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The Paperwork and Documentation of Home Ownership

Now that you own a home, start preparing yourself for the tedium that is keeping track of everything. And pay careful attention to this post if you now work from home, like many do these days.

Document Everything

The first thing to remember is that what exists today didn’t always and the future will change. Tax write-offs for mortgage interest toggles around depending on administration. Solar credits come and go, swell and recede. So do yourself a favor and create a file for every expense that happens to your home, whether a physical or digital file–though we recommend to have a digital copy of everything. This includes, but not limited to, home improvements, utilities, mortgage statements, and property tax statements. There are likely others that have been left off this list, and if you come across any expense related to your home, put it in this file.

At least as of this writing, individual homeowners can write off the mortgage interest on their homes. Your mortgage company will send you a document by January 31 letting you know how much interest you paid in the previous calendar year, and you list this in the appropriate box on your tax forms. Then essentially, your taxable income is reduced by this amount.

That is about the easiest tax piece, but you should consult with an accountant or find a good piece of accounting software (<< that is just one we have used, but it’s not the only) to help you understand all the ins and outs of other deductions.

Writing Off Home Improvements

There are essentially two main ways this could be handled, and just to say it up front, we are not accountants, but just relaying, in general, what we know on the subject. Please do your own research for your own specific situation.

In short, you can write off home improvements each year or for the years that they were completed. The second is to take the deductions when you are looking to sell. We are going to approach the second part first with our own example.

We had a cabin in WV several years ago. We owned it for six years. We didn’t do much to it, besides paint and stain, but did a few things. We did not write off any of these costs as we went along and instead piled them up, believing we wouldn’t own it forever. When it was time to sell, we ended up having an “on paper” profit above purchase price of about $30k. We were then able to put the realtor fee and the home improvements as debt, and thus avoid a capital gains tax because we could show a technical loss on the property.

The first part is a bit trickier, especially if you work from home and are writing off portions of the home as business expenses. This is very specific to individuals and how to manage your taxes, year to year, so we won’t go much farther here. In this instance, you should really contact an accountant who can guide you through not only each particular year, but in general how to handle each year knowing where you are headed.

No matter what, though, document everything. Every Home Depot receipt or gas bill or tree removal mandated by the city. It may not matter today or even be something to use this year or next, but it may be useful later. Also, it might be something that is going away, like solar credits, and you need to pounce on it before it’s gone.

If you have a file where these things go, then you don’t need to worry about these things, because you know they are always in one particular place. My husband and I have a manilla envelope and any home improvement receipt just goes in it without much further thought. Same way digitally.

Rachel Richardson

Houses Continue To Grow Larger Even As Families Are Smaller

The size of homes in America on average are growing larger by square footage. Occasionally, the average news consumer may hear a story about the “tiny house revolution“. This is a movement of people who live in homes that are shockingly small. This movement has appealed in some fashion to the millennial age demographic, but not nearly as much as some might lead you to believe. The stronger trend is for people to purchase larger and larger homes even as family sizes get smaller.

Colliding Trends
There are some interesting colliding trends in the idea that families are getting smaller while homes are getting larger. On the one hand, young people are trending towards having smaller families or opting to not have children at all. An economic squeeze on the millennial generation has made many of them consider putting off having a family or foregoing one. They have a combination of crushing student loan debt and wages that have not gone up on an inflation-adjusted basis in many decades at this point.

The other set of trends is that many people are retiring every single day. Current estimates put the number at approximately 10,000 people retiring on a daily basis in the United States. Those people often have more free capital to purchase their dream home.

Which Trend Will Give In First
It is difficult to say with certainty which trend will give way to the other. It could remain a generational divide. A lot of the older generation may continue to purchase their over sized homes while younger people either choose to rent or purchase smaller homes that they can afford.

The trend among young people towards renting has only continued to grow as they don’t necessarily even see the value in buying a home outright. If this keeps up, then there could be a glut of homes on the market that could eventually force prices down. Perhaps at that point it will become economically possible for at least millennials to purchase a home. It will be interesting to see how these market dynamics play themselves out.

Rachel Richardson

Millennial Housing Crisis: Flip or Sell?

With Millennials becoming the generation of the past, as Gen Y and such take the lead, many are looking for homes in which they can start a family and live happily. However, this has become quite the dilemma as predictably so, most homes up to par these days are not meant for a family, but retired boomers. So, this raises the question as the need becomes more and more pronounced, will the real estate market flip retire-friendly homes for families, or force their sale and leave the renovations to the owner? Both sides have their benefits but can also be detrimental to both parties over time. Exploring both possibilities has become a necessity.

 

What if They Flip?

If the real estate market decides to flip, there will be a ton of profit for them, it will decrease the housing crisis all over the nation by a little (cause lets not forget they will be priced high for their efforts) and there will be an increase of houses being built for millennials. This is all well and good however this exact motion is what made the housing problems for millennials in the first place, meaning the cycle may repeat with Gen Y, however that is not certain.

 

What If They Sell?

You can best believe that the real estate market is going to take a huge hit on potential profit if they just sell-off, but it may be worth it if they try to drain all of their energy into making retired homes for Millennials or family homes for Gen Y. This is called a long game, but sometimes it doesn’t work out as planned and you lose what you fought for. Millennials will have homes at a lower price, this is true, but the amount of renovation that must be done will be exhausting.

So, with all of the pros and cons fresh in the mind, maybe you can predict which way this story will end. At the very least though, I think it’s safe to prepare for whatever is to come if either of those possibilities become a reality.

 

Rachel Richardson

Buyer Profile: Emerging Qualities of the Gen Z Home Buyer

Gen Z is starting to enter the home buying market. People within Gen Z were born around 1995 – 2012, putting the older portion in their early twenties. These early twenty-year-olds will be entering the market for the first time. Here are some of their characteristics and what to look out for when selling to Generation Z.

The details of Gen Z:

Generation Z doesn’t have the same thoughts of the “American dream,” as the other generations. They generally have higher student debt, and this goes into their buying choices. This is one of the more risk-averse generations, as they have had lower rates of things like teen pregnancy and drug use. They also keep up with technology and are very attached to the digital world through cell phones and tablets and are typically better educated and culturally diverse.

Gen Z tends to expect to purchase their first home from 26 to 30, and their consumer habits will influence their home buying experience. These are points you will want to pay attention to as you are selling your home.

Social Media Use

Many use social media, such as Twitter, Snapchat, and Instagram. Gen Z responds better to advertisements on these platforms than other online or email ads.

Phone Use While Shopping

Gen Z tends to use their phones while out shopping to look for better prices as they’re in retail stores. They will be paying attention to other homes in their price range and will use their phones to do extensive research before they buy anything.

Money Savers

Gen Z tends to lean more towards saving than spending their hard-earned cash. They tend to self-identify as “deal seekers” and will do plenty of research to find what they see as a good deal. They will likely look for affordable housing options.

Gen Z is known as the “digital” or “net” generation, and most will even look into purchasing a home online. Since they are living in a time where most of their wants can be met very quickly, this impacts the way they are buying things, even a home.

It’s never a bad idea to ensure that you are staying up tode on technology and gaining information that can help you with this new home buying generation’s wants and needs as they look to buy their first houses.

 

Rachel Richardson

Buyer Profile: Characteristics of the Millennial Home Buyer

Millennials are currently the largest group of home buyers and it is changing many American communities for the better. This new generation of people are buying more in affordable neighborhoods for investment opportunities for their families. Most Millennial’s already have children and they want their children in good school districts for a better education. They are looking for safe neighborhoods that you can walk and push strollers and to take their pet out for a stroll. Nice parks that they can sit at and picnic and watch their children play.

The houses that they are purchasing are in the suburban areas searching for affordably and desirability. The properties are usually priced better and in nice condition to move in without a bunch of repairs needed down the road. The affordability gives them more money to take the family out to eat at restaurants, go shopping, go to the movies and attend events. Some Millennial’s are searching for Midwest communities because it usually has a college university nearby. The schools always have fun and exciting events year round, it gives them something fun and entertaining close to home for all ages.

Some of the characteristics that they keep in mind while purchasing a home is “Going Green”. Energy efficiency is commonly sought for reducing heating and cooling costs. It not only helps the environment but it is saving them money keeping the bills down.

3 Hottest Trends For Millennial’s

Pre-World War 2 Homes

These are beautiful architectures that offer charm and character with exterior frame and wood and is covered in stucco brick or stone.

Mid-Century Homes

This type of home is a 50’s style with flat roofs, triangular windows and spacious open floor plans.

Mediterranean Homes

These structures have Italian and Spanish details of ceramic flooring, tiles roofs, grand entrances, arch ways and nice detailed patios.

Some of the kitchen essentials that they are looking for in a home are 6 burner stoves, granite counters, islands and cabinets with plenty of storage. The trending designs in bathrooms are stone and glass shower doors. Sinks of all shapes and sizes are a great bathroom decor.

Rachel Richardson

How Epidemics and Pandemics Impact Property Values

Despite significant progress in medicine over the last couple of years, contagious diseases such as malaria and influenza still represent significant threats to modern societies. While some have been fought successfully, others can spread rapidly within a larger geographical area, becoming a pandemic or epidemic such as HIV/AIDS and coronavirus.

The primary effect of a pandemic or an epidemic is human suffering and loss of lives. Pandemics or epidemics present significant repercussions on national or regional economies. Studies show that the alarming spread of diseases impact on the economy through channels like health, transportation, agriculture, real estate, and tourism. Let us focus on the effect caused on real estate, especially on property value.

Positive Impact on Property Value
Since time immemorial, the outbreak of a pandemic or an epidemic carries along a lot of fear. With fear comes the natural need for safety, which causes people to move from hard-hit areas or ground zeros to other areas that seem safe. Places, where people move to, end up having a huge demand for properties, with some who want to buy houses or land and others who want rentals. High demand increases the property values in those regions.

Negative Impact on Property Value
People move away from areas that are hard hit with a disease, leaving behind vacant houses and land with few people willing to occupy them. This creates a vacuum in the demand of property and therefore forcing property owners to reduce their rates to attract the few available customers.

Foreclosure — For fear of contracting a contagious disease, a neighboring land or house owner may short sale his or her property just they can move away fast. Foreclosure usually devalues other surrounding properties.

A global pandemic can force governments to indefinitely shut down learning institutions, prohibit public gatherings in social places and shut down public transport like railways. Such government interventions affect the neighborhood dependent on these facilities. People buy property while putting a high value on the proximity of learning institutions, public transport and shopping social centers such as malls. Indefinite closure of such facilities and services creates an uncertainty of the students’ education and transportation to work. If this situation continues for a long time, then the value of the properties in the region will drop.

 

Rachel Richardson