The Baby Boomer Burden

The more Baby Boomers entering retirement, the greater the housing strain to accommodate them. FiveThirtyEight Economics reports that, at 14.5% in 2014 and a projected 20.9% in 2050, the U.S. has a high concentration of residents aged 65 and over. A report published by the Harvard Joint Center for Housing Studies and the AARP Foundation recently revealed that the number of adults 65 and over will more than double to 73 million by 2030.

Still, other countries have an even higher proportion: Japan tops the chart with 25.8% in 2014 and a projected 40.1% in 2050. Other countries with a high concentration of seniors include developed countries such as Germany, France, and Canada.

Unfortunately, retirees have less savings (partially attributed to the financial crisis) and carry more debt than previous generations: 70% of Boomers between 50 and 64 and 40% of Boomers 65+ still owed money on their home in 2010. Non-housing debt (such as credit card and auto loan debt) among boomers aged 65+ surged from $4,300 in 1992 to $7,200 in 2010. CNN Money brought attention to the fact that the number of senior households living on less than $15,000 (below the poverty line) is expected to increase by an astonishing 37% in 10 years. The fact that many will have to put over 30% of their income toward housing means they will have to cut back on other expenses such as medical care and transportation.

Federal rental assistance does exist; however, only one-third of eligible low income seniors received assistance in 2011. Opinions on how to remedy this precarious situation vary, from improved in-home senior programs, senior tax relief, and increased federal rental assistance.

What does this mean for the rest of the population? When Boomers retire they reduce production and consumer spending and increase dependence on others (such as their children and the government), resulting in overall slower economic growth.  Key indicators that speak to this trend include the labor force participation rate (the ratio between those working or actively looking for work and the overall population) and  the dependency ratio (the number of people outside of working age--under 18 or over 64--per 100 adults between those two limits).

Making Moving Easy

Moving homes can be an exhausting process. Fortunately, you can do many relatively simple things to get through it as smoothly as possible. You have control over hiring the moving company. Do your research--are they licensed and insured? Do they have testimonials or client ratings posted online? You can also take referrals from neighbors and friends. Once you've hired a moving company, treat its crew well--they are the ones responsible for handing your items. Cold refreshments go a long way!


Before you pack, measure the width of the doors in your new home to ensure all furniture will fit. Examine tax laws on moving: some move-related items are tax deductible. Don't forget to change your address.

You can often come by boxes for free--ask a local store if it has spare boxes you may take. When you're packing, label all boxes with handling instructions ("this side up" / "fragile"), the contents of the box, and the room it's meant to go in. Pack heavy items in small boxes to make them easier to carry. Do not pack flammable, explosive, or corrosive materials--doing so is illegal! The image to the right can help you identify which products fit into these categories.

Finally, never lose sight of the bill of landing (the contract between you and the movers). It's an imperative document to have should problems arise.

For now, happy packing and safe travels!

Tax Tips For Homeowners

Tax experts have identified common errors that homeowners make when filing taxes. Read below to ensure that you don’t make the same mistakes!

When filing property taxes, enter whatever amount you actually paid that year on federal forms, regardless of the date on your tax bill. It’s common for homeowners to deduct the wrong year for property taxes; remember that homeowners take tax deductions for property taxes in the year they actually pay them.

Differentiate between escrow amount and actual taxes paid. If your lender escrows funds to pay your property taxes, don’t simply deduct this amount. List actual taxes paid (not 12 months of escrow property tax payments) as specified by your lender’s official statement.

Deduct points over the life of your new loan when you refinance your home, rather than only deducting points paid to your lender to secure your full mortgage in the year you bought your home.

Track home related expenses and capital gains. Expenses may include home improvement and home office costs (on a side note, home office deductions are complicated—read the fine lines when determining your deductions). Also, file records that document statements such as energy tax credits and confirmation of paid property taxes. Remember to pay capital gains taxes on any profit derived from selling your main home. Single owners and married couples can exclude $250,000 and $500,000, respectively, of profits from taxes.

Know how much to claim for the mortgage interest tax deduction: taxpayers may deduct mortgage interest on home acquisition debt up to $1 million, and another $100,000 on home equity debt.

Following these guidelines should help you maximize tax deductions and minimize encounters with the IRS. For more in-depth information published directly by the IRS, click here. The video below discusses what you can and cannot deduct on federal income tax:

Kitchen Countertops: Out with the Old; In with the New

The kitchen has become the focal point of the American home. Granite used to be an expensive countertop found only in luxury homes. Recently, though, it has become the standard countertop material, and is found at homes in many price ranges and architectural styles. As people update their homes, installing granite is one of the most common changes. People are turning to alternative materials to set their kitchens apart, such as the following:

• Wood. It's not just for floors! Wood is a good option due to its multitude of types and price points. Popular countertops choices are walnut, mahogany, and reclaimed wood. Wood is warm  and inviting to sit at, and newly developed finishes make wood waterproof. In order to make the island stand out, some homeowners use a stone countertop along the perimeter of their kitchen and use a wood countertop for the island. 

• Concrete. This industrial material should not stain after it has been sealed, although it may chip and is heat-resistant only to a degree. 
  
  

  

  Concrete

• Sintered compact. This new material is composed of metals welded together just below the melting point. It is similar to porcelain, and has many advantages: the material is recyclable, stain resistant, waterproof, heat resistant and scratch resistant. It also has near-zero porosity, making it easy to clean.

Sintered Compact

• Porcelain. Like sintered compact, porcelain is heat and scratch resistant. It does not need to be resealed after several years the way granite does, and is suitable for both outdoor and indoor kitchens. Porcelain can be placed over existing countertops. 

Porcelain Tile

• Metal. Stainless steel, zinc, and copper countertops are exceptionally modern in appearance, don't require sealing, and are nonporous (AKA stain resistant). They can be cleaned simply with soap and water. However, metal countertops do scratch. Aside from stainless steel, metals will also oxidize, forming a patina (a green or brown film). Your metal countertops, then, may change colors over time. Click here for more information on metal countertops. 

Copper

• Marble. One of the most expensive options, marble is relatively high maintenance, suseptable to stains, scratches, etches, and developing a patina with time. Marble is one of the more pourous of the metamorphic stones, and is softer than granite, which is why it is less durable. Although they are beautiful, marble countertops may not be the most practical for regularly-used kitchens. To read more about the differences between granite and marble, click here. 

Marble

• Quartz and Quartzite. One of the most popular alternatives to granite, quartz is a nonporous, low-maintaince stone-like countertop. Quartz is one of the most abundant minerals on earth, and as a result, can be engineered into a number of looks. It is stain resistant and does not require sealing. Quartzite is a metamorphic rock formed from sandstone. It resembles marble yet has the durability of granite. Its solid looks makes it popular among modern, gourmet kitchens. 

Quartz

• Glass. Glass is durable and easy to clean, and requires no annual sealants. It's great at bringing light into the kitchen. The downside? It's expensive. 

Glass

The Best Time to Buy a Home

The real estate market is cyclical, moving up and down. Still, seasonal variations affect buyers and sellers alike.

The spring is the most common time to buy a home, as most home sales occur between April and July. Buyers like buying at this time because they have more vacation time, better weather, and don't have to take their kids out of school should they change school districts. This is good news from an inventory standpoint, but bad from a price perspective. Sellers who have just listed their homes in the spring will be less willing to negotiate the price than sellers who have withstood less favorable conditions. Increased competition means buyers risk losing a home if they do not act quickly.

Contrarily, buyers can generally expect to find less inventory but better prices in the fall, winter, and summer (the "off" season), when competition is reduced. Realtor.com suggests buying a home between Thanksgiving and New Years, as home prices are typically at a 12-month low in December. Also during the colder months, some mortgage lenders forgo some of their fees in order to attract customers, who in turn get good mortgage deals. Realtor.com also lists early spring as a good time to buy, just as sellers are listing their properties and determining an asking price.

Interest rates and related economic factors are also important to consider when starting your home search. Ultimately, though, the best time to buy varies from person to person, based on personal factors. Beware: waiting for the "perfect" time to buy a home may result in a lost opportunity, given the unpredictable timing of the real estate market.

Ready to start your home search? Contact me!

Most Expensive U.S. Home Debuts on MLS

Looking to upgrade? Last week, the United States' most expensive publicly listed home debuted on the Multiple Listing Service (MLS) for $139 million. The Hillsboro Beach estate, known as the Le Palais Royal, is to be completed in 2015. The Palace of Versailles inspired its gold ornaments, extensive balconies, and six fountains.

The mansion's 60,000 square feet of living space encompasses 11 bedrooms, 17 bathrooms, an Imax home theater, a 1,300 gallon aquarium, a spa, and other equally impressive features. The subterranean garage accommodates 30 vehicles. The house celebrates outdoor living just as much as indoor living--the presidential palace flaunts its own private pool on its terrace! The main pool has an infinity edge, swim-up bar, water slide, fire pit and Jacuzzi. The property also features a summer kitchen, an almost 500 foot dock that can accommodate a 185 foot yacht, and 465 feet of private beachfront.

However, Le Palais Royal is not the most expensive home for sale in the U.S. when you consider properties that are being shown off market. The Manor, in the Holmby Hills neighborhood of Los Angeles, is priced at $150 million. The 1991 Manor originally housed Candy and Aaron Spelling and had a bowling alley and hair salon. British Heiress Petra Stunt (daughter of billionaire Bernie Ecclesiastes) purchased the house for $85 million in 2011 and updated it to appear more youthful. Stunt is only 25 years old.

The Beverly House, in Beverly Hills, California, is available to buy at $135 million or rent at $600,000 per month. The house was built in the 1920s and was home to publishing magnate William Randolph Hearst and actress Marion Davies. The Beverly House appears in The Godfather and served as a honeymoon retreat for Jacqueline and John F. Kennedy. The compound includes the H-shaped house (complete with 40 bedrooms and 30 bathrooms, a 50-foot entry hall, and a library) three pools with a pool house, and a tennis court.

           

The Beverly House, Beverly Hills

The Manor, L.A.

The Average American Home: Bigger than Ever

In America, you've probably heard the phase, "bigger is better." This philosophy is manifested in U.S. home sizes, which have steadily increased over time. According to the Census Bureau, the average home size grew from 1,725 square feet in 1983 to 2,598 square feet in 2013--an increase of 50%!

Many trends explain this phenomenon. First, the wealthily have gotten wealthier, and are buying bigger homes to show for it. The market for homes 4,000 square feet or more has increased from 6.6% in 2005 to 9% in 2013. Homes between 3,000 and 4,000 square feet have increased even more--from 15.6 % to 21.7% over the same time period. Director of Economic Services for the National Association of Home Builders Stephan Melman states that people who have invested in the stock market have seen their money double since 2009. 

On another note, first-time homebuyers are finding it more difficult to buy homes, thanks to student debt and trouble getting mortgages. Because first-time homebuyers make up the majority of the market for small homes, the market for such homes (1400 square feet and less) has decreased from 9% in 2005 to only 4% in 2013. The average first-time homebuyer in 2013 was 31 years old according the National Association of Realtors. 

Third, people are demanding more from their homes. Buyers want home offices, play rooms, walk-in closets and oversized bathrooms. Parents want their children to each have their own room. For many, a one car garage will no longer suffice. Therefore, alongside the increase in home size, the number of rooms in the average home is increasing as well.

Another trend that helps explain the increase in home size involves the current rental market. Rental rates have increased since 2006 by roughly 20%---turning many homeowners into landlords to order to help pay off home mortgages. People who move into a larger home are more inclined to hang on to their previous home as a rental given their low mortgage rates. Glenn Kelman, CEO of the brokerage firm Redfin, points out that every home converted into a rental means one less home on the market, contributing to low inventory and limited sales growth.

If you are interested in buying a home, be it small or large, contact me to see how I can help. I work for all types of buyers, from first-time homeowners to empty nesters. Click here to view my featured listings.

Finding the Best Contractor

Home contractors have been busy since the economy began to recover, and increased material costs have raised their prices. What does this mean for people who want to renovate their home? Finding a contractor may not be as simple as it once was. Follow these tips to make sure you and your home are in good hands:


Ask friends, family members and neighbors for referrals. Take the names of at least three different contractors. When you call them, let them know you have been referred by one of their previous clients. This will incentivize them to maintain a high level of customer satisfaction. Contractors can also be found online on websites such as the National Association of the Remodeling Industry.

Know what you want to accomplish and how much money you want to spend. This shows you are serious about home renovation, which contractors admire when they are considering bids. At the same time, feel free to get the contractor's opinion. Asking for a contractor's initial thoughts about a project communicates that you value his or her expertise. It also gives you a better idea of how the contractor thinks, based on the feedback he or she provides. It's best to talk about the overarching plan before you discuss price.

Never hire a contractor solely based on price! You will be working closely with this person for a prolonged period of time. The ideal contractor is a good communicator who you feel comfortable discussing your plans and budget with. Someone who comes off as untrustworthy is not right for the job. 

Solicit bids from multiple contractors, and disregard those that come in suspiciously low or high. It's okay to let them know you are getting bids from other contractors. If a bid comes in above what you are willing to pay, tell the contractor how much lower you'd like to go and ask for suggestions on how to lower the cost of the renovation with as little impact on the overall project as possible. Simply negotiating (asking for the same amount of work but at a lower cost) might lead contractors to cut corners. Allow for an additional 10-20% for unexpected expenses. 

Finally, ask for a rough start and end date but keep in mind that you may have to wait for a good, affordable contractor. Want additional information on hiring a contractor? Click here or watch the video below:

Mortgage Demand Dropping - Find Out Why

Fixed-rate mortgages continue to decline rather than increase, which was expected of the second half of 2014. Last week, they reached the lowest average of the year, as reported by Freddie Mac. For the week ending August 21, the average 30-year fixed-rate mortgage was 4.10 percent (down from 4.58 this time last year and 4.12 percent last week), while the average 15-year fixed-rate mortgage was 3.26 percent (down from 3.60 percent this time last year and 3.24 percent last week). Freddie Mac predicts new and refinance mortgage origination volume this year to be the lowest since 2000, at approximately $1.15 trillion.

 So why has mortgage origination declined? Freddie Mac analysts identify three reasons:

1. The refinancing boom is over. The number of home refinances has fallen 60% from 2013 to 2014 and is expected to decrease another 50 percent from 2014 to 2015. Mortgage rates are expected to rise soon, discouraging borrowers from refinancing.
2. Home sales are low. Compared to the first half of 2013, home sales have fallen roughly 5 percent in the first six months of this year. Reasons include slower economic growth, a phase of higher mortgage rates, a harsh winter, minimum new home construction, and limited inventory.
3. More buyers are using cash. Although the number of buyers paying in cash is expected to decrease alongside the number of distressed homes on the market, all-cash home sales rose from 31 to 33 percent in the first six months of 2014.

Whatever the reason, now is the time to take advantage of lower borrowing costs before they inevitably rise!