Young Adults Disappearing From Home Buying Market

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
 
There was a time when many homeowners bought their first house in their 20s. It's not hard to see that trend has changed quite a bit in markets across the country.
 
Ten years ago, the homeownership rate among young adults under age 35 was 43.6%, according to Census data. Today, the rate stands at just over 36%.
 
But while some homeownership critics have tried to say in recent years it's because young people don't value ownership as much as they do experience and freedom, the underlying economics tell a much different story.
 
It's not that America's young adults don't want to buy homes. Instead, there are a number of factors at play: fewer jobs (or jobs that pay enough to afford a home), delayed marriage, higher debt, and poor credit scores.
 
Eric Belsky, managing director of Harvard's Joint Center of Housing Studies, told a crowd at the National Association of Realtors' conference in Washington, D.C., last week, "There really are serious issues in the first-time buyer market."
 
Belsky estimates that nearly 3 million more young adults live with their parents today compared with 2007, before the Great Recession kicked into gear. This no doubt points to underlying problems with debt, the job market, and increasing housing costs in many areas.
 
The average college graduate is already carrying a large debt load as soon as he steps off campus. Student debts collectively add up to $1.1 trillion. And the Federal Reserve Bank of New York says student loan default rates climbed to nearly 12% last year (up from 6% in 2003).
 
Of course, millions of young adults are already affected by these numbers. But what happens to the housing market when first-time buyers become more and more delayed by circumstance? At some point, many markets may start to feel the missing buyers just as much. For instance, who buys the empty nesters' homes when they're ready to retire and downsize? Who do the move-up buyers sell to when they outgrow their starter homes?
 
It's an issue that eventually impacts each stage of the housing chain. We haven't seen a lot of solutions being laid out – other than a few initiatives that aim to curb student debt or give those in some professions relief.
 
We'll be watching this area closely to see what new data impact home buying and selling.

Finances - Tax Deduction Checklist

Finances - Tax Deduction Checklist

Tax deductions are what get you bigger refunds. If you itemize your tax return you need to have a good idea of what you can deduct. This checklist covers most of the major tax deductions.

Tax Deduction checklist

Form 1098 or your mortgage statement: if you purchased a home in the previous tax year and prior tax return or if you refinanced in the prior year and are deducting points on that loan over its life.

Investment interest expense: Brokers' statements showing any margin interest paid and loan statements for loans taken out to purchase investments.

Losses due to theft: include a description of property and insurance reports showing reimbursement or any cancelled checks showing value of property.

Charitable donations: bills, receipts or cancelled checks for cash donations, mileage records for charitable purposes, receipts from charitable agency with estimated value in the case of property donations, prior years' tax returns for any unused charitable contributions.

All work related expenses : Reimbursement check stubs or reports from an employer, union dues, receipts, bills or invoices for supplies, gifts to clients, any uniforms or special clothing, seminars attended, professional publications and books. Travel information including invoices or receipts for transportation, lodging, restaurants and parking. Any job search expenses and job related educational expenses.

Misc. deductions like Tax preparation fees, cost of income tax return preparation software and books. Safe deposit box rental fees from bank. IRA custodial fees, investment advice costs.

Last year's state income tax return, W-2 and any cancelled checks for state estimates you've paid.

Medical and dental expenses including Form SSA-1099, year-end pay stub for premiums paid through your after tax wages, mileage records for trips to the doctor, clinics, etc.

Real estate tax collector bills or cancelled checks and Form 1098 or closing statement if you bought, sold, or refinanced property in the tax year.

Any tax bills or cancelled checks for personal property like automobiles.

Employee SSN and wages paid during tax year to any household employees.

Records showing any estimated tax payments or overpayments for prior years.

You could save huge in tax preparation fees by being a bit organized. You can also save a lot of time by getting all your required documents in order before you go to a tax preparer or start your tax return online.

This communication is for information only. Please consult a tax professional regarding tax deductions.

Great news on Short Sales.....

The good news just keeps continuing.

 

 

As we anticipated, C.A.R. today received a letter from the California Franchise Tax Board (FTB), obtained by the State Board of Equalization, clarifying that California families who have lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale. 

Last month, in a letter to California Sen. Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes.  Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB.  Now with the FTB’s clarification, underwater home sellers also are assured that they are not subject to state income tax liability, rescuing tens of thousands of distressed home sellers from California tax liability for debt written off by lenders in short sales.

We are pleased with the recent clarifications issued by the IRS and the California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California.  We would like to thank Sen. Boxer and BOE member George Runner for their leadership in obtaining this guidance from the IRS and FTB.  Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of this year.

Sincerely,

Kevin Brown
2014 President
CALIFORNIA ASSOCIATION OF REALTORS®