Moving day – it happens every month

I can understand how it happens. People have to move in a hurry and they get evicted. They don’t have any way to move their stuff. Most of their belongings end up in a dumpster. Sometimes items that are usable or even new and still in the original box end up in landfills.

Towards the beginning of every month, I see dumpsters filled with furniture and household items.

It costs money to move. Stuff costs money. Having space for stuff costs money. I have occasionally pulled furniture from the alley and donated it to the local thrift shop which is run by a church.

There has to be a better way. A more environmentally friendly way and a way to get these household items back to their owners or get them in the hands of someone who can use them.

Counting Minnesota Realtors

The chart shows how many Minnesotan’s are Realtors and the data is from the national association of Realtors. (NAR) Realtors are members of the national association of Realtors and Realtor is not a job title it is a membership. Not all Realtors have real estate licenses and not all members sell real estate but a large percentage of us do.

A person with a real estate license can sell real estate without being a member of the NAR, yet the numbers on this chart accurately reflect a trend. The number of Realtors is rising but very slowly. There 19,515 Minnesota Realtor members as of December of 2017 and that is up slightly from 2016 which is why I did not bother making a new chart.

As older member retire Realtors as a group is getting younger. At one point the median age was around 57 now it is 53 and has been for the past few years.

The number of Realtors peaked nationwide in 2006 and in Minnesota.

There are plenty of REALTORS®. My theory as to why there are fewer today than there were in 2006 is because of the economy. Typically when employment is high and there are plenty of jobs fewer people decide to start businesses or become REALTORS® (Independent contractors)

Usually this time of year I get a lot of phone calls from people who are interested in becoming real estate agents. I think I have gotten one call so far this year.

It is hard to calculate how many homes are sold each year in Minnesota. If I were to guess I would guess that we have about half as many home sales as there are REALTORS®.

Cats kill 500 million birds a year

cat
House cat – in the house

Cats roam free in my neighborhood and they make little cats too. There are people who believe that it is alright to let their cat roam free and that it is a cat’s right to roam free.

The house cat has long been listed among the 100 most dangerous invasive species. They kill millions of birds and other small animals each year to the point of extinction. A cat is a pet when kept inside but once when outside it is a heartless killer.

“If we extrapolate the results of this study across the country and include feral cats, we find that cats are killing more than 4 billion animals per year, including at least 500 million birds. Cat predation is one of the reasons why one in three American bird species are in decline,” said Dr. George Fenwick, President of American Bird Conservancy [wildlife management institute]

There was a study that shows that they only bring home about 25% of what they kill. They eat some of what they kill but they leave a lot of it where they killed it.

Being a free-range cat in St. Paul is not good for the cat either. Here are some statistics:

200 cats are killed annually in traffic

Life expectancy of a cat allowed to roam is only three to four years

Confined cats can live beyond 14 years

Over 1,200 cats are picked up each year by animal control

Roaming cats may be a nuisance by urinating and defecating in sandboxes and gardens

Outdoor cats are susceptible to injury or death from other predatory animals

Outdoor cats are predators to wildlife such as birds

Be a good neighbor and keep your cat inside.

Only a few days left to pre-pay property taxes

There are some who are pre-paying property taxes for 2018 so that they can take advantage of the tax deduction. In 2018 there will be a cap of 10,000 on the state and local tax deductions.

In 2017 there is no limit on deductions for state and local taxes. Both Hennepin and Ramsey county allow pre-payment, check your county website for instructions on how to pre-pay.

Taxes have to be pre-paid by December 29th, it isn’t enough just to have them postmarked before the end of the year.

It might also be possible to make extra house payments or more importantly interest payments on the mortgage before the end of the year.

Ask your tax professional for advice and then call your mortgage company if taxes are being escrowed.

Cash real estate purchases

washing machine
Laundromat

Every year I work with a few buyers who pay cash for real estate. So far I have not run into anything weird. As a Realtor® I am not required to report it  I am suspicious that a buyer is laundering money, but am encouraged to do so. That is hard to do because I also owe my clients ‘confidentiality”.

Buying real estate is a great way to launder money. Suspicious activity includes people who buy property for cash without looking at it and people who pay way too much cash for a property that doesn’t seem to be desirable or worth what is being paid for it.

The cash buyers I typically work with are pulling money out of investment accounts or retirement accounts and they usually supply me with some kind of a letter from a financial institution stating that they have the money.

Money laundering usually involves “shell corporations”, rather than individuals.

Actual cash in paper currency is not accepted by title closing companies.

People who are selling real estate especially investment property rarely take an interest in the buyer and many investment property buyers do so through a corporation. Which makes sense. I guess I am writing this just to put the idea on everyone’s radar.

How tax bill may affect the housing market

tower
Turret

It is really too soon to tell how the tax bill will affect the housing market. On the one hand, it shouldn’t have much of an impact on housing that is costs less than 650K because the mortgage interest on a mortgage up tp 500K will still be tax deductible, for those who itemize.

If the tax bill passes as is  95% of taxpayers will claim the standard deduction rather than itemize, according to experts because the standard deduction will almost double.

That means that mortgage interest will not be deducted for most. Currently according to the IRS about 31% of taxpayers itemize, and can deduct mortgage interest.

If higher priced homes decrease in value that doesn’t mean that lower-priced homes will follow. The demand for homes at the lower end of the price spectrum is very high and I can’t see that changing.

There is some speculation that if interest on loans used to pay for second homes is not longer tax deductible that prices of the summer cabins in Northern Minnesota will go down. I will believe it when I see it.

The five of eight rule may have an impact.  Under current law, you can exclude up to $250,000 ($500,000 for married taxpayers) in capital gains from the sale of your home so long as you have owned and resided in the house for at least two of the last five years.

That rule is going to change to five of the last eight years. The rule will make homeownership more of a long term proposition and home sellers may want to consult a tax advisor if they wish to sell before they have owned the home for eight years.

People used to move about every 7 years but in the last decade, that has changed to about every 10 years so it is hard to say what kind of an impact the new five of eight rule will have on the real estate market.

I remember the big tax cuts during when Reagan was president. At the time we were in a recession. I don’t really understand why a tax cut and jobs bill is being passed during a time of high employment. In fact, we may not have enough workers to fill more jobs.

It isn’t clear to me right now as a business owner if my taxes will go up or down. The tax cuts are aimed at large corporations not at small businesses like mine that make up 99.7% of all U.S. businesses.

The Republican party used to be against running huge deficits but now they are in favor. Here is a link to a list of how they voted.

The bill will not be made into law until it is reconciled with the House bill and signed by the president who will sign anything he is asked to sign . . . or at least he has so far.

There are still numerous advantages to home ownership as opposed to renting. Interest rates are likely to continue to rise so buying a house now might make more sense than buying it later.

Real estate has been a tax favored investment for decades yet homeownership is currently at a 50 year low last July and has started to go up again. Will new tax laws cause home ownership to fall again?