|Read the post from a real estate newsletter |
from Al Clark. No doubt there is lots to read
about the impacts of the Fiscal Cliff...here is
a thought on the Housing Market
Hear about the Texas woman proposal not to
pay anyone in Washington(President or
House) until they resolve the Fiscal Cliff.
Perhaps that is a place to start to have them
look at the severe impact to you and me.
FISCAL CLIFF TALKS POISED TO IMPACT HOME OWNER TAX INCENTIVES
Front and center now in Washington is the "Fiscal Cliff" and the talk of reducing the incentives of Home ownership. Many are intent on scaling back or outright eliminating long cherished tax breaks such as the Mortgage Interest Deduction (MID). Recently we covered the topic of the "Fiscal Cliff" in this article.
Home ownership has long been a pillar of the American Dream. For more than 100 years, Americans believed that building and buying homes is a ticket to a stable, productive society. In this same period, the government has provided tax breaks meant to stimulate home ownership and the housing industry.
For most, the home represents their biggest social and economic investment. The number of housing sales and starts is a commonly used barometer of economic health. Many economists believe a robust housing market has lead us out of several recessions, and evidence now suggests that this expanding housing recovery we are in now may be helping our overall economy.
So we are going to offer a few snippets or factoids that get at the rationale for sustaining home ownership incentives in light of the discussions in Washington. We are going to closely monitor these discussions and offer you an ability to weigh in with your elected officials.
New Home Building:
15 percent of the U.S. Gross Domestic Product (GDP) comes from housing, and nothing packs a bigger local economic impact than home building. Constructing 100 new homes creates more than 300 full-time jobs, $23.1 million in wage and business income and $8.9 million in federal, state and local tax revenue. (1) This whole process is called the Domino Effect. Click on this video (2) and see all that Home ownership means locally.
( It was designed for Florida, but the local impact is the same nationwide)
Equity and Home Values:
The national median existing-home price for all housing types was $178,600 in October, which is 11.1 percent above a year ago. Rising home prices have already resulted in a $760 billion growth in home equity during the past year.Given that each percentage point of price appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year. (3) When homeowners feel their equity is rising they are more likely to renovate or move up to a larger home.
RenovatingWhen homeowners experience greater home equity, they tend to improve on what they have. Remodeling activity has climbed to its highest point since the third quarter of 2005. In the 4th quarter of this year, homeowners will spend over $120 billion improving and renovating their homes.
Every $10 million in remodeling expenditures yields the following economic benefits:(4)
- 111 jobs
- $8.3 million in wage and business income
- $3 million in taxes and revenue for state, local and federal governments
Supporting The Local Tax-base
Today, home owners pay 80 to 90 percent of the income taxes in the U.S. and, among those who claim the mortgage-interest deduction, nearly two-thirds are middle-income earners.
(2) Florida Assoc. of Realtors
(3) National Assoc. of Realtors
(4) National Assoc. of Home Builders