2nd Quarter of 2019 is complete!

This is a brief summary of the Quarterly Gardner Report.

Things are still seeing positive growth from a Real Estate perspective.

In Western Washington YOY price growth is 2.8% higher. When compared to 1st Quarter it’s 12%. County by County is a bit different – for King County we saw a -0.4% price drop. This speaks directly to the affordability in that area. Days on market is still relatively low (21 Days in King County) and if a home is priced and marketed well – it will attract attention and sell rapidly. One strong take away is that interest rates are still at an all time low – with inventory up this is a great time to buy. And for those needing to sell before you can buy contingent offers are a viable possibility again!

Posted on August 7, 2019 at 6:23 pm
Denise Perkins | Category: Bellevue, Denise Perkins, Eastside, Helpful Home Tips, Home Sweet Home, In the News, Market Stats, North Kirkland, Redmond, Snoqualmie, Woodinville | Tagged , , , , , , , , , , ,

The Cost of Waiting!

Interest rates are at a two year low. Who knew!

There have been so many predictions over the past several  years that rates were headed higher and higher and while they have fluctuated a bit – today it’s like free money! Our economy as well as the real estate market is unpredictable.  But one thing is for certain, if you are or were on the fence about buying – either for the first time, selling and getting a bigger house or even ready to downsize and get into your retirement home – now could be a great time to make that happen.  Most markets in our area are still great for sellers if the home is marketed and priced accordingly – and inventory is up (24.5% as of May) which means more for buyers to choose from.

Multiple offers are still the story again in some markets – but with more to choose from it’s doesn’t seem as frenetic.  So why does all this hub-bub matter when it comes to interest rates – well it really can effect what you can buy.  BUYING POWER is the answer – and with low interest rates you can afford more.  And in our area – that makes a big difference.   Which brings me to the information seen here – it’s a great depiction of what waiting, or what a changing interest rate can mean to you and your bottom line.

So when you’re ready to talk about finding your next community – let’s chat – I can help!

Posted on July 24, 2019 at 11:22 pm
Denise Perkins | Category: Denise Perkins, Eastside, Helpful Home Tips, Home Sweet Home, In the News, Market Stats, North Kirkland, Redmond, Snoqualmie, Uncategorized, Woodinville | Tagged , , , , , , , , , , , , , , , ,

How Much Is Capital Gains Tax on Real Estate? What Homeowners Need to Know to Avoid It

I know…tax season is over (hopefully you got yours done already!!)  But this question about CAPTIAL GAINS TAX is a question I get on a regular  basis from my clients —  about what it is and does it apply to me?  This was an article I recently sent out in my monthly ‘paper’ newsletter (I know so  old school) to my mailing list.  It was super helpful for me to understand what it actually is and how it works — I hope you find it as informative.  

 

What is capital gains tax? This is a prime question that might creep up when you sell your home for more than you paid for it. That’s good news for you, but the downside is, you may have to pay taxes on those profits in the form of capital gains tax. Yep, just as you pay income tax and sales tax, home sale profits are subject to taxation, too.

Complicating matters is the new Tax Cuts and Jobs Act, which is changing the rules. So if there’s ever a time to brush up on all things capital gains, it’s right now. Here’s what you need to know.

What is capital gains tax—and who pays it?

In a nutshell, capital gains tax is a duty levied on property and possessions you’ve held onto for more than a year that you sell for a profit—including your home.

The IRS gives each person, no matter how much the person earns, a $250,000 tax-free exemption for a primary residence.

“So if you and your spouse buy your home for $100,000, and years later sell for up to $600,000, you won’t owe any capital gains tax,” says New York attorney Anthony S. Park. However, you do have to meet specific requirements to claim this exclusion:

  • The home must be your primary residence.
  • You must have owned the home for at least two years.
  • You must have lived in the home for at least two of the past five years.

If you don’t meet all these requirements, you may be able to take a partial exclusion for capital gains tax. For more information, consult a tax adviser or IRS Publication 523.

How much capital gains tax will you have to pay?

For capital gains over that $250,000-per-person exemption, just how much of a bite will Uncle Sam take out of your real estate sale? In the past, that depended on your tax bracket. Under the new tax law, capital gains rates are now based on your income, explains Park. Let’s break it down.

Single Filer

Married Filing Jointly

Head of Household Capitol Gains Tax Percentage
Earning Less Than $39,375 $78,750 $52,750 0%
Earning Between $39,376 – $434,550 $78,751 – $488,850 $52,751 – $461,700 15%
Earning More Than $434,550+ $488,850+ $461,700+ 20%

Don’t forget, your state may have its own capital gains tax. And very high earners may owe an additional 3.8% net investment income tax.

Do home improvements reduce capital gains tax?

How much capital gains tax you’ll pay may also be reduced because of home
improvements you’ve made. The money you spent on any home improvements—such as replacing the roof, building a deck, replacing the flooring, or
finishing a basement—can be added to the initial price of your home to give you the adjusted cost basis of your home.

For example, if you purchased your home for $200,000 in 1990 and sold it for $550,000, but over the past 29 years have spent $100,000 on home improvements, that $100,000 would be subtracted from the sales price of your home this year. Instead of owing capital gains taxes on the $350,000 profit from the sale, you would owe taxes on $250,000. In that case, you’d meet the requirements for a capital gains tax exclusion and owe nothing.

Make sure to save receipts of any renovations and repairs, since they can save you big-time come tax filing season.

How capital gains tax works on inherited homes

What if you’re selling a home you’ve inherited from family members who’ve passed away? The IRS also gives a “free step-up in basis” when you inherit a family house. But what does that mean?

Let’s say Mom and Dad bought the family home years ago for $100,000, and it’s worth $1 million when they die and leave it to you. When you sell, your purchase price (or “basis”) is not the $100,000 your folks paid, but instead the $1 million it’s worth on their date of death.

How to avoid capital gains tax as a real estate investor

If the home you’re selling is a second home (i.e., vacation home) rather than your primary residence, avoiding capital gains tax is a bit more complicated. But it’s still possible. The best way to
avoid a capital gains tax if you’re an investor is by doing a 1031
exchange. This allows you to sell your property and buy another one without recognizing any potential gain.

“In essence, you’re swapping one investment asset for another,” White says. He cautions, however, that there are very strict rules regarding timelines and guidelines with this transaction, so be sure to check them with an accountant.

If you’re opting out of the rental property investment business and putting your money in another venture, then you’ll owe the capital gains taxes on the profit.

Source: https://bit.ly/2CDrl5n

Posted on April 24, 2019 at 11:01 pm
Denise Perkins | Category: Denise Perkins, Helpful Home Tips, Home Sweet Home, In the News, Market Stats, Uncategorized | Tagged , , , , , , , , , , , , , , ,

November Market Stats

Increased inventory, slower sales and more price reductions all point to a balancing market—welcome news for price-shocked buyers. Sales prices are up from last October and down from the all-time high reached this spring. Despite the slowdown, it’s important to point out that we’re only moving back toward what a normal market looks like. King and Snohomish counties each have over two months of available inventory. While that is double the inventory of a year ago, it’s far short of the four to six months supply that is considered a balanced market. Sellers looking to list their home now can be sure there remains plenty of interest among home buyers.

Eastside

>>>Click image to view full report.

The median home on the Eastside sold for $890,000 in October, up 5 percent from a year ago and unchanged from the previous month. While year-over-year price increases were in the single digits for the Eastside overall, several areas, including Kirkland, Woodinville and Mercer Island, experienced double-digit price gains. Buyers are still having to pay a premium for desirable Eastside properties. However, with more choices and less buyer urgency, sellers need to price their home correctly to maximize their chances of getting the best possible return.

King County

>>>Click image to view full report.

Inventory in King County for all homes, both single-family and condominium, soared 102 percent over last October. The increase was due to an influx of new listings and the fact that homes are now taking longer to sell than at the peak of the market this spring. While buyers now have more breathing room to make their decisions, the 2.4 months of inventory in King County is still far from a balanced market. The median price of a single-family home in October was $670,999, an increase of 7 percent from the same time last year, and virtually unchanged from August and September. South King County showed larger increases, with prices rising more than 10 percent from a year ago in Auburn, Kent and Renton.

Seattle

>>>Click image to view full report.

In October, the median price of a single-family home in Seattle was $750,000, up 2 percent from last October and down slightly from last month. While inventory doubled over a year ago, Seattle falls behind most areas of King County in supply with just under two months of inventory available. Demand is predicted to stay high, with Seattle’s population projected to grow at twice the national rate next year. That said, buyers are in the position to be able to negotiate. A recent analysis named Seattle as one of the top markets in the country where it makes the most sense to buy this winter.

Snohomish County

>>>Click image to view full report.

Inventory in Snohomish County soared 65 percent in October as compared to a year ago. The area now has 2.4 months of inventory, about the same relative supply as King County. As with most of the Puget Sound area, the increase in inventory was due to a higher number of sellers listing their homes and fewer sales. Year-over-year, the median price of a single-family home sold in October in Snohomish County grew 8 percent to $473,000. The median price in September was $485,000.

This post originally appeared on the Windermere Eastside Blog.

Posted on November 28, 2018 at 7:52 pm
Denise Perkins | Category: Eastside, Helpful Home Tips, Home Sweet Home, In the News, Market Stats, North Kirkland, Redmond, Uncategorized, Woodinville | Tagged , , ,

5 Reasons Rising Interest Rates Won’t Wreck the Housing Market

Interest rates are changing.  Here is a great article written by Windermere’s Chief Economist Matthew Gardner about how this may affect the Real Estate Market.

Interest rates have been trending higher since the fall of 2017, and I fully expect they will continue in that direction – albeit relatively slowly – as we move through the balance of the year and into 2019. So what does this mean for the US housing market?

It might come as a surprise to learn that I really don’t think rising interest rates will have a major impact on the housing market. Here is my reasoning:

1. First Time Home Buyers 

As interest rates rise, I expect more buyers to get off the fence and into the market; specifically, first time buyers who, according to Freddie Mac, made up nearly half of new mortgages in the first quarter of this year. First-time buyers are critical to the overall health of the housing market because of the subsequent chain reaction of sales that result so this is actually a positive outcome of rising rates.

2. Easing Credit Standards

Rising interest rates may actually push some lenders to modestly ease credit standards. I know this statement will cause some people to think that easing credit will immediately send us back to the days of sub-prime lending and housing bubbles, but I don’t see this happening. Even a very modest easing of credit will allow for more than one million new home buyers to qualify for a mortgage.

3. Low Unemployment 

We stand today in a country with very low unemployment (currently 4.0% and likely to get close to 3.5% by year’s end). Low unemployment rates encourage employers to raise wages to keep existing talent, as well as to recruit new talent. Wage growth can, to a degree, offset increasing interest rates because, as wages rise, buyers can afford higher mortgage payments.

4. Supply

There is a clear relationship between housing supply, home prices, and interest rates. We’re already seeing a shift in inventory levels with more homes coming on the market, and I fully expect this trend to continue for the foreseeable future. This increase in supply is, in part, a result of homeowners looking to cash in on their home’s appreciation before interest rates rise too far. This, on its own, will help ease the growth of home prices and offset rising interest rates. Furthermore, if we start to see more new construction activity at the lower end of the market, this too will help.

5. National versus Local

Up until this point, I’ve looked at how rising interest rates might impact the housing market on a national level, but as we all know, real estate is local, and different markets react to shifts in different ways. For example, rising interest rates will be felt more in expensive housing markets, such as San Francisco, New York, Los Angeles, and Orange County, but I expect to see less impact in areas like Cleveland, Philadelphia, Pittsburg, and Detroit, where buyers spend a lower percentage of their incomes on housing. The exception to this would be if interest rates continue to rise for a prolonged period; in that case, we might see demand start to taper off, especially in the less expensive housing markets where buyers are more price sensitive.

For more than seven years, home buyers and real estate professionals alike have grown very accustomed to historically low interest rates. We always knew the time would come when they would begin to rise again, but that doesn’t mean the outlook for housing is doom and gloom. On the contrary, I believe rising interest rates will help bring us closer to a more balanced real estate market, something that is sorely needed in many markets across the country.

Posted on October 3, 2018 at 5:45 pm
Denise Perkins | Category: Helpful Home Tips, In the News, Market Stats, Uncategorized

September Real Estate Market Stats

The number of homes for sale in August increased dramatically over the same time a year ago. This is the result of a moderate increase in new listings and a much slower pace of sales. Homes are staying on the market longer, giving buyers more choices and more time to make an informed decision. While home prices are up compared to a year ago, the rate of increase was in the single digits rather than the double-digit surges of past months. It’s still a seller’s market, but sellers need to have realistic expectations about pricing their homes as the market softens.

Eastside

>>>Click image to view full report.

The median price of a single-family home on the Eastside was up nearly 10 percent from the same time last year to $935,000. Home prices have declined each month from the all-time high of $977,759 set in June. Inventory increased 73 percent over last August. With supply soaring and home prices moderating, sellers need to work with their broker to price their home to meet the current market conditions. A year ago 47 percent of the homes on the Eastside sold for over list price. This August that number was down to 29 percent.

King County

>>>Click image to view full report.

King County experienced yet another flood of inventory with the number of homes for sale jumping 65 percent over the previous year. Despite the growth, the county has just 1.9 months of inventory and remains a seller-oriented market. The market has slowed but it remains fast-paced, with 62 percent of the properties here selling in fewer than 15 days. While home prices were up 3 percent from a year ago, the median price of $669,000 represented the third straight month of declines from the record-high of $726,275 reached in May.

Seattle

>>>Click image to view full report.

After leading the nation in home price growth for nearly two years, Seattle is finally cooling off. The median home price in August was $760,000, up just 4 percent from last year and down from the record $830,000 reached in May. Inventory soared in August, but the city still has just two months of supply, far short of the four to six months that is considered balanced. Bidding wars are becoming less common and price drops more common. Sellers must adjust their expectations to what appears to be a long waited moderating of the market.

Snohomish County

>>>Click image to view full report.

Mirroring the market slowdown in King County, Snohomish County also experienced a cooling off in August. The median price of a single-family home was $492,000, up 8 percent from a year ago but down from the record high of $511,000 two months prior. Inventory increased nearly 30 percent, but at just 1.6 months of supply the market remains very tight and sales are brisk. Sixty percent of homes here sold within 15 days.

This post originally appeared on the WindermereEastside.com Blog.

Posted on September 18, 2018 at 6:19 pm
Denise Perkins | Category: Eastside, In the News, Market Stats, North Kirkland, Redmond, Uncategorized, Woodinville | Tagged , , , ,