Higher-end Homes Hit by Excise Tax Rate Increase

Sellers of higher-end homes will pay more in real estate excise tax (REET) next year due to changes adopted by the Washington state Legislature. A new graduated tax, or tiered REET, will go into effect for homes sold on or after January 1, 2020.

Washington state has one of the highest real estate “transfer tax” rates in the country, according to a study by the National Association of REALTORS®. That rate will now be higher for sellers of homes valued at slightly over $1.5 million or more. The current single rate REET is assessed at 1.28% on the sale price of the home. In addition, most local governments in the state assess an additional one-half percent on the sales price, making the current effective rate 1.78%.

Under the new system, effective in 2020, the first $500,000 of value will be taxed at a new reduced state rate of 1.1%, saving the seller of a $500,000 home $900. For the value of the sale between $500,000 and $1,500,000, the tax rate remains 1.28%. For the value of the sale between $1.5M and $3M the rate is 2.75 % and for sales above $3M the rate is 3%. Because the tax is assessed at a marginal rate (the different rates apply on each portion of the sale), the actual break even point between the old and the new rates is $1,561,224 of value. Sales greater than that amount will pay more REET under the new system and sales under that amount will pay less.

The local government REET rates do not change and remain in effect. The combined state and local taxable rate is shown in the table above.

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Buyers May Find Relief in Cooling Housing Market

The housing market is showing several signs of slowing, providing a much-needed break for potential buyers who have been waiting to jump into the market. Existing-home sales were 2.4 percent lower in the third quarter than a year ago, and the drop comes at a time when many areas are starting to see an uptick in new listings.

Home prices in many markets are no longer rising by double digits—or even single digits—annually. But with a strong economy and low unemployment, the housing dip is more of a rebalancing of the market than a sign of a downturn, housing analysts say.

Sellers are realizing there is a slowdown and are starting to cut their prices to better compete. Nearly 29 percent of listings in major markets during the month ending Oct. 14 saw price reductions, according to the real estate brokerage Redfin. “The cycle has moved from seller-advantage to at least mildly buyer-advantage in many parts of the United States,” writes Kenneth Harney, a nationally syndicated real estate columnist. “If you’re a buyer, take your time. But keep in mind: If you shop diligently, this fall could be a smart time to catch a deal—a marked-down price on the house you really want.”

Source: REALTOR® Magazine

Home Sales Expected to Soar Through 2018: What Buyers Need to Know

By now just about every would-be buyer out there knows there simply aren’t enough homes for sale these days to appease the hordes of competition. But despite the shortages, rising prices, and bidding wars, more homes are expected to be sold this year than in more than a decade.

In 2017, the number of sales of existing homes (which have previously been lived in) is expected to rise about 3.5%, to 5.64 million, according to the midyear forecast from the National Association of Realtors®. The group predicts that existing-home purchases will rise an additional 2.8% in 2018, to 5.8 million.

Read more on Realtor.com…

Predictions Roll in: 2017 Housing Forecasts

Thoughts

We can expect a hot year for home sales in 2017, according to recent forecasts from the National Association of REALTORS®, the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae, and more.

NAR is predicting existing-home sales to reach 6 million in 2017, higher than its 5.8 million forecast for this year. But other entities are even more bullish. MBA is predicting home sales to eclipse 6.5 million next year, while Fannie Mae and Freddie Mac are both predicting 6.2 million.

A huge wave of Generation Yers, who have delayed home buying, are emerging into their key buying years. They are predicted to keep home sales and condo sales strong well into 2020, according to economists.

The top markets for price appreciation likely will be in Seattle, Wash.; Portland, Ore.; Denver, Colo.; and Boston, predicts Eric Fox, vice president of statistical and economic modeling at VeroForecast. These markets’ robust economies have growing populations but a tight supply of homes for sale on the market that will likely lead to some of the largest price increases across the country.

Meanwhile, new-home construction starts likely will tick up to about 1.5 million per year to 2024, predicts Forisk Research.

Home builders likely will continue to be more subdued, despite calls for more inventory.

“Home builders behavior likely is a continuing echo of their experience during the crash,” Pantheon Macro Chief Economist Ian Shepherdson told MarketWatch. “No one wants to be caught with excess inventory during a sudden downshift in demand. In this cycle, the pursuit of market share and volumes is less important than profitability and balance sheet resistance.”

Source: REALTORmag

Existing-Home Sales Rise in June as Home Prices Surpass July 2006 Peak

Proceeds from Sale

Existing-home sales increased in June to their highest pace in over eight years, while the cumulative effect of rising demand and limited supply helped push the national median sales price to an all-time high, according to the National Association of Realtors. Sales are now at their highest pace since February 2007, have increased year-over-year for nine consecutive months and are 9.6 percent above a year ago. The median existing-home price in June surpasses the peak median sales price set in July 2006. June’s price increase also marks the 40th consecutive month of year-over-year gains. Unsold inventory is at a 5.0 month supply.

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Inventory Problems Stall Home Sales

Pending home sales dropped in December, despite interest rates being at the lowest levels in more than a year, the National Association of REALTOR® reports. All regions across the country posted declines in December.

In December, pending home sales nationally fell 3.7 percent month-over-month. Still, NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, remained about 6 percent above year-over-year levels for the fourth consecutive month.

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NAR Chief Economist Reveals 2014 Predictions

Graph - up

Speaking at the 2013 Realtors Conference & Expo earlier this month, National Association of Realtors (NAR) chief economist Lawrence Yun predicted steadiness in existing-home sales over the next year as prices continue to ascend.

Over the past two years, Yun says existing-home sales have shown a 20 percent cumulative increase, while prices have gained 18 percent. Meanwhile, incomes have only barely risen, coming up somewhere between 2-4 percent.

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