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.
Hosted by Tony Meier & Team - Windermere Real Estate/NE
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:
“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.”
“Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”
“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.”
“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.”
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.
Forbes.com recently released the results of their new American Dream Index, in which they measure “the prosperity of the middle class, and…examine which states best support the American Dream.”
The monthly index measures several different economic factors, including goods-producing employment, personal and commercial bankruptcies, building permits, startup activity, unemployment insurance claims, labor force participation, and layoffs.
The national index score was rounded out to 100 in January and saw a modest jump to 100.5 in February.
Alaska represented the lowest score on the index at 80.7, due mostly to the recent collapse in oil prices. Nevada came in with the highest score at 108.8, boosted by big gains in goods-producing jobs and new construction activity. The full results can be seen in the map below.
Forbes Senior Editor Kurt Badenhausen explained why many states saw a boost in the index last month:
“[B]usinesses are hiring in part in anticipation of tax cuts and less regulation… Many areas of the country have experienced strong upticks in employment and construction, as well as declines in unemployment claims since the start of the year.”
The American Dream, for many, includes being able to own a home of his or her own. With the economy improving in many areas of the country, that dream can finally become a reality.
Sold for $883,000
Wonderfully updated home in Coventry on English Hill. The light filled 2,390 s.f. floorplan features 4 bedrooms, 2.5 baths on a sunny 8,396 s.f. lot. Many updates includes updated kitchen & baths, new carpet, hardwood floors, refreshed interior paint & white millwork!
The gracious two story entry welcomes you in. Formal living room with big windows and cozy fireplace. Formal dining room overlooks rear yard. Big kitchen with breakfast bar, custom cherry cabinets, stone counters, custom tile backsplash & stainless steel appliances included! Spacious nook adjoining kitchen and family room. Relaxing family room with hardwood floor border, brick fireplace and a slider to rear patio & yard. Updated powder room for your guests. Laundry room with cherry cabinets & soaking sink – washer and dryer included!
The staircase is finished in hardwoods and leads to a large landing on the second floor. The wonderful master suite has ample room, a walk-in closet and a second closet too. The attached bath has been update with a double vanity, white cabinetry, soaking tub and an oversized shower with custom tile, glass wall, rain showerhead & skylight. Three additional bedrooms are very spacious. The full bath in the hall has been update too!
Big, entertainment sized patio overlooks the private, fully fenced rear yard with dog run. Nice lawn provides room for play or soaking up the sun! Ample garden space will satisfy any gardener! Attached two car garage with storage options. The English Hill HOA has several acres of open space, walking trails & basketball court for your enjoyment. Outstanding Northshore schools – Sunrise Elementary, Timbercrest Jr High & Woodinville High.
Sold for $1,300,000
This custom built recently updated home is located on a private 35,011 s.f. lot. Ideally positioned in the easily accessible English Hill area, the home features 4 bedrooms, 4 separate baths, den, 4,150 s.f. and a park-like lot.
Wonderful home for entertainment with cozy spaces in a flowing layout. Craftsmanship shows throughout with ample molding, wainscoting and refinished extensive hardwood floors. Formal living room with gas fireplace and big windows. Elegant dining room is perfect for a dinner party. Updated powder room with plenty of counter space. Relaxing family room with wood burning fireplace, built-ins and French doors to the patio. Private den with built-ins and large windows showcasing the front yard. Recently remodeled 3/4 bath with stone counters, tile floor, glass shower and pedestal sink. Laundry with storage cabinets, folding counter and soaking sink.
Chefs kitchen includes: Stainless steel appliances, gas cooktop, island with seating, granite counters, custom backsplash, abundant oak cabinets, wet bar with wine rack, desk area and large pantry closet too!
The lush master is a welcoming retreat at the end of the day with an enormous walk-in closet and lighted crown molding. Sumptuous 5 piece master bath with skylight, jetted tub, oversized glass shower, double sinks, toilet closet – all finished in beautiful marble tile.
Three spacious guest rooms all located on the 2nd floor. The first bedroom includes a remodeled en-suite bathroom with stone counters, tile floors, double vanity, linen closet and pocket door separating the vanity area from the toilet/shower area. The second bedroom is adjacent to the en-suite bathroom. The third bedroom is quite large and could also be used as a bonus room.
Stunning yard is your own private park! Large patio, putting green, fire pit area, mature shrubbery, large lawn for play, storage shed – all with a tree-lined backdrop. Simply gorgeous!
Outstanding Northshore Schools – Sunrise Elem., Timbercrest Jr. High & Woodinville High.
According to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S. housing market has continued to move deeper into buy territory, supporting the belief that housing markets across the country remain a sound investment.
The BH&J Index is a quarterly report that attempts to answer the question:
The index examines the entire US housing market and then isolates 23 major cities for comparison. The researchers “measure the relationship between purchasing property and building wealth through a buildup in equity versus renting a comparable property and investing in a portfolio of stocks and bonds.”
While most of the metropolitan markets examined moved further into buy territory (15 of the 23), markets like Dallas, Denver, and Houston are currently deep into rent territory. In these three markets, it is estimated that renting will top homeownership 7 out of 10 times.
Due to a lack of inventory, the home prices in the Dallas, Denver, and Houston, areas have increased by 13%, 11.4%, and 7.3% respectively. Home prices in these areas will begin to return to more normal levels once residents realize that renting is not the best option, therefore bringing home affordability back as well.
The majority of the country is strongly in buy territory. Buying a home makes sense socially and financially, as rents are predicted to increase substantially in the next year. Protect yourself from rising rents by locking in your housing cost with a mortgage payment now.
To Find Out More About the Study: The BH&J Index and other FAU real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.
Sold for $985,003
Completely remodeled home in the desirable neighborhood of Eastbrook. This spacious floorplan boasts 3,070 s.f. and features 4 bedrooms, 2.5 baths on a shy acre lot. The list of recent and extensive updates include: Outside – high quality roof and maintenance free Azek deck. Inside – updated kitchen with top of the line appliances and built in espresso machine, remodeled baths and laundry room.
Formal living room features windows encasing the room, coffered ceiling and elegant gas fireplace. Dining room with built-in buffet and large windows showcasing the front yard. Updated kitchen includes new cabinets, granite counters, custom tile backsplash, designer lighting, breakfast bar, French doors to deck and top of the line stainless steel appliances included. Relaxing family room with gas fireplace and vaulted ceiling. Updated powder room with new vanity, counter and fixtures. Main floor den is a private place to catch up on work.
Generous master bedroom with walk-in closet, gas fireplace and vaulted ceiling. The attached bath is fully remodeled and includes double vanity, stone counter, new fixtures and jetted tub. Three additional bedrooms are spacious. The hall bath has been remodeled with a new vanity, counter, new fixtures and tile floor. Upstairs bonus room is a great place to lounge or play!
Lush yard with maintenance free Azek deck, lighted sport court, fire pit area and large lawn for play – all with the backdrop and privacy of majestic trees. Outstanding Northshore schools – Cottage Lake Elementary, Timbercrest Jr High & Woodinville High.
If you thought about selling your house this year, now may be the time to do it. The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing. We were still in high school when we learned the concept of supply and demand: the best time to sell something is when supply of that item is low and demand for that item is high. That defines today’s real estate market.
Jonathan Smoke, Chief Economist at realtor.com, revealed in a recent article that:
“The biggest challenge to buyers this spring will be simply finding a home to buy and getting it successfully under contract. That’s because the supply of homes for sale is at an all-time low, and yet demand is strong and getting stronger.”
Smoke goes on to say:
“We started the year with the lowest inventory of homes available for sale that we’ve ever seen on realtor.com. While we did see inventory grow 2% in February, total inventory was down 11% over last year.”
In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction including the inspection, appraisal and financing contingencies.
As a potential seller, you are in the driver’s seat right now. It might be time to hit the gas.
The media has extensively covered the rise in mortgage interest rates since last fall (from 3.42% last September to the current 4.1% according to Freddie Mac). However, a less covered aspect of the mortgage market is that requirements to get a mortgage have eased while rates have risen.
The Mortgage Bankers Association (MBA) quantifies the availability of mortgage credit each month with their Mortgage Credit Availability Index (MCAI). According to the MBA, the MCAI is:
“A summary measure which indicates the availability of mortgage credit at a point in time.”
The higher the index, the easier it is to get a mortgage. Here is a chart showing the MCAI over the last several months as rates have increased.
Yes. Here are two examples:
Whether you are a current homeowner looking to move to a home that will better serve your family’s current needs, or a first-time buyer looking for a starter home, it is easier to get a mortgage today than it has been at any other time in the last ten years.