Listing Courtesy of SANDCASTLE REALTY INC
Every now and again Forbes magazine assembles what it calls its “top financial brain power” to comment on a topic of interest. Late last week, the topic was real estate—more specifically, the answer to the question, “Is the Real Estate Market Still Healthy?” Speaking for our Delaware real estate market, I’d have to the answer “yes.”(It’s a cinch I’ll never be asked by Forbes to join the panel because a one-word answer doesn’t make for a very long article).
Their panelists did better at elaborating. They voiced a couple of blanket observations on homeownership in today’s market, then settled on some reassuring points on housing affordability. Their observations are aimed at the nation as a whole, but the conclusions are apt for Delaware buyers and sellers, too:
Point One: The inventory of existing homes for sale continues to be tight just about everywhere. It’s been trending that way for quite a while—and it results in the average days on market continuing to be shorter than usual. Ultimately, that should cause new housing construction to accelerate.
Point Two: The average age of homeowners is gradually increasing. Younger first-time buyers—who have spent their entire working lives during The Great Recession and its aftermath—have been having a harder time gathering the wherewithal to buy their first home. If the latest optimistic projections about the economy prove accurate, those demographics should reverse.
Point Three: Rising interest rates have not had much of an impact on the residential market because the overall level of rates “is low enough right now…The fact is that housing is affordable.” Delaware buyers should be reassured by one investment officer (he oversees $200 billion) who says that housing “still will be affordable even if rates go up another 50 basis points.”
Point Four: In a related point, fixed mortgages are growing in popularity. As we head into real estate’s peak season, that “speaks to housing affordability” because it reflects buyers’ satisfaction with today’s rates: they don’t have to stretch the family budget to handle the resulting monthly payments.
Delaware buyers and sellers benefit when the Housing Affordability Index—the measure that tracks payment amount as a percentage of income—indicates that typical families can qualify for a mortgage loan on a typical home. That has much to do with the real estate market health the analysts were pointing to…and a sign that now is a good time to give me a call! Call/Text me Russell Stucki at (302) 228-7871, email me at email@example.com, visit more listings at www.beachrealestatemarket.com.
People approach the whole idea of owning a second home from a hundred different perspectives simply because a second home can answer so many different purposes. If you are an Sussex County homeowner at the stage in life where making retirement plans is becoming a more immediate imperative, you might want to buy a second home as a vacation destination—but one which is also a tryout for your family’s future center of operations. Those who have spent a good part of their lives in cities sometimes seek a second home in the mountains or at the shore as a restorative refuge. People living in less crowded environs might crave a pied-à-terrefor proximity to a city’s cultural riches. There really can be a hundred different reasons (and that’s not even counting all the financial ones)!
Once you begin to seriously entertain the notion, it becomes evident that deciding on which of many possible directions to pursue will involve weighing the tradeoffs each presents. In addition to an opening a conversation with the Sussex County real estate professional whose advice you’ve come to trust the most, some of the main points you will want to consider—
· If the second home is going to serve even temporarily as a weekend getaway spot, then buying within reasonable driving distance may be more important than you might assume. Keep in mind that the drive (or flight) will grow steadily less interesting as time passes.
· In most instances, a second home will be occupied by members of your family only on a part-time basis. This brings up a number of issues—among them, insurance. Vacant properties present a different profile to insurers than do homes that are occupied most of the time. Hazard insurance tariffs could also differ from what you are used to (especially in flood-prone areas). Investigating insurance coverage and costs early on in your search will help you to avoid surprises.
· You should consult your tax expert for details, but as a general rule, if the home is not rented out as a business proposition, you’ll likely find that you are able to deduct mortgage interest and property taxes on your Federal tax return. Then again, if you are thinking of renting the house out for more than 14 days per year, rental income is taxable. In that case, though, you’ll be able to use deductions for expenses, such as insurance, maintenance, professional fees, and sometimes even depreciation. Each situation will be different—again, your tax professional will have the relevant answers.
· Financing a second home is similar to financing your main residence. You are likely to need a down payment of 10% to as much as 30% in some cases. If you will be drawing on the equity in your current home, it’s only prudent to be able to retain a reasonable amount of reserves for unforeseen emergencies.
Many people buy a second home in anticipation of retirement. If that is the case, think of factoring in the availability of quality medical and support services in your search areas. A remote cabin in the woods may seem appealing now, but as a retirement venue, maybe not so much! Thinking about the long range is never more important than when you are entertaining the purchase of a second home. I’m here to help clarify those issues, as with all your other Sussex County real estate need.