Tax reform remains a possibility this year and should the conversation about it begin members of Congress will benefit hearing from REALTORS® to reduce the chance they make decisions that could hurt markets, a lawmaker, Hill staff, and analysts said at forums in Washington yesterday.
“We really value your judgment because of your sense of the local economy and also because you know what your neighbors think,” said Rep. Chris Van Hollen (D-Md.), ranking minority member on the House Budget Committee.
Van Hollen made his remarks before a group of politically active REALTORS® in town for a day of orientation on federal issues of importance to real estate.
Staff professionals on Capitol Hill who work with members of Congress told REALTORS® lawmakers have a lot on their plates, making it difficult to predict the likelihood of their tackling tax reform. But a staff person on the House tax-writing Ways and Means Committee says the committee chair, Rep. Dave Camp (R-Mich.), would like to see comprehensive reform passed out of his committee this year.
Would the mortgage interest deduction be part of the mix? It can’t be ruled out, the staff aides and other speakers said, so REALTORS® have to remain engaged and be able to sift through proposals that would be unacceptable to them and proposals that would be less bad. “Some proposals will be worse than others,” Van Hollen said. He added that his sense is that many members of Congress believe supporting home ownership is a “good policy choice” and that he will “certainly oppose any effort” to change or dismantle MID.
Van Hollen and Hill staffers said Congress is facing three more “fiscal cliff”-like deadlines that will keep the economy in a state of uncertainty: the deadline for the automatic, across-the-board cuts to federal programs, known as the sequester, which is March 1; the deadline for raising the debt ceiling, which is May 19; and the deadline for extending a continuing resolution, which is a temporary budget measure for keeping the federal government operating in the absence of a congressionally passed appropriations bills, which expires March 28.
A panel of analysts at the orientation agreed that for most of the public and for many lawmakers the issue of whether the federal government should support home ownership is largely decided, and it’s in favor of maintaining a path for a broad swath of households. “I think that’s where the country is,” said Jaret Seiberg, managing director and financial services policy analyst for Guggenheim Securities.
“There isn’t a snowball’s chance in hell that any of these programs are going away,” said George Mason University professor Anthony Sanders, referring to FHA, Fannie Mae, and Freddie Mac, among other ways the federal government is involved in home ownership.
The more immediate issue is how any modifications to these entities or to tax incentives for home ownership, including MID, would be designed, and it’s on that point that the analysts and staffers echoed Van Hollen’s point about the importance of REALTORS® staying engaged, because REALTORS® are the ones who can explain to lawmakers the impact different proposals can have on markets. The worst thing that can happen is for lawmakers to make changes without understanding the impact of what they decide.
“Come in to see us and tell us how these different ideas impact the market,” said one of the staff aides on the House tax-writing committee.
The Super Bowl is less than a week away and fans are abuzz in anticipation for the “HarBowl” or the “SuperBaugh,” as the matchup between San Francisco 49ers and Baltimore Ravens pits sibling coaches against one another.
But football in general is a family affair — especially among viewers. According to Century 21’s Big Game Survey conducted in December, 84 percent of Americans watch the game from the comfort of their own home, a friend’s home, or a family member’s home.
“It gives us an unprecedented opportunity to tell our story in front of the largest TV viewing audience of the year,” said Century 21 Chief Marketing Officer Bev Thorne. “What’s great is it’s set in the home, which is the heart and soul of the services we offer.”
Drawing a record 111.3 million viewers last year, Super Bowl game day has evolved into a celebrated multimedia phenomenon, infiltrating YouTube channels, Facebook statuses, and Twitter feeds. It’s also a big game day for advertisers — and Century 21 is in the huddle again this year.
Last year, they became the first real estate company to advertise during the Super Bowl in 21 years. The commercial featured Donald Trump, Deion Sanders, and Apolo Anton Ohno working with a Century 21 agent who does it “Smarter. Bolder. Faster.”
“Because [the Super Bowl] brings together friends and family in a very familial environment, it’s a great opportunity for lots of conversation, so we’re putting our Century 21 agents in the middle of those conversations,” Thorne said.
Super Bowl advertisers paying between $3.7 million and $3.8 million per 30-second ad spot. For Century 21, that investment paid off in 2012. Continue reading »
NAR’s forward-looking pending home sales index slipped 4.4 percent in December, signaling a loss of momentum in contract signings, but the easing seems to be more about inventory shortages than weak demand, NAR Chief Economist Lawrence Yun says.
“Clearly to me the slowdown is due to the lack of inventory, the lack of supply,” Yun says, “because one can see the month’s supply situation variation. The month’s supply is the lowest in the West region and also it is in the West region that we see the highest price increase, clearly implying that it is a supply constraint slowdown rather than [a slowdown from] demand decelerating.”
Outside the West, the regions actually saw gains in contract signings in December, suggesting that the tight inventory in the West is a big enough issue that it’s dragging down the numbers measurably on a national basis.
Yun says builders are ramping up starts but they need to ramp up quite a bit more to make a dent in the inventory situation, because starts have been way down from what’s needed for several years now. So, builders are starting from a considerable deficit and their increased pace isn’t near enough what’s needed to make up for that lost ground.
NAR released its December 2012 pending home sales index today, January 28. The index is considered a leading indicator because it points to the pace of expected closings a month or two down the road.
At a briefing during the group’s annual conference, NAHB Vice President of Survey and Housing Policy Research Paul Emrath was upbeat about the recovery of housing targeted toward seniors and baby boomers. He noted in particular that builder confidence in new, single family homes in the 55-plus market tripled in the third quarter of 2012 as compared to the same time in 2011.
“Everything is up, year-over-year,” Emrath said. “It’s an indication that we’re starting to dig out of the hole we fell into in 2009.”
In NAHB’s forecast, boomers and seniors are projected to grow their share of the market over the next few years. By 2020, the group expects the market share of U.S. households in the 55-plus age bracket to grow more than four percent, to 46.6 percent.
Yet Emrath warned that the future of NAHB’s reporting on boomer and senior markets is in peril because the Census Bureau changed the way that they collect generational information.
“The forecast that you just saw is at risk right now,” Emrath said. “When I get back to Washington, I’m going to spend a lot of time writing letters trying to persuade [HUD and the Census Bureau] that they were misguided in removing these 55-plus questions from their surveys.”
In addition to the economic data, Emrath hit a few of the boomer and senior highlights of NAHB’s new consumer preference survey, called What Home Buyers Really Want. Continue reading »
I recently came across an article on Mars One, an initiative to fund a trip to the red planet by filming the selection of astronauts for a reality TV show. According to the organization’s Web site, the individuals chosen in this process will begin the lengthy preparation for a journey to Mars about a decade in the future.
Once they’ve reached the planet, they’ll begin the process of colonization. (They’ll be preceded by unmanned craft carrying cargo.) The explorers will operate out of a handful of pods connected by tunnels and powered by solar panels that have food production units, research facilities, and living spaces.
Whether the Mars One project is successful in its aims or not, it seems likely that humans will set foot on that planet sometime in this century. Over the past decade, private exploration has expanded to the point where commercial space flights are being talked about for next year. And nations besides the United States and Russia are going to space nowadays.
This got me thinking: What would selling real estate on Mars be like? Very likely, these would be things to think about in a Martian transaction: Continue reading »
NAR Government Affairs summary of “fiscal cliff” legislation as passed by the House and the Senate. UPDATE: President Barack Obama has signed the agreement into law.
Real Estate Provisions in “Fiscal Cliff” Bill
On Jan. 1 both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama.
Below is a summary of real estate related provisions in the bill:
Real Estate Tax Extenders
• Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014
• Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
• 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.
• The 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.
Permanent Repeal of Pease Limitations for 99% of Taxpayers
Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.
These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.
The Capital Gains rate stays at 15 percent for those at the top rate of $400,000 (for individuals) and $450,000 (for those filing a joint return). After that, any gains above those amounts will be taxed at 20 percent. The 250/500k exclusion for sale of principle residence remains in place.
The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.