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By Susanne Dwyer

As we kick off 2017 with a new administration and the start of the 115th Congress, the National Association of REALTORS® (NAR) will ramp up its messaging on the social and financial benefits of homeownership. While NAR has long touted the benefits of owning a home, it’s more important than ever to send a strong message to lawmakers about NAR’s priorities as Congress considers tax reform proposals in 2017.

Studies have long shown the wealth-building opportunities that Americans get from becoming homeowners. A research paper by the Joint Center for Housing Studies at Harvard concluded that even after the decline in housing prices and the increase of foreclosures beginning in 2007, homeownership continues to be a significant source of household wealth, particularly for lower-income and minority households. The study notes that “efforts to save for a down payment lead to a large jump in wealth that is then further supported by at least modest appreciation and some pay-down of principal over time. Renters may have the opportunity to accrue savings and invest them in higher yielding opportunities, but lack strong incentives and effective mechanisms for carrying through on this opportunity…and those who made a failed transition from owning to renting are no worse off financially than those who remained renters over the whole period.” [1]

Homeownership also has many proven social benefits. NAR research has shown that homeowners are more involved in their communities, have children who perform better in school and have lower crime and incidences of drug use in their households. [2] With all of these proven benefits, it is not surprising that most millennials—the generation that everyone thinks is disinterested in homeownership—say they want to own homes themselves one day.

Many homebuyers count on taking advantage of the mortgage interest and property tax deductions after buying a home. These taxpayer benefits have made a tremendous difference in helping renters afford to transition to homeownership. NAR’s message to policymakers on tax reform has been to preserve the Mortgage Interest Deduction (MID). This message has been effective, as most Members of Congress are promising not to repeal the MID. Three leading tax reform plans released over the past few years by congressional leaders, two Republicans and one Democrat, each promise to protect the MID; however, we must take a closer look at these plans. While they promise to protect the MID, in reality, they take away the tax benefits of owning a home for most. How does this happen? These tax reform plans greatly increase the standard deduction, and, in the case of the GOP plans, repeal the deduction for state and local taxes paid. The result is that the one-third of people who now itemize, who are mostly homeowners, would drop to only about 5 percent. For everyone else, buying would offer little or no more tax benefit than renting. As a result, REALTORS® should ask their Members of Congress not simply whether they support the MID, but whether they will stand up to preserve the tax incentives for homeownership.

NAR has …read more

From:: Finance and Economy

By Susanne Dwyer

As we kick off 2017 with a new administration and the start of the 115th Congress, the National Association of REALTORS® (NAR) will ramp up its messaging on the social and financial benefits of homeownership. While NAR has long touted the benefits of owning a home, it’s more important than ever to send a strong message to lawmakers about NAR’s priorities as Congress considers tax reform proposals in 2017.

Studies have long shown the wealth-building opportunities that Americans get from becoming homeowners. A research paper by the Joint Center for Housing Studies at Harvard concluded that even after the decline in housing prices and the increase of foreclosures beginning in 2007, homeownership continues to be a significant source of household wealth, particularly for lower-income and minority households. The study notes that “efforts to save for a down payment lead to a large jump in wealth that is then further supported by at least modest appreciation and some pay-down of principal over time. Renters may have the opportunity to accrue savings and invest them in higher yielding opportunities, but lack strong incentives and effective mechanisms for carrying through on this opportunity…and those who made a failed transition from owning to renting are no worse off financially than those who remained renters over the whole period.” [1]

Homeownership also has many proven social benefits. NAR research has shown that homeowners are more involved in their communities, have children who perform better in school and have lower crime and incidences of drug use in their households. [2] With all of these proven benefits, it is not surprising that most millennials—the generation that everyone thinks is disinterested in homeownership—say they want to own homes themselves one day.

Many homebuyers count on taking advantage of the mortgage interest and property tax deductions after buying a home. These taxpayer benefits have made a tremendous difference in helping renters afford to transition to homeownership. NAR’s message to policymakers on tax reform has been to preserve the Mortgage Interest Deduction (MID). This message has been effective, as most Members of Congress are promising not to repeal the MID. Three leading tax reform plans released over the past few years by congressional leaders, two Republicans and one Democrat, each promise to protect the MID; however, we must take a closer look at these plans. While they promise to protect the MID, in reality, they take away the tax benefits of owning a home for most. How does this happen? These tax reform plans greatly increase the standard deduction, and, in the case of the GOP plans, repeal the deduction for state and local taxes paid. The result is that the one-third of people who now itemize, who are mostly homeowners, would drop to only about 5 percent. For everyone else, buying would offer little or no more tax benefit than renting. As a result, REALTORS® should ask their Members of Congress not simply whether they support the MID, but whether they will stand up to preserve the tax incentives for homeownership.

NAR has …read more

From:: Real Estate News

By Susanne Dwyer

President-Elect Donald Trump made his early fortune in the real estate sector, and his business holdings clearly indicate he is a firm believer in the economic power of the U.S. housing market. Real estate analysts are hopeful that Trump’s business background will boost housing significantly. Despite concerns regarding his cabinet pick for the top post at the Department of Housing and Urban Development (HUD), Trump believes that HUD should go through a process of reform that cuts down on bureaucracy.

The question of how the housing market will react in 2017 and beyond can be answered in different ways:

Positive Economic Sentiment
The U.S. housing market is intrinsically tied to the global economy. On the night of the presidential election, the global markets tumbled momentarily before getting back to normal. Since that incredible night, the Dow Jones Industrial Average has come very close to closing at 20,000 points, the highest level in the history of Wall Street.

According to Fortune, based on economic sentiment alone, financial markets seem to favor a Trump presidency, which means that the housing market is bound to react in a similar manner. The National Association of Home Builders (NAHB) recently announced that confidence among the residential construction sector is at a nine-year high.

Higher Mortgage Costs
The final meeting of the Federal Reserve this year resulted in a decision to raise interest rates, with Fed Chair Janet Yellen hinting at the possibility of rates increasing a couple of times in 2017. If you are planning on buying a home or refinancing your existing mortgage, be ready to pay more for financing costs during the Trump Administration. Yellen’s statements were very clear insofar as her intention of cooling down market volatility with higher rates. She has made allusions to the fiscal package that Trump plans to introduce during his first 100 days in office, but according to The Atlantic, if the stimulus results in a Wall Street bonanza, she will be ready to put out the fire of irrational exuberance with a bucketful of higher interest rates. Naturally, you will end up paying more as a mortgage borrower.

The Housing Market May Not Be Affected after All
Some analysts are brushing off the idea of the Trump Administration having a profound effect on the market. This rationale is based on the fact that the housing market should have reacted negatively to the presidential campaign. Nothing of the sort happened; this can be construed as the housing market operating independently from political sentiment.

As for other factors related to housing, insuring your home and paying your utilities should not be affected unless the U.S. enters a period of high inflation. There is somewhat of a chance that this may happen; after all, the Fed has been concerned that the economic recovery of the U.S. has largely occurred without a substantial increase of inflation rates. The 10-year Treasury Yield has been inching up since the summer, and bond market analysts believed that this was a sure sign of inflation. They may …read more

From:: Finance and Economy