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Wednesday, January 17, 2018

How Will the New Tax Bill Affect Us Locally?

With the new tax bill coming into effect, many are wondering how it will affect our local market. Here are four ways the bill will and won’t impact us.

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I’m sure that many of you are aware that a new tax law has been passed by Congress. There is a lot of uncertainty about how that may affect real estate, so today I’m going to talk about four of those changes and how they may affect us here in the local market. The first of those changes is that the deduction allowed for what you pay in local property taxes is being capped at $10,000. The important thing to note is that if you pay more than $10,000 in local property taxes, you won’t be able to deduct any more than the capped amount. Here’s the positive side: the cap won’t affect a large percentage of home sellers or homeowners in the area. This is partially due to our average sales price, so while this may affect a small portion, especially on the high end of the market, it’s not likely going to cause sweeping change throughout the market. Take a look at how much you pay in property taxes every year to know whether or not you’ll be affected. The second change to note is that the amount that can be deducted, or what you pay in mortgage interest, is changing as well. Under the previous code, mortgage interest could be deducted up to the first $1 million. That’s now being reduced to $750,000. Like the first change, this will mostly affect those living or looking to buy in the upper price ranges in our area. The thing to keep in mind is if you have a mortgage up to $1 million, you can still refinance it to be grandfathered in to the previous rules. New mortgages taken out after mid-December will be subject to the cap. Also keep in mind that if you have a mortgage less than $750,000 or if you’re looking at purchasing a home for less than that amount, you won’t be affected by this change.

These changes won’t hit our local market as hard as areas with higher taxes or higher average sales prices.

The third item on the list is the new tax bill’s effect on capital gains—it won’t change at all. In previous versions of the bill, when they were looking at how capital gains as they relate to real estate might be affected, they looked at changing the amount of time that someone would have to live in their home as a primary residence from two of the last five years to five of the last eight years. This is a huge change because one of the biggest benefits to homeownership in any area is that if you live in a home as your primary residence for two of the past five years, your gains on the sale of that home aren’t taxable as capital gains. For the earlier versions of the bill, Congress had looked at changing the time period to five of the previous eight years. The important thing to note is that our area is very transient; we’ve got a huge military contingent, tons of federal workers, and a lot of contractors that end up moving areas. Having to pay taxes for selling before that five-year mark would have a massive effect on the local market. A lot of homes wouldn’t enter the market because they hadn’t yet hit the five-year mark, and it would make it a lot more expensive for local sellers to sell their home. After lobbying efforts from the real estate industry, keeping the the time frame at two of the past five years is a big victory. The last item is something that can affect sellers anywhere. Deductions for moving expenses are no longer allowed, with the caveat that if the seller is a member of the military, those deductions can still be factored in. Keep that in mind as your factoring in your moving costs. The big thing to keep in mind as we look at these changes is that you’re going to hear quite a bit of negative reporting. Even the National Association of Realtors has said that some of these changes could have an effect of up to 10% on prices. The key here is that our average sales price is below the threshold for the first two points. It won’t hit our local market as hard as areas with higher taxes or higher average sales prices. Going into 2018, things still look really positive. There are many things that are still going our way, and for our area in particular, I don’t anticipate these changes having a big negative impact. Since I’m a real estate agent and not a CPA, I can’t give you tax advice, but only my opinion as it relates to real estate. If you do have further questions about the tax bill, I can put you in contact with a CPA to provide you with more details and insight. For any other questions regarding real estate, feel free to reach out to us. We’d be glad to help you.

Friday, December 15, 2017

What Does the End of 2017 Mean for the 2018 Market?

We end 2017 in a balanced market, which means it’s a good time for both buyers and sellers to take advantage of it.

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What did we see in our local market in 2017? The easiest way to answer that question is by answering another question I get almost every time I talk to someone about real estate: Is it a buyer’s or seller’s market? Over the course of 2017, we saw a little bit of both. Spring was a very successful time for sellers. Midway through June, though, the buyer activity that was putting upward pressure on prices slowed down. That slowdown continued on into August and allowed inventory levels to creep up a bit in certain price segments. Over the past few months, things have started to normalize. Inventory has come back down and buyers have begun to re-enter the market, which is a really positive sign. This means we’re not carrying as much inventory into the winter months leading up to the spring market push.

It’s a great time to be a buyer or a seller in our market.

Going into 2018, I don’t think we’re in a solid buyer’s or seller’s market—we’re in a balanced position. There are a lot of things we’ll have to wait and see about next year, including the current tax overhaul discussion that’s happening. What does all this mean if you’re considering buying or selling a home in 2018? In our area, the pace of sale is usually strong going into the spring. If you’re a seller and your home is priced and prepped correctly, you will absolutely have a successful spring. If you’re a buyer, you still have a great opportunity to buy because interest rates are still low and we haven’t seen enough inventory reduction to create an extreme seller’s market. Also, remember that we’re expecting several rate increases in 2018, so your best opportunity to maximize purchasing power may be sooner rather than later in the year. In short, it’s a great time for both buyers and sellers. If you have any more questions about our market or you’re thinking of buying or selling in the upcoming months, give us a call or shoot us an email. We’d love to help you!

Tuesday, December 12, 2017

New Year – New Home! Get Prepared!

Are you thinking of buying a home in 2018? Here are a few tips that can help.

Looking to buy in the Stafford/Fredericksburg area? Perform a full home search 
Looking to sell in the Stafford/Fredericksburg area? Get a free Home Price Evaluation

The new year is here – this means new beginnings, new resolutions and for many, new homes! Today I’ll go through a few tips to help you prepare to buy a home in 2018. Even if you aren’t sure exactly what your timeline is, the best thing you can do is to begin the process early and take time to prepare. But that doesn’t mean that you need to make any major decisions or lock yourself into anything before you’re ready. There are a few steps you can take that will help you be ready when the time is right. First of all, have an idea what your credit looks like. You may have things on your credit report you aren’t currently aware of. There are free sites you can use to help you check your score so that there aren’t any surprises when you're ready to move forward with your home purchase. The next thing you should do is talk to a reputable lender. If you don’t know who to talk to, I’d be happy to give you some recommendations. Talking to a lender early on will set you up for a more efficient home buying process and will help you feel secure in your decisions about what to look for. A great lender will be able to guide you toward the right loan program and show you some real numbers to give you an idea of what your payments will look like. 


Once you’ve talked to a lender, you should interview real estate agents. Too many buyers fail to be their own advocate when choosing an agent. It’s very important that you get information on an agent’s experience, where they are market experts and what sort of systems they have in place to ensure a smooth home buying process. This will allow you to make an informed decision about which professional will represent your needs the best. Many experienced agents offer a home buying consultation. This helps them understand your wants and needs and he or she will give you a clear picture of what you can expect from the rest of the process. This includes things like inspections that will be conducted, out-of-pocket expenses and deposits. You’re likely to spend a lot of time with this person so you want to make sure they’re someone you’re comfortable with and enjoy being around.
After you choose the right agent, PUT THEM TO WORK! They should start sending you property listings based on your specific criteria. Have conversations with your agent about which homes you like and don’t like – the more they know about your perfect home, the more they can do to help you find it. Finally, when the time is right, get out and look. Doing so will give you a better idea of what you like and what you should expect from the market. Seeing homes in person, even if they’re not the home you fall in love with, will give you great perspective so that when you see the right home, you know it. Buying a home doesn’t have to be a super-fast process. Take your time, be well prepared and have the right pros on your side. If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.