Using Your Tax Refund to Achieve Your Homeownership Goals This Year

from KEEPING CURRENT MATTERS

If you’re buying or selling a home this year, you’re likely saving up for a variety of  expenses. For buyers, that might include things like your  down payment  and closing costs. And for sellers, you’re probably working on a bit of spring cleaning and maintenance to spruce up your house before you list it.

Either way, any money you get back from your taxes can help you achieve your goals. Using a tax refund is a common tactic for buyers and sellers. SmartAsset  estimates  the average American will receive a $2,897 tax refund this year. The map below provides a more detailed estimate by state:

Using Your Tax Refund To Achieve Your Homeownership Goals This Year | Keeping Current Matters

If you’re getting a refund this year, here are a few tips to help with your home purchase or sale this season.

 

How Buyers Can Use Their Tax Refund

According to  American Financing, there are multiple ways your refund check can help you as a  homebuyer. A few include:

  • Growing your down payment fund – If you haven’t started saving for your  down payment, let your tax refund kick off the process. And if you have a fund already, the money you get back could put you closer to your  goal.
  • Paying for your home inspection – Your home inspection can save you a lot of headaches down the road by helping you determine the condition of the house. As a buyer, you’ll typically be responsible for paying for your  inspection, and it’s definitely worth the investment.
  • Saving for closing costs –  Closing costs are additional expenses you’ll need to pay once it’s time to close. They  average  anywhere between 2-5% of the purchase price of your home.

This list is a great start, but it isn’t exhaustive of all the costs you may encounter as you set out on your  homebuying journey. The best way to prepare is to work with a trusted real estate professional to make sure you understand what’s to come in the process.

 

How Sellers Can Use Their Tax Refund

If you own a home and are planning to  sell this spring, your tax refund can help you make sure your home is  ready to list. Here are a few ways current homeowners can put their tax refund to good use:

  • Making small upgrades –  NerdWallet provides a list of great ways to use your tax refund, including tackling small projects or boosting your curb appeal to help your home stand out.
  • Making repairs – If there’s anything in your house that needs to be fixed,  American Financing  notes that completing repairs is another great use of that money.
  • Buying your next home – Whether you’re selling to  move up  or downsize, you can use your tax refund to help pay for any costs on the purchase of your next home.

Of course, it’s important to talk with your trusted real estate advisor before taking on any projects. They’ll make sure you can focus on areas that’ll help you receive the best possible price when you sell.

 

Bottom Line

Funding your home purchase or sale can feel like a daunting task, but it doesn’t have to be. Your tax refund can help you reach your goals. Connect with a local real estate advisor today to discuss how you can start on your journey.


 

Why Right Now Is a Once-in-a-Lifetime Opportunity for Sellers

If you’re thinking about selling your house in 2022, you truly have a once-in-a-lifetime opportunity at your fingertips. When selling anything, you always hope for  strong demand  for the item coupled with a  limited supply. That  maximizes your leverage  when you’re negotiating the sale. Home sellers are in that exact situation right now. Here’s why.

Demand Is Very Strong

According to the latest  Existing Home Sales Report  from the National Association of Realtors (NAR), 6.18 million homes were sold in 2021. This was the largest number of home sales in 15 years. Lawrence Yun, Chief Economist for NAR, explains:

“Sales for the entire year finished strong, reaching the highest annual level since 2006. . . . With mortgage rates expected to rise in 2022, it’s likely that a portion of December buyers were intent on avoiding the inevitable rate increases.”

Demand isn’t expected to weaken this year, either. In addition, the  Mortgage Finance Forecast, published last week by the Mortgage Bankers’ Association (MBA), calls for existing-home sales to reach 6.4 million homes this year.

Supply Is Very Limited

The same sales report from NAR also reveals the months’ supply of inventory just hit the lowest number of the century. It notes:

“Total housing inventory at the end of December amounted to 910,000 units, down 18% from November and down 14.2% from one year ago (1.06 million). Unsold inventory sits at a 1.8-month supply at the present sales pace, down from 2.1 months in November and from 1.9 months in December 2020.”

The reality is, inventory decreases every year in December. That’s just how the typical seasonal trend goes in real estate. However, the following graph emphasizes how this December was lower than any other December going all the way back to 1999.

Right Now, Sellers Have Maximum Leverage

As mentioned above, when there’s strong demand for an item and a limited supply of it available, the seller has maximum  leverage  in the negotiation. In the case of homeowners who are thinking about selling, there may never be a better time than right now. While demand is this high and  inventory  is this low, you’ll have leverage in all aspects of the sale of your house.

Today’s buyers know they need to be  flexible negotiators  that make very  competitive offers, so here are a few areas that could tip in your favor when your house goes on the market:

  • Competitive sales price
  • Flexible closing date
  • Potential for a leaseback to allow you more time to find a home
  • Minimal offer contingencies

Bottom Line

If you’re thinking of selling your house this year, now is the optimal time to list it. Contact us at info@coloradolandmark.com to learn more about putting your house on the market today.

2022 Economy Will Continue Recovery, but Issues Remain

By LISA KLEIN

The pandemic caused a very short economic downturn unlike any other, and while the globe bounced back quickly, the manufacturing and service sectors lag behind.

Affluent individuals generally benefitted from the COVID-19 economy but are also feeling the fallout in terms of what they are able to buy and do, which is a trend that is expected to continue into 2022.

“No matter how much money they had, they couldn’t spend money on the kind of high-touch, close-contact services that many of them were accustomed to, that had sort of been built into their lives,” said Marci Rossell, chief economist for Leading Real Estate Companies of the World,®  during Luxury Portfolio International’s 2021 Affluence Forum.

 

Highs and Lows

In the spring of 2020, entire countries closed down and were forced to continue to restrict their restaurant, travel and hospitality sectors. Manufacturing and shipping, too, had to hold back thanks to COVID-19, and mass layoffs were seen across numerous industries.

Naturally, the global economy was not immune either, but the downturn it saw was different than a usual recession.

“What made it different than other downturns is that it came from outside the economy and moved in rather than inside the economy and moved out,” Ms. Rossell said.

The recessions of the 1970s started within the oil industry, and in 2008 it all started in the housing sector before spilling out into other areas of the economy.

With the coronavirus pandemic, things crashed all at once due to a non-economic factor.

Also, in normal circumstances, an economic downturn typically leads to declines in personal wealth.

“This time around, the value of folks’ portfolios and their homes might have dipped dramatically in a three-month period of time, but boy, everything just snapped back so very quickly,” Ms. Rossell said.

After the initial shock of the pandemic, the value of stocks, bonds and real estate – the main vessels for personal wealth – actually increased dramatically.

According to Ms. Rossell the stock market alone is up 30 percent worldwide, and from pre-pandemic levels to boot.

“Wealth increased almost $28 trillion globally last year,” she said.

“To put that into perspective, the U.S. economy is a $22 trillion economy,” she said. “So in terms of wealth, it was almost as if you added to the globe an entire U.S. economy, plus some.”

Supply & Demand

Fast gains in wealth ushered in big increases in demand throughout the past year, with pandemic-affected industries struggling to keep up.

“2021 was a year where the global economy really snapped back in terms of economic activity, and growth picked up,” Ms. Rossell said. “Many sectors sort of exploded in terms of how quickly they recovered.”

Somehow, though, despite the initial pandemic unemployment rate, there is a shortage now in the labor pool for many sectors, caused by the unusual nature of the 2020 downturn.

While any economic downturn will lead to job losses, normally that happens over a long period of time. In 2020, people were instantly severed from their employer and often the place they lived as a result.

“Once you cut that for them, they’re not going back to the same job, they’re not going back to the same town, they’re not going back to the same way that they lived before,” Ms. Rossell said. “And so this is causing real friction in labor markets today.”

In addition, Gen Z is much smaller that the millennial generation, and every year there are 400,000 fewer 18-year-olds entering the labor pool in the United States alone.

High demand plus a workforce shortage have led to sticker shock for many, with goods and services price hikes, real estate prices that went through the roof and a whopping 5 percent inflation.

“Those inflation numbers are something we haven’t seen in decades,” Ms. Rossell said. “And it’s making folks worry: is the stock market going to crash, is there a housing bubble?”

 

2022 Forecast

The economist does not believe 2022 will see any burst bubbles, especially when it comes to the housing market.

Throughout the pandemic, people purchased larger and larger homes because they needed the space for working, schooling and entertaining. But pandemic or not, millennials have been buying those homes anyways, as they are moving on into a new family-oriented phase of life.

Plus, homebuyers can afford what they are purchasing this time around, many making cash offers for property recently.

There will, however, be some things that money just cannot buy again yet.

“Factories worldwide are churning out goods trying to get them to clients,” Ms. Rossell said. “But you don’t have truck drivers, you don’t have dock staff, to get them from the ships to our homes, our stores, all those things because of the labor market issues.”

Labor shortages in the travel, leisure and entertainment industries have also soured the experience, especially in the luxury market where consumers are used to a certain quality of service.

“If you’re a high-net-worth person who has plenty of income, plenty of wealth – it’s piling up in your stock portfolio, it’s piling up in the value of your home,” Ms. Rossell said. “You want to spend money on things and in some instances you can’t.”

While she advised that these issues are only temporary, that may not be enough for some.

“I think 2022 could be sort of a year of frustration,” Ms. Rossell said.


 

Just Released: International Luxury Buyer Trends and Demand

The past year has shown us that real estate is a timeless investment that can endure and even thrive in challenging economic conditions.

Accordingly, Luxury Portfolio International® has released its latest report,  International Luxury Buyer Trends and Demand, which follows on our State of Luxury Real Estate 2021 report released in January.

Taking from the trends we identified in our initial State of Luxury Real Estate report, we find the international buyer is highly mobile, motivated by feelings of self-reliance, and after many months of time at home, is looking to add excitement and fun in his or her daily life.

Findings include:

  • Investment properties and holiday residences are of top interest
  • Proximity to nature is prioritized over proximity to the city
  • Newer builds are preferred, namely those constructed during the last five years
  • A list of top global property destinations for luxury buyers
  • The primary reasons for international purchases

From a regional standpoint the U.S./Americas & Caribbean account for 37% of the interest from international luxury buyers, followed by Europe and the Middle East at 29%, and Asia at 18%. Narrowing location further, Hawaii is garnering the most attention – a noteworthy one in five (20%) international buyers have expressed interest.

Mickey Alam Khan, President of Luxury Portfolio International commented, “Hawaii tops the list for international property buyers, and if you’ve visited the Aloha State it’s easy to understand why. The islands boast pristine beaches, lush tropical greenery and incredible year-round temperatures.  Our report shows affluent buyers are interested in regions which provide for their needs—great entertainment as well as investment opportunity and lifestyle enrichment.”

 

Take a deep dive into the mind of the affluent. Download  International Luxury Buyer Trends and Demand.

 

Spring Maintenance Checklist

Spring is the perfect opportunity for homeowners to prepare their property for the months to come. Here are tips from Pillar to Post Home Inspectors to get started:

  • Check siding for cracks, peeling or chipped paint, and general wear and tear. Have damaged areas repaired and repainted as needed for lasting protection.
  • Clean gutters and downspouts of debris that collected over the winter.
  • Check patios and walkways for cracks and any loose bricks or pavers. These are a tripping hazard that needs to be corrected promptly.
  • Clean window screens and repair any holes or tears, or replace the screen material.
  • Check around for damaged tree limbs and branches. If a large tree appears to be damaged, be safe and call a professional to address any issues.
  • Inspect the irrigation system for broken sprinkler heads and emitters. Also check for overspray and adjust the system to prevent water waste.

 

Happy Spring Everyone!

 

3 Reasons We’re Definitely Not in a Housing Bubble

from Keeping Current Matters

Home values appreciated by about ten percent in 2020, and they’re forecast to appreciate by about five percent this year. This has some voicing concern that we may be in another housing bubble like the one we experienced a little over a decade ago. Here are three reasons why this market is totally different.

 

1. This time, housing supply is extremely limited

The price of any market item is determined by supply and demand. If supply is high and demand is low, prices normally decrease. If supply is low and demand is high, prices naturally increase.

In real estate, supply and demand are measured in “months’ supply of inventory,” which is based on the number of current homes for sale compared to the number of buyers in the market. The normal months’ supply of inventory for the market is about 6 months. Anything above that defines a buyers’ market, indicating prices will soften. Anything below that defines a  sellers’ market  in which prices normally appreciate.

Between 2006 and 2008, the months’ supply of inventory increased from just over 5 months to 11 months. The months’ supply was over 7 months in twenty-seven of those thirty-six months, yet home values continued to rise.

Months’ inventory has been under 5 months for the last 3 years, under 4 for thirteen of the last fourteen months, under 3 for the last six months, and currently stands at  1.9 months  – a historic low.

Remember, if supply is low and demand is high, prices naturally increase.

 

2. This time, housing demand is real

During the housing boom in the mid-2000s, there was what Robert Schiller, a fellow at the Yale School of Management’s International Center for Finance, called “irrational exuberance.” The  definition  of the term is, “unfounded market optimism that lacks a real foundation of fundamental valuation, but instead rests on psychological factors.” Without considering historic market trends, people got caught up in the frenzy and bought houses based on an unrealistic belief that housing values would continue to escalate.

The mortgage industry fed into this craziness by making mortgage money available to just about anyone, as shown in the  Mortgage Credit Availability Index  (MCAI) published by the Mortgage Bankers Association. The higher the index, the easier it is to get a mortgage; the lower the index, the more difficult it is to obtain one. Prior to the housing boom, the index stood just below 400. In 2006, the index hit an all-time high of over 868. Again, just about anyone could get a mortgage. Today, the index stands at 122.5, which is well below even the pre-boom level.

In the current real estate market, demand is real, not fabricated. Millennials, the largest generation in the country, have come of age to marry and have children, which are two major drivers for homeownership. The health crisis is also challenging every household to redefine the meaning of “home” and to re-evaluate whether their current home meets that new definition. This desire to own, coupled with historically low mortgage rates, makes purchasing a home today a strong, sound financial decision. Therefore, today’s demand is very real.

Remember, if supply is low and demand is high, prices naturally increase.

 

3. This time, households have plenty of equity

Again, during the housing boom, it wasn’t just purchasers who got caught up in the frenzy. Existing homeowners started using their homes like ATM machines. There was a wave of cash-out refinances, which enabled homeowners to leverage the equity in their homes. From 2005 through 2007, Americans pulled out  $824 billion dollars  in equity. That left many homeowners with little or no equity in their homes at a critical time. As prices began to drop, some homeowners found themselves in a negative equity situation where the mortgage was higher than the value of their home. Many defaulted on their payments, which led to an avalanche of foreclosures.

Today, the banks and the American people have shown they learned a valuable lesson from the housing crisis a little over a decade ago. Cash-out refinance volume over the last three years was less than a third of what it was compared to the 3 years leading up to the crash.

This conservative approach has created levels of equity never seen before. According to Census Bureau  data,  over 38% of owner-occupied housing units are owned ‘free and clear’ (without any mortgage). Also, ATTOM Data Solutions just released their fourth quarter  2020 U.S. Home Equity Report,  which revealed:

“17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value…The count of equity-rich properties in the fourth quarter of 2020 represented 30.2 percent, or about one in three, of the 59 million mortgaged homes in the United States.”

If we combine the 38% of homes that are owned free and clear with the 18.7% of all homes that have at least 50% equity (30.2% of the remaining 62% with a mortgage), we realize that 56.7% of all homes in this country have a minimum of 50% equity. That’s significantly better than the equity situation in 2008.

 

BOTTOM LINE

This time, housing supply is at a historic low. Demand is real and rightly motivated. Even if there were to be a drop in prices, homeowners have enough equity to be able to weather a dip in home values. This is nothing like 2008. In fact, it’s the exact opposite.


 

Things You Need To Know About Dogs and Home Insurance

Brought to you by Bennett & Porter Wealth Management + Insurance


It’s official: The United States is a country of dog lovers.

According to the American Pet Products Association’s (APPA) 2019-2020 National Pet Owners Survey, nearly 64 million households have dogs for pets, with cats a distant second at 42.7 million.

The popularity of dogs is hardly surprising. After all, they do have many positive effects on their owner’s lives, from the active lifestyle they bring about to the way they relieve stress and anxiety in people.

Still, one can’t help but wonder about the rates dog owners are paying for their home insurance policy—if they even have one. Yes, the dogs you have at home will factor into your home insurance rates.

If you’re planning on getting protection for your home and you own a dog or two or more, here are some things you need to know about dogs and homeowners insurance.

 

Dog Breeds Matter To Insurers

A standard home insurance policy provides you liability coverage. If a visitor suffers an injury while within your property–like getting bitten by your dog–your home insurance policy’s liability coverage will pay for that person’s hospital and medical bills.

Since dogs are generally perceived to present such a risk, it’s perfectly normal for insurance companies to be worried about your four-legged companions. That concern prompts them to take measures designed to protect their interests.

Some insurance providers charge higher premiums for dogs with a genetic predisposition for aggressiveness. Others simply deny home insurance coverage altogether to households with aggressive dogs.

In short, the breed of your dog will dictate your home insurance rates, that is, if your insurer would even consider providing you coverage.

 

Restricted Breeds

Some dog breeds are more aggressive than others. As far as most insurance companies are concerned, the following breeds are on the restricted list:

  • Akita
  • Alaskan Malamute
  • Chow Chow
  • Doberman Pinscher
  • German Shepherd
  • Great Dane
  • Mastiff
  • Pit Bull Terrier
  • Rottweiler
  • Siberian Husky
  • Wolf Hybrid

As restricted breeds, these dogs will either drive up your home insurance rates or get your application for coverage denied.

 

Preventing Dog Bites

Let’s assume that you were fortunate enough to get home insurance coverage regardless of the breed of your dog, and at a reasonable rate at that.

As much as possible, you should take steps that will help you avoid dog bite incidents in the future. While your home insurance coverage will pay for the bite victim’s medical expenses, the subsequent liability claim could cause your insurance premiums to skyrocket.

Worse, liability claims triggered by dog bites could also force your insurance company to deny you coverage moving forward.

To prevent that from happening, you should take precautions to reduce or eliminate the possibility of dog bite incidents, like:

  • Spaying or neutering your dog to reduce aggressiveness
  • Keeping your dog on a leash, especially when you have guests
  • Not letting random strangers on the street come up and pet your dog
  • Respecting your dog’s space, especially when eating
  • Socializing your dog
  • Signing up for dog obedience school

 

There Are Dog-Friendly Insurance Companies

Fortunately for many dog owners, there are insurers that don’t discriminate against dog breeds. These companies—some of them among the biggest ones in the industry—will consider providing coverage for any breed after taking into account the specific dog’s history and behavior.

It is also not unheard of for insurance companies to ask for a meet and greet with the dogs themselves for assessment.

To find out if the home insurance provider you’re eyeing is dog-friendly, talk to a representative or agent, and be as honest as possible about the dogs you own.

 

Market Updates & Listing Outreach from CLR Agent Phil Booth

We are in a VERY UNIQUE WINDOW right now, which reinforces that there may not be a better time to sell than the second quarter of 2021!

We are currently in an extremely strong sellers market.  There is very little housing inventory (low supply) and an abundance of buyers (high demand).   This situation is a direct reflection of concerns around COVID and super low mortgage interest rates.  These factors are colliding to create a ‘perfect storm’ for sellers.

To explain concisely, there are two forces at play:

1. SUPPLY (SELLERS) – There are many would be sellers who have chosen to hold tight over the past year and not sell because of COVID.  They simply do not want to open their homes up to buyers!  As such, we have had and continue to have historically low inventory.

2. DEMAND (BUYERS) – There is super high buyer demand based on COVID… there is a dramatic influx of people moving from denser population centers to the area, there are many people who, having spent more time than ever at home over the past 12 months, have realized that their current home does not meet their needs  Couple these factors with the fact that money is ‘cheap’ at present… people looking to capitalize on historically low interest rates.

THE RESULT.  When properties come onto the market that are well prepared, well presented, and well priced, we are seeing extremely high showing demand and multiple offers, at well above asking price.   This phenomenon is causing rapid appreciation.  In the last 12 months in Boulder County we have seen appreciation of up to 20% for single family homes and 10% for attached dwellings.  And, this pattern is continuing stronger than ever here in 2021, with 2% appreciation per month in certain areas and price points!

However, this supply and demand imbalance is likely to balance out in the second half of 2021. WHY?

1. SUPPLY – As we see higher vaccination rates (hopefully by mid summer) home owners will feel less wary about COVID and will feel more comfortable about selling, and will be HIGHLY motivated to realize the rapid appreciation they have seen in their homes.

2. DEMAND – We are likely to see interest rates creep up, which will cause buyer demand to wane somewhat.

It is still promise to remain a Sellers’ market, but not to the degree of imbalance we are seeing at present.

Hence, the second quarter of 2021 is a fantastic opportunity to sell and realize the benefits of  THE PERFECT STORM!

Phil Booth

REALTOR®

303-817-8307

Phil@ColoradoLandmark.com

 

Spring 2021 Buyer, Seller + Millennial Guides Are Now Online

Great news! Spring 2021 Buyer & Seller Guides are now available! Both Guides speak of present, crucial information about today’s housing market in an easy-to-understand way.


Seller Guide

Selling your house when the fewest number of homes are available to buy is what puts you in the driver’s seat. With today’s high buyer traffic and low inventory of houses for sale, this power combination makes now the optimal time to sell, if you’re ready. Whether you want to move-up or downsize, here’s the breakdown on supply and demand and why this imbalance in the current housing market positions this season as the optimal time to make your next move.

 

Buyer Guide 

The housing market recovery has been nothing short of remarkable. Many experts agree the turnaround from the nation’s economic pause last year is playing out extremely well for real estate, so it’s an ideal time to buy a home for those who are ready to make a purchase. Here’s a dive into some of the biggest wins for homebuyers this spring.

 

Millennials Guide

If you are one of the millions of millennials who has seen their peers begin to buy homes recently and are wondering what it would take for you to do the same… you’ve found the right eGuide!

There are many stereotypes and myths about the millennial generation as a whole, AND about what it takes to buy a home in today’s market. These myths have prevented many millennials from even considering homeownership as an option for them and their families.

The goal of this eGuide is to provide you with the information you will need to make the best decision for you and your family in regards to homeownership. We will break down the myths and stereotypes that have long been believed to be true, as well as shed light on the opportunity you have to build wealth using your monthly housing cost.


 

The Spring 2021 Luxury Portfolio Magazine is Now Available

NEW LUXURY PORTFOLIO MAGAZINE: NATURE AND HOME DESIGN

Just released, LPI’s Spring edition of Luxury Portfolio magazine explores biophilia, or the desire to be near nature, and how it relates to home design. The issue also notably features second home market trends, sustainable luxury brands, celebrity homes, and more.


NATURE AND HOME: BIOPHILIA IN DESIGN

Biophilia has been steadily trending in home design for years, and it’s only been exasperated with greater time at home and the need for a tranquil and healing space. In our exclusive four-page spread “Nature and Home: Biophilia in Design,” we explore the definition and its incorporations by exceptional designers and architects. The piece offers everything from eco-friendly design tips to a Disappearing Pool (yes!).

The nature theme is found throughout the issue, also showcasing outdoor furnishings, our favorite houseplants, and tips for exterior living.

 

A LOOK AT ETHICAL LUXURY

In our latest edition of recurring article “Jet Set,” we looked at four ethical luxury brands from around the world, including recognizable names Stella McCartney and Bobbi Brown, as well as beautifully crafted sustainable jewelry and clothes made from seaweed.

Additionally, LPI conducted a Q&A with the Chief Sustainability Officer of Tiffany & Co., Anisa Kamadoli Costa, to gain insight into how Tiffany has been influential in promoting ethical practices among luxury brands.

 

BREAKING TRADITION: THE SECOND HOME MARKET

Second home markets have shattered expectations in 2020. To gain insight into various markets, we interviewed experts from Brown Harris Stevens – The Hamptons; Chase International; John R. Wood Properties; Turks and Caicos Property; VALLAT; and The Whistler Real Estate Co. Ltd. The article explores how the markets are performing and the most popular amenities within the respective regions.

 

NOTABLE OWNERS

Every issue, we make a point to showcase celebrity homes. The most recent lineup includes athlete Derek Jeter and popular musical artists, like John Lennon, Katy Perry, and Sonny Bono.

 

BONUS: EXTENDED INTERVIEWS

In the coming weeks, be sure to keep up with our blog. Every week for six weeks, LPI will share extended interviews from the issue. Including designer insight on biophilia, a look at various second home markets, and an extended interview with Tiffany & Co.

 

Read the  digital edition, request your  print copy, or view our  press release for additional details.