Property Taxes by Congressional District | Waccabuc Real Estate

Earlier this year, NAHB released 2017 property taxes by state as a blog post and as a longer special study. However, in light of changes made to the tax code by the Tax Cuts and Jobs Act (TCJA), further refining the statistics by congressional district is instructive to both members of Congress as well as their constituents.

Property Tax Payments, Effective Tax Rates, and Intrastate Comparisons

The highest average property tax bill was $11,389, paid by home owners residing in New York’s 17th district (Rockland County and portions of Westchester County). The smallest average annual real estate tax bill was $425, paid by home owners in Alabama’s fourth district (Franklin, Colbert, Marion, Lamar, Fayette, Walker, Winston, Cullman, Lawrence, Marshall, Etowah, and DeKalb Counties). The congressional districts in which homeowners pay the 20 largest and 20 smallest annual property tax bills are shown in Figure 1.

Figure 1

It is not surprising that many of the districts with the highest property tax rates are in states that impose the highest average property tax rates.  Figure 2 illustrates the geographic concentration of high- and low-tax congressional districts.

Figure 2

For example, 17 of the 20 congressional districts with the highest property tax rates are in three states: New Jersey, New York, and Illinois (Figure 3).

Figure 3

Source: U.S. Census Bureau, 2017 American Community Survey

Congressional districts in New York State exhibited the most variability of effective property tax rates – equal to the percentage of the property value paid in taxes each year (see Figure 4). The difference between rates in the 25th and 13th districts was 2.43 percentage points in 2017, the largest such difference within a state. The average property tax rate in the 25th district (2.79%) is more than six times greater than that in the 13th (0.36%). The smallest differential within a state with five or congressional districts was in Washington, where the highest effective property tax rate is 1.04% (WA-10) and the lowest is 0.75% (WA-7).

Figure 4

Property Taxes and the Tax Cuts and Jobs Act

The state and local tax (SALT) deduction decreases federal tax liability by allowing taxpayers to deduct the total of property tax payments plus either sales or income taxes paid to state and local governments during the year.  Under prior law, this deduction was uncapped but disallowed for taxpayers forced to pay the alternative minimum tax (AMT).  However, the Tax Cuts and Jobs Act (TCJA) capped home owners’ SALT deduction at $10,000 per year (through 2025).

The value of a tax deduction is determined by the amount deducted from taxable income and the taxpayer’s top marginal tax rate at which the income would have been taxed.  Thus, under prior law, a taxpayer in the top tax bracket (39.6%) who paid $10,000 in state income taxes and $10,000 in property taxes could have decreased their federal tax liability by $7,920 [39.6% x ($10,000+$10,000)].

Until the TCJA-made change expires in 2026, that amount would be reduced to $3,700 (equal to the $10,000 cap multiplied by the new, top marginal tax rate of 37%). The effect of this change on after-tax income is obvious in certain high-tax congressional districts.  For example, the average yearly bill for property taxes alone exceeded $10,000 in six districts in 2017 (NY-17, NY-3, NJ-11, NJ-7, NY-4, and NJ-5).

But as AMT status affects a taxpayer’s possible SALT deduction, one must bear in mind the significant changes made to the AMT by the TCJA.  The most impactful of these changes was the increase of the income threshold at which the AMT exemption begins to phase out.  For a married couple filing jointly, the phaseout threshold went from $160,900 to $1 million in 2018.

As a result, the number of AMT-affected taxpayers is expected to fall 90%–from five million to 500,000—between tax years 2017 and 2018.  The taxpayers who no longer face the AMT may now be able to claim a $10,000 deduction that was previously unavailable to them, lowering their tax liability.

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Builder confidence holds firm | Cross River Real Estate

Builder confidence in the market for newly-built single-family homes rose one point to 65 in July, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This marks the sixth consecutive month that sentiment levels have held at a steady range in the low- to mid-60s.

Builders report solid demand for single-family homes. However, they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes.

Even as builders try to rein in costs, home prices continue to outpace incomes. The current low mortgage interest rate environment should be getting more buyers off the sidelines, but they remain hesitant due to affordability concerns. Still, attractive rates should help spur new home purchases in large metro suburban markets, where approximately one-third of new construction takes place according to the NAHB HBGI. Lower recent have driven new home sales 4% higher on a year-to-date basis thus far in 2019, while single-family permits continue to lag.

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All the HMI indices inched higher in July. The index measuring current sales conditions rose one point to 72, the component gauging expectations in the next six months moved a single point higher to 71 and the metric charting buyer traffic increased one point to 48.

Looking at the three-month moving averages for regional HMI scores, the South moved one point higher to 68 and the West was also up one point to 72. The Northeast remained unchanged at 60 while the Midwest fell a single point to 56.

The HMI tables can be found at nahb.org/hmi.

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Building material prices fall | Katonah Real Estate

Prices paid for goods used in residential construction decreased by 1.1% in June (not seasonally adjusted) according to the latest Producer Price Index (PPI) released by the Bureau of Labor Statistics.  The decline broke a four-month trend of increases and was only the fifth month over the past two years in which prices fell.

Over the past 12 months, building materials prices have decreased 1.6%, just the fifth June year-over-year decrease since 2000.  The decline is a sharp reversal of June 2017 to June 2018, during which prices increased 8.8%.

The PPI report shows that softwood lumber prices decreased (-1.7%, not seasonally adjusted) in June—the index’s third consecutive monthly decline. Prices remain at their lowest level since February 2017.  While weekly prices have been volatile since mid-May according to Random Lengths, the difference between the average prices of softwood lumber in May and June mirrored the PPI data (-1.8% v. -1.7%).

One of the special indexes published by BLS tracks lumber and plywood in one category.  Similar to softwood lumber, the lumber and plywood index fell 2.3%.  Prices paid for softwood lumber and lumber and plywood have decreased 23.1% and 17.6%, respectively, since June 2018.

The price index for gypsum products continued its downward trend in June, declining 1.9%.  In the last 10 months, gypsum prices have only increased twice.

Prices have declined by 6.2% and 10.8% since January 2019 and August 2018, respectively.

Ready-mix concrete prices increased 1.2% in June and remain relatively volatile.  Prices have risen by more than 1.0% in two of the past three months, something that has only happened in 18 of the previous 231 months.

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Most homebuyers would sacrifice a big yard for a shorter commute, realtor.com says | Bedford Hills Real Estate

aerial neighborhood houses

Realtor.com added a new filter that allows people to look at homes for sale based on the commuting distance to their work. 

The new search option, created in response to user feedback, is designed to help buyers understand how long it will take to drive to and from work before pulling the trigger on a home purchase, realtor.com said in a statement. About 85% of people in a survey of 600 users of realtor.com said they would compromise on various home features, including lot size, square footage, and style of the home, to reduce their commute time. 

“Buyers would choose to save their sanity and sacrifice various home amenities in turn for a shorter commute,” realtor.com said.

The new feature currently is available only on the company’s IOS app, meaning right now you can only see it on iPhones, which represent about a third of the mobile market. In coming days it will be added to realtor.com’s Android app as well as its website, according to Shannon Baker, a spokeswoman for realtor.com.

The average American’s commute inched up to 26.9 minutes from 26.6 minutes in 2018 from the previous year, according to Census data. While that 18-second increase was small, it added up to two and a half extra hours on the road when tallied over the course of the year. 

Washington, D.C., has the nation’s worst commute, at an average 41 minutes each way, according to Geotab, a company that sells GPS fleet management systems, based on its computation of Census data. That’s followed by Boston and New York, both at 40 minutes. San Francisco is fourth, at 36 minutes, followed by Atlanta and Chicago, at 35 minutes. Los Angeles and Miami are seventh and eighth, at 33 minutes. Rounding out the top 10 is Philadelphia and Seattle, both at 32 minutes. 

This is what the filter looks like:

realtor.com's new filter

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https://www.housingwire.com/articles/49485-most-homebuyers-would-sacrifice-a-big-yard-for-a-shorter-commute-realtorcom-says?utm_campaign=Newsletter%20-%20HousingWire%20Daily&utm_source=hs_email&utm_medium=email&utm_content=74291785&_hsenc=p2ANqtz-9j58HHTMliEJmwZipM5rhh_O4VD6CzS9EkZVIHI7VToGUFvt5LIsNcWzip68L6WdCbZpAtAHtmu061zfsIR8Kj1ZsByg&_hsmi=74291785

Apartment demand spikes to 5 year high | Bedford NY Real Estate

Apartment for rent

Demand for apartments hit a high not seen in five years as a shortage of affordable homes has locked an increasing number of Americans out of the market.

According to recent data from RealPage, the national occupancy rate rose to 95.8% from 95.4% last year.

The increase in demand has sent rental prices upward, causing them to rise 3% from the same time last year.

Rental price increases varied across cities, with Las Vegas and Phoenix posting the greatest gains at 8.8% and 8.1%, respectively.

Of the cities that saw the most leasing activity, the Dallas-Fort Worth area takes the cake, with renters moving into 10,443 units in the second quarter of 2019, RealPage revealed.

“Apartment leasing activity accelerates during the warmer weather months, and demand is proving especially strong in this year’s primary leasing season,” according to RealPage chief economist Greg Willett.

“Solid economic growth is encouraging new household formation, and rentals are capturing a sizable share of the resulting housing demand,” Wlillet continued. “At the same time, loss of existing renters to home purchase remains limited relative to historical levels.”

Storied Westchester Skinny House seeks a buyer with a big heart and $250K | Pound Ridge Real Estate

VIEW PHOTO IN GALLERY

It’s easy to see that the little red house at 175 Grand Street in Mamaroneck, NY, is no ordinary home just by looking: At a mere 10 feet wide, the Skinny House stands out for its size alone. As 6sqft previously reported, this unique dwelling, listed on the National Register of Historic Places, has quite a tale to tell. The little house on a 12.5-foot lot was built in 1932 by Nathan T. Seely, one of New York’s first African American builders. Its story is one of ingenuity and skill, and it provided for its creator during hard times. In need of a new chapter and some real TLC, the house is on the market–for only the second time since its construction–for $275,000.

175 Grand Street, cool listings, mamaroneck, skinny house

Seely and his brother had built a successful home-building business constructing houses throughout Mamaroneck, mainly catering to black Southerners who fled northward as part of the Great Migration. But the Great Depression crushed the business; Seely went bankrupt and lost his home.

175 Grand Street, cool listings, mamaroneck, skinny house
175 Grand Street, cool listings, mamaroneck, skinny house
175 Grand Street, cool listings, mamaroneck, skinny house

Seely’s next-door neighbor, Panfino Santangelo, generously gave him a 12.5-foot by 100-foot strip of land in 1931; Seely put his considerable skills to work constructing the Skinny House using salvaged materials. A chicken coop was used as part of the living room; a center beam in the basement is a rusted railroad track; walls were constructed from paperboard hammered into wood scraps. When it was finished the home had everything you’d find in a much bigger dwelling including a cellar, a living room, a kitchen and pantry, two bedrooms and a bathroom on three floors. Seely even accounted for high winds by running cables from the side of the house into the ground.

175 Grand Street, cool listings, mamaroneck, skinny house

Seely died in 1962; his house was passed down to members of his family who continued to occupy it. In 1984, Panfino Santangelo’s daughter bought the house from Seely’s daughter for $30,000, returning the property to her family. The house was a rental up until it was discovered that a termite infestation had damaged much of the property. The home was inducted into the National Register in 2015, but the necessary repairs have not yet been done. The home is being sold as-is, but its history and potential remain.

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New York to investigate Facebook’s allegedly discriminatory housing ads | Bedford Corners Real Estate

Facebook’s advertising practices are, once again, under scrutiny.

This week, Gov. Andrew Cuomo called on the Department of Financial Services (DFS) to investigate Facebook’s ad practices that, according to reports, allow New York state-regulated advertisers to exclude consumers—even those looking for housing—through zip code information, based on classifications including race, sex, disability, national origin, religion, and familial status, the Daily News first reported.

“Facebook touts its advertising platform as a powerful means for housing and housing-related advertisers to reach desired consumers,” a statement from Cuomo’s office reads.

“The allegations against Facebook advertisers are extremely troubling and fly in the face of everything that New York stands for,” Cuomo said in a statement. “I am calling on the Department of Financial Services to investigate these claims and help ensure that New Yorkers seeking housing for themselves and their families are not discriminated against in any way.”

In March, following several legal actions, the American Civil Liberties Union (ACLU) announced a civil rights settlement with the tech giant as it vowed to take steps to ensure that advertisers could not discriminate when sending credit, job, and housing ads to users.

“As the internet—and platforms like Facebook—play an increasing role in connecting us all to information related to economic opportunities, it’s crucial that micro-targeting not be used to exclude groups that already face discrimination,” Galen Sherwin, senior staff attorney at the ACLU, said in a statement.

Also recently, on the federal level, the Department of Housing and Urban Development sued Facebook for allegedly violating the Fair Housing Act through its advertising practices.

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https://ny.curbed.com/2019/7/2/20678837/facebook-housing-discrimination-advertising-andrew-cuomo

Housing is providing another in a line of troubling signs pointing to an economic downturn | Armonk Real Estate

GP: Home for sale New home sales.

A for sale sign stands before property for sale in Monterey Park, California.Frederic J. Brown | AFP | Getty Images

A Federal Reserve economist says the current housing backdrop is similar to recent economic slumps, with several metrics “consistent with the possibility of a late 2019 or early 2020 recession.”

“Data on single-family home sales through May 2019 confirm that housing markets in all regions of the country are weakening,” the St. Louis Fed’s William R. Emmons said in a report posted on the central bank district’s site. “The severity of the housing downturn appears comparable across regions—in all cases, it’s much less severe than the experience leading to the Great Recession but similar to the periods before the 1990-91 and 2001 recessions.”

Specifically, Emmons looked at sales numbers for the 12 months ending May 2019 compared to the average over the past three years. He uses December 2019 as the “plausible month for peak growth” in the current case, and then looks at how far back from the peak was the first month in which sales fell below their three-year average in the previous three recessions. 

WATCH NOWVIDEO02:50Here’s what Fannie Mae is forecasting for the housing market

The process may seem at least somewhat opaque, but Emmons said it has been a reliable indicator from the housing market for when the next recession is due — usually about a year away, according to historical trends.

In the Northeast, for instance, August 2018 was the first month that sales fell below the region’s three-year average. That would be 16 months from the December 2019 assumed peak. In the previous recessions, the first negative month respectively came 23, 10 and 21 months before the peak. That would put the current pattern within the historical range, Emmons wrote.

These charts look at how each region stacks up. The four lines each represent a recession; the deviation of the 12-month sales average toward the three-year average decreases until it goes negative; the charts then show how long it took before a recession hit:

In addition to the sales numbers, Emmons said current mortgage rates, inflation-adjusted house prices and residential investment’s contribution to economic growth are similar to patterns that preceded the most recent three recessions.

Single-family home sales work best as indicator, he said, because the other metrics are national in nature and thus don’t reflect whether the deterioration has spread through all regions.

“Considering signals from other housing indicators and from indicators outside housing with good forecasting track records (such as the Treasury yield curve), the regional housing data noted here merit close attention,” Emmons wrote.Calling for rate cut

The St. Louis Fed, where Emmons works, is led by its president, James Bullard, who has been one of the loudest voices on the Federal Open Market Committee advocating for an interest rate cut. Bullard was the lone member of the monetary policymaking body in June to vote against keeping the benchmark funds rate steady. He is advocating an “insurance” cut to head off anticipated economic weakness.

Markets are anticipating up to three rate cuts this year, though most Fed officials have not committed to policy easing ahead of the July 30-31 FOMC meeting.

There are mounting signs that global weakness and business concerns over tariffs could hamper U.S. growth or cause an outright recession.

The New York Fed uses the spread between the 10-year and three-month Treasury yields to determine the probability of a recession over the next 12 months. That part of the yield curve has inverted, which has been a reliable recession indicator. Chances for negative growth by May 2020 are at 29.6%, up from 27.5% in April and the highest level since May 31, 2008, just as the financial crisis was set to explode in September.

Still, there are hopes that the U.S. can withstand a significant downturn.

Cleveland Fed President Loretta Mester, in a speech Tuesday, pointed out that the economy has been resilient through growth scares during a recovery that began 10 years ago. Mester said she expects housing to be neutral for growth this year.

Also, Joseph LaVorgna, chief Americas economist at Latixis, said a diffusion index of leading economic indicators is showing positive trends for six out of 10 components, indicating that “the risk of a downturn remains relatively low.”

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https://www.cnbc.com/2019/07/02/home-sales-point-to-recession-in-late-2019-or-2020-fed-economist-says.html?__source=newsletter%7Ceveningbrief

Home prices continue rise | Chappaqua Real Estate

FILE - This Jan. 26, 2016 file photo shows a "For Sale" sign hanging in front of an existing home in Atlanta. Short of savings and burdened by debt, America's millennials are struggling to afford their first homes in the face of sharply higher prices in many of the most desirable cities. Surveys show that most Americans under 35 lack adequate savings for down payments. The result is that many will likely be forced to delay home ownership and to absorb significant debt loads if they do eventually buy. (AP Photo/John Bazemore, File)
A “For Sale” sign hanging in front of an existing home in Atlanta. (AP Photo/John Bazemore, File)

Home price gains in the U.S. fell in April — marking the 13th consecutive month of slowing growth.

Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index posted a 3.5% year-over-year increase in April, down from 3.7% in March. The 20-City Composite posted a 2.5% gain, down from 2.6% the previous month — the slowest pace since August 2012. Both results met analysts’ expectations.

“Home price gains continued in a trend of broad-based moderation,” said Philip Murphy, managing director and global head of index governance at S&P Dow Jones Indices, in a press statement. “Comparing the YOY National Index nominal change of 3.5% to April’s inflation rate of 2.0% yields a real house price change of 1.5% – edging closer to the real long run average of 1.2%.”

“We expect home price growth to continue in the low single digits for the remainder of the year as inventory rises,” said Ruben Gonzalez, chief economist at Keller Williams, in a statement.

Inventory, the number of homes for sale, which has been a factor in driving home prices up the past few years has been increasing in major markets, indicating that there may be some relief in home prices in the coming months.

Price growth in major markets continues upward but “at diminishing rates of change,” according to Murphy. In fact, in Seattle there was zero price growth in April, compared to a 13.1% annual gain the same month last year. Since June 2018, price growth in Amazon’s home city has been decelerating from its double-digit rates. Las Vegas led the 20-City Composite for 10 straight month posting a 7.1% annual increase.

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https://finance.yahoo.com/news/home-price-growth-slows-for-the-13-th-straight-month-130011766.html

Berlin is imposing a five-year rent freeze—Could it work in New York City? | North Salem Real Estate

VIEW PHOTO IN GALLERY

Photo via Pixabay

In June, New York State rolled out a slate of proposals to protect renters. Among other changes, the new legislation closes several loopholes that have permitted owners to legally spike rents following renovations—a tactic that has been successfully used to deregulate more than 150,000 units over the past two decades. In essence, under the new legislation, owners will no longer be able to deregulate rent-regulated apartments at all. While the new legislation is certainly good news for many renters, for the tens of thousands of New Yorkers who now already live in unregulated apartments, the current legislation doesn’t fix their current woes. But could a five-year rent freeze help? It may sound impossible, but this is precisely what Berlin—once an oasis of inexpensive rents—has just approved as a way to put the brakes on rising rental prices.

Berlin’s changing rental landscape and five-year price freeze

Just a decade ago, Berlin was still known around the world as a phenomenally cool city where one could rent a large apartment at a very reasonable rate. As Berlin’s economy has improved and its tourism industry has expanded, finding an affordable apartment in some of Berlin’s most desirable neighborhoods has become increasingly difficult.

By one estimate, since 2008, Berlin rents have doubled from 5.60 euros to 11.40 euros. Downtown neighborhoods such as Friedrichshain-Kreuzberg have been especially hard hit. And prices aren’t just soaring on the rental side of the market. Buying a unit in Berlin is also increasingly out of reach. According to a recent report by the UK-based Frank-Knight, in 2017, Berlin bucked global trends, becoming the only major city in the world to report real estate price growth above 20 percent. However, in a city with more renters than any other European city, Berliners’ real concern remains the rising cost of rentals.

To be clear, Berliners are still not as hard up as people in New York, London, Paris, or Tokyo, but there are fears the city may be heading in this direction. On average, one-bedroom units in Berlin’s center are about 1,000 euros per month. Of course, this figure reflects area averages, and therefore, takes into account the high number of units still being rented out at pre-gentrification prices. As a result, if you’re new to Berlin’s housing market and looking for an apartment, you’ll likely pay much more than 1,000 euros monthly for a decent one-bedroom unit in a desirable neighborhood—as much as 1,500 to 2,000 euros or roughly $1,700 to $2,250 USD.

With rents rising, competition is also getting tough. A recent BBC report noted that over 100 prospective tenants often show up for apartment viewings. To stand out, some Berliners have reportedly even started to bribe prospective landlords who are willing to take them on as tenants. One couple, both professional photographers, reportedly offered prospective landlords a free photoshoot.  Another house hunter posted a sign offering regular baking to any landlord willing to rent her a flat. While a free photoshoot or weekly fresh-based bread may not be enough to close a deal in New York City, such bribes are apparently growing increasingly common in Berlin’s rental market.

To put the kibosh on the rising rents, tough competition, and bribes, on June 18, the Berlin Senate voted in favor of a five-year rental freeze. Although planned to take effect on January 2020, the freeze will be applied retroactively from June 18. While many Berliners are in support, not everyone in Germany is happy about the proposal. Some critics worry that the freeze will prevent landlords from making necessary repairs to their buildings. Business analysts also fear the freeze may negatively impact Berlin’s economy. Even Chancellor Angela Merkel is skeptical. She’s suggested that building more affordable housing in the city may be a better solution.

Could a five-year rental freeze work in New York City?

Theoretically, a five-year freeze on both rent-regulated and market-rate units could be imposed—albeit not without major backlash from the real estate industry—but would it help control the city’s already inflated rental market?

NYU Furman Center’s historical data reveals that a lot can happen in five years, depending on a wide range of factors. The graph above features real median gross rental prices for MN 03 (the Lower East Side-Chinatown) compared to Manhattan and citywide rents from 2006 to 2017. As illustrated, had a five-year freeze on rents come into play in 2012, average rental prices would have been about $200 less on average by 2017. However, in the inflated Lower East Side-Chinatown market, a rental freeze in 2012 would have had virtually no impact on real median gross rental prices at all since the freeze would have happened during the area’s 2012 peak in prices.

Another risk of imposing a five-year rental freeze in New York City is what would happen next. In Berlin, no new lease can be 10 percent higher than the previous lease, but in New York, owners of unregulated units are free to raise rents as high as they like when an apartment turns over and even when an existing tenant renews a lease. The risk, then, is that if the city did impose a five-year freeze, owners would rebel and spike rents after the freeze, creating an even more untenable rental landscape.

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