Sure, even the idea of homeownership is appealing for all of the traditional emotional and lifestyle reasons. Having proprietary control over your family’s center of operations is a goal for most Sapphire residents—just as most of us would consider it a necessary evil if professional obligations make frequent moves unavoidable. Travel may be broadening, but most rolling stones (no matter how moss-less) eventually hanker to settle down.

But aside from the lifestyle aspects, another major advantage to settling down and owning your home gets its turn in the limelight at least once a year. This advantage is anything other than abstract. The time of year is April 15, when the concrete financial benefits are tallied up in the very welcome form of Sapphire homeowner tax deductions.

Tax advice is not my specialty—for that, you should always defer to your qualified financial advisor, whose full time job it is to do all that’s humanly possible to keep track of the ever-changing Federal Tax Code. But even non-specialists know that some of the most beneficial provisions in the Code’s 75,000 pages do relate to the range of significant homeowner tax deductions.

In the National Association of Realtors’ periodical houselogic, writer Dona DeZube recently surveyed some of the major ones—tax tips that deserve to be investigated by any Sapphire homeowner who will soon be charting out their own mid-April strategies.

The list was headed by the most obvious one, the mortgage interest deduction, which applies to interest paid on a loan secured by the place you live in. That doesn’t have to be a house—it could also be a trailer or a boat. As long as you sleep and cook in it, if it also has toilet facilities, interest paid for its purchase falls into the category.

Likewise, there is the prepaid interest deduction. Prepaid interest (aka “points”) you pay in when you take out a mortgage or refi can usually be deducted in the year it is originated. An exception is when you refinance and use the proceeds for other than home improvements, in which case the deduction is spread out over the life of the loan. If you refinance again, it gets a little more complicated (may be time to ring up that qualified advisor again).

Another hefty deduction is the one for Sapphire property taxes you have paid. If your mortgage lender required you to insure repayment through private mortgage insurance (PMI), if your income is less than a set amount, the premiums may be fully deductible (otherwise, a reduced deduction will apply). Even more complicated rules apply to government insurance premiums (qualified advisor time).

More homeowner tax deductions can be applicable, too, with varying degrees of complication—particularly those which relate to Sapphire vacation homes. And there are also tax credits for things like energy-efficient home systems.

The bottom line deductibility of many aspects of homeownership can be a major reason why April 15 gets many Sapphire renters to do some serious examination of their residential futures. I’m here to help with any of your own real estate plans!

“Location, location, location!” is one of the few proclamations which needs no verb, no adjective, no preposition to fully communicate its message. Everyone in Sapphire understands—and usually agrees with—its meaning: The location [of something] is all-important.

In the commercial context, it used to mean “your store better be situated somewhere that gets a lot of the right kind of traffic.” Today, in the same context, that “traffic” can be clicks on the web rather than auto or foot traffic. Either way, location, location, location! stands for a truism that’s inarguably valid.

What’s interesting about the Sapphire location, location, location! axiom when it’s invoked in a residential real estate context is how true it remains—though for different reasons. When it comes to buying or selling a Sapphire home, location isn’t vitally important because of its being visible or easy for prospective buyers to find. This meaning of “location” points to a property being more or less desirable for a variety of reasons:

⦁ Accessibility—offers easy access to Sapphire places of business, recreation points, etc.
⦁ Inaccessibility—provides an oasis of privacy
⦁ Position—offers superior orientation: for instance, receives more (or less) sunshine.
⦁ Geography—takes advantage of superior land features: for instance, is on a hilltop, by a stream, etc.
⦁ Exclusivity—it’s in a respected, physically safe neighborhood, home to successful families
⦁ Community—offers desirable schools, lower tax rates, well-kept parklands and the like. The Brookings Institution finds that living near a high-scoring school can increase a home’s value by $100,000—or more!

Needless to say, another facet of location, location, location! in Sapphire is how important it can be in dollars and cents. It isn’t just that houses are listed for different prices depending greatly on their neighborhoods and even locations within the same neighborhoods, but the ease of buying and selling can also be location-dependent. The “comps”—estimated values assigned by reports of sales of similar properties—are assembled taking into account how near or far they are, as well as the characteristics of their neighborhoods.

For the most part, people tend to agree on the value of those location, location, location! characteristics—but in case you aren’t one of the crowd, the financial repercussions can be noteworthy. If, for instance, your ideal degree of privacy makes you value a home that’s considered to be too far out of town for most people, the asking price could be at a considerable discount from the same house closer in. If you prefer cool, shady backyards over more open and sunny ones, your offer might be accepted by an eager owner who’s not had many other takers.

Location, location, location! may be a cliché, but it’s been around forever for a reason. When you are house hunting—especially if you are new to Sapphire — it’s important to give special attention to local neighborhood characteristics that may not be obvious at first glance. In Sapphire, it’s another good reason to count on a knowledgeable local real estate specialist…like yours truly!

You’d think that the single most influential factor governing a potential Sapphire home buyer’s decision on whether to buy now or hold off would be the ongoing bottom line—that is, the amount of an anticipated monthly mortgage payment.

Maybe not.

The New York Federal Reserve argues otherwise. Not just a little bit otherwise; “dramatically” otherwise.

To cut to the chase (and that’s a good idea, for reasons that we’ll get to later), what is more likely to impact that decision—especially for those who are currently renters—is the size of the down payment. It follows that Sapphire home renters are more likely to be encouraged by any relaxation of down payment requirements than they are to be discouraged by a rise in mortgage interest rates (with the resulting increase in the monthly payment).

Upon reflection, the Fed’s finding isn’t so surprising. The slow-motion economic recovery and stall in wage growth has made it tougher than ever for the average Sapphire home renter to scrape together a traditional 20% down payment. That would be why the FHA began to loosen down payment requirements (they started doing that in late 2013).

The details of the NY Fed’s study—Survey of Consumer Expectations—involved asking respondents how they would react to different home-buying scenarios. They measured the resulting “WTP”: Willingness to Pay, and found out…well, they found out a number of complicated things that we can leave for the statisticians to figure out—but one that stands out is that for renters (and we could easily imagine many of our own Sapphire home renters are among them), the amount of a proposed down payment is much more important than the interest rate. Everyone who has ever lived with an income that’s about equal to their expenditures understands why: rent money spent gets you nowhere, mortgage payments are different. They represent, in part, retained value.

The reason that earlier we immediately cut to the chase was because the language in the study itself is part English, part FedSpeak (a language created by Fed spokespersons for the apparent purpose of foiling attempts to decipher meaning). For example:

“…since there is generally no exogenous variation in these variables that is independent of confounding factors (such as economic conditions or household characteristics), it is difficult to cleanly estimate these sensitivities empirically.”

Thankfully, that study was accompanied by a summary. The upshot for us is that the current hard-to-predict mortgage interest rate ups and downs may not be as important a WTP influence (at least where the Sapphire home renter population is concerned) as we might assume. What are always keys for swaying potential buyers are objective pricing, proper presentation, and energetic marketing. I can help with all of those—so call me!

Looked at from one perspective, there has been a “bailout” of enormous magnitude. Okay—maybe you have to expand the meaning of “bailout” just a bit, but if you do, many Sapphire homeowners can be counted among the most prominent beneficiaries. We Sapphire real estate agents wouldn’t be complaining, either. As bailouts go, it’s the least controversial in a long time—probably because there are no politicians involved (so they aren’t quarreling about who’s responsible for what).

The colloquial term “bailout” has become a household word of late. “Bailout” comes from a straightforward nautical solution for a sinking ship: grab a bucket and bail as fast as you can. The odds of success increase if you can also stop more water from pouring in. Wikipedia’s definition is “providing financial support to a company or country which faces serious financial difficulty.”

It’s no exaggeration to say that after the last decade’s financial meltdown had driven residential real estate prices into the basement, many Sapphire homeowners faced, if not actual “financial difficulty,” at least the threat that it might be on the way. If the amount outstanding on their mortgage was greater than their home’s market value, they were said to be “upside down.” Since bailing and buckets don’t have much effect on a boat that’s upside down, perhaps that’s why another term gained prominence.

They were “underwater.”

The coincidence of maritime imagery couldn’t be more apt. During the underwater days, if you were a Sapphire homeowner wanting to sell or refinance, more likely than not the outcome left you feeling swamped. The banks were inundated with foreclosed properties. The market was flooded with bank auctions. Property values sank…

But finally, rays of sunshine broke through the storm clouds. The floodwaters receded, etc. etc. etc., until today, when CoreLogic has just come up with some buoyant metrics about the current unambiguous state of the nationwide turnaround. A huge amount of equity has returned to the residential real estate market. The increase in homeowner equity in owner-occupied homes is now $6 trillion since mid-2011—$1.3 trillion in the last 12 months alone!

If that is a type of bailout, it’s one accomplished through the free market, powered by consumers reversing the previous distortion. CoreLogic’s figures include the good news that 92% of homeowners no longer bear the burden of being “underwater.” A relatively short while ago, among those who didn’t own their homes outright, that designation tainted nearly a quarter of the nation’s homeowners.

For several years now, the return of high and dry Sapphire homeowner equity has meant a more stable and blessedly predictable marketplace. Right now, some excellent property offerings—not to mention historically low mortgage interest rates—make this a propitious moment to call me to take a look at all that’s available!

A sizeable portion of the recruiting business has gone online, and a lot of small and medium-sized businesses are using them. We hear a lot of ads for them—promising job hunters an efficient way to distribute their resumes; promising business managers an efficient way to attract new talent.

Busy Sapphire business managers are assured they’ll snag quality candidates to fill their open positions by simply filling out an online form describing their job vacancies. Some even promise to deliver the resumes of dozens of candidates almost overnight (if not actually overnight!) using their online job-hunting database systems. What is left unsaid is what personnel professionals know to be the most important next step in the recruiting process: the interview.

If you are wondering what this has to do with you and Sapphire real estate, the answer is just about everything! If you are selling your home or condo (and are among the nearly 90% of people who team up with a real estate agent to help get it done), your choice of agents makes you a personnel manager. You are the CEO of your own home selling enterprise; you’re the boss. And all experienced business owners will verify that just collecting resumes and leafing through them is not good enough. Not when you’re looking for top talent.

It takes some winnowing; some qualifying; the willingness to make judgement calls. There are books written about effective approaches to interviewing, but you don’t have to have a business or psychology degree to select a Sapphire real estate agent you can have confidence in. And you don’t have to devote days to the process, either. There are a couple of pointers about the interview, and a shortcut to the whole process:

First, once you have picked out the names of a few Sapphire real estate agents whose qualifications seem to fit the bill, give them a call. Be clear and honest about where you are in the process, and let them know you are pre-interviewing. You can do this over the phone. Let them present their qualifications briefly—and then get down to business.

1 Ask them for the names and phone numbers of two former clients and two current clients.
2 Then call the clients (be sure to thank them for their time at the end of the calls).

You’ll find out as much (probably more) this way than you would through hours-long conversations with the real estate agents themselves. By the time you have their clients’ feedback on how well they provide marketing materials, handle buyers, and stay in touch, you’ll be a local expert on Sapphire’s real estate agents.

Once you determine which ones have the ‘A’ ratings, it will be time to sit down and have a couple of in-depth interviews—the kind that tell you how well you mesh on the extremely important personal level. By then, you’ll have the satisfaction of having done a most professional job of selecting your agent who (I hope) is me!

“Is now a good time to sell?”

A Sapphire home is never put up for sale on a whim. Although outside events can conspire to control the timing of that kind of major real estate venture, in most cases, the sale or purchase of a home happens on a timetable the Sapphire buyer or seller thoughtfully works out. That can be when a move will least interfere with everything else that’s going on (school and career schedules are often the ruling considerations). Or, it can be when surrounding conditions seem particularly auspicious.

The answer to the “is now a good time to sell” question looked to be a pretty firm ‘yes’ last fall for a number of reasons. The rebound in Sapphire home values had been underway for long enough that in many instances, previous high water marks had been equaled. Many who would have expected low appraisals as few years back could now anticipate friendlier results. The volume of sales seemed mainly limited by the number of homes being offered; and if fewer competing properties were available, all the better. In the background, good economic news began to arrive more frequently…

Also, there was one well-publicized additional factor that made it look as if the “good time to sell” might not last much longer. It was widely anticipated that action by the Federal Reserve Board to finally raise the Fed funds rate would rain on the Sapphire real estate parade, since that would certainly force banks to raise home loan interest rates.

Nationwide, those reasons had the expected result. Per Reuters in last Friday’s New York Times, apparently it had been a very good time to sell. “HOME RESALES RALLIED IN DECEMBER, AND PRICES ROSE AS WELL” was the headline describing last month’s activity. Unseasonably warm weather had helped, but “buyers rushing into the market in anticipation of higher mortgage rates” may have been more of a factor.

Sure enough, the Fed did raise the benchmark Fed funds rate, causing mortgage interest rates to…er…

That’s where the analyses, expectations, predictions, forecasts and conjecture fell to pieces. The banks were supposed to have to raise home loan rates to match, yet by last Friday they had shed another quarter of a percent. As the Times reported, “…rates on 30-year mortgages have dropped below 4%, and many mortgage experts expect them to stay below 4.25% this year.”

As the Sapphire real estate market prepares for the upcoming spring selling season, that unexpected boost seems to herald a lengthy extension of the extremely favorable borrowing environment. When Sapphire homeowners ask themselves “is now a good time to sell?”—the answer seems to have gone from a “yes” to “yes, indeed!”

If your response to the buying or selling question is tipping toward a ‘yes,’ now is the time to explore how your plans mesh with today’s Sapphire market. A good start: give me a call!