Real Estate Market Update

 The Real estate Market in Illinois AND Indiana is still good, due to a shortage of Listings.

There are still buyers out there, despite interest rates being around 6.6%.

Another measure we use to determine market activity is called Absorption rate.

AB rates: less than 5 (months) indicate a Sellers market.

AB rates 5-7, indicate a balanced market.

AB rates greater than 7, indicate a buyers market.

NW Indiana, including Cedar Lake, Munster, Dyer, Highland, Schererville, St. John and Crown Point, is currently at 1.8.

If you are a seller, this is still great news. Listing inventory is low.

If you are a buyer, this is still good, because there are fewer buyers and less competition. Fewer multiple contracts.

In the Southern Cook county Illinois suburbs of Lansing, Thornton, South Holland and Lynwood, the AB rate is 2.6.  Yes, a Sellers market with the same reasons as Indiana.

Do you have to pay capital gain on the profit from your home?

 You can sell your primary residence and be exempt from capital gains on the first $250,000 if you are single and $500,000 if married filing jointly. All you have to do is live in the house at least 2 of the last 5 years. Exemption is only available once every 2 years.

Plus, you can add your cost basis and costs of any improvements that you made to the home to the $250,000/$500.000 amounts.

Example: A married couple, purchased a home for $500,000 in 2015. The neighborhood experienced tremendous growth, and home values increased significantly. Seeing an opportunity to reap the rewards of this surge in home prices, they sold their home in 2022 for $1.2 million. The capital gains from the sale were $700,000. As a married couple filing jointly, they were able to exclude $500,000 of the capital gains, leaving $200,000 subject to capital gains tax. If they had sold for $1.0 million, there would be no capital gains tax. $1.0 million sales price - $500,000 original purchase price = $500,000, which would be exempt from taxes.

Always consult a tax professional, as a double check and because of the mention of cost basis and improvements mentioned earlier.

This is an excellent incentive to invest in real estate, as up to a $500,000 gain is not taxable.

And as Mark Twain once said: 

“A person doesn't know how much he has to be thankful for until he has to pay taxes on it."

Except in selling your home!

Another Indicator that the local Real Estate Market is Still Pretty Good

 

Is This 2008 Again? (No)

 Question: Do you see the real estate market collapsing like it did in 2008? So many people we knew lost their homes.

Answer: Although no one can predict the future, we don’t see this happening, nor does the National Association of Realtors chief Economist, Lawrence Yun. There are several key indicators of how this market differs.

For one, In the last major housing downturn, there were 8 million job losses in a single year. Now there are virtually none. Though layoffs in the technology and mortgage industries are occurring, they haven’t accumulated enough to form a net job loss, Yun noted. A strong job market bodes well for housing’s future.

The subprime loans that were prevalent during the 2008 housing bust are basically nonexistent today.

Home inventory is less than half of what it was then. This means more of a demand for homes.

About 10% of all mortgage borrowers were delinquent on their loans in the previous housing bust. The mortgage delinquency rate is now at 3.6%, holding at historical lows.

Homes in foreclosure reached a rate of 4.6% during the last housing crash as homeowners who saw their property values plunge walked away from their loans. Today, the percentage of homes in foreclosure is 0.6%—also at historical lows, Yun said. He predicted foreclosures to remain at historical lows in 2023.

Overall, the fundamentals don’t point to a housing market that is operating similarly to the 2008 cycle, Yun said. While home sales are slowing, prices remain good. Also, inventory remains low, which will keep home prices elevated, Yun said. “The chance of a price crash is very small due to the lack of supply.”

We feel Real estate is still a very good long term investment. The economy has its ups and downs, investments have their highs and lows. Hopefully, inflation will come down, making housing more affordable to everyone!

Budget

 

NO...

 

There are no market similarities now compared to 2008.

Lawrence Yun is the chief Economist for the National Association of Realtors.

Overall, the fundamentals don’t point to a housing market that is operating similarly to the 2008 cycle, Yun said. While home sales are slowing, prices remain good. Also, inventory remains low, which will keep home prices elevated, Yun said. “The chance of a price crash is very small due to the lack of supply.”

We feel Real estate is still a very good long term investment. The economy has its ups and downs, investments have their highs and lows. Hopefully, inflation will come down, making housing more affordable to everyone!

Factoid

 An average of 3000 wind turbines were installed every year across the US since 2005. It’s now the nation’s leading renewable electricity source. How much US electricity comes from wind power?

usa factoid

How much US electricity comes from wind power?

Almost 10% of US electricity comes from wind farms.