Personally I haven't seen this for my area. Comparing the number of closers to the number of listings, if the trend continues, gives something like a 10 month supply of product in the single home category.
If the 2 year rule increases to 1 million like mentioned below. I'll put this place I'm now on the market in a heart beat and so I have to think others would too. Making even more supply!?
It's location always location. Oprah Winfrey just plunked down 50 million for a 42 acre estate in Montecito. That changed hands two years ago for 14 million. Now the seller has done some renovations but 36 million should compensate them.)dave
Rising Home Prices Spark Call For Bigger Write-Offs
Kenneth R. Harney, Realty Times Columnist
The latest federal home value appreciation numbers are out and they underline what home builders, brokers and buyers in many parts of the country already know: The U.S. economy may be slowing down, but the market values of homes -- especially in some of the highest-cost markets -- are headed in the opposite direction.
The average American home rose in market value by 8.8 percent from the first quarter of 2000 through the first quarter of 2001, according to the Office of Federal Housing Enterprise Oversight, which tracks over 180 of the largest markets in the country. That 8.8 percent is the highest rate of home price inflation measured by the federal agency in over 15 years, and tops the 8.1 percent recorded three months ago.
Nearly 50 of the 180 biggest markets saw average values of existing homes rise by 10 percent or more in the latest study. Virtually all of California continues to be red hot, including San Jose and Santa Rosa (both up 21.4 percent in the year), Oakland (+20.1 percent), and San Francisco (+18.6 percent).
Other high-appreciation markets around the country include Austin, TX (+16.1 percent),Washington,D.C. (+15.4 percent), New York City (+14 percent), Denver (+13.2 percent), Boston (+13.1 percent), Minneapolis-St.Paul (+11.8 percent), Providence, RI (+11.7 percent), and Jacksonville, FL (+10.5 percent).
Think about this: Houses in San Jose have more than doubled in market value during the last 60 months alone (up 102.7 percent.) Houses in Denver have gained 60 percent in the same period. The average house in San Francisco has gained 84.2 percent in resale value since 1996 -- and that gain came on top of the country's highest-cost housing base.
What does all this mean for owners and buyers? For the time being at least, it means spectacular gains in net household wealth. A San Francisco condo that sold for $480,000 last year now is worth $570,000 -- a $90,000 jump in 12 months, or an average $7,500 gain per month. A Boston house that sold for $400,000 in early 2000 is now worth $52,400 more -- and average gain of nearly $4,400 a month. A Manhattan duplex apartment that sold for $1.2 million last year is worth nearly $200,000 more today.
In the face of prodigious gains like these -- especially in high-cost real estate markets -- some federal legislators on Capitol Hill are beginning to devise ways to help constituents keep as much of their home sale profits as possible.
For example, Rep. Zoe Lofgren (D-CA), has sponsored a bill (H.R.1722) that would amend current tax law to allow anyone -- single or married filing jointly -- to keep up to $1 million in home sale profits tax-free, as often as once every two years.
Current law allows home sellers to exclude up to $250,000 (singles) or $500,000 (married joint filers) on qualified sales every two years. But Rep.Lofgren says the current exclusions just aren't enough in high-cost markets on the west and east coasts. Too many home sellers in high-price areas are racking up gains well over the limit, she says, and they're being forced to pay capital gains taxes.
Her bill would eliminate the possibility of home sale capital gains taxes for all but the super-luxury category of homes. If Lofgren's bill becomes law, you'd be able to buy a place for $700,000, spend $300,000 to improve it, and then sell it two years later for $2 million, and pay zero in federal taxes as a joint filer.
A somewhat less generous effort is underway in the Senate, where Sen. Orrin G. Hatch (R-UT) is sponsoring a bill (S. 818) that indexes the current $250,000/$500,000 caps to the annual rate of inflation as measured by the Consumer Price Index (CPI). If the CPI jumped 4 percent next year, the home-sale tax exclusion limits under the bill would rise by the same percentage the following year -- to $260,000 and $540,000.
The fates of both bills at the moment are uncertain, given the upheaval underway in the wake of the Senate power shift to the Democrats. But one thing is for certain: If home values continue to increase at anywhere near the percentage rate seen in the last year, the $250,000/$500,000 tax-free caps will have to increase, too. Politically-influential voters on the east and west coasts will insist upon it, and their congressional representatives will deliver. |
