Eye on Santa Fe

The Tax Cuts and Jobs Act – What it Means for Homeowners and Real Estate Professionals

The National Association of REALTORS® (NAR) worked throughout the tax reform process to preserve the existing tax benefits of homeownership and real estate investment, as well to ensure as many real estate professionals as possible would benefit from proposed tax cuts. Many of the changes reflected in the final bill were the result of the engagement of NAR and its members, not only in the last three months, but over several years.

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January 14, 2020

Nothing is Easy

For those who are classic rock fans, the title of this very old song by the British band Jethro Tull might best describe our 2020 and our attempts to climb out of the pandemic. Certainly 2020 was not easy and our attempts to curtail the pandemic were not easy as well. Even the solutions have not been easy.

We did get a strong stimulus bill out of Congress as an initial response to the crisis. But the second bill took excruciatingly long to negotiate. And even after it passed, there were questions about whether the bill would be signed (it was) and whether the amount of the checks sent out should be increased (it was not). The vaccine development process was very impressive, and we were all thrilled when the rollout began in December.

But it turns out that vaccinating millions and millions will not be so easy either, as we fell behind right off the bat. Let us hope the pace of vaccinations will pick up as we move along. For now, we can say definitively that “nothing was easy” about 2020 and regaining our momentum in 2021 will not be easy either. The employment report last week was just a reminder of how far we have to go. But we are confident we will get there. This country was not built on easy street.

Scott Robinson, Gateway Mortgage Group

REAL ESTATE NEWS

If you’re thinking about refinancing your home at the lowest rate possible, your window may be closing. The coronavirus pandemic has made refinancing your home more attractive — and affordable — but things could change quickly in the next few months. To ensure you’re getting low rates, get started on your refinancing application today. Rates on home loans have hit historic lows, thanks to actions by the Federal Reserve in March 2020 to help strengthen the economy amid the pandemic. Given this news, it’s no surprise refinances are booming. Homeowners want to snag a better interest rate, loan term, and lower their monthly payment in the process. However, the Federal Housing Finance Agency’s new adverse market fee, which is equal to 0.5% of a total refinance loan has already made refinancing more expensive. And this could be just the tip of the iceberg. Harvard Business Review is reporting that the global economy is recovering faster than anticipated. They speculate that at least part of the reason the economy is recovering so quickly is that many fears, including the next Great Depression, never happened. Additionally, while unemployment rates did increase, it’s lower than experts anticipated. The potential of a viable coronavirus vaccine did encourage a slight increase in rates the week after Pfizer and BioNTech announced their Phase 3 trial had concluded. Now, as people in the United States are being administered the vaccine, it’s likely that consumer and investor confidence will grow — and rates on home loans could continue to rise with it. While most financial experts agree that the Federal Reserve isn’t likely to raise baseline rates any time soon, mortgage rates could still move away from record lows over the next few weeks and months. Source: Fox Business

The Federal Housing Finance Agency reported a 1.5% month-over-month increase in the House Price Index in October 2020 and a 10.2% increase year-over-year. “U.S. house prices rose for the fifth straight month since states re-opened their local economies,” said Dr. Lynn Fisher, FHFA’s deputy director of the Division of Research and Statistics. “The 12-month gain of 10.2% in October is the highest annual appreciation observed since the 2004-2005 period. Extremely low mortgage rates and a limited supply of homes for sale continue to propel price gains. The data does not yet reflect renewals of some local and state COVID-19 restrictions.” In the nine census regions, both the Mountain and New England saw the largest year-over-year increases in house prices at 12.5%. The Pacific region followed at 10.6%, with the Middle Atlantic region coming in at 10.4%. Source: National Mortgage Professional
New analysis from Zillow predicts that housing demand will stay high for years to come due to low rates of household formation. Zillow found that since the Great Recession 5.7 million missing households now exist. These “missing” households are formed when people who would have historically moved into their own home, were unable or unwilling to do so. According to the report, if rates remained at pre-Great Recession levels, there would be 5.7 million more U.S. households today. Zillow also stated that whether or not household formation rates begin to recover in the coming years, the missing households from the past 15 years and the large Millennial generation aging into peak homebuying age should keep housing demand high for the foreseeable future. The report does point out that interest in wanting to form a household has not declined, rather, long-term financial and housing factors have made homeownership and household formation more difficult. “The housing crash set back millions of Americans on the path to having their own place to call home, whether they owned or rented it,” said Zillow senior economist Jeff Tucker. “Between a wave of foreclosures, rising rents, and under-building of new homes, the housing market became much harder to crack into from 2006 to 2017. The last two years showed that when the economy is firing on all cylinders and most Americans have access to decent jobs, more of them will be able to find a home of their own. The sooner we can put the pandemic and 2020 recession behind us, the sooner access to housing can resume its expansion.” Source: Zillow