Are you a homeowner who is considering the sale of your home in 2018? Or, perhaps you’re hoping to purchase your dream home this year.
The Twin Cities area continues to go through complex changes regarding its real estate market.
When you add the president's tax reform bill to the mix, the likelihood of confusion increases substantially.
Where the Twin Cities Real Estate Market Stands Now and into 2018
As MAAR reports the latest numbers available from November 2017, the Twin Cities region has boosted a definitive seller's market with nearly every indicator showing growth over 2016 data. Minneapolis and the surrounding 13-county metro area continues to be a great place to own your own home with both strong employment numbers and housing prices.
In Anoka County, for example, new listings jumped by nearly six percent year-over-year and the median sales price increased from $219,900 to $232,000. Homes spent an average of 49 days on the market compared with 55 in 2016. The inventory of homes for sale in Anoka also fell from 1,022 in November 2016 to 799 in November 2017.
Hennepin County and Wright County showed similar findings regarding the year-over-year changes in their real estate markets, but Lisa Ash; leader of the Homes by Ash Team with Keller Williams Integrity NW caution sellers to not jump to assumptions or rely on unsubstantiated or unqualified insight of static number reports you find online through sites like Zillow before you decide when and what to sell for.
Current reports show it continues to be a strong seller’s market with only 1.5 months of housing supply, and real estate professionals don’t expect to see any immediate changes on the horizon. The housing market has rebounded in most market areas and this has allowed sellers to “buy up”; selling existing homes and moving up to larger, more spacious, or newer housing options. Buyers are also set to take advantage of the strong housing values this year. Purchasing a home in 2018 may allow buyers to still take advantage of long-term appreciation in housing prices.
Tax Reform and Home Ownership
The new tax reform bill brought with it lots of questions, some of them centered around homeownership. Being able to take a deduction for mortgage interest paid throughout the year, as well as a break for capital gains taxes, that helped ease their tax burden was something that homeowners could look forward to.
Under the Tax Cuts and Jobs Act signed into law by President Trump in December 2017, some of these options changed. For example, the cap on the deduction for mortgage interest that homeowners can claim on their taxes drops from $1 million to $750,000. The new law also changes the deduction for property taxes by combining them with state and local taxes for a cap of $10,000 in total.
What Does the Tax Bill Really Mean for Twin Cities Homeowners?
In spite of what might seem like bad news, many potential homeowners in the Twin Cities and Northwest Metro areas won't have mortgages over that amount. As an example, in Wright County, while the median sales price for a home rose 6.5 percent from $225,400 in 2016 to $240,000 in 2017, this amount is still well under the $750,000 cap on mortgage interest deductions.
Benefits of Homeownership
For many people, the tax breaks are a nice benefit of homeownership -- if you qualify for them. Most home buyers aren't focused on tax breaks as their primary reason for fueling the decision to becoming a homeowner. Other, often more compelling reasons include:
- privacy
- building wealth
- more predictable housing costs
- taking advantage of
equity in the home with rising housing values - ability to decorate, update and upgrade as you see fit
- become part of a community
Tangible Advantages of Owning a Home
Getting a tax break for a purchase that helps you build equity and wealth over the long term is a good strategy for your overall financial stability. The advantages of homeownership go far deeper than that on a tangible level that is experienced on a daily basis. For example, few people who rent become wealthy. They are also not able to control their space and conform it to their lifestyle.
In contrast, baby boomers -- a segment of the population that often wants to downsize -- are finding townhomes or condos offer them the advantages of homeownership with a reduced responsibility for maintenance. This allows them to enjoy their retirement more while still being able to customize their living space to suit their needs.
Building a sense of community is also often easier when it comes to owning a townhome because there a close-knit neighborhood built right in. Traveling and other pursuits undertaken during retirement are easier when you own a townhome compared to a single-family dwelling.
If you're wondering what the Twin Cities real estate landscape looks like for your housing situation this year, contact the Homes by Ash Team for more information.
Every home is unique, every seller’s motivation different, and every neighborhood varies in results based on buyer interest of the area. Lisa Ash urges homeowners and prospective buyers alike to learn more about what the latest MLS statistics could mean for their specific situation.
Lisa
