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Slaying The Myths About Buying a Home
By Michael
April 21, 2017

Slaying Home Buying Myths [INFOGRAPHIC] | Simplifying the Market

Some Highlights:

  • Interest rates are still below historic numbers.
  • 88% of property managers raised their rent in the last 12 months!
  • The credit score requirements for mortgage approval continue to fall.
Tax Time Depressing? Owning a Home Could Help!
By Michael
April 20, 2017

Tax Return Depressing? Owning a Home Could Help | Simplifying The Market

Tax Return Depressing? Owning a Home Could Help

Many Americans got some depressing news last week; either their tax return was not as large as they had hoped or, in some cases, they were told they owed additional money to either the Federal or State government or both. One way to save on taxes is to own your own home.

According to the Tax Policy Center’s Briefing Book -“A citizen's guide to the fascinating (though often complex) elements of the federal Tax System” - there are several tax advantages to homeownership.

Here are four items, and a quote on each, from the Briefing Book:

1. Mortgage Interest Deduction

“Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $1 million of debt incurred to purchase or substantially rehabilitate a home. Homeowners also may deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds. Taxpayers who do not own their home have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.”

2. Property Tax Deduction

“Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”

3. Imputed Rent

“Buying a home is an investment, part of the returns from which is the opportunity to live in the home rent-free. Unlike returns from other investments, the return on homeownership—what economists call “imputed rent”—is excluded from taxable income. In contrast, landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their simultaneous role as their own landlords.”

4. Profits from Home Sales

“Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale. But homeowners may exclude from taxable income up to $250,000 ($500,000 for joint filers) of capital gains on the sale of their home if they satisfy certain criteria: they must have maintained the home as their principal residence in two out of the preceding five years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous two years.”

Bottom Line

We are not suggesting that you purchase a house just to save on your taxes. However, if you have been on the fence as to whether 2017 is the year you should become a homeowner, this information might help with that decision.

Disclaimer: Always check with your accountant to find out what tax advantages apply to you in your area. 

The 'REAL' News about Housing Affordability
By Michael
April 6, 2017

The 'REAL' News about Housing Affordability | Simplifying The Market

The 'REAL' News about Housing Affordability

Here is how NAR defines the index:

“The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national level based on the most recent price and income data.”

Basically, a value of 100 means a family earning the median income earns enough to qualify for a mortgage on a median-priced home, based on the price and mortgage interest rates at the time. Anything above 100 means the family has more than enough to qualify.

The higher the index, the easier it is to afford a home.

Why the concern?

The index has been declining over the last several years as home values increased. Some are concerned that too many buyers could be priced out of the market.

But, wait a minute…

Though the index skyrocketed from 2009 through 2013, we must realize that during that time, the housing crisis left the market with an overabundance of distressed properties (foreclosures and short sales). All prices dropped dramatically and distressed properties sold at major discounts. Then, mortgage rates fell like a rock.

The market is recovering, and values are coming back nicely. That has caused the index to fall.

However, let’s remove the crisis years (shaded in gray) and look at the current index as compared to the index from 1990 – 2008:

The 'REAL' News about Housing Affordability | Simplifying The Market

Though prices and rates appear to be increasing, we must realize that affordability is composed of three ingredients: home prices, interest rates, and income. And, incomes are finally rising.

ATTOM Data Solutions recently released their Q1 2017 U.S. Home Affordability Index. The report explained:

“Stronger wage growth is the silver lining in this report, outpacing home price growth in more than half of the markets for the first time since Q1 2012, when median home prices were still falling nationwide. If that pattern continues, it will help turn the tide in the eroding home affordability trend.”

Bottom Line

Compared to historic norms, it is still a great time to buy from an affordability standpoint.   But individual circumstances rarely track "the norm".   Every homebuyer's situation is unique.   As your REALTOR®, I will facotr in this type of information to help you make the right decision for you, but the first step is to find you affordability "comfort zone" before you buy your next home.

Buying this Spring? Be Prepared for Bidding Wars
By Michael
April 5, 2017

Buying this Spring? Be Prepared for Bidding Wars | Simplifying The Market

Traditionally, spring is the busiest season for real estate. Buyers come out in force and homeowners list their houses for sale hoping to capitalize on buyer activity. This year will be no different!

 

Buyers have already been out in force looking for their dream homes and more are on their way, but the challenge is that the inventory of homes for sale has not kept up with demand, which has lead to A LOT of competition for the homes that are available.

A recent Bloomberg article touched on the current market conditions:

“It’s the 2017 U.S. spring home-selling season, and listings are scarcer than they’ve ever been. Bidding wars common in perennially hot markets like the San Francisco Bay area, Denver and Boston are now also prevalent in the once slow-and-steady heartland, sending prices higher and sparking desperation among buyers across the country.”

Sam Khater, Deputy Chief Economist at CoreLogic went on to explain why buyers are flocking to the market in big numbers:

“In today’s market, many buyers think the trough in [interest] rates is over. If you don’t get in now, it’s just going to be worse later. Rates will be higher, prices will be higher, and maybe inventory selection will be lower.”

In some markets, “thirty-five percent of properties are selling within the first week or two of hitting the market.” Homes are selling at a rapid clip in places like:

  • Fort Worth, TX
  • Watauga, TX
  • North Richland Hills, TX
  • Hurst, TX
  • Saginaw, TX
  • Denver, CO
  • Seattle, WA
  • Oakland, CA
  • Grand Rapids, MI
  • Boise, ID
  • Madison, WI
  • Omaha, NE

Bottom Line

Let’s get together to discuss your exact market conditions and help you create a strategy to secure your new home in this competitive atmosphere! 

15,014 Homes Sold Yesterday… Did Yours?
By Michael
April 4, 2017

15,014 Homes Sold Yesterday… Did Yours? | Simplifying The Market

There are some homeowners that have been waiting for months to get a price they hoped for when they originally listed their house for sale. The only thing they might want to consider is... If it hasn't sold yet, maybe it's not priced properly, or has a market strategy that is not reaching buyers.

After all, 15,014 houses sold yesterday, 15,014 will sell today and 15,014 will sell tomorrow.

15,014!

That is the average number of homes that sell each and every day in this country, according to the National Association of Realtors’ (NAR)  latest Existing Home Sales Report. NAR reported that sales are at an annual rate of 5.48 million. Divide that number by 365 (days in a year) and we can see that, on average, over 15,014 homes sell every day.

The report from NAR also revealed that there is currently only a 3.8-month supply of inventory available for sale, (6-months inventory is considered ‘historically normal’).

This means that there are not enough homes available for sale to satisfy the buyers who are out in the market now in record numbers.

Bottom Line

We realize that you want to get the fair market value for your home. However, if it hasn't sold in today's active real estate market, perhaps you should reconsider your current asking price.  The other consideration is that it's not reaching potential buyers.   Maybe you heard that all you had to do was put a sign in the yard and sell it yourself.  Perhaps you listed with a limited service agreement that pinches pennies while missing the best chance for it to sell.  Either way, it's time to talk to a professional, if you're home sits available but unsold.