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The proposed House and Senate tax reform bills have serious implications for our economy, and will affect current and future home owners. Both bills mandate that in order to access the capital gains profit from selling a home, owners must have lived there for at least five years. The National Association of Realtors® estimates that 54 percent of trade-up buyers use capital gains equity as a down payment for their new home, and 10-22 percent of owner occupied home sellers only lived at their residence for 2-5 years. Put into a broader perspective, more home owners will opt to hold out on trading up their homes, reducing real estate sales and lowering the gross national product that comes from new construction, remodeling, fees, and other associated factors. In the long run, home owners of all demographics will be hurt, including making it harder for millennials who are saving to purchase their first home. To read more, click here.
Yesterday the Northern Arizona Association of Realtors® had the pleasure of hosting the National Association of Realtors® chief economist, Lawrence Yun, to Flagstaff. Dr. Yun gave us an overview of what the Tax Reform could do to real estate sales. The way the current tax bill reads there are many things that could hurt your real estate investment. Homeowners may not be able to write off the interest and property taxes on their homes. There is also a chance that Capital Gains tax will have to be paid unless a seller has lived in the home 5 years or longer. Currently it is 2 years. We will all have to wait and see how this all pans out.
Dr. Yun gave us a very positive outlook for the next few years when it comes to real estate on the national and local levels. We have heard many people and clients say that they fear we are entering into another real estate bubble like we did in the early 2000’s. Dr. Yun gave a lot of great examples about how the market is so much different now than it was then. He believes that we are not in a bubble. A couple reasons why he feels this way is because the lending agencies have been more strict in giving loans, and, therefore, lending to more qualified buyers who are less likely to default. He also stated that our rate of price increase is very healthy economically compared to before. In the early 2000’s prices increased way too rapidly.
It was a wonderful presentation and a lot of positive perspective. You can see his slides by clicking here.
We, of course, are always happy to discuss what is happening in real estate here in Flagstaff and on the national level. Give us a call and we can grab coffee!
This beautiful 4 bedroom, 3 bath Swiss Manor home has it all. The heavily treed Cul-de-Sac lot is over 12,000 sf and gives you the forest-living feel inside the city limits. A very warm and cozy living room with vaulted ceilings, hardwood floors and wood burning fireplace. On one level you will find a master suite, along with 2 additional bedrooms and bathroom. Downstairs there is a separate suite with a bonus/family room with unlimited options and new carpet. Spacious garage with a bonus storage area. The backyard is to die for. There is nice deck, a huge shed, room to park anything and much more space. The views of Mount Elden are hard to beat. This 4089 Zermatt Way home will not last. Call (928) 714-0001 today.