Installing a tankless hot water heater | Katonah Real Estate

On Demand Water Heaters

You could save up to $75 a year with an on-demand water heater!

 

ILLUSTRATION: KEITH WARD

Although some conventional water heaters are more energy-efficient, most older water heaters and many lower-priced models waste about 20 percent of the energy they consume. Much of the heat they produce escapes through the wall of the tank as the hot water sits unused for hours at a time. This is known as standby loss.

Besides being inefficient, storage water heaters (conventional water heaters) don’t last long — only about 13 years. Homeowners can increase the life of their water heaters by lowering the temperature to a more reasonable setting, by periodically flushing sediment from the bottom of the tank, and by replacing the anode rod. Some of these measures also save energy.

If your water heater is more than 10 years old and has not been maintained, it may be approaching the end of its useful life. If it’s leaking or showing signs of rust, it definitely needs to be replaced. So consider your options before it goes kaput and you have to make a rushed decision to get hot water back. Now might be the time to install a tankless water heater.

How Do Tankless Water Heaters Work?

Also known as “instantaneous” or “tankless” water heaters, on-demand water heaters are surprisingly compact units. Some are designed to meet the needs of a laundry room or bathroom, but others provide hot water for an entire house.

Like conventional storage water heaters, tankless water heaters provide hot water 24 hours a day, 365 days a year. However, they meet this need without the standby losses of storage tank heaters.

Tankless water heaters don’t suffer from standby losses because they don’t store hot water — they generate it as it’s needed. When a hot-water faucet is turned on, cold water begins to flow into the water heater. A flow sensor inside the tankless water heater detects water flow and sends a signal to a tiny computer inside the unit. The computer sends a signal to the gas burner or electric heating element in the water heater, turning on the heat source. Water flowing through the heat exchanger in the tankless water heater heats up rapidly — increasing in temperature from about 50 degrees to 120 degrees in a matter of seconds.

Estimated Energy Savings

Because tankless water heaters eliminate standby losses, replacing an old, inefficient water heater with a compact tankless water heater will reduce your annual energy bills. The U.S. Department of Energy (DOE) projects savings up to 30 percent on the cost of heating water, compared to a storage water heater.

Actual savings depend on several factors, primarily the efficiency of the new water heater and the amount of hot water a family uses each day. Also, using electricity instead of natural gas is a much more costly way to heat water.

For homes that use up to 41 gallons of hot water daily (probably a two-person household), the DOE estimates savings of 24 to 34 percent on the cost of providing hot water via a tankless heater compared to a conventional storage-tank heater. In homes that use substantially more hot water, around 86 gallons per day (probably four or more people), the DOE estimates reduced savings, only about 8 to 14 percent. This is because there is less idle time and less standby loss with a conventional water heater if a lot of hot water is used throughout the day. (Hot water use varies significantly depending on your habits. Estimate how much hot water you use by using the Consumer Reports calculators.)

For large families, it may make more sense to stick with an energy-efficient conventional water heater and implement other hot-water saving strategies — such as installing water-efficient shower heads, dishwashers, and clothes washers — to cut down the quantity of hot water used, rather than changing the way water is heated.

Even greater energy savings can be achieved by installing a tankless water heater at major points of use — for example, near the master bathroom, a washing machine, or kitchen. (This reduces the length of the pipe run, which reduces the amount of hot water left in the line when the faucet is turned off.) This strategy could yield savings ranging from 27 to 50 percent, although savings could be offset by the cost of purchasing and installing additional tankless water heaters.

Additional savings also result from the long life of tankless water heaters. According to the DOE’s Office of Energy Efficiency and Renewable Energy, most tankless water heaters last at least 20 years. And they’re made from easy-to-replace, off-the-shelf parts, so repairing a tankless water heater (not an option with leaking storage water heaters) can result in even longer service. A tankless water heater, with periodic maintenance, could outlast two storage water heaters. If you’re considering a tankless water heater and comparing costs to a new storage water heater, be sure to consider longevity.

By reducing your energy demand, a tankless water heater also reduces your family’s contribution to local, regional and global air pollution. Because they’re smaller, easier to repair, more durable and longer-lasting than storage water heaters, tankless water heaters also reduce resource consumption and landfill waste. Using fewer natural resources means less environmental disruption from mining, as well as pollution.

Possible Downsides

Although tankless water heaters offer many benefits over storage water heaters, they do have a few disadvantages. While they produce a steady stream of hot water, they may not produce enough hot water to meet everyone’s needs if demand is high. If hot water is being used at several locations simultaneously, water temperature at the various points of use may decline. Someone taking a shower may experience a drop in water temperature if another family member is also showering, washing clothes, or running the dishwasher. (The same can occur, however, when using a traditional storage water heater.)

This problem can be corrected (or at least mitigated) by simple, cost-effective efficiency measures, such as installing water-efficient shower heads, taking shorter showers, replacing old appliances with water-efficient models, washing clothes with cold water, and coordinating hot water use.

There are three more-expensive ways to ensure plenty of water from a tankless water heater: 1) Purchase the highest output model you can find. 2) Install two tankless water heaters, although this is a less efficient use of resources. If connected in parallel, two tankless water heaters can dramatically increase the availability of hot water. 3) Install a tankless water heater at each point of use — near bathrooms, the laundry room and the kitchen.

Installing an On-Demand Water Heater

Replacing a storage water heater with a tankless model is a major project, especially if the installation requires rerouting the exhaust (flue) pipe or increasing the size of the opening through which the flue pipe exits your house. Some tankless water heaters require larger flue pipes than those used for storage water heaters. This project requires considerable knowledge of plumbing and electricity and is best done by a professional.

Shopping Tips

If you’re replacing a conventional water heater, you may want to consider buying a more efficient storage water heater. Some manufacturers have made dramatic efficiency improvements. Check out the yellow energy tag, which indicates energy use of the model you are considering versus the average for models in its size range. A side-by-side comparison of an efficient storage water heater and a tankless water heater is worth the time.

By maintaining a new storage water heater — replacing the anode rod as needed and annually flushing the sediment from the tank — you can dramatically increase its life. Installing energy-efficient faucet aerators and shower heads will also lower your water and energy bills.

Tankless water heaters can be purchased through home improvement centers (which offer installation services) and from plumbers. When shopping for a tankless water heater, be sure to consider the physical size of the unit and whether it will fit in the location you have in mind.

Also, pay close attention to the output of the tankless water heater—the rate at which it produces hot water versus your demands. Most tankless water heaters supply 2 to 5 gallons of hot water per minute, which is sufficient for energy- and water-efficient end-users.

Gas-fired tankless water heaters typically produce higher flow rates (more hot water per minute) than electric units. Takagi makes a tankless water heater that delivers up to 7 gallons of hot water per minute, which should be enough for several simultaneous uses, especially water-efficient ones.

Some manufacturers, such as Paloma, rate their units on heat output, measured in Btus (British thermal units). Paloma recommends its 141,000- to 145,000-Btu tankless water heater for homes with one or two bathrooms, and the 199,000-Btu units for two- to three-bathroom homes.

When shopping for a tankless water heater, pay attention to fuel type. Power from natural gas and propane produces fewer pollutants than electric models, if they are powered by nuclear or coal-burning plants. Burning natural gas and propane is nearly twice as efficient as making electricity. Look for a tankless water heater with high energy efficiency (called the “fuel factor” or “energy factor”). For greater savings, purchase a model with an electronic ignition instead of a pilot light.

In addition to the cost of the unit, get an estimate of installation costs before you lay your money down. Like a conventional water heater, a tankless water heater requires a flue pipe to remove unburned gases and pollutants, among them carbon monoxide, which is generated from the combustion of natural gas or propane.

Venting is not required for electric water heaters, which slightly lowers installation costs. Unfortunately, electricity is a much more costly way to heat water.

Finally, if you’re thinking about installing a solar hot water system or already have one in place, purchase a tankless water heater designed to work with these systems. Solar hot-water systems feed solar-heated water to the tankless water heater.


What Will It Cost?

Tankless water heaters aren’t cheap. Prices range from about $600 to $1,500, depending on the size of the unit and its output. Installation can run from a few hundred dollars to $1,000 or more for difficult projects. In contrast, a conventional natural gas or propane water heater costs roughly $300 (for a small tank) to $700, plus about $200 to $300 for installation, depending on the size and any complications. Electric water heaters are typically the more expensive models.


What Will You Save?

Is the extra cost of a tankless water heater worth the investment? A family of four spends about $2,100 a year on energy (the average bill in 2007). With water heating constituting 12 percent of a family’s monthly fuel bill, they’ll spend more than $250 per year for hot water. If they use water wisely, a tankless water heater could save 30 percent — about $75 (or substantially more as energy costs continue to rise). Although these savings may seem modest, in 10 years’ time, they add up to over $750, which partially makes up for the additional initial investment.

Over the 25-year life of the unit, savings could turn the water heater into a money-maker, netting about $1,875 in tax-free savings. Not a bad return, especially considering you’re also saving natural resources and reducing pollution. When doing the math, be sure to include any rebates offered by local utilities and/or tax incentives from the federal government or some state governments. Rebates lower the initial cost, resulting in greater lifetime savings. Check into financial incentives by contacting your state’s office of energy conservation. Every state has one, but the names vary in each state. You can also check the Database of State Incentives for Renewables and Efficiency.


Do Tankless Water Heaters Reduce Water Consumption?

Contrary to popular misconception, tankless water heaters do not reduce water demand in a home, unless they’re installed at the point of use. In most instances, you still have to run the water until the hot water from the water heater purges all of the cold water that’s been sitting in the hot water line between the tank and the end user. As a result, tankless water heaters are primarily installed to save energy, not water.

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https://www.motherearthnews.com/green-homes/on-demand-water-heaters-zmaz09onzraw?newsletter=1&spot=headline&utm_source=wcemail&utm_medium=email&utm_campaign=MEN%20GEGH%20eNews%2010.06.17&utm_term=MEN_GEGH_eNews&_wcsid=24FE5BB810FAD26219151E535C083A3B046D07A2642370FA

Home buyers love porches | Bedford Hills Real Estate

Of the roughly 780,000 single-family homes started in 2016, 65.1 percent included porches, according to NAHB tabulation of data from the Survey of Construction (SOC).  The SOC is conducted on an ongoing basis by the U.S. Census Bureau with partial funding from the Department of Housing and Urban Development.

Among other things, the SOC shows that, over the period when single-family starts were declining (from 1.7 million in 2005 to 430,000 in 2011), the share of new homes built with porches was increasing (from 54.1 percent in 2005 to 65.7 percent in 2011).

Since the trough of 2011, single-family starts have increased every year, but still remain well below historical averages.  During most of that span, the share of new homes with porches remained relatively stable, hovering in a narrow band between 63 and 64 percent.  In 2016, the single-family porch share moved back above 65 percent for only the second time.

SOC data can also be tabulated separately for each of the nine Census divisions.  In 2016, the share of new homes with porches ranged from a low of 52 percent in the Mid-Atlantic Division to a high of over 85 percent in the four states that make up the East South Central.

While the SOC shows how many new homes come with porches, it doesn’t provide much information about the nature of the porches.  For that, we can turn to the Annual Builder Practices Survey (BPS) conducted by Home Innovation Research Labs.  The latest BPS shows that front porches on new homes are far more common than side porches, and that most new home porches are open rather than screened in.

 

read more…

http://eyeonhousing.org/2017/10/share-of-new-homes-with-porches-back-over-65-percent/

Crowdfunding your home purchase deposit | Bedford Real Estate

Crowdfunding your way into home ownership. Here's how

Crowdfunding your way into home ownership. Here’s how  

You can crowdfund your business, your charity, your product, your vacation — and now you can crowdfund your home.

CMG Financial, a mortgage lender, just launched HomeFundMe, the first online platform that allows borrowers to crowdfund the down payment on a home purchase without fees and with the backing of mortgage giants Fannie Mae and Freddie Mac.

The majority of millennials today may say they want to be homeowners, but that claim nearly always comes with the caveat…if I can afford the down payment. High levels of student loan debt, high rent and underemployment during the recession have left the largest generation with little savings and diminished hopes of home ownership.

“This allows you to tell your story. It allows for folks to be able to buy into the story of what it is you have, your loan story, your home story,” said Christopher George, CEO of CMG Financial and vice chairman of the Mortgage Bankers Association. “Our tag line is, ‘Fund your way home.’ We think homeownership still is very sensible and, done correctly, is a good idea to step forward toward wealth, stability and quality of life.”

Until now, borrowers could receive down-payment assistance from their close family members, employers, community nonprofits and their churches, all with significant documentation. This was so lenders could be sure they weren’t borrowing the down payment, adding debt on top of the mortgage. Lenders also wanted to be sure borrowers were able to make the monthly mortgage payments.

A home for sale in Miami.

Getty Images
A home for sale in Miami.

Most business crowdfunding platforms offer returns on the investment, but this has none — it is simply a gift. George said the individual gifts will be small, in the $50 to $250 range. The platform can be linked to wedding and baby registries.

“You’re going to spend $250 on a coffee making machine? If that $250 goes to a down payment of your home, at the very least, I improve your quality of life and the second thing I do is I give you some, today, some tax deductibility,” George added.

As an incentive for encouraging prospective homeowners to attend credit education courses and counseling, borrowers can also receive grants of up to $2,500 once they’ve completed the free classes. After that, the platform will match donations at $2 for every $1 raised, up to $2,500.

“Folks that go to counseling tend to be more informed, and they also tend to be better borrowers,” George said. “We’ve looked at this as advertising dollars and have said, listen we think this promotes homeownership, we think it’s something that we would otherwise spend either through the internet or through social media. We’ve put our money here where we think it has its best use.”

On the other side, contributors are also assured that the money will in fact go to fund the home purchase and can make their gift conditional on that.

The idea is not just to raise money for the down payment but to add to the borrower’s existing funds. This can help eliminate the need for mortgage insurance, which is required on very low down payment loans. Fannie Mae is calling it a “pilot project,” and will be watching the results closely.

“What we’re doing today is we’re trying to test and learn a variety of solutions because the preferences for today’s homebuyers have changed significantly, and there is no silver bullet to solving a problem that’s as hard as how do you find a down payment,” said Jonathan Lawless at Fannie Mae. “What we prefer to do is source ideas from all sorts of different places. Our customers are a major one, lenders who are dealing every day with people trying to buy homes, and instead of trying to take those ideas and spend three years trying to roll out a major change, we’d rather test and learn.”

Sellers used to be able to assist buyers with the down payment, but that was prohibited following the financial crisis. No-down payment loans are also largely gone since then, except for high net worth individuals in private lender programs not backed by the government.

One of the biggest criticisms of lending during the housing boom and ensuing bust was that homeowners were able to finance their properties so easily, with little to no money up front, so they had no “skin in the game.” They therefore found it much easier to default on the loans when home prices crashed and walk away from the homes altogether.

This program walks a fine line between gift and equity. Some borrowers will add the crowdfunded equity to their own cash while others may not, depending on how much they get.

“Skin in the game is a little bit of a confusing concept. If you pay for your closing costs, is that skin in the game? Is it really down payment?” asked Lawless. “Would you rather have somebody have a lot of money in the bank after they buy the home and no down payment or the opposite? And so we still have a lot of questions and a lot to learn when it comes to the role of down payment.”

Lawless says it is all about savings — helping the homeowner avoid becoming house poor after their purchase. He says that makes the consumer safer than someone who is unable to generate any savings. Others argue that if you can’t save enough for a down payment in the first place, then you probably shouldn’t be buying the house.

read more…

https://www.cnbc.com/2017/10/05/a-new-way-to-buy-a-home-crowdfunding-the-down-payment.html

Mortgage rates increase to 3.91% | Chappaqua Real Estate

Freddie Mac (OTCQBFMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the average 30-year fixed mortgage rate posting its biggest week-over-week increase since July 2017.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.91 percent with an average 0.5 point for the week ending October 12, 2017, up from last week when it averaged 3.85 percent. A year ago at this time, the 30-year FRM averaged 3.47 percent.
  • 15-year FRM this week averaged 3.21 percent with an average 0.5 point, up from last week when it averaged 3.15 percent. A year ago at this time, the 15-year FRM averaged 2.76 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.16 percent this week with an average 0.4 point, down from last week when it averaged 3.18 percent. A year ago at this time, the 5-year ARM averaged 2.82 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quote
Attributed to Sean Becketti, chief economist, Freddie Mac.
“The 30-year mortgage rate increased for a second consecutive week, jumping 6 basis points to 3.91 percent. The 10-year Treasury yield also rose, climbing 4 basis points this week.”

Dealing with home emergencies | Pound Ridge Real Estate

Grease Fire in the Kitchen

Grease Fire in the Kitchen

Home emergencies are best planned out before the case of an emergency. Never use water to put out a grease fire – it splashes the grease around and often makes things worse. Instead, look around for a handy metal lid from a nearby pot (a wok lid, for example, is ideal). Cover the fire with the lid until it suffocates and dies down. Then carefully remove the hot lid to observe the damage. If a lid is not around, carefully douse the fire with baking soda. Sorry, but your food is probably finished. Plus: How to Prevent Home Fires

Burst and Broken Pipes

Burst and Broken Pipes

Your home has a main water valve – often in the basement or near the front of the house – that controls the flow of water: If you have a bad leak, you need to turn this valve off immediately to prevent expensive water damage (this is also a good preventative step if you are leaving the house during winter). Then inspect the pipes to find out what is damaged and needs to be replaced. If freezing water caused your pipes to burst, you should also consider pipe insulation.

Furnace Failure

Furnace Failure

Remember to shut down electrical power to your furnace before taking a look inside. If you have a gas furnace, check to see if the pilot light has gone out and needs to be re-ignited. If the pilot light isn’t the problem, look for signs of damaged wiring or burnt out switches and sensors to narrow down the problem. Make sure the fan and motor are also working. If any of these components have failed, call a professional about a repair date. Photo: Neil Lockhart/Shutterstock

Overflowing Toilet

Overflowing Toilet

Toilets typically overflow when they can’t stop running and cannot drain properly. First, stop the flow by turning off the valve in the back of the toilet near the wall, which shuts down water. Quickly mop up standing water before it causes any damage, then look for the source of the problems. First look for issues with the fill tube and float that may keep the toilet running, then look for clogs and other issues that are keeping the toilet from draining.

Broken Windows

Broken Windows

Pull on thick gloves and carefully inspect the damage. Pick up any glass shards and remove any jagged, dangerous edges while noting the extent of the damage. You can seal the window by taking a trash bag and cutting it with scissors to fit the window opening. Tape several layers of this bag plastic to the window’s frame with duct tape. Window repair professionals typically offer same-day repairs if you don’t have enough time for a DIY project.

Power Outage

Power Outage

Pull out your phone for a guiding light and make sure everyone is OK. Then check nearby homes and streetlights: If they still have power, you should check your breakers to see if there was an overload or other problem that caused the shutdown. If everyone has lost power, call up your power company (or visit online) to document the power loss and get information about repair times. If the outage is going to last at least several hours, start making plans to put refrigerator or freezer perishables on ice or toss them out.

Confirmed Mice in the House

Confirmed Mice in the House

Grab a flashlight and carefully inspect the perimeter both outside and inside your home. Look for three things: Droppings (a sign that mice are sticking around), signs of chewing/nests and any tiny crevices that mice may be using. Cover crevices with sealant or wire mesh to prevent further rodent problems and set a series of traps to get rid of mice in the house. If mice continue to appear, call up a professional inspector before they start causing structural damage.

Ant Infestation

Ant Infestation

If you notice trails of ants, remove the ants and thoroughly clean everywhere they’ve been with a vinegar spray to remove their trail scents. Then start looking for cracks and gaps in windows, doors, floorboards and other areas the ants may be emerging from. If you can’t narrow it down, set up ant traps and call a professional to see if you have a nearby nest. Remember, large black carpenter ants are a more serious threat to your home than other species and should be removed quickly.

Smoking Oven

Smoking Oven

Some light smoking is expected with brand new ovens or ovens with spilled oils or food. Clean the oven compartment thoroughly, making sure any oil or chemical residue is removed. For worse smoking problems, switch the oven off and open up windows around the house to encourage air flow (this is also a good time to see how sensitive your smoke detector is). If your oven is overcooking food, make sure the timer controls are working. Plus: Stove Repair

Leaking Water Heater

Leaking Water Heater

Check your temperature and pressure valve, a small faucet toward the top of the hot water heater. If the tank develops pressure issues, water will be evacuated from this valve: It’s not a leak, but it is a sign that you need to check wiring and settings. Real leaks from a broken valve or cracked tank are more serious: Shut down your water supply and consider your options. Repairs typically require fully draining the tank, which at least gives you an excuse to clean out any sediment at the same time.

Ceiling Leak

Ceiling Leak

If the ceiling is dripping, prevent water damage by gathering buckets or plastic sheets under the leak. Then climb to your crawlspace or attic and track down the source of the leak: This could be anything from a broken pipe to a damaged roof underlayment and the leak may be far from the source of the problem, so this requires some patience. If you cannot narrow down the source, call in an experienced professional. Meanwhile, get ready to patch and repair your ceiling. Bottom line is these types of home emergencies are best to be dealt with right away. Plus: 12 Roof Repair Tips
read more…
https://www.familyhandyman.com/smart-homeowner/12-common-home-emergencies-and-how-to-deal-with-them/view-all/

Why do people buy homes debate | South Salem Real Estate

Gary Cohn: 'People don't buy homes because of the mortgage deduction'-or do they?

Gary Cohn: ‘People don’t buy homes because of the mortgage deduction’-or do they?  

In the midst of the mad selling and explaining and quantifying and qualifying of potentially the biggest U.S. tax overhaul in decades, President Donald Trump‘s chief economic advisor stood at a White House podium and made a bold declaration: “People don’t buy homes because of the mortgage deduction.”

He said that, even though members of the Trump administration have repeatedly said they will “protect” the popular tax break.

There are a lot of reasons people buy homes — financial, practical and emotional. For the vast majority of those who make that choice, it is by far their single largest investment. Until the financial crisis, the common belief was the home prices always rise, and a home was therefore a proven way to build wealth, but that was proven wrong.

More than 6.5 million homeowners lost their homes to foreclosure in the past 10 years, according to Attom Data Solutions, and 2.8 million current homeowners still owe more on their mortgages than their properties are worth. This after home prices plummeted nationally for the first time since the Great Depression.

Most consumers, at least according to several recent surveys, still believe that a home is a good investment. The majority of renters still aspire to homeownership, despite the fact that millennials have been deemed the “renter generation.” That designation is likely more due to high student loan debt and lower initial employment for this generation than anything else. Millennials have also been slower to marry and have children, which are the primary drivers of homeownership.

“I think people buy homes because it represents security and a way to build wealth and a sense of stability,” said Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute. “I don’t think the mortgage interest deduction plays a large role in that decision.”

For a great many homeowners, the deduction isn’t even a financial factor. A taxpayer can only take the deduction if he or she itemizes, and just one-third of taxpayers itemize, but about 64 percent of Americans own a home (and just over one-third of homeowners have no mortgage). Three-quarters of those who do itemize take the deduction, but if the standard deduction were raised, fewer taxpayers would itemize, and therefore the mortgage deduction would be used even less.

“Gary Cohn is probably right about that,” said Richard Green, director and chair of University of Southern California’s Lusk Center for Real Estate. “It does absolutely encourage people to buy bigger houses than they would, but does it flip the switch between buying and renting? — maybe half a percent in homeownership, very little.”

Green notes that the deduction is most important to those living in states like California, which has both high tax rates and high home prices. Home prices there, he said, could drop without the deduction. As for overall homeownership, he points to other nations like Canada and Australia, which have no mortgage deduction but have very high homeownership rates.

The National Association of Realtors, one of the most powerful lobbying organizations in Washington, vehemently opposes any change to the deduction. Even though there has been no change so far, they came out against the current plan, claiming that because it would result in fewer taxpayers itemizing, it would weaken the power of the deduction.

“This proposal recommends a backdoor elimination of the mortgage interest deduction for all but the top 5 percent who would still itemize their deductions,” wrote NAR President William Brown in a release. “When combined with the elimination of the state and local tax deduction, these efforts represent a tax increase on millions of middle-class homeowners.”

In response to Cohn’s statement, Brown said, “There’s a reason our nation has incentivized homeownership in the tax code for over a century. It works, and helps make homeownership more affordable for middle-class families who might not otherwise be able to close the deal, while setting them on track for a strong financial future.”

Tax breaks do work. Witness the first-time homebuyer tax credit, designed to spur homebuying during the housing crash. It did cause a temporary but sizeable jump in home sales. The mortgage interest deduction, however, gives bigger benefits to those in higher tax brackets with larger loans. In other words, it benefits more wealthy owners, and is therefore less likely to the driving factor for homeownership.

Still, Brown contends that the lost incentive for even some to buy a home, “could cause home values to fall.”

Could home values really fall under the new tax plan? That depends less on taxes and more on the fundamental reason why home prices are currently overheating, which is a historically low supply of homes for sale. It is unlikely that the very strong supply and demand imbalance right now would be hit hard by any changes to the mortgage deduction, especially given that the largest generation is entering its homebuying years.

“We’ve got big supply issues right now. The reason housing purchases are down is because supply is down,” said Dan Gilbert, CEO of Quicken Loans in an interview on CNBC’s “Squawk Box.” Gilbert was more concerned with interest rates than the deduction and the net amount consumers will pay in taxes in the end.

Quicken Loans founder Dan Gilbert: As long as rates are reasonable, mortgage deduction going away doesn't matter

Quicken Loans founder Dan Gilbert: As long as rates are reasonable, mortgage deduction going away doesn’t matter  

The fact is, today’s housing market needs more houses far more than it needs lower taxes. In that respect, the mortgage interest deduction is far less important than tax savings for small-business owners, like homebuilders, who could increase production if costs were lower. The vast majority of homebuilders are small-business owners.

“I think the lower the cost of doing business, the more you can create a situation that leads to affordable housing,” said Jerry Howard, CEO of the National Association of Home Builders, in an interview on CNBC’s “Power Lunch.” “The women and men that make up the homebuilding sector are businesspeople as well, and we have to look at the holistic treatment of business taxes and housing taxes.”

NAHB CEO: We have to look at tax reform plan holistically

NAHB CEO: We have to look at tax reform plan holistically  

While the realtors claim that without the savings from the mortgage deduction, some buyers couldn’t afford a home, others claim home prices are higher because the savings from the deduction gives consumers more buying power.

read more…

https://www.cnbc.com/2017/09/29/gary-cohn-people-dont-buy-homes-because-of-the-mortgage-deduction-or-do-they.html

Tax reform ideas | Chappaqua Real Estate

Details leaking out about the Republican tax reform plan hint that while two popular deductions would remain intact, they’d become useless to the majority of taxpayers who now take advantage of them.

GOP lawmakers have signaled they’ll retain the tax breaks for mortgage interest and charitable contributions even as they pursue eliminating others.

Yet given that President Donald Trump today said the plan is to nearly double the standard deduction, “many current itemizers would choose that instead, so a lot less people would use those deductions,” said Joseph Rosenberg, a senior research associate at the Urban-Brookings Tax Policy Center.

Currently, taxpayers choose between the standard deduction or itemized deductions and use whichever amount is greater to reduce their tax bill. For 2017, the standard deduction is $6,350 for individual taxpayers, $9,350 for heads of households and $12,700 for joint filers.

Construction on a new home.

Peter Cade | Getty Images
Construction on a new home.

In other words, if those amounts nearly double as discussed by both Trump and congressional Republicans, a married couple would need deductions to exceed $24,000 to make itemizing worthwhile.

The Tax Policy Center estimates that of the 45 million tax filers who itemize, 38 million, or 84 percent, would opt for the $24,000 standard deduction because it would exceed the combined value of other deductions available to them.

Trump is expected to deliver a speech Wednesday in Indianapolis that will offer more specifics about what plan will emerge in Congress, although it’s unclear how detailed the reveal will be.

Who uses the mortgage interest deduction, by income

Income range*
# of filings
Total amount
0 to $50,000 2.32 million $1.11 billion
$50,000 to $100,000 9.77 million $9.19 billion
$100,000 to $200,000 14.6 million $24.85 billion
$200,000 & up 7.18 million $29.78 billion
Totals: 33.87 million $64.93 billion
Source: 2016 data from Joint Committee on Taxation report. *Income ranges include AGI plus variety of untaxed items (i.e., employer contributions to health care plan, nontaxable social security benefits, etc.)

The deductions for mortgage interest and charitable contributions have been a political third rail in the past, due largely to the idea that they spur home ownership and charitable giving. Yet of all taxpayers, only about 20 percent take advantage of each deduction for mortgage interest and charitable contributions, according to the tax policy center.

Of the roughly one-third of taxpayers who do itemize, roughly three-quarters use each of the deductions. The biggest benefits tend to go to higher-income taxpayers.

For instance, the 7.18 million filers with incomes of $200,000 or more will reduce their taxable income by $29.78 billion this year from using the mortgage interest deduction, according to tax expenditure estimates from the congressional Joint Committee on Taxation.

Charitable giving deduction use by income

Income range
# of filings
Total amount
0 to $50,000 2.38 million $526 million
$50,000 to $100,000 10 million $4.37 billion
$100,000 to $200,000 15.2 million $11.93 billion
$200,000 $ up 8.2 million $40.73 billion
Totals: 35.8 million $57.55 billion
Source: 2016 data from Joint Committee on Taxation report. *Income ranges include AGI plus variety of untaxed items (i.e., employer contributions to health care plan, nontaxable social security benefits, etc.)

In comparison, the 14.6 million filers with incomes of $100,000 to $200,000 will save less: $24.85 billion. Filers with incomes below that have even smaller tax savings.

Likewise, the 8.2 million filers with incomes above $200,000 will save a collective $40.7 billion this year by using the charitable deduction. The 15.2 million filers with incomes of $100,000 to $200,000 will reduce their tax bill by $11.9 billion.

Nonprofit groups and the home building industry are concerned about what reduced utilization of those deductions would mean for home ownership and charitable giving.

“It marginalizes the mortgage interest deduction,” said J.P. Delmore, assistant vice president of government affairs for the National Association of Home Builders. “We’d see the effect where a small number of homeowners would benefit, and that’s not the direction anyone is looking to go with tax reform.”

Cost of select tax deductions

Deduction
Cost 2016-2020
Mortgage interest $357 billion
State and local taxes $368.8 billion
Charitable contributions* $230.5 billion
Property taxes $180 billion
Medical & long-term care expenses $56.6 billion
Student loan interest $11.9 billion
Teacher classroom expenses $1.2 billion
Source: Joint Committee on Taxation Jan, 30, 2017 report *Excludes education- and health-related donations

The National Association of Realtors also has expressed concern that home prices would suffer if the mortgage interest deduction were to become useless to most homeowners.

The group released a study in May showing that if elements similar to GOP’s 2016 plan went into effect, home values would fall by more than 10.2 percent on average in the near term.

The study also found that homeowners with income of $50,000 to $200,000 would face an average tax increase of $815 while non-homeowners in that range would get an average tax cut of $516.

“This is an emerging issue [lawmakers] don’t intend to create,” Delmore said. “But we hope there’s an opportunity to find a solution so that homeowners have a meaningful tax incentive that doesn’t involve being marginalized and benefiting only the wealthy.”

read more…

https://www.cnbc.com/2017/09/26/gop-tax-plan-could-trash-the-value-of-two-popular-tax-breaks.html

Mortgage rates average 3.85% | South Salem Real Estate

Freddie Mac (OTCQBFMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the average 30-year fixed mortgage rate ticking up to its highest mark in six weeks.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.85 percent with an average 0.5 point for the week ending October 5, 2017, up from last week when it averaged 3.83 percent. A year ago at this time, the 30-year FRM averaged 3.42 percent.
  • 15-year FRM this week averaged 3.15 percent with an average 0.5 point, up from last week when it averaged 3.13 percent. A year ago at this time, the 15-year FRM averaged 2.72 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.18 percent this week with an average 0.4 point, down from last week when it averaged 3.20 percent. A year ago at this time, the 5-year ARM averaged 2.80 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quote
Attributed to Sean Becketti, chief economist, Freddie Mac.
“After holding steady last week, rates ticked up this week. The 10-year Treasury yield rose 8 basis points, while the 30-year mortgage rate increased 2 basis points to 3.85 percent.”

New single family home sales drop | Bedford Corners Real Estate

Sales of new single-family houses in the United States shrank 3.4 percent to a seasonally adjusted annual rate of 560 thousand in August of 2017 from an upwardly revised 580 thousand in July. It is a new low so far this year, well below market expectations of 588 thousand. Sales fell the most in the South, partly due to Hurricanes Harvey and Irma. New Home Sales in the United States averaged 650.80 Thousand from 1963 until 2017, reaching an all time high of 1389 Thousand in July of 2005 and a record low of 270 Thousand in February of 2011.

United States New Home Sales

 

US New Home Sales Fall for 2nd Month

Sales of new single-family houses in the United States shrank 3.4 percent to a seasonally adjusted annual rate of 560 thousand in August of 2017 from an upwardly revised 580 thousand in July. It is a new low so far this year, well below market expectations of 588 thousand. Sales fell the most in the South, partly due to Hurricanes Harvey and Irma.

Sales fell in the Northeast (-2.6 percent to 38 thousand), the West (-2.7 percent to 146 thousand) and the South (-4.7 percent to 307 thousand) and were unchanged at 69 thousand in the Midwest. The counties in Texas and Florida accounted for about 14 percent of US single-family housing units authorized by permits in 2016, and about 27 percent of single-family housing units authorized in the South region. In August, information on the sales status was collected for only 65 percent of cases in Texas and Florida counties, compared to a normal 95 percent rate.
The median sales price of new houses sold was $300,200, above $298,900 a year earlier. The average sales price was $368,100, also higher than $355,100 in August of 2016.
The stock of new houses for sale went up to 284 thousand from 274 thousand in July, hitting the highest level since May of 2009. This represents a supply of 6.1 months at the current sales rate.
Year-on-year, new home sales shrank 1.2 percent.
Figures for July were revised up to 580 thousand from an initial estimate of 571 thousand. The June figure was revised down to 614 thousand from 630 thousand.
read more…
https://tradingeconomics.com/united-states/new-home-sales

Home prices rise 5.9% | Armonk Real Estate

The Standard & Poor’s CoreLogic Case-Shiller national home price index rose 5.9 percent in July from a year earlier, slightly faster than June’s 5.8 percent annual pace.

Sales of both new and existing homes slipped over the summer, which typically might slow price gains.

But demand remains strong and has created bidding wars among potential buyers, pushing up prices at a much faster pace than incomes. The number of existing homes for sale fell 6.5 percent in the past year.

Seattle, Portland, Oregon and Las Vegas saw the largest increases, with prices in Seattle soaring 13.5 percent in July from a year earlier.

Other cities are also seeing strong gains. Home prices rose 7.3 percent in Dallas and Detroit, and 7.2 percent in Denver. The slowest increases were in Washington, D.C. and Chicago, which both reported 3.3 percent gains.

With unemployment low and paychecks rising modestly, more people are in the market for a home. But construction of new single-family homes has been held back by a limited supply of land in hot markets and difficulty in finding construction workers.

That has intensified the competition in the housing market. Homes sold after an average of just 30 days on the market in August, according to the National Association of Realtors, down from 36 days a year ago.

Hurricanes Harvey and Irma began to pinch sales in August and should drag on the sales in the months ahead.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The July figures are the latest available.

 

read more…

http://us.spindices.com/index-family/real-estate/sp-corelogic-case-shiller