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READY FOR TAX SEASON? HERE ARE A FEW HOUSING-RELATED TAX TIPS TO CONSIDER

READY FOR TAX SEASON? HERE ARE A FEW HOUSING-RELATED TAX TIPS TO CONSIDER
February 15, 2021
By Boomer Foster, President, General Brokerage and Gary A. Scott, President, General Brokerage.

It’s hard to believe it’s been nearly a year since the Covid-19 pandemic began and changed the way we live, work and play. Although tax filing deadlines were extended last year due to the pandemic, this year, the deadline is back to its usual April 15 date. As you prepare your 2020 taxes, here are a few housing-related items to keep in mind.

Home interest deductions.

Mortgages that closed before Dec. 14, 2017: A married couple filing jointly and single filers can deduct mortgage interest on a combined debt limit of $1 million.
Mortgages that closed after Dec. 14, 2017: For both primary residences and second home loans, mortgage interest can be deducted on a combined debt limit of $750,000.
Property tax deductions.

Taxpayers who itemize can only deduct up to $10,000 on a combination of state and local property, income and sales taxes. This applies to property taxes on your primary residence, a vacation home and undeveloped land.

Capital gains tax exclusions.

Married-joint filers can exclude up to $500,000 and single filers can exclude up to $250,000 when selling their primary home, provided they’ve lived there two of the past five years.

Those are just a few of the housing-related tax laws. Please consult your tax advisor for more information on how these and other tax deductions may apply to you.

Will the Housing Market Bloom This Spring?

Spring is almost here, and many are wondering what it will bring for the housing market. Even though the pandemic continues on, it’s certain to be very different from the spring we experienced at this time last year. Here’s what a few industry experts have to say about the housing market and how it will bloom this season.

Danielle Hale, Chief Economist, realtor.com:
“Despite early weakness, we expect to see new listings grow in March and April as they traditionally do heading into spring, and last year’s extraordinarily low new listings comparison point will mean year over year gains. One other potential bright spot for would-be homebuyers, new construction, which has risen at a year over year pace of 20% or more for the last few months, will provide additional for-sale inventory relief.”

Ali Wolf, Chief Economist, Zonda:
“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”

Freddie Mac:
“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points… However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”

Mark Fleming, Chief Economist, First American:
“As the housing market heads into the spring home buying season, the ongoing supply and demand imbalance all but assures more house price growth…Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”

Bottom Line
The experts are very optimistic about the housing market right now. If you pressed pause on your real estate plans over the winter, reach out to The Butch Cazin Team to determine how you can re-engage in the homebuying process this spring.

-KeepingCurrentMatters.com

WHAT’S THE DIFFERENCE BETWEEN AN APPRAISAL AND A HOME INSPECTION

by KeepingCurrentMatters.com.

What’s the Difference between an Appraisal and a Home Inspection?

If you’re planning to buy a home, an appraisal is an important step in the process. It’s a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here’s the breakdown of each one and why they’re both important when buying a home.

Home Appraisal
The National Association of Realtors (NAR) explains:

“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.

This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.

However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.

Home Inspection
Here’s the key difference between an appraisal and an inspection. MSN explains:

“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.

Bottom Line
The appraisal and the inspection are critical steps when buying a home, and you don’t need to manage them by yourself. Reach out to The Butch Cazin Team today so you have the expert guidance you need to navigate through the entire homebuying process.

MARKET UPDATE – DECEMBER 2020

While 2020 has been an incredibly challenging year, housing turned out as a bright spot. Despite the impact of the coronavirus pandemic, homeownership rates rose to 67.4% in the third quarter, up from 64.8% the same period in 2019.
The fundamentals are in place for a continued strong housing market in 2021, particularly with expectations that mortgage rates will remain around 3%. Here are a few more of our predictions for the year ahead.
Home prices will rise. The law of supply and demand will drive prices higher, with 5% to 6% increases predicted on average.
Affordability will remain mostly positive. Low mortgage rates will offset rising prices, increasing the number of households who can afford to buy a home.
Inventory challenges will continue. While builders are expected to construct homes at a faster pace in 2021, there’s still a gap between demand and supply for new and existing homes.
Increased teleworking will influence housing. People will continue to work from home, affecting where they’re shopping for homes and what they’re looking for in those properties.
Vacation home markets will stay hot. In 2020, homeowners with rising equity and investors with high stock market profits drove a spike in demand for homes in coastal markets, which will continue next year.
Technology remains critical. Virtual tours, remote closings and video conferencing kept real estate moving in 2020, and virtual buying and selling will continue to lead the way in 2021.
Whether you’re looking to buy, sell or invest in real estate in 2021, we can help. With our partners in mortgage, title, insurance and moving, our Long & Foster family has you covered for all your real estate needs. Happy Holidays!

Weekly Update: July 13, 2020

We’re halfway through the year and many are curious to know how the real estate market is measuring up to past years – especially with this year’s added challenges from the COVID-19 pandemic. While we expect some bumps in the road in the coming months, as of today, the market looks good.

Mortgage rates continue to decline. Last week mortgage rates dropped to an average of 3.03% for the 30-year-fixed rate. This new low has helped spur both home sales and refinances.

Consumer sentiment is moving in the right direction. Consumer sentiment is one of the most important metrics in determining the health of the real estate market. For June, consumer sentiment came in at 78.1, up from May’s low of 72.3.

Inventory remains low and people are still looking to buy. Active inventory was down 10% in the first week of July compared to the same week in 2019, while new listing volume was up by 22%. Showing activity of homes on the market was up 27.6%.

Median sale prices rose while homes sold faster. In most areas, median sale prices of homes were up slightly in June. The average number of days homes spent on the market fell by about 2 days.

The stock market is up. Rising numbers in the stock market can likely be attributed to good employment numbers from June as well as hopes for a vaccine for COVID-19. Last month brought another 4.8 million jobs, which was higher than predicted, and unemployment fell to 11.1%.

The bottom line is if you’re planning to sell, I recommend putting your house on the market before fall. There are many buyers out there who are ready and waiting for more inventory to come on the market, and presidential election years typically come with a slowdown in home sales in the weeks surrounding the election. Similarly, if you’re looking to buy, let me know. We can start your virtual house hunt today.

Let me know if you have additional questions. I’m happy to assist you with your real estate needs.

Weekly Update: June 26, 2020

As we approach the end of June, most states are gradually reopening businesses and pent-up demand for housing is driving a busier than usual summer. Buyers and sellers are cautiously re-entering the real estate market, and with their return, here are some trends we tracked this past week.

Mortgage rates. Compared to the previous week, mortgage rates were flat but remain at all-time lows, allowing buyers to purchase more home for their money.

Stock market. The Dow remained volatile, but it was down by week’s end, due to the rise in the number of reported coronavirus cases.

Unemployment claims. Although 1.48 million people applied for unemployment, there’s been a steady decline of claims for 12 consecutive weeks.

On the real estate side, year-over-year listings were flat, but new contracts increased by double-digits. Home showings were over 30% greater compared to the same week in 2019, demonstrating high consumer demand for housing.

Window of opportunity. Historically, national elections bring uncertainty that can lead to a slight lull in real estate the fall before that election. If you’re thinking about buying or selling a home, the time to do so is now.

As usual, the health and safety of our clients is our priority. Our virtual buying and selling programs continue to lead our customers on their journeys home. If you’d like to know more about how I can help you, virtually or in person, with your home-buying or selling needs, I’m ready to assist you.

Weekly Update: June 12, 2020

It’s been an interesting and historic week for our economy and the real estate industry. As states and businesses open, a few trends have emerged.

Mortgage rates. This week, rates dipped below 3% for the first time ever, allowing buyers to get more home for their money.

Unemployment claims. About 1.5 million people applied for unemployment, which was the lowest number we’ve seen since the coronavirus (COVID-19) pandemic began.

Stock market. The Dow was volatile this week, and we are expecting continued market fluctuations as we move through the health crisis.

“Spring” market. In real estate, the busy spring market traditionally occurs in April and May, and it has shifted to June and July. Upward positive trends continue, fueled by pent-up demand and the dip in mortgage rates. Although inventory dropped this week, 80% of the homes that were previously taken off the market have now been actively listed for sale. Property showings were up by double-digits compared to the same time last year and at the highest levels we’ve seen since February.

To stay updated on what’s happening in your market, or for professional guidance through the process of buying or selling a home, don’t hesitate to contact me via phone or email.

Wishing good health to you, your friends and family.

Weekly Update: June 5

It was a busy week in the real estate market, with trends continuing to move in the right direction. Mortgage interest rates decreased to 3.15%, which helped spur a 18% jump in mortgage applications compared to the year prior. In contrast, when the coronavirus (COVID-19) pandemic was starting about six weeks ago, mortgage applications were down 35% annually.

The stock market also moved upward, fueled by an extremely positive jobs report. While economists were estimating unemployment would hit 20%, reports instead showed that 2.5 million jobs were added in May. That’s the biggest increase the country has experienced in the history of tracking those numbers.

On the real estate side, the volume of home showings last month was higher than it was in both May 2019 and 2018. Just last week, Long & Foster, as a company, had over 1,000 new listings and wrote contracts for over $760 million in homes. We believe real estate’s strong performance in May will set the tone for June and July.

As we focus on positive economic indicators, we also wanted to acknowledge this was an emotional week for our country. I’m proud to be affiliated with Long & Foster, a company that supports diversity, equality and opportunity, and that condemns intolerance, racism, bigotry and any other forms of hatred and injustice.

Please reach out to me with any questions you have about the real estate market and let me know how I can help you. As always, stay safe and healthy.

Weekly Update: May 29, 2020

With coronavirus-related restrictions easing and the economy reopening, real estate activity has been trending in a positive direction. At Long & Foster Real Estate, we are cautiously optimistic about the future.

While transactions have declined since March, they did not drop as much as many industry experts predicted. May has been more favorable, with increasing numbers of properties under contract and new listings across the Mid-Atlantic, according to MLS data.

Here are a few other promising economic metrics.

A balanced market. Inventory shortages have prevailed for the last 48 months. While the number of homes for sale remains low, demand for properties has leveled out. This allows qualified buyers to get the home they want with low interest rates.

Property appreciation. In April, the median sale price increased 9.3% and the average sale price was up by 7.2%. Provided housing demand continues to outpace supply, home prices should remain stable, if not increasing.

Quicker home sales. It took 11 fewer days to sell a home in April than it did in March, resulting in a 38.9% decrease in the average number of days that a property remains on the market.

Consumer confidence increase. Although consumer confidence was expected to decline from April to May, it rose month-over-month. We expect to see continued upward movement going forward, as businesses reopen and further progress is made toward a vaccine.

I’ll continue to keep you updated on the real estate market and the effects we’re seeing from the pandemic. As always, feel free to reach out if you have any questions. In the meantime, stay safe and healthy.

Weekly Update: May 22, 2020

Coronavirus (COVID-19)-related restrictions are slowly loosening across our region, and we’re seeing some upward real estate trends as a result. Here’s some of what’s currently occurring, as well as what we expect to see in the coming weeks.

Mortgage rates remain low. We’ve seen rates drop again this week and they’ve been trending under 3.3% for the last four weeks, which allows buyers to get more home for their money.

Stock market sees positive movement. Gaining much territory, the Dow Jones Industrial Average increased about 800 points in the past week.

Consumer sentiment inches up month-over-month. The University of Michigan Consumer Sentiment Index, which measures consumer confidence, was expected to decline, but instead rose from 71.8 to 73.7. The upward tick is likely due to the stimulus bills and the economy starting to re-open.

What’s trending in Long & Foster’s footprint.

Although all real estate is local, we’re seeing favorable trends where Long & Foster conducts business. Weekly inventory, which includes active, coming soon and temporary off-market listings, are about the same as they were this time last year. With more people venturing out to shop for homes, more properties are going under contract. Sales of single-family homes are outperforming condos and townhomes, especially in more densely populated areas, and home values are appreciating.

To stay updated on what’s happening in your market, or for professional guidance through the process of buying or selling a home, please contact me via phone or email.

As always, please stay safe. My best to you, your friends and families.