One of the most rewarding things I see, as a tax professional, is when clients and friends come to me for advice about “tax things.”
I’m happy to share my knowledge, and open up my Rolodex for referrals about many, many things – how to structure your start up, determining a plan for retirement, understanding the assets you own and the assets you are planning to invest in, and of course, home ownership.
Now, obviously, I look at all of these from a tax standpoint. Granite countertops or an “S-corp” doesn’t mean anything more to me than their actual definition, but this week, I wanted to share a few things I’ve seen regarding the new home market in America right now.
It’s HOT! Inventory levels are low, prices are climbing, and the real reason for it is simple – there’s simply too much demand. People are ready to buy and they aren’t willing to wait. Seriously, have you see the price of lumber lately?
That’s really the challenge right this minute – builders and remodelers can’t get the supplies they need, and what they can lay their hands on? It’s at a premium. The result is going to be high short-term prices and – at least potentially, a drop in home value when supply production gets back to normal.
So what should you do? Honestly? If you’ve been thinking about selling your home – and you have a plan for where you’re going to live – then now might be a great time to do it. If you’re in the market for a home, especially a new one, be prepared to overpay, or to at least pay a premium.
Now, the real world we all live in dictates this: you have to have a place to live, regardless of where that actually is. If you have to move, well, you have to move. For those who are renting and contemplating a home purchase, I’d have to simply say this: Don’t overthink it - Buy it!
There are just too many upsides to owning your own home. Not only do you get the ability to write down the mortgage interest (read that, “nearly everything you pay for the first few years…”), you’ll also be creating equity.
That down payment? Right there, you’ve got equity in your home. Sure, prices might fall in the short term, but if you just bought your home, why are your thinking about selling it? It’s kind of a false alarm from that point of view.
The bigger point in all this is that if you decided to wait and rent one more year, you’re simply losing money, not some false value based on comparable home prices in the neighborhood you purchased in. If you’re spending $1,200/month on rent, that’s nearly $15,000 you’ll spend and never see again this year. Why not put that money into the purchase of a home?
I recognize that buying a home can be nerve-wracking, but the truth of the matter is that no one ever got wealthy paying rent. Even if you’re worried about the caliber of home you can buy, or the buying “budget” you might have, my team and I can help lift the veil on that, and really, all aspects of home ownership.
NOTHING is more satisfying than the feeling of owning your own home, and if you’re thinking about it now, even as crazy as the markets are, I encourage you to reach out and let’s look at the real costs of buying and what your budget really is – not what some silly app on your phone says it should be.
I look forward to hearing from you!
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