Tag Archives: South Salem Real Estate for Sale

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.

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

South Salem’s Hidden Sandwich Maestro | South Salem Real Estate

Find your way to The Market on Spring for fresh foodie fare in a quaint setting.

PHOTOS COURTESY MARKET ON SPRING

Most Northern Westchesterites who drive Route 35 are on a mission — to get from one town to another in a hurry, to make a train, or to pick up their kids. But, there’s a charming spot just minutes off this busy thoroughfare that’s certainly worth the detour.

The Market on Spring is at the center of the tiny but lovely hamlet of South Salem. Antiques, a riding academy, a tack shop, and cozy tavern are just about all you’ll find here, but that’s what makes it so wonderful. The small market is the perfect fit, renovated last year in a mix of natural wood and rustic metal, and serving carefully sourced, high-quality fare for breakfast and lunch. Though tucked away, the shop is attracting a steady stream of customers, explains manager and Vista native Bryce O’Brien. “People tell us they’ve lived in the area for years and have never made the turn onto Spring Street, never knew ‘anything was here,’ but now they’ve found us.”

Maybe word is getting out about the delicious sandwiches made from New York State grass-fed beef, or cage- and hormone-free turkey (all roasted in-house by Market’s chefs), with condiments such as chipotle remoulade, onion jam, and honey mustard aioli. The organic egg breakfast sandwiches (options include house-cured salmon and homemade chorizo) are also gaining a dedicated following. O’Brien says the shop’s country industrial decor and elevated deli menu are especially appealing to city folk who weekend at homes on nearby Lake Truesdale. Well, we suburbanites know a good thing when we see it, too!

The Market on Spring
112 Spring St, South Salem
914.977.3939;
www.marketonspring.com

 

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http://www.westchestermagazine.com/Blogs/Eat-Drink-Post/June-2017/South-Salem-Market-on-Spring/

Housing bubble, then and now | South Salem Real Estate

You can’t blame a homeowner in Fresno, California, for viewing the thriving metropolis to its northwest with both envy and dismay. While San Francisco home values have surged since the recession, Fresno’s housing market is stuck in a rut. Less than 3 percent of homes in the city and its environs have returned to their pre-recession peak, according to a new study from Trulia. Median home values are a teeth-clenching $78,000 below their pre-recession peak.

The difference between the two California markets helps explain a key dynamic of U.S. housing a decade after the foreclosure crisis. Popular measures of the landscape, like S&P CoreLogic Case-Shiller Index and the FHFA House Price Index, show the market has recovered to levels last seen before the housing market went bust. But according to Trulia, this isn’t the whole, significantly bleaker picture.

Nationally, just 1 in 3 homes are worth more now than they were at their peak. While tech hubs in the Bay Area and Denver and job centers like Dallas or Nashville have seen home values explode past earlier highs, there are more losers than winners when you look across the country, Trulia’s analysis shows. And it’s really bad news if you live in Las Vegas, Tucson—or Fresno.

Many of the losers aren’t just losing—they’re getting trounced. There were 28 metros where fewer than 10 percent of homes have recovered their value since the bubble burst. Las Vegas has seen less than 1 percent of its homes returning to or surpassing what they were worth before the recession. The median sales price there is down a full $91,000 from its peak.

“It’s a reflection of just how well a metro area has recovered, broadly speaking,” said Ralph McLaughlin, chief economist at Trulia, adding that his findings largely correlate with other measures of metro-level growth, such as gains in income and total population.

As a result, it’s tempting to view these results through the prism of the 2016 election. Many of the metropolitan areas where home values lag the most are Rust Belt towns with little prospect for an immediate comeback, or Sunbelt cities whose peak home values were a product of the bubble that preceded the collapse.

McLaughlin says a zip code-level analysis offers a more nuanced view of the haves and have-nots. In much of the middle of the country, cities have stagnated while less populated regions lead the recovery. While it’s true coastal markets have experienced the lion’s share of appreciation, the majority of homes in pricey markets like New York, Los Angeles, Silver Spring, Maryland, and Fairfield County, Connecticut, are still worth less than a decade ago.

To be sure, Trulia’s research is based on its own estimates of home values, while the big indices are based on actual sales. Other research suggests a hot economy gives rural workers more choice, causing an outflow of potential employees to better jobs, often in the cities or on the coasts, potentially speeding a decline in home value elsewhere.

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https://www.bloomberg.com/news/articles/2017-05-03/most-u-s-homes-are-worth-less-than-before-the-crash

Property Taxes by State | South Salem Real Estate

The 2015 American Community Survey data shows that New Jersey still leads the nation with the highest average annual real estate tax (RET) bill of $8,180—$7,528 more than RETs paid by Alabama’s homeowners. The overall distribution remained roughly unchanged since 2014, as the composition of the top and bottom ten remained the same. The map below clearly illustrates that the highest property tax states are found in the Northeast while—with the exception of Texas—southern states boast the lowest RET bills for their resident homeowners.

Source: U.S. Census Bureau, 2015 American Community Survey, NAHB calculations

As property values vary widely by state, controlling for this variable produces a more instructive state-by-state comparison. In keeping with prior analyses, NAHB calculates this—the effective property tax rate as measured by taxes paid per $1,000 of home value—by dividing aggregate real estate taxes paid by the aggregate value of owner-occupied housing units within a state. As shown below, New Jersey has the dubious distinction of imposing the highest effective property tax rate—2.13% or $21.25 per $1,000 of home value. Hawaii levies the lowest effective rate in the nation—0.28%, or $2.84 per $1,000 of value.

Source: U.S. Census Bureau, 2015 American Community Survey, NAHB calculations

Interstate differences among home values explain some, but not all, of the variance in real estate tax bills across the country.  Texas is an illustrative example of a state in which home values hardly, if at all, explain real estate tax bills faced by homeowners.  While Texas ranks only 32nd in the country for average home values, it is 12th in average real estate taxes paid.  Other factors are clearly at play, and state and local government financing turns out to be a major one.

Property taxes account for 35% of state and local tax receipts, on average, but some state and local governments rely more heavily on property taxes as a source of revenue than others. Texas serves as an excellent example once again.  Unlike most states, Texas does not impose a state income tax on its residents.  Even though per capita government spending is tame compared with other states—7th lowest in the country—Texas and its localities must still find a way to fund government obligations.  Local governments accomplish this by levying the 7th highest effective property tax rate (1.63%) in the country, on average.  The state government partly makes up for foregone individual income tax revenue by imposing a tax on corporate revenue rather than income

Where are the Nation’s Second Homes? | South Salem Real Estate

According to NAHB estimates, the total count of the second home stock reached 7.5 million in 2014, an increase of 0.6 million over 2009 when NAHB Economics last produced these estimates. The share of second homes among the total housing stock also increased from 5.4% to 5.6%.

It is worthwhile to understand the patterns of second homes because they could have a significant economic impact on local housing markets and thus have important policy implications. This analysis focuses on the number and the location of second homes qualified for the home mortgage interest deduction using the Census Bureau’s 2014 American Community Survey (ACS).

The county with the largest share of second homes is Hamilton County, NY with 79.3%, followed by Forest County (74%), PA, and Rich County (72.7%), UT. As one might expect, the top 10 counties with the largest share of second homes are mostly tourist destinations.

Slide1

In-depth analysis, however, shows that the concentration of second homes is not simply restricted to conventional locations like beachfront areas. There were 913 counties spread over 49 states, where second homes accounted for at least 10% of the local housing stock. Only Connecticut and Washington D.C. were exceptions. 357 counties, 11% of all counties in the U.S., had at least 20% of housing units that were second homes.

27 counties in 14 states had over half of housing units qualified as second homes. Of these counties, five counties are in Michigan, four in Colorado and Wisconsin, two in California, Massachusetts, Pennsylvania, Utah, and one county each in Idaho, Missouri, North Carolina, New Jersey, New Mexico, and New York. These national patterns are mapped below.

sechome

Of course, the geographic locations of second homes also correspond to population density. Counties with more than 25,000 second homes are mostly located in or near metropolitan areas. The table below lists the top 10 counties with the most second homes. States with at least one such county are Arizona, Florida, California, Massachusetts, Illinois, New York, New Jersey, Nevada, South Carolina, Delaware, Texas, Michigan, and Maryland.

Slide2

sechome_num

NAHB estimates are based on the definition used for home mortgage interest deduction: a second home is a non-rental property that is not classified as taxpayer’s principal residence. Examples could be: (1) a home that used to be a primary residence due to a move or a period of simultaneous ownership of two homes due to a move; (2) a home under construction for which the eventual homeowner acts as the builder and obtains a construction loan (Treasury regulations permit up to 24 months of interest deductibility for such construction loans); or (3) a non-rental seasonal or vacation residence. However, homes under construction are not included in this analysis because the ACS does not collect data on units under construction.

 

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http://eyeonhousing.org/2016/12/top-posts-of-2016-where-are-the-nations-second-homes/

Builder Confidence Begins Year on a High Note | South Salem Real Estate

Builder confidence in the market for newly-built single-family homes jumped seven points to a level of 70 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest reading since July 2005.

The increase in market confidence follows the November election results, increasing hopes among home builders and other stakeholders in the residential construction industry that the incoming administration will reduce costly regulatory burdens, particularly for small businesses. Research from NAHB published earlier this year indicated that for home builders, such regulatory costs have risen by more than 29% over the last five years.

While the significant increase in builder confidence for December could be considered an outlier, the fact remains that the economic fundamentals continue to look good for housing as we head into 2017. And the rise in the HMI is consistent with recent gains for the stock market and consumer confidence. At the same time, builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.

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 three HMI components posted healthy gains in December. The component gauging current sales conditions increased seven points to 76 while the index charting sales expectations in the next six months jumped nine points to 78. Meanwhile, the component measuring buyer traffic rose six points to 53, marking the first time this gauge has topped 50 since October 2005.

First-Time Buyers Step Up | South Salem Real Estate

Existing home sales, as reported by the National Association of Realtors (NAR), increased 3.2% in September and were up 0.6% from the same month a year ago, as first-time buyers seized a 34% share of sales. Total existing home sales in September increased to a seasonally adjusted rate of 5.47 million units combined for single-family homes, townhomes, condominiums and co-ops, up from a downwardly adjusted 5.30 million units in August.

existing-home-sales-september-2016

September existing sales increased in all four regions, ranging from 5.7% in the Northeast to 0.9% in the South. Sales increased by 5.0% in the West in September, despite a 5.3% decrease in the August PHSI for that region. Year-over-year, September sales increased by 2.3% in the Midwest and 1.6% in the West, while falling 0.9% in the South. The Northeast remained unchanged year-over-year for September.

Total housing inventory increased by 1.5% in September, but remains 6.8% lower than its level a year ago. At the current sales rate, the September unsold inventory represents a 4.5-month supply, compared to a 4.6-month supply in August.

The August all-cash sales share was 21%, down from 22% in August and 24% during the same month a year ago. Individual investors purchased a 14% share in September, up from 13% in August and a year ago. The September first-time home buyer share of 34% was up from 31% in August, and 29% from the same month a year ago. Distressed sales, comprised of foreclosures and short sales, fell to 4%, the lowest rate since NAR launched that series in 2008.

The September median sales price of $234,200 was 5.6% above the same month a year ago, and represents the 55th consecutive month of year-over-year increases. The median condominium/co-op price of $222,100 in September was up 6.1% from the same month a year ago.

 

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http://eyeonhousing.org/2016/10/first-time-buyers-step-up/

US New Home Sales Unexpectedly Rise 3.1% | South Salem Real Estate

Sales of new single-family houses in the United States rose 3.1 percent to a seasonally adjusted annual rate of 593,000 in September of 2016, compared to market expectations of a 1 percent decline. Figures for the previous month were revised down by 34,000 to 575,000. New Home Sales in the United States averaged 651.94 Thousand from 1963 until 2016, reaching an all time high of 1389 Thousand in July of 2005 and a record low of 270 Thousand in February of 2011. New Home Sales in the United States is reported by the U.S. Census Bureau.

United States New Home Sales
Calendar GMT Reference Actual Previous Consensus Forecast (i)
2016-09-26 02:00 PM Aug -7.6% 13.8% -8.8%
2016-10-26 02:00 PM Sep 593K 575K 600K 610K
2016-10-26 02:00 PM Sep 3.1% -8.6% -1%
2016-11-23 03:00 PM Oct 3.1%
2016-11-23 03:00 PM Oct 593K 450K
2016-12-23 03:00 PM Nov

 

 

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http://www.tradingeconomics.com/united-states/new-home-sales

National Home Prices Re-accelerated | South Salem Real Estate

S&P Dow Jones Indices released the Case-Shiller (CS) National Home Price Index for July. The index rose at a seasonally adjusted annual growth rate of 5.0%, faster than the 2.1% in June. House prices have decelerated since the beginning of 2016 due to the sharp decline in existing home sales at the end of 2015. But, home prices started to accelerate in May and home price appreciation increased to 5.0% in July.

The Home Price Index from the Federal Housing Finance Agency (FHFA) rose at a seasonally adjusted annual rate of 5.8% in July, following 3.4% in June, confirming the reacceleration in home prices.

figure1_jul16

However, local housing markets varied greatly. Figure 2 shows home price appreciation for 20 major U.S. metropolitan areas in July.

Twelve out of the 20 metro areas had positive home price appreciation. The highest one in the list was Portland, OR with an annual rate of 8.2%, followed by Denver with an annual rate of 6.6%. Phoenix placed third with an annual rate of 5.9%.

Home price appreciation in the remaining eight metro areas was negative. They are San Francisco, Washington, DC, Atlanta, Chicago, Boston, Detroit, Minneapolis, and New York. Home price appreciation in Chicago was -5.9%, the lowest among 20 metro areas.

figure2_jul16

 

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http://eyeonhousing.org/2016/09/national-home-prices-reaccelerated-local-home-prices-varied-in-july/

Mortgage rates at 3.47% | South Salem Real Estate

Oct 13, 2016) – Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates following Treasury yields and moving higher.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.47 percent with an average 0.6 point for the week ending October 13, 2016, up from last week when they averaged 3.42 percent. A year ago at this time, the 30-year FRM averaged 3.82 percent.
  • 15-year FRM this week averaged 2.76 percent with an average 0.6 point, up from last week when they averaged 2.72 percent. A year ago at this time, the 15-year FRM averaged 3.03 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.82 percent this week with an average 0.4 point, up from last week when it averaged 2.80 percent. A year ago, the 5-year ARM averaged 2.88 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.

“This week the 10-year Treasury yield continued its climb as an increasing number of financial market participants foresee a December rate hike after a series of positive economic data releases. The 30-year fixed-rate mortgage moved up 5 basis points to 3.47 percent in this week’s survey, the first increase in one month. Even though we’ve seen economic activity pick up, consumer price inflation and implied inflation expectations remain below the Federal Reserve’s 2 percent target.”