taxes – Page 13 – Find a Broker™

Home Sellers Adjust Asking Prices Amid Rising Median Sale Prices

The real estate market is currently in a state of flux, with more home sellers cutting their asking prices, suggesting that the rapid growth in sale prices may soon decelerate. However, despite these adjustments, the median sale price has hit a new record high, further complicating the landscape for prospective buyers.

Price Adjustments and Inventory Insights

Nationwide, 6.4% of home sellers reduced their asking prices during the four weeks ending May 26, the highest percentage since November 2022. In the last week alone, the median asking price dropped by approximately $3,000 to $416,623, marking the first decline in six months. Concurrently, the age of inventory—measured by the number of days listings remain active—has started to rise year over year, reaching a median of 46 days. This stagnation in inventory suggests that the pace of sale-price growth could slow in the coming months as high mortgage rates deter potential buyers.

Despite these trends, the median home sale price continues to climb, up 4.3% year over year to a new record high. It’s important to note that sale prices are a lagging indicator, often reflecting negotiations made at least a month before closing.

Mortgage Rates and Buyer Impact

There is a slight respite for homebuyers this week. The typical monthly housing payment has dropped to $2,812, the lowest level in six weeks. This decrease is attributed to a dip in mortgage rates, which have fallen below 7% for the first time since early April, with the current weekly average rate at 6.94%. However, this relief may be short-lived as daily average rates began to rise again after recent disappointing treasury auctions.

High housing costs continue to dampen demand. Pending sales have decreased by 3.4% year over year, consistent with recent monthly declines. Additionally, mortgage-purchase applications are near their lowest level in six months. Low inventory remains a significant factor, as listing growth has been losing momentum, leaving buyers with fewer options than usual for this time of year.

Strategies for Prospective Buyers

Given the challenging market conditions, buyers are advised to remain flexible and open-minded. Here are some strategies to consider:

Consider Outdated Single-Family Homes: These homes may not require major renovations and tend to stay on the market longer, potentially allowing buyers to purchase at the asking price without entering a bidding war.
Explore Lesser-Known Neighborhoods: Homes in non-trendy areas often have less competition and may offer better deals.
Look at Condos: Condos are currently less popular, and many are selling below the asking price. For buyers who can make do with less space, this could be an advantageous option.

The real estate market is undergoing notable shifts, with more sellers reducing their asking prices and inventory becoming more stagnant. While median sale prices continue to rise, the slowing growth and slight decrease in mortgage rates offer a mixed bag for prospective buyers. By staying adaptable and considering less competitive options, buyers can navigate this complex market and find opportunities that align with their needs and budgets.

If you’re considering a move or investment and require a trusted Real Estate Broker, we’re here to assist you. Contact us via email at TEAM@McDanielCallahan.com, complete the form below, or give us a call at 925-838-4300. We are ready to provide expert guidance and support for all your real estate needs. Terry McDaniel DRE License #00941526

Go back

Your message has been sent

Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand

Navigating Multiple Offers: Cash vs. Higher Loan Offer

Selling your house can be an exciting yet complex process, especially when you receive multiple offers. Imagine this scenario: you have two offers on the table. One is a cash offer but $12,000 less than the other offer, which comes with a loan. How do you decide which one to accept? Here are five crucial factors to consider:

1. Timing of the Sale

Why it Matters: The closing timeline can significantly impact your decision, especially if you have a specific moving schedule or financial needs.

Cash Offer: Typically, cash transactions close faster, often within a couple of weeks, since there are no lender requirements or appraisal delays.

Loan Offer: The offer involving a loan will usually take longer to close, often 30-45 days, due to the mortgage approval process, including underwriting and appraisal.

Consideration: If you need to sell quickly to buy another home or to avoid paying two mortgages, the cash offer might be more appealing despite being lower.

2. Terms of the Loan

Why it Matters: The terms of the buyer’s loan can introduce uncertainty and potential delays into the transaction.

Loan Offer: Investigate the specifics of the loan. Is it a conventional loan, FHA, VA, or another type? Each has different requirements and potential hurdles. Conventional loans are generally smoother, while FHA and VA loans might come with stricter appraisal and property condition requirements.

Consideration: A buyer with a strong conventional loan and substantial down payment might present less risk than those with government-backed loans.

3. Appraisal Contingency

Why it Matters: If the home doesn’t appraise for the agreed-upon purchase price, it can complicate the transaction.

Loan Offer: The offer with a loan will include an appraisal contingency. If the property appraises lower than the purchase price, the lender might not approve the full loan amount, requiring the buyer to make up the difference, renegotiate the price, or potentially back out.

Cash Offer: Cash buyers often waive the appraisal contingency, eliminating this risk entirely.

Consideration: Assess the likelihood of your home appraising at the loan offer price. If it’s uncertain, the cash offer’s security might be more attractive.

4. Other Contingencies

Why it Matters: Contingencies are conditions that must be met for the sale to proceed, adding complexity and potential delays.

Loan Offer: Common contingencies include financing, inspection, and appraisal. The more contingencies, the greater the risk of the deal falling through.

Cash Offer: Cash offers typically come with fewer contingencies, often limited to inspection or none at all, making them more straightforward and less risky.

Consideration: Weigh the number and type of contingencies attached to each offer. Fewer contingencies mean a smoother, more certain transaction.

5. Pre-Listing Inspections and Buyer’s Loan Pre-Approval

Why it Matters: Having a clear understanding of your home’s condition and the buyer’s financial standing can affect the perceived value and reliability of each offer.

Pre-Listing Inspections: If you’ve already conducted pre-listing inspections, you know the property’s condition and can address potential issues upfront. This can make the loan offer less risky if you can provide a clean bill of health.

Buyer’s Loan Pre-Approval: Ensure the buyer with the loan is pre-approved, not just pre-qualified. Pre-approval indicates a more serious and capable buyer, reducing the likelihood of financing falling through.

Consideration: A pre-approved buyer with a higher offer might be worth the risk if inspections are already completed and issues resolved. However, the certainty of a cash offer remains appealing.

Choosing between a lower cash offer and a higher loan offer involves balancing immediate financial gain against potential risks and delays. By considering the timing of the sale, terms of the loan, appraisal risks, other contingencies, and the reliability provided by pre-listing inspections and buyer pre-approval, you can make an informed decision that aligns with your goals and timeline.

Remember, while the allure of a higher offer is tempting, the certainty and speed of a cash deal often outweigh the potential gains, especially in a fluctuating market. Carefully weigh each factor, consult with your real estate agent, and choose the path that best meets your needs.

Go back

Your message has been sent

The Housing Affordability Crisis: What the Latest NAHB Data Reveals

Housing affordability remains a critical issue for many American families. The latest quarterly Cost of Housing Index from the National Association of Home Builders (NAHB) highlights just how severe this problem has become. According to the data, the typical American family must now spend a staggering 38% of their household income to cover mortgage payments for a median-priced new single-family home. For low-income families, the situation is even more dire, with 77% of their earnings required to secure housing.

The Burden of Home Ownership

NAHB’s findings reveal that in the first quarter of this year, typical families in eight out of 176 major metro areas were considered severely cost-burdened. This means they needed to allocate more than half of their income to afford a median-priced existing home. In 80 additional markets, families faced a significant cost burden, spending between 31% and 50% of their income on housing. Fortunately, there are 88 markets where the housing cost burden is more manageable, at 30% of earnings or lower.

The Most and Least Burdened Markets

The report identifies the San Jose-Sunnyvale-Santa Clara area in California as the most severely cost-burdened market, where an overwhelming 84% of a typical family’s income is needed for mortgage payments on an existing home. Other heavily burdened markets include:

Urban Honolulu, HI: 73%
Naples-Marco Island, FL: 71%
San Diego-Chula Vista-Carlsbad, CA: 70%
San Francisco-Oakland-Berkeley, CA: 69%

For low-income families, the burden in these markets is insurmountable, with between 138% and 168% of their income required for housing.

On the flip side, Illinois’ Peoria and Decatur metros are the least cost-burdened markets, with families needing only 14% of their income to afford a mortgage on an existing home. This stark contrast highlights the regional disparities in housing affordability across the country.

The Root Cause: A Nationwide Housing Shortage

According to NAHB Chief Economist Robert Dietz, the primary driver of this affordability crisis is a severe shortage of housing. The nation is currently short by approximately 1.5 million homes, a gap that is fueling the rise in housing costs and placing an unsustainable burden on many families.

Dietz emphasizes the need for comprehensive policy changes to address this shortage. Key recommendations include:

Speeding up permit approval processes: Streamlining the bureaucratic hurdles that delay new construction can help increase the housing supply more quickly.
Investing in skilled labor training: Enhancing the workforce capable of building homes is crucial to meet the growing demand.
Fixing building material supply chains: Ensuring a steady supply of essential materials can help keep construction costs in check.

The Path Forward

The latest data from NAHB underscores the urgent need for action to address the housing affordability crisis. Policymakers at all levels of government must prioritize housing as a critical issue and implement strategies to increase the supply of affordable homes. Without such measures, the dream of homeownership will remain out of reach for many American families, perpetuating economic inequality and social instability.

As we navigate these challenges, it is imperative to keep the focus on creating sustainable, long-term solutions that ensure all families can afford a safe and secure place to call home.

Go back

Your message has been sent

https://wrenews.com/nahb-families-must-spend-38-of-their-income-on-mortgage-payments/?utm_source=ActiveCampaign&utm_medium=email&utm_content=NAHB%3A%20Families%20Must%20Spend%2038%20%20of%20Their%20Income%20on%20Mortgage%20Payments&utm_campaign=WRE%20Afternoon%20News%2005%2024%2024%20Nationwide%20%28Segmented%29&vgo_ee=wRvkLhixrTeiE%2FTPjgRvUVQIRjmswHG3pcXWPlN6JXtdW4vNDGVv%2FQ%3D%3D%3A4cpSmT99%2B63cnf%2FXnITIH3B6xsToPgdg

Unlocking the Benefits: Tax Savings for Homeowners

Owning a home is a dream for many, but it comes with its fair share of expenses. From mortgage payments to property taxes, the costs can add up quickly. However, there’s good news for homeowners: there are several tax benefits available that can help offset some of these expenses and put money back in your pocket. The various tax deductions, programs, and allowances that homeowners can take advantage of to maximize their savings:

Deductible House-Related Expenses

One of the most significant tax benefits for homeowners comes from deductible house-related expenses. These include:

State and Local Real Estate Taxes: Homeowners can deduct state and local real estate taxes paid, up to a limit of $10,000.
Home Mortgage Interest: The interest paid on a home mortgage is deductible within certain limits. This can include interest on a mortgage used to purchase, build, or improve a home.

To claim these deductions, taxpayers must itemize their deductions on their tax return.

Non-Deductible Expenses

While some expenses related to homeownership are deductible, others are not. These non-deductible expenses include:

Home insurance premiums
Mortgage principal reduction
Wages paid to domestic help
Depreciation on the home
Utility costs (gas, electricity, water)
Most settlement or closing costs
Forfeited deposits, down payments, or earnest money
Internet or Wi-Fi service charges
Homeowners’ association fees or condominium fees
General home repairs

Understanding which expenses are deductible and which are not can help homeowners make informed financial decisions.

Mortgage Interest Credit

For lower-income homeowners, the Mortgage Interest Credit can provide valuable assistance. This credit helps offset the cost of home mortgage interest payments for those who qualify. To be eligible, homeowners must have been issued a qualified Mortgage Credit Certificate from their state or local government.

Ministers and Military Housing Allowance

Ministers and members of the uniformed services who receive a nontaxable housing allowance can still benefit from tax savings. They are allowed to deduct real estate taxes and home mortgage interest without reducing their deductions based on the allowance.

Navigating the complex world of tax deductions and credits can be daunting, but for homeowners, it can lead to significant savings. By taking advantage of available tax benefits, homeowners can reduce their tax burden and keep more money in their pockets. However, it’s essential to understand the eligibility criteria and rules associated with each benefit to ensure compliance with tax laws.

For more detailed information on tax benefits for homeowners, taxpayers can refer to IRS Publications 530 and 936. With proper planning and understanding, homeowners can unlock the full potential of these tax savings and make homeownership more affordable and rewarding.

https://www.irs.gov/forms-pubs/about-publication-530

https://www.irs.gov/forms-pubs/about-publication-936

Go back