Pagosa Springs Real Estate Newsletter, June 2013
Hello From Pagosa Country!
Pagosa is very green (at least for now) with the rivers and streams running at their peak and making the rafters happy. I have been extremely busy over the past month both with sales and with getting a bunch of new listings. School finished up last Friday, and my wife, Laurie, has the summer off. We will be taking a break soon to go on our summer vacation to Tennessee – Davy Crockett country!
So what’s going on in the real estate game? Last month, I was very optimistic, partially because I have been so busy and the numbers were improving. Now I’m somewhat confused. The stats for May definitely did not live up to my expectations. Last month I was bragging on low interest rates, and now they are heading up and are at 4.125%. A silver lining is there. There are 81 properties under contract and of those I have 11. Hopefully June closes most of them. The pending deals continue to be strong. We’ve got 82 deals under contract right now, which is the highest since last fall. Building permits are also up 38% since the same time last year. There are even a few spec homes going up around town, which shows that some of the local builders have confidence in the improving market.
I’ve been noticing recently that the home market has split sharply at the $300,000 line. Out of all the homes currently under contract, 79% of them are under $300,000. Further, there are only two properties under contract above $500,000. If you’ve got a home to sell under $300,000, your prospects are suddenly brighter. For homes in the higher price classes, the outlook is still pretty dim.
I’ve also noticed a lot of people talking about Obamacare and how it is supposedly going to affect home sales. There is a lot of mis-information out there, and I’d like to do what I can to correct it. I won’t comment on whether this new law is actually a good idea or not, but I do want to explain correctly how the law works. Here’s the Reader’s Digest version.
There is a rumor going around that there is a new 3.8% “home sale tax” that will take 3.8% out of your pocket any time you buy or sell any home or property. There is a grain of truth at the heart of this, but the rumor is not accurate. Starting in 2013, there is a new 3.8% tax on investment income that could potentially be applied to a home sale. However, it is very unlikely that this new tax will apply to you in particular.
First, you are allowed to make a profit of up to $500,000 on the sale of your primary residence without paying any tax at all. So, unless you are going to profit more than $500,000, this new law does not apply to your primary home. (If you are going to profit more than $500,000 on the sale of your primary residence, give me a call! You are doing something right!)
If you are selling a property other than your primary residence, the new tax will apply only to your profit, and only if your adjusted gross income is above $200,000 for an individual and $250,000 for a couple. About 5% of Americans fall into this category. And only the profit above and beyond these levels will fall under the new 3.8% tax.
Finally, buyers do not have to pay the new tax. It only applies to sellers.
The scenarios can get very complicated, and there are, of course, loopholes and exceptions. To get the full story, I suggest you read the full report written by the National Association of Realtors. It is available on my website, ISellPagosa.com.
That’s all for now. Have a great summer. If you don’t live in Pagosa, come visit us this summer!