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Home building rebound

by Brian Peterson

How construction can lose jobs in middle of home building rebound

@CNNMoney May 3, 2013: 1:40 PM ET

 
construction employment

Cuts in government spending on construction projects led to the drop in April's construction employment.

NEW YORK (CNNMoney)

The April jobs report showed a drop in construction employment, but it isn't because the housing boom is slowing.

The sector lost about 6,000 jobs overall, according to the Labor Department's jobs report. This was largely due to a decline in hiring for non-residential buildings or public works projects like roads or sewer plants. Combined, these two areas lost 19,700 jobs.

Meanwhile, home builders and their subcontractors added 13,300 workers, even more than in March.

A big part of the sector's pullback is due to a drop in government-funded construction projects, a trend that has been going on for about two years.

Federal construction spending is down 28% since peaking in August 2011, when stimulus spending was still going strong, according to Ken Simonson, chief economist of the Associated General Contractors of America, an industry trade group. Local governments, particularly school districts, have also been pulling back on construction spending after building a rush of new ones during the housing boom.

"You don't need to open a new school every month if people aren't coming," he said.

Related: April jobs report - Hiring picks up

Additionally, many builders are having a hard time finding skilled construction workers.

David Crowe, chief economist with the National Association of Home Builders, said residential construction hiring likely would have been even higher in April if not for the shortage of skilled workers in some markets. He said a survey of his trade group's members found about half couldn't find workers with the necessary skills.

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Simonson and other experts say the cutback in federal spending -- known as the sequester-- that went into effect March 1 hasn't halted work on any construction projects already underway. But they said federal agencies knew the sequester was looming and did scale back new construction contracts earlier this year.

Record low mortgage rates, a rebound in home prices and strong new home salesprompted the fastest pace of home building in nearly five years in March, according to a separate government report. To top of page

 
 

"Should I wait until spring to list my home"?

by Brian Peterson

 

Often times, Sellers will ask "Should I wait until spring to list my home"? This can make sense for some; however, buyers are always looking for the "right" house. So it is often hard to predict the perfect time to put your home on the market. My advice is, if your home is show ready and you have a need to sell, why wait? 

The article below provides some great tips on how to be successful during the winter months. I hope you find this information helpful.

 

13 tips for selling your home in winter

Sure, there are fewer buyers and the skies are gloomy. So warm and brighten up the place; make it look like a refuge from the weather.

By Bankrate.com

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13 tips for selling your home in winter (© Corbis)

 

© Corbis

 

What makes selling a home more stressful? Selling it in the middle of winter.

The lawn is brown, the weather is usually bad and, unlike the longer days of summer, you have less time to show it off during daylight hours.

But not everyone has the luxury of waiting until the traditional spring or summer home-buying season to plant that "for sale" sign. And while it's true that in most areas you'll probably have fewer buyers during the winter, you will have less competition from other sellers.

The season makes staging — the concept of showing your house at its best — even more important.

Be prepared to put a little effort into it. "It's more difficult to make something look really appealing this time of year," says Ron Phipps, broker with Phipps Realty in Warwick, R.I.

If you do it right, you can really make your house stand out.

1. Keep snow and ice at bay.
The top tip from agents: If the buyer can't get in easily, the house won't sell. That means keeping walkways and driveways free of the frozen stuff. Just like trimming the lawn in the summer, you want to make the home look like it's been maintained. If you're away frequently or live in an area that's subject to bad weather, it can pay to hire a service to regularly salt or shovel the driveway and sidewalks.

What's your home worth?

2. Warm it up.
If you're showing during the winter, think "warm, cozy and homey," says Ken Libby, owner of Stowe Realty in Stowe, Vt., and a regional vice president of the National Association of Realtors.

Before a buyer comes through, adjust the thermostat to a warmer temperature to make it welcoming. "Sellers like to turn the temperature down because of heat costs," says David Ledebuhr, president and owner of Musselman Realty in East Lansing, Mich., and a regional vice president of the National Association of Realtors. "But buyers who come in and aren't comfortable won't stay long."

If you have a gas fireplace, turning it on right before the tour can give the house a little ambience, Libby says.

With a wood-burning fireplace, you've got to be a little more careful. If the house is vacant, don't chance it. But if you're still living there and will be there during the tour, it can be a nice touch.

Many times, sellers leave right before the agent and prospective buyers arrive. In that case, adjust the heat to a comfortable temperature and have the hearth set for a fire. Buyers feel the warmth and see the potential, and you don't have to worry about safety concerns.

3. Take advantage of natural light.
"Encourage showing during the high-daylight hours," Ledebuhr says. At this time of year, "if you show after work, you're totally in the dark."

Make the most of the light you do have. Have the curtains and blinds cleaned and open them as wide as possible during daytime showings. Clean all the lamps and built-in fixtures, and replace the bulbs with the highest wattage that they will safely accommodate. Before you show the house, turn on all the lights.

4. Get the windows washed.
"Buyers act on the first impression," Ledebuhr says. Windows are one thing that many sellers don't even consider. In winter, that strong southern light can reveal grime and make it look like the home hasn't been well-maintained.

5. Play music softly in the background.
To create a little atmosphere, tune the radio to the local classical station. Turn it down so that you barely hear it in the background. "It's soothing," says Libby, who finds that soft classical music tends to have the most appeal to buyers. "I think people tend to stay around a little longer and look a little longer."

6. Make it comfortable and cozy.
Set the scene and help the buyers see themselves living happily in this house. Consider things such as putting a warm throw on the sofa or folding back the thick comforter on the bed. Tap into "the simple things this time of year that make you feel like you're home," Phipps says.

7. Emphasize winter positives.
Is your home on a bus route or some other vital service that means it's plowed or de-iced regularly in bad weather? Be sure to mention that to the buyers.

8. Set up Timers. You want your home to look warm and welcoming whenever prospective buyers drive past. But you're not home all the time, so put indoor and outdoor lights on timers, Phipps says.

Look at the outside lighting around the door. Is there enough illumination to make it inviting? If not, either get the fixtures changed or have new ones added.

9. Make it festive.
Even if you're not actually going to be present, greet your buyers as if they were going to be guests at a party, Phipps says. Set up the dinner table with the good china and silver. Have a plate of cookies for your guests, some warm cider or even chilled bottles of water.

"First impressions are so powerful," Phipps says. "If it looks like you're expecting me and greeting me as company, that's a powerful impact."

10. Give the home a nice aroma.
The No. 1 favorite? "Chocolate-chip cookies," Libby says. "Just about everybody likes that smell."

Other popular scents: cinnamon rolls, freshly baked bread, apple pie, apple cider or anything with vanilla, cinnamon or yeast.

"But don't overdo it, either," Ledebuhr says. Scented candles in every room or those plug-in air fresheners can leave buyers wondering what you're trying to mask.

Watch the bad smells, too. Pet smells, smoke and musty odors can cling to curtains and carpets. Ask your real-estate agent or a friend to give it a sniff test. Then clean the house, air it out and replace drapes, carpets or rugs before you show it.

11. Protect your investment.
Some sellers (or their agents) will ask buyers to either remove shoes or slip on paper "booties" over their footwear before touring the house. Many buyers like that, Phipps says. It indicates a "pride of ownership and meticulousness that resonates with buyers," he says.

12. Use the season to your advantage.
While the holidays are over (and the Christmas and Hanukkah stuff should come down), you can still use winter wreaths and dried arrangements around the door to spark interest. "Anything seasonally appropriate is fun," Phipps says.

In the winter, with the leaves off the trees, you might also have a nice view that isn't as apparent in the spring and summer months. It's a great time to sell waterfront properties, Phipps says. "You can see the views better this time of year."

13. Consider the area.
In some parts of the country, such as ski areas or warmer regions where the snowbirds flock, winter weather can actually be a selling point. "We're right in the middle of our selling season," says Libby, who is located in Vermont. "It's not always spring and summer."

By Dana Dratch, Bankrate.com

 

 

Mortgage Interest Deduction Under Scrutiny

by Brian Peterson

Many people have benefited from the Mortgage Interest deduction for a long time. But that could change as Washington tries to figure out ways to reduce the budget deficit. Once considered a "sacred cow", the mortgage tax deduction is one of the suggested cuts brought to the table for consideration.

How will this affect you? Well that depends, if you are among the few who have not claimed this deduction or are affected by it, this may come of little or no concern to you. But, if you rely on this deduction every year to make your home affordable, this could potentially have significant negative effects on the slowly returning real estate market. Here is one of many articles referring to the issue  http://www.cnbc.com/id/100306907  

Please, if you have any interest in keeping this deduction contact your senator or congress person today and tell them to take this one off the table please!

Here is how you contact your senator... http://www.senate.gov/general/contact_information/senators_cfm.cfm

And here is how you contact your congress person.. http://www.house.gov/representatives/

Insight into the 3.8% Real Estate Tax

by Brian Peterson

 

I've recently experienced concerns within our community about the 3.8% Real estate tax.  Do you find yourself wondering if this tax will affect you and perhaps influence your decision to sell your home?  If so, I encourage you to read the following article shared by the National Association of Realtors website. 

 

Brian Peterson

 

The 3.8% Tax Is Not a Real Estate Transfer Tax

Shortly after the federal government enacted sweeping healthcare reform earlier this year, there was considerable concern over a last-minute addition to the legislation: a 3.8 percent tax on investment income of upper-income households to help shore up Medicare. The tax takes effect in 2013.

Among the concerns expressed among consumers and business people, including real estate professionals, both then and today, is that the tax amounts to a transfer tax on real estate. Not true, NAR Director of Tax Policy Linda Goold says.

Here’s how the tax works. For individuals earning $200,000 a year or more and married couples earning $250,000 a year or more, certain investment income above these income levels might be subject to the 3.8 percent tax on a portion of that income. I say “might” because whether the tax applies or not depends on many factors having to do with the kind and amount of the investment income the household receives.

Investment income includes capital gains, dividends, interest payments, and, for those who own rental property, net rental income.

 

Importantly, the $250,000 (for individuals) and $500,000 (for married couples) capital gain exclusion on the sale of a principal residence remains in place. So, if you’re a married household that sold a house for a $500,000 gain (that’s gain, not sale proceeds), that amount remains excluded from your income calculation.

Let’s take a look at a married couple that has $325,000 in adjusted gross income (AGI), plus $525,000 in capital gains from the sale of their house.

This household would be considered upper-income by most standards. Not only is their income relatively high, at $325,000 (adjusted gross income, or AGI), but they’re receiving a $525,000 gain on their house sale. Presumably, they bought their house years ago and it’s appreciated over the years, so upon selling it, their gain is a relatively high $525,000.

For this household, only $25,000 in investment income would be subject to the 3.8 percent tax. That would amount to $950. That’s because it’s the $25,000 over the $500,000 capital gains exclusion that’s taxable.

Before they would know that, though, they would have to do a calculation that involves their adjusted gross income. They would have to add their capital gain of $25,000 to the amount of their income above the $250,000 income trigger (for married couples).  Since their income is $325,000, they would add the $25,000 to $75,000 ($325,000 – $250,000), which would equal $100,000. Then they would compare the $25,000 to that $100,000, and apply the tax to the lesser of the two, which is the $25,000. Thus, $25,000 x 3.8%  = $950.

So, you have a household that had income of $850,000 for the year, and its tax on investment equaled $950.

This is a simplification. Other tax issues could come into play. But it shows that the tax applies to just a portion of investment income for certain upper-income households and that the capital gains exclusion remains untouched.

Nobody likes taxes, and this tax was inserted into the legislation at the 11th hour as a “pay-for,” that is, as a revenue generator to help offset some of the costs of the reform. It’s expected to generate $325 billion over eight years.

NAR has prepared a brochure that looks at how the tax might apply under eight income scenarios: 1) sale of principal residence (which we just looked at), 2) sale of a non-real estate asset, 3) gain, interest, and dividend from securities, 4) real estate investment income, 5) rental income as sole source of earnings, 6) sale of second home with no rental use, 7)  sale of inherited investment property, and 8. purchase and sale of investment property.

You can download the brochure for free. It’s written in plain language and I think you’ll find it organized efficiently, so you can see at a glance the potential considerations for the different scenarios. Of course, it’s just guidance: each household’s situation will be different, so you would want to suggest to your customers and clients that they consult with a tax advisor to make sure the tax is applied correctly in their case.

You can also get a good sense of how the tax works in the video above, in which Goold walks through a sample income scenario.

 

 

Should I Buy a Home Now?

by Brian Peterson

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

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Brian Peterson
Brian Peterson Real Estate Group
2000 E. Center Street
Warsaw IN 46580
574-268-1899
Fax: 574-203-0208