35 percent.

Instead of writing off mortgage interest at the top current bracket of 35 percent – or 39.6 percent as proposed in the budget – the White House would have deductions on mortgage interest and charitable contributions limited to 28 percent.

To illustrate: say you paid $10,000 in interest on your home mortgage. Under current rules, you’d be able to get a writeoff worth $3,500 in the 35 percent bracket and $3,960 if the bracket moved to 39.6 percent.

Under the Obama plan, no matter which bracket you’re in, the limit would be $2,800.

The White House proposed a similar change last year as a way to pay for health care reform, but housing, real estate, banking and charitable groups opposed it vigorously.

The same coalition would likely fight the idea this year as well. But lobbyists say the mere presence of the proposal in the president’s budget makes it a serious threat – especially when the deficit is ballooning to all-time records.

Robert Story, chairman of the Mortgage Bankers Association, said limiting the mortgage interest deduction – even limited to the wealthiest Americans – sets a bad precedent and could hit high-cost housing markets disproportionately hard, especially California and New York.

Housing and mortgage groups praised other non-tax portions of the Obama budget, however, such as its effort to strengthen the FHA program.

The White House asked Congress to authorize FHA to raise its annual premiums charged to borrowers in order to strengthen the agency’s reserve funds. FHA’s annual premiums – which are typically rolled into the monthly payment – are capped at 55 basis points but the budget would nearly double them, to 90 basis points.

If Congress agrees with the move to increase annual premiums, said Stevens, the agency will be able to reduce its upfront premium charges to borrowers – thereby allowing more home buyers to qualify for an FHA loan.

At the recent annual governance meeting of the National Association of Realtors®, held in San Diego, the Board of Directors adopted a recommendation to expand its existing support of equal opportunity to include its application with respect to sexual orientation. The exact wording of the motion was: “That existing NAR policy on equal housing opportunity be amended to include opposition to discrimination based on sexual orientation.”

The recommendation came to the Directors from the Equal Opportunity – Cultural Diversity Committee. At the committee and at the Board of Directors the recommendation passed unanimously. There was no spoken opposition. Indeed, at the committee level a number of often-impassioned members spoke in its favor. Additionally, as part of the rationale presented to the Directors, it was noted that “The Obama Administration has signaled its intent to announce proposals ensuring that HUD’s housing programs are open to all regardless of sexual orientation or gender identity.”

For many years NAR has had within its Code of Ethics (at Article 10) a fair housing policy that pretty well mirrors the law under the federal Fair Housing Act. “Realtors® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, or national origin.” A similar policy, within the same Article, prohibits discrimination in “real estate employment practices.” This doesn’t exactly match federal law, because the Realtor® code doesn’t address age discrimination.

It is also true that there are state and local jurisdictions with more expansive anti-discrimination rules. Some already have such laws regarding sexual orientation. Moreover, it is not clear that the Realtor® code might treat the concept of “handicap” as broadly as has been done by some legislative and judicial bodies. Still, for the most part, the Realtor® code is a close approximation of the law as far as discrimination is concerned.

While not specified in the Board of Directors’ action, presumably the adoption of this recommendation will lead to a specific change in the Code of Ethics to include a prohibition against discrimination of the basis of sexual orientation. Also, presumably, that prohibition will cover both the provision of professional services and also brokerage hiring practices. This, in turn, will call for new training at both the local level and within individual companies.

It would be naïve to think that all Realtor® members will be equally accepting of this new policy. We know from the news and from national polling that across the country there are deep-seated divisions about such matters. The fact that no opposition was voiced at the NAR meetings probably doesn’t tell the whole story.

Adopting anti-discrimination policies with respect to race and religion was no cake walk either. To do so was no doubt unsettling to many. Change, we all know, can be painful. But so can being the object of discrimination.

When you buy anything in a panic, you create lots of room for regret. Buy real estate in a panic and you may lose more than you gain.

Rumblings about interest rate increases, tougher mortgage qualification criteria and rising home prices may make buyers who act on emotion hit the panic button. Add the July 1 reality of new Harmonized Sales Tax (HST) in Harmonized Sales Tax (HST) in British Columbia and Ontario and the need for urgency is heightened for buyers who want their limited loonies to go into their real estate, not government coffers.

Here, our aim is to present the voice of reason, but expect media in all formats to fan the “gotta buy now or get shut out forever” flames in 2010. Local and regional economies may be far from out of the woods, but Canadians want to continue their recession-stifled love affair with home ownership. Buyers are ready to plunge in. Many are afraid that, if they don’t act now, they may miss their real estate opportunity. This market pressure may cause some to act in haste and repent at leisure.

If you agree that this is a good, but challenging, year for you to buy, then, our point is: Be prepared to be a savvy buyer instead of an easy sell. Be prepared to act with confidence, instead of hesitating and missing out.

• The 500 plus articles in this column offer specific suggestions on many aspects of buying, including home selection and financing.
• Our site is a Knowledge Warehouse, so there’s no need to feel unprepared for market eventualities.
• The federal housing agency, Canada Mortgage and Housing Corporation, provides a range of free information to get you started building your real estate knowledge: http://www.cmhc.ca/en/co/buho/index.cfm [bullet] Your Registered Retirement Savings Plans may contribute to your ability to purchase or build in 2010 through the Home Buyers’ Plan. Get the facts on this and other tax advantages from the Canada Revenue Agency beforehand to ensure that the benefits are all yours. Here’s a useful summary to start with: cmhc.com.

Off to a Solid Start One important tip for buyers, especially first-timers, is: Buy the least of the best. That is, buy the least house on the best street you can afford or a lesser unit in the best condo you can afford. This way, although improvements to your property will increase the value of your home, improvements made by neighbours will also improve the value of your property. Regardless of local market dips, your gem in the best location should remain saleable, so you’ll have more resale flexibility and a shorter time to a break-even point and to profit.

With this value goal in mind, set yourself up for panic-free success:

1. Search for a real estate professional who has experience and knowledge with the location and property type you value. Don’t just go with the first professional you bump into.
2. Keep asking “why?” Challenge your thinking and assumptions, and those of the professionals you work with.
3. Get to know the neighbourhood(s) you want to live in, so you can evaluate which streets carry the highest property values and the greatest potential for value growth. Within each neighbourhood, there is a gradient of values. When abutting areas are of higher value, streets closer to this “better” neighbourhood will carry higher values. The opposite is true for adjacent lesser areas.
4. Seek out a knowledgeable, reliable home inspector who can address quality of construction and property devaluators, such as out-dated electrical systems like knob and tube and aluminum wiring, and dangerous insulation like urea formaldehyde and Zonolite. Learn as much as you can about cost-to-correct for worn-out roofs, sagging eavestroughs and other standard home repair projects. This will allow you to estimate expenses over the first year or so of ownership. Your chosen real estate professional can also project potential maintenance and repair costs to enable you to accurately budget your purchase for sustainability.
5. Pre-qualify with a mortgage broker who can provide access to funds beyond traditional lenders. Mortgage brokers can usually arrange better mortgage terms with traditional lenders than an individual buyer can, but these brokers may also have private and less-traditional sources of funding. Their lending criteria may not be as rigid and their scope of properties greater.
6. Know what you “need” and what you “want” and how you’ll prioritize the items on these two lists. Buying real estate is all about compromise. Doing this under pressure can be difficult. Taking the time to make these decisions beforehand can pay off.

Will you recognize the right house or condominium unit when you are shown it?

No home is ever perfect. The right fit is a combination of compromises that don’t matter that much to you and the essential value evident to you.

Real estate value is deeply embedded in and unique to each property:

• Decor distractions: Watch some of the real estate make-over television shows. Notice potential buyers discussing the value of a home based on how the current owner has decorated and furnished the property? They ignore the fact that this is all superficial and easily-changed as the television shows prove. Although cosmetic alterations may cost only a few hundred or thousand dollars, buyers are ready to pay tens of thousands in reaction to these “improvements.”
• Immovable object: Location remains the main value criteria as the property cannot be moved away from the bad things around it or toward the good things in the area.
• Useable, liveable space: The house or condominium unit could be made larger, but at the cost of considerable time, money and inconvenience. Your viewing question is, “How could the space be used more efficiently than the current owners are using it?”
• Expensive problems: Look beyond what you like or don’t like. Consider what would be expensive to fix or replace. Which could you solve yourself? With the help of your real estate professional and the home inspector, search out the expensive, not-so-easily-solved problems and cost them out. Now, weigh the benefits of location against repairable problems and expensive repairs at the price set by the seller.

When you’re well prepared, even a tight deadline won’t rattle you. You’ll reason out advantages and disadvantages for a property, calmly and without panic. You may never be 100% sure (that’s the hindsight figure), but you can be more sure than unsure about the value of making an offer to purchase.