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Itemized Tax Deductions Available to a Homeowner

by Solus Real Estate Group

Home ownership has always been the "great American dream". Here is an article from "Realty Times” that talks about some real monetary advantages from home ownership. I learned something new in the section labeled Points. There is some good information here.

To foster and encourage this dream, Congress has consistently enacted tax legislation which favors homeowners. Indeed, much has been written that our tax laws discriminate against renters, by giving unfair and unequal tax benefits to those who own homes.

Every four years, some candidate for high political office tries to focus our attention on equalizing the tax laws, and repealing the homeowner benefits, but these arguments have consistently fallen on deaf ears. And this coming election year is no different.

For those of us who own homes, here is a list of the itemized tax deductions available to the average homeowner. Every year, you are permitted to deduct the following expenses:

 Taxes. Real property taxes, both state and local, can be deducted. However, it should be noted that real estate taxes are only deductible in the year they are actually paid to the government. Thus, if in year 2015, your lender held in escrow moneys for taxes due in 2016, you cannot take a deduction for these taxes when you file your 2015 tax return.

Mortgage lenders are required to send an annual statement to borrowers by the end of January of each year, reflecting the amount of mortgage interest and real estate taxes the homeowner paid during the previous year.

 Mortgage Interest. Interest on mortgage loans on a first or second home is fully deductible, subject to the following limitations: acquisition loans up to $1 million, and home equity loans up to $100,000. If you are married, but file separately, these limits are split in half.

You must understand the concept of an acquisition loan. To qualify for such a loan, you must buy, construct or substantially improve your home. If you refinance for more than the outstanding indebtedness, the excess amount does not qualify as an acquisition loan unless you use all of the excess to improve your home. However, any other excess may qualify as a home equity loan.

Let us look at this example: Several years ago, you purchased your house for $150,000 and obtained a mortgage in the amount of $100,000. Last year, your mortgage indebtedness had been reduced to $95,000, but your house was worth $300,000.

Because rates were low last year, you refinanced and were able to get a new mortgage of $175,000. Your acquisition indebtedness is $95,000. The additional $80,000 that you took out of your equity does not qualify as acquisition indebtedness, but since it is under $100,000, it qualifies as if it was a home equity loan.

Several years ago, the Internal Revenue Service ruled that one does not have to take out a separate home equity loan to qualify for this aspect of the tax deduction. However, if you had borrowed $200,000, you would only be able to deduct interest on $195,000 of your loan -- the $95,000 acquisition indebtedness, plus the $100,000 home equity.

The remaining interest is treated as personal interest, and is not deductible.

Points. When you obtain a mortgage loan, some lenders will allow you to pay one or more points to get that loan. The more points you pay, the lower your mortgage interest rate should be. Whether referred to as "loan origination fees," "premium charges," or "discounts," these are still points. Each point is one percent of the amount borrowed; if you obtain a loan of $170,000, each point will cost you $1,700.

The IRS has also ruled that even if points are paid by sellers, they are still deductible by the home buyer. Points paid to a lender when you refinance your current mortgage are not fully deductible in the year they are paid; you have to allocate the amount over the life of the loan. For example, you paid $1700 in points for a 30 year loan. Each year you are permitted to deduct only $56.66 ($1700 divided by 30); however, when you pay off this new loan, any remaining portions of the points you have not deducted are then deductible in full.

Needless to say, if you have any questions about these tax benefits, discuss them with your financial and legal adviser.

Year End Numbers

by Solus Real Estate Group

We have the end of the year numbers in so we can share them with you:

 

Dec 2014

Dec  2015

% Change

YTD 2014

YTD 2015

% Change

New Listings

227

254

-11.9%

5866

6104

+4.105%

Pending Sales

314

400

+27.4%

3808

4644

+22.0%

Closed Sales

314

318

+1.3%

4020

4505

+12.1%

Median Sales Price

164.400

165.30

+0.6%

159,900

171,000

+6.9%

% of Original List Price Received

97.5%

97.5%

+0.0%

97.8%

98.2%

+0.4%

Days on Market

93

95

+2.2%

94

91

-3.2%

Inventory of Homes for Sale

1357

1119

-17.5%

 

 

 

Month’s Supply of Homes for Sale

4.3

2.9

-32.6%

 

 

 

So this is how we are ending the year. I observe that the YTD Listings are up slightly, however the pending sales and the closed sales are both up significantly! It also shows us that inventory or supply of homes is down significantly. Now the check point is that the median sales price (median point of all sales) is only up slightly. Homes are selling but they are not bringing major price increases at this point.

Now if you want to see how your price ranges or the price range you want to move up to is doing, check out our Supply of Homes report on our web site.  Remember when looking there that we consider a 4-6 month supply of homes to be healthy. Six price ranges are below that, 1 is in it, 2 price ranges are significantly above that. Be informed, check it out.

If you find this report informative and think someone else would enjoy seeing it, please feel free to share it.

 

Rates!

by Solus Real Estate Group

One thing that you can depend on is that the Real Estate Market that you see today is most likely not going to be the same one that you see a month from now and so on.  The environment for first time home buyers has been the exception as of late, but it is most likely due for a change.  The following is an article from Realty Times that explains why first time home buyers need to act now!

With some of life's milestones, there may not be a picture-perfect time to take the plunge. But when it comes to buying your first home, the combination of good market conditions and your own financial situation can dictate timing. If you've got the credit and down payment, you'd be crazy not to buy now. Want to know why?

Rates are still low

The Federal Reserve did raise rates slightly here at the end of 2015. So what does that mean for buyers? It is not much at this point but if they continue to raise rates it will have a significant impact especially on Millennials.

"If mortgage rates hit 6%, a third of millennial (people younger than 35 years old) wouldn't be able to afford homes as they're currently listed, according to an analysis by HouseCanary, a housing-data analytic company," said Money magazine. "Mortgages are huge loans, so a seemingly small shift in interest rates can change a borrower's monthly payment by hundreds of dollars (though going from the current 4.08% rate to 6% is in no way a small shift)."

Investopedia's example using a $215,000 home with 20 percent down (leaving a $172,000, 30-year mortgage) figures a monthly payment of $821.15 at an interest rate of four percent and $923.33 at five percent. Is that $100 a month enough to get you moving?

New low down payment loans

First-time buyers have typically gravitated toward FHA loans for their low credit score requirements and down payments of just three and one-half percent. But new loans from Fannie Mae require as little as three percent. Known as the 97% LTV (Loan to Value) loan or Conventional 97, it can be more affordable for first-time buyers because "the Conventional 97 program does not require an upfront mortgage insurance premium, and because it’s annual mortgage insurance rates are cheaper, too," said The Mortgage Reports.

Rising rents

In many market, home prices are up significantly from their lowest levels several years ago, but are still within range of many buyers. Rents, on the other hand, continue to go up, pushing household spending to new, uncomfortable, heights.

"Payments on a mortgage used to purchase a three-bedroom home were more affordable than paying rent on a similar home in 66 percent of the counties recently analyzed by RealtyTrac," said Mortgage News Daily. "Across all 285 counties analyzed, the average percentage of median household income needed to rent was 29.96 percent while the average percentage of median household income needed to buy was 29.00 percent."

Tax deductions

When you pay rent, the entirety of your payment goes to the landlord or property owner, and all you get in return is a temporary place to stay. When you own your home, the government essentially pays you money back for your investment.

"Your biggest tax break is reflected in the house payment you make each month since, for most homeowners, the bulk of that check goes toward interest," said Bankrate. "And all that interest is deductible, unless your loan is more than $1 million."

Any points you paid on your loan are also deductible the year you paid them, as are your property taxes. "These taxes will be an annual deduction as long as you own your home," said Bankrate. "But if this is your first tax year in your house, dig out the settlement sheet you got at closing to find additional tax payment data. When the property was transferred from the seller to you, the year's tax payments were divided so that each of you paid the taxes for that portion of the tax year during which you owned the home. Your share of these taxes is fully deductible."

Lower PMI

First-time home buyers who put less than 20 percent down on an FHA loan will have to pay Private Mortgage Insurance (PMI). It's one of the drags of having limited cash. For the past several years, those payments have cost buyers an annual premium of 1.35% of the loan balance, but a recent change dropped the premium to 0.85%.

"This change is expected to save more than 2 million FHA homeowners about $900 a year and allow about 250,000 consumers to buy their first homes in the next three years," said Credit.com.

Remember also that your PMI may also be tax deductible, subject to a few restrictions (and remind yourself again what portion of your rent is deductible: none).

If you want to see what houses in a particular area are currently pricing at, check out our Search for Homes on our web site. Or if you want to start by talking to a lender, check out our Preferred Lenders; just remember to tell them where they received their name so they can give you The Solus Group Preferred treatment.
Or give us a call anytime on our Solus Group Hotline 605-336-9600.

Some Ideas to Upgrade the Condition of your Home!

by Solus Real Estate Group

Even during this time of a strong Real Estate market in the Sioux Falls area, there are homes that hit the market and fail to sell.  The primary reason for homes not selling in any market is pricing.  Homes that are priced above their competition will sit and be looked at, but may not get offers and typically will not sell.  

One of the other primary factors that affect the value of a home is its condition.  Here are some ideas as to how to upgrade the condition of your home to get a higher sales price.

When it comes to looking at houses, we do tend to judge a book by its cover. That’s why it’s so important to make sure your home looks as appealing as possible, both inside and out, if you want to get top dollar when you sell. U.S. News & World Report talked to real estate experts, who said these home improvements will help boost your selling price.

Improve your landscape. Keep your lawn neat, trim the bushes, clear out any old or tired-looking shrubbery and replace with new ones, add color with potted plants or garden beds, and top everything off with a fresh layer of mulch or rock. In the winter months like we have now, keep the walks and driveway not just open but cleared off completely.

Spruce up your entryway. Paint the front door or replace it, and update your house numbers and mailbox. If they are brass colored, consider painting them black.

Change out light fixtures and plumbing fixtures. Replacing outdated fixtures with more modern ones gives your house an instant lift.

Return rooms to their original uses. If you use the extra bedroom as an office, turn it back into a bedroom.

Replace dirty or worn carpet. Prospective buyers can tell the difference between new carpet and cleaned carpet, and often, cleaning it just isn’t enough. If you have hardwood floors underneath the carpet, your best bet might be to refinish them and forego carpet completely.

Remove window treatments, unless they are current and high-end. Your window treatments probably won’t match a prospective buyer’s décor, so you’re better off removing them. Plus, uncovered windows let in more light.

Depersonalize. House hunters want to imagine themselves in your home, so remove obvious and identifying personal items, like photos and knick-knacks.

Clean thoroughly. Make every inch of the house sparkle and shine by deep cleaning it. And then think about hiring a house-cleaning service to do it, too.

Paint every room. A fresh coat of paint in a neutral color appeals to everyone. It freshens up the house, making it look newer and more modern.

These are a short list, for a complete list for your home call us, We can help you even if you are not planning on selling for a while, let us give you ideas for your personal home to make it sell faster and for better money.

November Statistics

by Solus Real Estate Group

Welcome to December!  Enjoy the warm weather while you can! Have a Christmas attitude and think of why we really celebrate this season.

Our November statistics came to us just today, so we can share them with you.

 

Nov. 2014

Nov.  2015

% Change

YTD 2014

YTD 2015

% Change

New Listings

298

321

+7.7%

5639

5841

+3.6%

Pending Sales

269

369

+37.2%

3494

4356

+24.7%

Closed Sales

269

260

-3.3%

3706

4175

+12.7%

Median Sales Price

164,900

167,500

+1.6%

159,000

171,900

+7.5%

% of Original List Price Received

97.7%

97.9%

+0.2%

97.8%

98.3%

+0.5%

Days on Market

93

91

-2.2%

94

90

-4.3%

Inventory of Homes for Sale

1602

1266

-21.0%

 

 

 

Month’s Supply of Homes for Sale

5.2 Months

3.3 Months

-36.5%

 

 

 

 We have reason to celebrate in the Real Estate market. We have had better sales than last year (pending & closed) and the number of Listings is better than last year. It appears prices are going up very moderately. The supply of homes is basically balanced as a whole with the overall month’s supply.

If you want to see how a particular price range is doing go to our Supply of Homes on the Market Report under the News Tab (which gives you a report on National Existing Homes Sales).

Have a Fantastic day and remember to celebrate Jesus is the reason for our season.

ARE YOU CONSIDERING A NEW HOME

by Solus Real Estate Group

There are many new construction opportunities available!  Home builders in Southeast South Dakota continue to experience growth and success.  The new construction market is expanding and new communities are blossoming in our marketplace.  Building a new home may be a new option to consider if you are in the market for a new home.

With the experience our Team provides, you could save money and have better peace of mind when building new construction.  By letting us help you with the building services, you get all our home buyer services, as well as those offered by the builder without paying more.  In most cases, it does not cost a buyer to have REALTOR representation as sellers pay a commission to get their home sold.  This includes a new home builder.

It is always advisable to have buyer representation in a real estate transaction.   Having a REALTOR represent you in new construction provides many benefits to you as the consumer.   Whether buying or building, purchasing a home is a large financial commitment and you deserve representation throughout the process.

This allows you to have a REALTOR looking out for your best interests.  The builder’s staff is employed to protect the builder’s best interests and does not represent you in the transaction.  With a REALTOR by your side, you will have a representative throughout the building process.  From the contract negotiations to the closing and beyond, you will have an advocate on your side.

Building a home can be a complicated process and having a seasoned professional representing you is crucial.  From finding the right community and narrowing down the builder options, to knowing the right questions to ask in financing and price negotiations, it is important to have a REALTOR for every step of the process.

 

Supply and Demand from August 15 to November 15, 2015

by Solus Real Estate Group

SUPPLY OF HOMES ON THE MARKET
August 15 to November 15, 2015
This shows how many months supply of houses are on the market. We have taken how many sold
during the past three months and then divided it by the number of homes currently on the market.

Price Range

Months Supply

Last Months Supply

Supply 3 Months Ago

$1,000-$100,000

3.1 Months

2.8 Months

1.3 Months

$100,000-$150,000

2.4 Months

2.2 Months

1.1 Months

$150,000-$200,000

2.1 Months

2.0 Months

1.0 Months

$200,000-$250,000

2.6 Months

2.9 Months

1.4 Months

$250,000-$300,000

2.1 Months

2.9 Months

2.2 Months

$300,000-$350,000

2.3 Months

3.1 Months

1.5 Months

$350,000-$400,000

5.8 Months

7.0 Months

3.2 Months

$400,000-$450,000

8.4 Months

7.1 Months

2.8 Months

$450,000-UP

17.6 Months

13.4 Months

7.7 Months

The market is changing; four price ranges the supply decreased and 5 price ranges the supply increased. Balanced market is a 4 to 6 month supply of homes. Below $350,000, we continue to have a shortage of supply of Listings but above $350,000, we have an oversupply. The interest rates are still very good. See below. Additional proof that the market is changing – look at what the supply was 3 months ago and you will see what direction we are going in almost all of the price ranges.

Fixed rate purchase loan for 30 years based on $150,000 purchase price Conventional 3.990% (APR 4.507%) with 5% down payment VA 3.375% (APR 3.651%) with 0% down payment FHA 3.375% (APR 4.615%) with 3.5% down payment Rates from Lisa Malone Swenson - Plains Commerce Bank

Yes, it is a great time to buy and sell!
The Solus Real Estate Group is here to serve you in all of your Real Estate needs. Give us a call to see how these low mortgage rates could benefit you!!

Harlan TenNapel-harlan@SolusRealEstate.com
mark youngberg- mark@SolusRealEstate.com
Erika Boen – erika@SolusRealEstate.com
605-274-7273

Monday Morning

by Solus Real Estate Group

Good Morning to everyone! We hope everyone was able to get outside and enjoy the wonderful weather we had this weekend.

We saw some breaking news about Condos that we posted to our Team Facebook page, take a look. If you own a unit that has not been able to get the first time buyers into the units using FHA loans or if you have looked to buy but could not because financing was not available, some doors have just opened in this style of living. This is a significant improvement because many units are built with the young professional first time home buyer in mind. Now it will be easier to get financing.

While you are there, scroll down to see the video that Erika posted and be sure to like our page to see the future posts. We try to post information that is relevant to Sioux Falls and South Dakota. Scroll down to see the article link to Sioux Falls being ranked the # 10 place to live & lots of good articles.

We wanted to point out that we have some Good Home Buying Tips and some Good Home Selling Tips available on our web site, take a look and share them with anyone that would benefit from them.

If you like to think a little just outside the box,  take a peek at our Morning coffee column, some good ideas for you there.

Well, is it time to get to work? Hope you have a Fantastic Week!

Supply and Demand from July 15 to October 15, 2015

by The Houses By Harlan Team

SUPPLY OF HOMES ON THE MARKET

July 15 to October 15, 2015

    This shows how many months supply of houses are on the market.  We have taken how many sold

during the past three months and then divided it by the number of homes currently on the market.                                                                                        

Price Range

Months Supply

Last Months Supply

Supply 3 Months Ago

$1,000-$100,000

2.8 Months

2.2 Months

2.5 Months

$100,000-$150,000

2.2 Months

2.2 Months

2.0 Months

$150,000-$200,000

2.0 Months

2.1 Months

1.9 Months

$200,000-$250,000

2.9 Months

2.5 Months

3.0 Months

$250,000-$300,000

2.9 Months

3.0 Months

3.3 Months

$300,000-$350,000

3.1 Months

3.2 Months

2.8 Months

$350,000-$400,000

7.0 Months

8.1 Months

5.2 Months

$400,000-$450,000

7.1 Months

6.0 Months

2.8 Months

$450,000-UP

13.4 Months

12.2 Months

9.2 Months

The market is changing; four price ranges the supply decreased and 4 price ranges the supply increased. Balanced market is a 4 to 6 month supply of homes. Below $350,000, we continue to have a shortage of supply of Listings but above $350,000, we have an oversupply.   Now would be a good time to sell if you are in these price ranges.  The interest rates are coming down slightly but we do not expect them to stay this low for very long.

Yes, it is a great time to buy and sell!

The Solus Real Estate Group is here to serve you in all of your Real Estate needs.  Give us a call to see how these low mortgage rates could benefit you!!

 

 
 

 

Great Reasons for Buyers to Buy Now!

by The Houses By Harlan Team

I thought this article in Realty Times does a very good job of describing some good reasons for buyers to act now!

With some of life's milestones, there may not be a picture-perfect time to take the plunge. But when it comes to buying your first home, the combination of good market conditions and your own financial situation can dictate timing. If you've got the credit and down payment, you'd be crazy not to buy now. Want to know why?

Rates are still low

The Federal Reserve was expected to raise rates this summer, but so far they have stayed put. There is still talk that rates could go up before the end of 2015. So what does that mean for buyers? Well, if you're a millennial, a rise in interest rates could spell bad news.

"If mortgage rates hit 6%, a third of millenniums (people younger than 35 years old) wouldn't be able to afford homes as they're currently listed, according to an analysis by House Canary, a housing-data analytics company," said Money magazine. "Mortgages are huge loans, so a seemingly small shift in interest rates can change a borrower's monthly payment by hundreds of dollars (though going from the current 4.08% rate to 6% is in no way a small shift)."

Investopedia's example using a $215,000 home with 20 percent down (leaving a $172,000, 30-year mortgage) figures a monthly payment of $821.15 at an interest rate of four percent and $923.33 at five percent. Is that $100 a month enough to get you moving?

New low down payment loans

First-time buyers have typically gravitated toward FHA loans for their low credit score requirements and down payments of just three and one-half percent. But new loans from Fannie Mae require as little as three percent. Known as the 97% LTV (Loan to Value) loan or Conventional 97, it can be more affordable for first-time buyers because "the Conventional 97 program does not require an upfront mortgage insurance premium, and because it’s annual mortgage insurance rates are cheaper, too," said The Mortgage Reports.

Rising rents

In many market, home prices are up significantly from their lowest levels several years ago, but are still within range of many buyers. Rents, on the other hand, continue to go up, pushing household spending to new, uncomfortable, heights.

"Payments on a mortgage used to purchase a three-bedroom home were more affordable than paying rent on a similar home in 66 percent of the counties recently analyzed by Realty Trac," said Mortgage News Daily. "Across all 285 counties analyzed, the average percentage of median household income needed to rent was 29.96 percent while the average percentage of median household income needed to buy was 29.00 percent."

Tax deductions

When you pay rent, the entirety of your payment goes to the landlord or property owner, and all you get in return is a temporary place to stay. When you own your home, the government essentially pays you money back for your investment.

"Your biggest tax break is reflected in the house payment you make each month since, for most homeowners, the bulk of that check goes toward interest," said Bank Rate. "And all that interest is deductible, unless your loan is more than $1 million."

Any points you paid on your loan are also deductible the year you paid them, as are your property taxes. "These taxes will be an annual deduction as long as you own your home," said Bank Rate. "But if this is your first tax year in your house, dig out the settlement sheet you got at closing to find additional tax payment data. When the property was transferred from the seller to you, the year's tax payments were divided so that each of you paid the taxes for that portion of the tax year during which you owned the home. Your share of these taxes is fully deductible."

Lower PMI

First-time home buyers who put less than 20 percent down on an FHA loan will have to pay Private Mortgage Insurance (PMI). It's one of the drags of having limited cash. For the past several years, those payments have cost buyers an annual premium of 1.35% of the loan balance, but a recent change dropped the premium to 0.85%.

"This change is expected to save more than 2 million FHA homeowners about $900 a year and allow about 250,000 consumers to buy their first homes in the next three years," said Credit.com.

Remember also that your PMI may also be tax deductible, subject to a few restrictions (and remind yourself again what portion of your rent is deductible: none)

Displaying blog entries 1-10 of 134

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Photo of Solus Real Estate Group Real Estate
Solus Real Estate Group
Ameri/Star Real Estate
5900 S Western Ave
Sioux Falls SD 57108
(605) 274-7273
605-336-9600
Fax: (605) 336-7749

Solus Real Estate Group Specializes in Selling or

Buying Homes and other Real Estate or Property in the Sioux Falls, South Dakota Region.