General Real Estate News

Sometimes when I meet with home sellers they tell me about the housing market. Their information is often based on national news. Reporting has gotten better but it usually lags by weeks or months.

Real estate is local. It is good to know what is going on in the housing market which is higher interest rates and fewer people interested in putting their house on the market. That is a national trend caused by the Federal Reserve raising interest rates.

Home prices are falling in some parts of the country while in other parts of the country, they are rising. Falling prices tend to make the news more often than rising prices do.

The continued strong demand for housing in the Twin Cities has led to modest price increases. Multiple offers on homes for sale are fairly common this spring.

Yes, we have a strong spring home buying and selling season in St. Paul. In order to know if right now is the best time to sell a house in 2023 I would have to be able to see the future.

Generally speaking, spring is usually a better time to sell a house but they are bought and sold every month of the year.

First a disclaimer. I can not give tax advice and this isn’t tax advice. These are observations.

Just because something is tax deductible does not mean that you will get a tax deduction. Many people get a larger deduction by taking the standard deduction rather than itemizing.

The interest paid on a home mortgage could be a deduction but might not be. It would depend upon the income of the borrower and if they have enough deductions so that they come out ahead of itemizing. There is also now a limit on how much mortgage interest can be deducted.

When you drop off a donation at a Goodwill or some of the other non-profit thrift stores the person who receives your donation may ask if you would like a receipt so that you can take advantage of the tax deduction. It is true that charitable contributions are tax deductible but there is a minimum amount and a person would have to itemize to get the deduction.

In 2022 a married couple filing jointly may able to a standard deduction of 25,900 to 27,300. It might not make sense to itemize if all of the allowable deductions add up to less than the standard deduction. A person could of course itemize anyway and pay more in taxes.

It is correct to say that the interest paid on the mortgage may be tax deductible.

There was great concern a few years ago that if the mortgage interest tax deduction went away people would stop buying houses.

Also, some Minnesota property taxpayers get money refunded back by the State of Minnesota. 

The deadline for filing 2022 taxes for most people is April 18,2023.

I don’t know how they do it but notices from the IRS and property tax notices always come to my house on a Friday or Saturday.

Anyhow our property tax statement came on Friday. Taxes went up. I did the math and if I was paying the taxes monthly instead of twice a year I would be paying $37.50 more each month.  Since I pay the taxes once or twice a year I really notice the $225 to $450 dollar increase.

OUCH!

There are some property tax refunds available through the State of Minnesota. I mention this because some folks do not seem to be aware of it. Homeowners can file it free online by August 15th.

There is also a program for seniors that allows them to defer tax payments. It is actually a loan to be paid back with interest.

As a person who is self-employed, I am used to setting money aside for income taxes and for property taxes.

It is safe to assume that property taxes will be even higher in 2024, this year ours went up 12%.  They do occasionally stay about the same from one year to the next. They rarely go down.

This just in from the Minnesota state Realtors association. The number of homes for sale in Minnesota is up from last year but there is only a 1.3-month supply of houses.  The low supply is the reason for the 3.4% increase in the median home sale price.  Interest rates also went up and may go up again.

The higher rates make both buying and selling less attractive. New listings also declined, dropping 23% year over year as just under 4,600 homes came on the market.

In St Paul, the median home sale price was $255,000 and the average days on market was about 50.

Why can’t AI (artificial intelligence)  price real estate correctly?

It is true we have all sorts of tools we can use for putting a value on real estate. I use them sometimes but always in conjunction with my own analysis. My analysis is always closer to the actual sale price than any of the auto valuation tools.

Autobaluation tools are great for doing a rough estimate or a starting point for finding the value.

I have a lot of experience, more than 21 years of experience pricing houses and figuring out how much they will sell for. Experience is a great teacher.

There aren’t any two houses that are exactly the same, Even if they are very similar they are not on the same piece of land.

In addition, to tools and data experience, there are things that I can see and know and understand about how people use houses and how a house may command more or less money depending upon intangibles like landscaping and traffic.

The basics for pricing residential real estate is to find three comparables that are close by and that have sold recently. Often the comparable houses are similar but now exactly the same. The three biggest factors that will determine value are location, size, and condition.

Pricing a house requires a kind of fuzzy logic that artificial intelligence doesn’t have.