Is the real estate market showing signs of improvements?
Blog :: 01-2012
There is a new antique shop open in Shelburne Falls. Located next to the Coldwell Banker Upton-Massamont Realtor's office on Bridge Street is the Trolley Stop Antiques and Collectibles. It has all kinds of collectibles and neat things to look at and purchase! If you like browsing antique shops, stop by and visit the Trolley Shop Antiques and Collectibles. Robert Fisher, the owner would love to see you.
There are some factors we can be certain about in this housing market such as home values rebounding. This is true; the housing market often moves in cycles.
It's safe to assume that many Americans harbored the same uncertainty during the George H. W. Bush administration in the early 1990s when the national homeownership rate fell from its previous historic high of 64.4 percent in 1980 to a low of 64.1 percent in 1991.
In the 1960s Lyndon Johnson illustrated a correlation between homeownership and accountability by stating "owning a home can increase responsibility and stake out a man's place in his community...The man who owns a home has something to be proud of and reason to protect and preserve it."
This statement is still true more than 50 years later. There are many reasons to take pride in homeownership such as:
- Appreciation - Buying a home now (at the current rates) can almost ensure your home's appreciation in the future. Mortgage rates are near historic lows and home prices in many parts of the country are down. This is the perfect recipe for home appreciation. Additionally, many foreclosed homes are available for a fraction of the original cost. This can translate to a higher profit if you decide to sell once the market rebounds.
- Property Tax Deductions - For income tax purposes, real estate property taxes for a vacation home and first home are fully deductible. The IRS (Publication 530) provides detailed tax information for first-time buyers that may answer many questions about what deductions homeowners are eligible for.
- Preferential Tax Treatment - If you own your home for more than a year and receive more profit than the allowable exclusion after the sale of your home, the profit will be considered a capital asset. Capital assets are given preferential tax treatment.
- Equity Building - Many factors such as credit qualification, loan flexibility, and annual percentage rate (APR) contribute to the final decision of what type of mortgage loan best fits your goals. Yet, a new trend being used by some homeowners is to actually add money to their monthly payment to decrease the principal balance of their loans at a much faster pace. This trend is called equity building. Equity builders usually select a home loan with a lower interest rate (and a shorter term loan such as a 15-year fixed) to help build equity faster. This rapid payment process allows borrowers to:
- Pay off the principal balance faster
- Lock in near-record-low interest rates
- Shorten the length of their home loan
- Own their home faster
- Pay substantially less mortgage interest
Equity building is a beneficial trend that's becoming more and more popular with fiscally responsible homeowners. Also, home equity is the largest single source of household wealth for most Americans.
- Pride - Homeownership offers many benefits to many different types of people. For some homeowners, playing your music as loud as you want and painting the walls the color of your choice is a perk. For me, homeownership will permit me to build an NBA regulation size basketball court on my own property. For my coworker Joel Jarvi, home ownership may allow him to build the indoor slide of his dreams. No matter who you are, homeownership is a purchase, commitment, and journey that's sure to bring you pride.
Furthermore, when the uncertainty surrounding the housing market fades and the market rebounds, homeownership may in fact transform that pride to profit through a home sale.
NAR released its pending home sales index figure last week, and for the second month in a row, the index is up. What's more, the index has broken 100. That's significant because the only other time the index has hit 100 in recent years is when the home buyer tax credit was available. "It is the natural, organic power of great affordability conditions and job creation that is bringing the index level up," says NAR Chief Economist Lawrence Yun. "This is a very encouraging sign." NAR Chief Economist Lawrence Yun is upbeat about 2012 because in a number of areas indicators are pointing upward. Not only are home sales up but housing starts are up and home prices are stabilizing in many markets and heading up in some. In areas where they're still down, the declines aren't that great. More fundamentally, broader U.S. economic signs are looking positive, including the all-important jobs picture. About 100,000 job are being created a month, and that could rise to 150,000--still not a quick enough pace to get us back to where we were before the downturn but the headwinds are in the right direction.
Released yesterday, December 29th, 2011, is the 2012 Economic and Housing Outlook from NAR Chief Economist Lawrence Yun. The full 15 slide PowerPoint looks at economic indicators such as existing home sales, new home sales, housing starts, GDP, payroll jobs and more.