93% of Young Adults Plan to Buy a Home

December 20, 2012 by PK Johnson · Leave a Comment 

If you follow this blog, you know that we have often posted that we believe young adults between the ages of 18-34 will be a major percentage of all buyers purchasing a home in 2013. Some believe we are overestimating the millennials’ belief in homeownership. However, a new study by Truliareveals we may be dead on. Regarding young adults, the study reports:

  • 43% are already homeowners
  • 93% that currently rent plan to purchase a home
  • 72% say homeownership is part of their personal American Dream

Jed Kolko, Trulia’s Chief Economist, explained:

“Millennials have been shaken, not scarred by the housing bust. Nearly all of them want to own a home someday, if they’re not homeowners already. But many of them think today’s low prices and low mortgage rates will last. They may be in for sticker shock if the cost of homeownership has returned to normal levels by the time they’re ready to buy.”

If you are a young adult waiting to buy, you must realize that the price of a home and the cost of a mortgage are both projected to increase in the next 12 months.

Source: KCM Blog

Can a Single Webinar Be a Real Estate Game Changer?

December 20, 2012 by PK Johnson · Leave a Comment 

Attention Industry Professionals!

Here at KCM, we pride ourselves on sharing excellent real estate content in as many venues as we can. The quality of the content ALWAYS comes first whether it is on our daily blog, in one of our eGuides or in our all-inclusive membership service, Keeping Current Matters. We strive for excellence every time. However, there are times we know that something very special has occurred. Our free webinar last week, KCM’s 5 Steps to Success in 2013, was one of those times. The reviews coming in from attendees are sensational.

“This was the best webinar you’ve ever done.”

“Tons of great information. Thanks so much!”

“I can’t wait to share this information with my clients. KCM is the best.”

We knew going in that something special was about to happen.

Some had warned us that doing a webinar in the middle of December might be foolish. They told us it was the wrong time of the year. We decided to go forward anyway. The results?

  • Over 2,300 real estate professionals registered for the webinar.
  • Registrants represented 43 of the 50 states and the District of Columbia
  • There were more likes/tweets/shares/plusses on social media than any other webinar we’ve ever done.
  • Hundreds of agents had already signed up to view the replay video within 48 hours of the webinar ending

Why has this webinar been so successful?

KCM stands for Keeping Current Matters. We believe there are opportunities in every real estate market and if we keep current on what matters in the industry, we will be able to decipher where these opportunities exist. Obviously, thousands of other industry professionals agree. They came to see what we believed would be the best opportunities in 2013.

I think we nailed it. The KCM research team revealed which segments of the market would be red-hot over the next twelve months. Our graphics department created powerful visuals to help you best work these opportunities. We then put it all together in one of the most important educational resources with which I have ever been involved.

I know many of you have had a good 2012. We all feel that 2013 will probably be evenbetter. However, I truly believe that viewing this webinar will give you the chance to have the best year you have ever had in real estate next year.

What is your next step?

If you haven’t seen this webinar yet, I highly urge you to check it out. I’m not going to say it will change your life, but it very well might change your year in real estate.

You can view a replay of the webinar here.

Source: KCM Blog

Time It Takes to Complete a Foreclosure [INFOGRAPHIC]

December 16, 2012 by PK Johnson · Leave a Comment 

InfoGraphic

Source: KCM Blog

Homeownership as an Investment

December 16, 2012 by PK Johnson · Leave a Comment 

In Real Estate: Today’s Golden Opportunity we compared the current housing market to the market for gold about a decade ago. Some commented on the fact that you can’t compare gold to real estate as an investment as gold is a very liquid asset and it would take more time and effort to sell a house. We were not trying to make the case for real estate vs. gold as an investment in our blog. We were just showing that all investments go through cycles and that the best time to buy any investment may be when everyone is saying not to.

However, since the subject of comparing real estate to other investments has come up, let’s take a closer look. There are two major advantages to investing in a home of your own rather than another option:

You Can’t Live in Your IRA

When you buy your own home you are not taking available dollars away from another investment. You are replacing one housing expense (rent) which has no potential for a return on investment with another (mortgage payment) that does give you an opportunity for a return. We realize that there has been research showing that over the last 30 years renting has been less expensive than owning. That research also says that if you invested the entire difference between the rent payment and mortgage payment you may have done better financially. There are two challenges with this conclusion:

  1. Today, in the vast majority of the country, renting is actually more expensive than owning a home.
  2. History has proven that tenants DO NOT invest the difference in their rent and mortgage payments.

Today, studies show that owning a home is no more expensive than renting a home. However, even if this wasn’t the case, history shows that owning a home creates greater wealth.

Paying a mortgage creates what financial experts call ‘forced savings’. The Joint Center for Housing Studies at Harvard University released a study last year titled America’s Rental Housing: Meeting Challenges, Building on Opportunities. In the study, they actually quantified the difference in family wealth between renters and homeowners:

“[R]enters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”

There Are Tremendous Tax Advantages to Investing in a Home

There is no doubt that selling an investment such as gold is easier than selling your home. However, this liquidity comes at a price. The price is called capital gains. That is the tax you pay on any financial gain you receive from the investment. This tax doesn’t apply the same way when you sell your primary residence:

Theresa Palagonia, a CPA and the Accounting Manager for the firm G.S. Garritano & Associates, was good enough to explain the Home Sale Exclusion Rules:

“You may qualify to exclude from your income all or part of any gain from the sale of your main home.

Maximum Exclusion

You can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true:

  • You meet the ownership test.
  • You meet the use test.
  • During the 2 year period ending on the date of the sale, you did not exclude gain from the sale of another home.

If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions listed above.

You may be able to exclude up to $500,000 of the gain on the sale of your main home if you are married and file a joint return and meet the requirements. (Special rules apply for joint returns.)

Ownership and Use Tests

During the 5 year period ending on the date of the sale, you must have:

  • Owned the home for at least 2 years, and
  • Lived in the home as your main home for at least 2 years

Certain exceptions exist in which you may qualify for the exclusion without satisfying the tests listed.”

Bottom Line

Every investment has pros and cons. That is why there is such an assortment of great opportunities. Real Estate has been, is and always will be one of those opportunities.

Source: KCM Blog

Was 2012 a Better Year for Real Estate Than 2011?

December 12, 2012 by PK Johnson · Leave a Comment 

There are still those questioning whether the housing market is truly making a comeback. We have decided to graph home sales over the last two years based on the National Association of Realtor‘s Pending Home Sales Report. We believe the graph removes all doubt.

The methodology for the report as per NAR:

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.”

Source: KCM Blog

5 Steps to Success in 2013 [Free Webinar]

December 12, 2012 by PK Johnson · Leave a Comment 

Source: KCM Blog

Luxury Housing Market Surges [INFOGRAPHIC]

December 8, 2012 by PK Johnson · Leave a Comment 

Source: KCM Blog

Barbara Corcoran to Move-Up Buyers: DO IT NOW!

December 8, 2012 by PK Johnson · Leave a Comment 

Barbara Corcoran on the TV Show Fast Money:

“Right now, if you are upgrading to a bigger house, even if you’re selling at 10% off, you buy your new house at 10% off. Price appreciation is going to go much higher than people anticipate.”

Source: KCM Blog

Will the Mortgage Forgiveness Act Be Extended?

December 5, 2012 by PK Johnson · Leave a Comment 

The Mortgage Forgiveness Debt Relief Act of 2007 is set to expire at the end of the year. The act allows taxpayers to be excluded from paying taxes on forgiven debt in certain situations. As their website explains:

“The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.”

The act also applies to debt forgiven in a short sale. The big question is whether or not Congress will extend it past the December 31st deadline. Forty-one state attorneys general signed a letter urging Congressional leaders to extend the act. In the letter, it is explained:

“Each of our offices receives calls every day from homeowners trying to save their homes or struggling to recover from losing their homes…Congress must act. We urge you to extend the existing exclusion of forgiven or cancelled mortgage debt from taxable income under federal law before it expires at the end of this calendar year.”

The push is on to get an extension. Here are the current bills in Congress:

Whether Congress will act in time to extend the act before its expiration is anyone’s guess.

Source: KCM Blog

Harmful Effects from Changing the Listing Price?

December 5, 2012 by PK Johnson · Leave a Comment 

With the housing market showing signs of a recovery, sellers may think they can list their homes at a higher price and adjust if necessary. That may not be a good strategy. This is a post we ran last year by Ken H. Johnson, Ph.D. — Florida International University (FIU) and Editor of the Journal of Housing Research. To view other research from FIU, visit http://realestate.fiu.edu/- The KCM Crew

The Research

Are there any negative effects from changing the listing price of a property?  This question haunts Brokers/Agents as well as sellers of property every day.  At present, there does not seem to be a consensus answer to this question within the professional real estate community.  Fortunately, this question was scientifically investigated by John R. Knight. Unfortunately, few know the results of Professor Knight’s research.

In Knight, the impact of changing a property’s listing price is investigated.  Additionally, the types of property that are most likely to experience a price change are also estimated.  The findings from this research indicate that, on average, properties which experience a listing price change take longer to sell and suffer a price discount greater than similar properties.  Furthermore, bigger price changes are found to experience even longer marketing times and greater price discounts.  Finally, as for which properties are most likely to experience a price change, Knight finds that the greater the initial markup; the higher the likelihood that any given property will experience a listing price change.

Implications for Practice

Sellers as well as Brokers/Agents should therefore be aware of the critical necessity of getting the price correct from the start.  Sellers wanting to over list will ultimately take longer to sell and will sell their property for less, on average, according to Knight.  Brokers/Agents’ desire to take a listing and get the price right later will ultimately lead to their working harder according to Knight, and they are not doing their sellers any favors.  Thus, an initial and detailed analysis of the proper price is much more critical than many originally thought.

Interestingly, I have found in my own research that the direction (up or down) of the listing price change does not matter.  A listing price increase and decrease both lead to similar results found in Knight’s work – longer marketing times and lower prices.  Therefore, get the price right from the beginning.  It is best for all.

Source: KCM Blog

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