December 6, 2019

The Truth About NAR’s Home Sales Numbers . . . and what it means to Investors . . . report by “Keeping Current Matters”

The Truth About NAR’s Home Sales Numbers

FLOOD OF LISTINGS COMING TO THE MARKET?

Flood of Listings

NOW THAT YOUR FOCUS IS ON INCOME TAX SAVINGS . . .

I am happy to announce:  Greater Seattle is having a sale!

Purchase pricing for investment properties and the mortgages to buy them are at all-time lows.  Consider the following benefits of investment property:

*  The following are deducted from the rent collected:

  • Mortgage Interest and Points
  • Property Taxes
  • Insurance
  • Utilities
  • Repairs/improvements
  • Maintenance
  • Property Management

*  Depreciation:  Deduction of the value of the ‘improvement’ usually over 27.5 years

BEST OF ALL:  Your tenants are purchasing the property for you!

Prediction for the Seattle housing market . . .

Seattle’s healthy employment picture coupled with its consistent population growth will increase home sales in 2014 and make it the second hottest market in the county, according to Zillow, an online real estate marketplace. While Zillow economists predicted that mortgage rates will rise to 5 percent next year, they also said loans would be easier to obtain. Curiously, the national homeownership rate, tugged down by foreclosures the past five years, will hit its lowest point in two decades, Zillow predicted.

Seattle: A market to watch . . .

Seattle ranks among top real estate “markets to watch” based on the strength of investment, development and homebuilding, according to a widely read forecast report.

The 35th edition of Emerging Trends in Real Estate reports the housing market “is no longer a drag on most local economies.”  The recovery will be strong enough to be an unexpected boost to a number of local economies, according to the report, a joint publication of PwC and the Urban Land Institute. Authors also stated:

  • A number of local housing markets have seen prices return to levels comparable to the peak from the previous cycle.
  • In most markets, activity has reached a level that is supportive of economic growth.

Researchers said survey results indicate an improved outlook for all types of residential property investment in 2014. Notably, infill and in-town housing continues to strengthen. That category is the top-ranked favorite for both investment and development.

Housing for seniors also ranked near the top, due in part to the aging population and a functional obsolescence of older independent living facilities.

Among “markets to watch,” Seattle moved up a notch from last year’s report, rising to No. 6. Of the three market components (investment, development and homebuilding) used to evaluate the markets, homebuilding posted the largest gain. Home prices are projected to increase 4.9 percent in 2014 when compared to 2013.

Researchers cited the city’s tech industry (and its above-average wages) and aerospace manufacturing as positive drivers in Seattle’s outlook. Quoting a national real estate consultant, the report said “Seattle is also becoming a core market for foreign investors.”

The study singled out Seattle’s high rate of educational attainment and global connections as factors that will keep the economy viable in 2014.

“It is a great time to buy” . . . statement confirmed!

Go to the link below to see what Warren Buffet has to say about buying Real Estate!

http://www.youtube.com/watch?v=28tnd5NZdWM

COMPARING YOUR INVESTMENT OPTIONS . . .

 

Let’s take a moment to determine the before-tax wealth accumulation potential of three types of investments.
Savings:  If you invest $40,000 in a certificate of deposit (CD) at 5%,compounded daily, our investment will grow to  $84,675 in fifteen years.

Stocks & Bonds:   If you invest $40,000 in a mutual fund growing at 10% annually, your investment will grow to $176,090 in fifteen years.

Real Estate:     If you invest $40,000 (20% down) in a $200,000 real estate investment, appreciating at annually, in fifteen years the value of the property will grow from $200,000 to $415,785.   Assuming a 15-year fully amortized loan was used to purchase the property, let’s take a look at the future net equity potential of this investment.

 Future value of property in 15 years        $415,785
– 7% overall cost of sale                              $29,105
– Loan balance                                                        $0
 = Net proceeds from sale before tax       $386,680

REVIEW:   In the above examples we determined that if you invested $40,000 for 15 years, you would be able to accumulate wealth (before tax) in the following amounts:
1) Certificate of deposit    $84,675
2) Mutual fund                   $176,090
3) Real estate                      $386,680

 

“Never invest in anything that eats or needs repainting” . . .

This title is a quote from Billy Rose, composer and investor.

THE LESSON:  Any investment that depends on repeated infusions of cash probably is not as good an investment as it first seems.  Even if you try to take the ongoing expenses into account, there is a good chance that you will underestimate them.

Example:  Those who are tempted to take advantage of today’s beaten-down real estate prices by becoming landlords should speak to a few other landlords — or a knowledgeable real estate consultant — first to get a clear picture of what you may be getting yourself into.

This warning is my introduction to a series of articles to follow on the ins and outs of investment properties.

You invested $1,000, $10,000, $100,000 . . . and your returns . . .

 Where did you invest your money?  Regardless of amount, your greatest growth was in real estate. 

Where did you invest your money?

YOUR INVESTMENT OPTIONS . . .

Investing Defined
Whenever an individual places surplus funds in the bank or stock market, or purchases real estate for speculation, he or she has made an investment decision. There is a wide variety of investment vehicles available. Each type of investment has unique characteristics that may be desirable to one investor yet undesirable to another.  Investors may even evaluate each investment differently. Each investment may also exhibit different risk levels, and the return or yield on an investment should be commensurate with the amount of risk associated with it.

Why People Invest
People invest to obtain the financial independence necessary to achieve their goals.  Achieving financial success usually takes time, careful planning, and the assistance of other professionals. Most people invest for the following reason:

  • To generate additional income                                            

    What will you do when you harvest from your money tree?

  • To acquire wealth for their retirement
  • To accumulate for their children’s education                     
  • To acquire prestige in the community
  • To create an estate for their heirs
  • To obtain financial independence

Common Investment Vehicles

  • Saving accounts and certificates of deposit
  • Stocks and mutual funds
  • Real estate
  • Partnership interests
  • Bonds and bond funds
  • Mortgages/trust deeds
  • Collectibles/art