Homeownership Offers Stability & Wealth Creation

Homeownership Offers Stability & Wealth Creation

The most recent Housing Pulse Survey released by the National Association of Realtors revealed that the two major reasons Americans prefer owning their own home instead of renting are:

  1. They want the opportunity to build equity.
  2. They want a stable and safe environment.

Building Equity

In a recent article by The Mortgage Reports, they report that “buying and owning a home is the essence of ‘The American Dream.’ Each month, your housing payments go toward owning your home instead of renting it; building your personal wealth and assets instead of someone else’s.

History has shown that homeownership is a clear path to wealth-building, with homeowners boasting a net worth [that is] multiples higher than the net worth of renters.”  

Family Stability 

Does owning your home really create a more stable environment for your family?

survey of property managers conducted by rent.com disclosed two reasons tenants should feel less stable with their housing situation:

  • 68% of property managers predict that rental rates will continue to rise in the next year by an average of 8%.
  • 53% of property managers said that they were more likely to bring in a new tenant at a higher rate than to negotiate and renew a lease with a current tenant they already know.

We can see from these survey results that renting will provide anything but a stable environment in the near future.

Bottom Line

Homeowners enjoy a more stable environment, and at the same time are given the opportunity to build their family’s net worth.

Avoiding Bad Trends when Updating your House

 

There has never been a time in history where trends could spread quicker. Trends involving updating a house are no different. Not long ago you would have to go over to someone's house in order to see what they've done. But not today. Whether you are on Facebook and seeing updates on your friends DIY projects or you have been scrolling through Pinterest ideas, seeing unique home improvements has never been easier. If a lady in Albuquerque paints her ceiling red and pins it on Pinterest, one month later that could have inspired thousands of ceilings to get painted red across the world. That could have never happened a decade ago.

With so many ideas out there you need to be careful not to turn a "home-improvement" into an eye sore down the road. 

As they say "Easy Come, Easy Go". If something gains popularity really quickly you can almost bet it will loose popularity quickly too. Shag carpet in earth-tone colors like gold and green wasn't heard of in early 1960's but in the 70's it had become the floor covering of choice. And then only a decade later it was gone again. 

Let's look at today's trends. What kind of styles are going as quickly as they came? 

 

Bypass Vintage Spoked Sliding Barn Door Closet by TheWhiteShanty: Barn Doors and barn wood everywhere. The trend probably started because old tumbled over barns needed to be put to use and someone got crafty and re-purposed it to make picture frames and shelves. Now you can buy Faux Barn Wood Furniture. They have even created vaulted ceilings out of barn wood and corrugated metal.  Can you imagine looking back on that and cringing?

Beautiful cobalt blue vessel sink....It needs a different faucet, etc., however.  Houzz ᘡղbᘠ: Unusual Sinks. It's not hard to imagine these going out of style quickly. Every design of these glass bowls are very style specific. And a small percentage of people would like the color and pattern than if it was a regular sink. Future buyers just might not be able to imagine that bathroom being their own.

House of Turquoise: Colordrunk Designs  (Would LOVE to try this tile in a bathroom!): Chevron. This pattern got a ton of attention very quickly and could be found on every skirt, baby blanket, and book cover. But should it belong in the house? Especially paired with a trendy color, you can bet on the year this backsplash was installed, 2013. It has only been 3 years and it is dated.

Tax Advantages of Owning Real Estate

 

Home-ownership comes with many perks. One advantage is a little bit of tax relief. You would be spending this money whether or not you owned a home because all expenses are built into the price of rent, however, a homeowner can deduct them!

Mortgage Interest Deductions: During the first years of a mortgage, most of the payment is going towards interest and only a small amount goes towards principal. For homeowners, all the interest is tax deductible. On a $100,000 30yr-loan at 4.25%, $4,200 goes towards interest in the first year. All $4,200 is deductible. This is the same for home-improvement loan interest!

Property Taxes: Property taxes are another expense homeowners have that are tax deductible.

Energy Efficiency Tax Credit: This is due to expire at the end of this year. But if you have made your home more energy efficient, you can get a tax credit of $500!

PMI: If you don’t have at least 20% paid down on your house you will be paying Private Mortgage Insurance. This is also deductible but only if you make less than $109,000 a year.

Depreciation: If you are renting out a house you can deduct the depreciation value of the house. The recovery period for a rental house is 27.5 years.  To calculate what you could deduct use this calculator. Make sure to set the recovery period to 27.5 years.
http://www.calculatorsoup.com/calculators/financial/depreciation-property-realestate.php

This information is for awareness only. I am not a tax adviser. All information given here has been abbreviated from Marketwatch.com. Consult a tax expert to fully take advantage of all home-ownership tax breaks.

Where does SD rank for best retirement state? You’ll be surprised!

It ranks #5! 

According to kiplinger.com our beloved South Dakota is ranked in the top for retirement friendly states. Their reasons are as follows:

  1. There is no state income tax so Social Security benefits and other retirement income are not taxed.
  2. Cost of living is low.
  3. Percentage of the population over 65 is above the national average with 14.5%
  4. Sales tax is relatively low.
  5. SD offers many home-owner benefits for Seniors including tax freezes, property tax reduction, and property tax homestead exemptions. Property Tax homestead exemption is for homeowners 70 or order or a surviving spouse. This allows them to delay paying property payment until the sale of the property.
  6. There are no inheritance and estate taxes.

The only states that rank better than SD for retirement are Delaware, Florida, West Virginia and Pennsylvania.

Our neighbors, Nebraska and Minnesota, are among the worst states for retirees along with North Carolina, New York, New Mexico, California, & District of Columbia.

So why not move all your older relatives to the wonderful state of South Dakota!

Click here to see the full report and how every state ranks.

Fixer Uppers — Is it a Good Deal or a Money Pit?

If you have been browsing through houses online and you found an under priced house that is a fixer-upper, you might have found a bargain! The other reality is that it could be a money pit.

Here are some questions to figure out before making an offer:

  1. Is it just ugly? or does it have bigger problems?  Old carpet, cat urine smell, ripping wallpaper, chipping paint, no problem! Not to say that it will be cheap to replace carpet and paint but it is a cost that you can easily calculate and decide if it is worth it. You can get a really good deal on a nice house if you are willing to use some elbow grease.
    Leaking roof, missing siding, broken furnace, missing plumbing? Now this is a problem. This is not a property to jump on. Take your time. You will need to get estimates to fix each of the issues. And plan for it being twice as expensive. If you believe its still worth it, then go for it. But don’t expect to be able to move in quickly!
  2. Always stay in your comfort zone. This isn’t usual advice but when it involves this much risk you need to know what you can handle. If you aren’t comfortable with a deal it is likely that you aren’t understanding everything that it will involve. And a miscalculation can be very very spendy!
  3. Have the money to spend. Make sure that you have your finances in order. If you can barely make the down payment, how will you afford the repairs? If you can’t move in until the repairs are done, you will be paying insurance, utilities, and interest on a property that you aren’t living in. If you are going to be taking a risk, make sure you can handle your worst case scenarios.
  4. Have a backup plan. In the worst of cases what will you do? Your Plan-B doesn’t have to be spectacular, make you money, or be convenient; but you should have one! Can you easily resell the property as-is for what you paid? Can you live in the house before repairs are made? Just as long as your plan isn’t to skip town and let the home be foreclosed on!

    If you need my assistance please don’t hesitate to call, Angie Uttecht 605-350-2553

How will Student Loans affect the Housing Market?

Here are some statistics to think about.

  • The average graduate of the class of 2015 has $35,000 in student loan debt.
  • Since 2010, 40% of households under 35 had a student loan.
  • The average American household with at least one credit card has nearly $15,950 in credit-card debt (in 2012), according to CreditCards.com, and the average interest rate runs in the mid- to high teens at any given time.

When a lender looks at debt, they see it all the same. A $260/month student loan payment is looked at in the same light as credit card debt or a car payment. If someone has all three debts, getting a mortgage can be a very difficult task.

Because of this increase in debt, for the first time ever, young people who did not seek a college education are more likely to buy homes than their college educated peers.

This is bad news for all homeowners looking to sell a home. If there are less young people who are looking to buy small and inexpensive homes, it will be harder for those trying to sell to move up. The ripple effect continues as those selling medium priced houses will have less potential buyers because they are stuck in their entry-level homes.

The twist? According to NAR, 88% of Millennials home purchases have been for houses over $100,000. And 45% of Millennials pay over $250,000 for their first home.

 

Weird and Cheap Kitchen updates that you can do yourself!

If you have an outdated house, (or are interested in buying a house that is outdated) good news! Here are a lot of cheap ideas that will transform your living area!

1. The Magic of Paint
Of course, fresh paint on the walls is always a great update. But did you know you can paint ugly cabinets and counter-tops too? The only change in the picture below is paint. Pretty huge change! Follow this link for instructions. 
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2. Concrete

How does concrete fit into a kitchen? Better than you would think? If painting the counter-tops isn’t your thing or you want stone but can’t afford it, this is for you! Concrete counter-tops are durable. You can stain it to look like marble, granite, wood, versatile, and best yet, cheap!   Learn how to do this yourself. 

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3. Upgrade all your appliances for $50? It isn’t impossible. If you desire a stainless steel look, you can buy stainless steel contact sheets. Applying this to your appliances will really change the appearance of your kitchen! Read more Here!

Or you can paint it with Rust-oleum Stainless steel paint. Read more here!

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If you were to get new counter-tops, cabinets, and appliances, you would be spending thousands of dollars, and very easily could be worth it. But these cheap tricks look at least 70% as good and cost only 5% as much!

FEBRUARY STATS (HURON RESIDENTIAL)

After a long’s winter nap real estate is starting to wake up!

FEBRUARY STATS (HURON RESIDENTIAL)
• Sold 2 Huron Residential Sales compared to 12 in 2014
• Pending sales up 180% with 14 in 2015 compared to 5 in 2014
• 15 new listings compared to 11 last year
• 86 current Huron Res listings compared to 62 in 2014
• Average days on the market was 280 days compared to 170

YEAR TO DATE STATS THROUGH FEBRUARY
• 5 sold compared to 26 last year
• 18 pending sales compared to 22 in 2014
• 31 new listings compared to 25 last year
• 191 average days on the market compared to 139

Christmas Season Light-up!

Decorating your house can be a friendly rivalry against the neighbors. But look at this house! The costs to light up this display was $686/hour!

How Much Does it Cost to Power Your Christmas Lights?

You don’t have to have your house visible to space to cheer up your neighborhood!

Favorite Tip: You can light up the inside and outside of your house by hanging lights inside your window. Use tape to hold the lights within the window itself. Do this to all your front facing windows. With curtains shut it looks like every light in your house is on. PLUS you don’t have to get out a ladder or adventure onto the roof.

 

November Real Estate Stats

HURON REAL ESTATE HAPPENINGS. Another month has come and gone! Here are real estate results for November*:
(*compiled from Huron Area MLS Stats)

(Call, text or email with questions! 605-350-2553, angie@soldbyangie.com, Angie Uttecht, Ace Realty, 1718 Dak Ave S, Huron, SD)

NOVEMBER STATS (HURON RESIDENTIAL)
• Sold 6 Huron Residential Sales compared to 11 in 2013
• Pending sales down 50% with 6 in 2014 compared to 12 in 2013
• 7 new listings compared to 22 last year
• 96 current Huron Res listings compared to 81 in 2013
• Average days on the market was 144 days compared to 234

YEAR TO DATE STATS THROUGH NOVEMBER
• 141 sold compared to 156 last year
• 129 pending sales compared to 176 in 2013
• 231 new listings compared to 268 last year
• 127 average days on the market compared to 147