February finds our real estate market still leaning in the seller’s favor but with definite and continued movement toward a buyer/seller balance. Home supply is still below average, and demand for homes is well below this same time last year. That said, comparing to this same time last year, the number of active listings is up 10.6% and the monthly median sales price of $262,000 is up 6.9%.
Our continued price appreciation on housing, combined with higher interest rates, naturally makes for less demand, and listings under contract are down 13.9% from last year. Many buyers are sitting on the sidelines, apparently uncomfortable with current pricing and interest rate uncertainty. The flux in the stock market is also a factor in buyer uncertainty.
On the interest rate front, the Fed has recently announced that it will pause its planned interest rate hikes for 2019 and instead more closely monitor the U.S. and other world economies. The intent (according to Fed Chairman Powell) is to take into consideration any economic and market impact the rate increases might have. As a result, current rate hike predictions for this year have gone from 3-4 hikes down to one or none. (Freddie MAC, January 29th 2019)
This modified forecast should help both buyers and sellers and remove (hopefully) some of the uncertainty keeping buyers sitting on the fence.
The good news on the seller front is that rental rates have risen about 8.6% year over year. Why is that a good thing for sellers? This means that the first- time buyers reluctant to pay the higher rental rates will see the value of buying a home, even though prices and interest rate are higher than in years past. But historically, these prices and interest rate are still very favorable. Buyers will need to come to terms with more expensive housing, whether buying or renting.
Some thoughts for this year… Expect fewer multiple offers. Both buyers and sellers will need to be much more flexible with their pricing expectations. If the prices in your neighborhood (or the one you are shopping) have gone up a lot, don’t take that as a “rule of thumb” for your transaction. The market is definitely in flux, and if buyers are looking to the future, then buying is better than renting. If sellers are looking to the future, now is the time to sell! Want more information about what your particular situation is, Contact me and we can go over everything and figure out what is best for you!
Understanding how your property taxes are calculated can often feel like unraveling one of the deepest mysteries of the universe. However, it’s vitally important that you get your arms around this tax, if you are subject to it, as it’s often a large expense that you may be saddled with for a lifetime.
Property taxes can vary wildly, not only between different areas of the country, but even between different parts of the same municipality.
Just how do property taxes work? Shouldn’t they be the same for everyone?
First, Real Property Versus Personal Property
When we refer to “property taxes,” what we really mean is “real property tax.” The term “real property” means the land you own and everything that is permanently affixed to it. For example, if you have a stick-built house, a garage, a shed with a permanent foundation — these are all things that would be considered “real property.”
On the other hand, you may also have “personal property,” which is basically anything else that you own that may have a title and can be moved, even if it takes a bit of work. Your fishing boat, your car and, to confuse matters further, most manufactured homes, are considered personal property – not real property. Manufactured homes specifically can be a bit of a sticky wicket because you can often affix one to your real property in such a way that it also becomes real property.
For the purposes of this discussion, when we say “property tax,” we’re talking about real property, less any specially qualified manufactured homes.
Your Property Taxes Are Made Up of Layers
Most people know that their property taxes are calculated based on the value of their property, but there are lots of homeowners who don’t realize that what we all generally refer to as “property tax” are actually several different taxes smashed into one greater tax sandwich… or layer cake, if you will.
Your home is very likely located in several intersecting tax jurisdictions that can vary greatly from area to area. The taxing jurisdictions that homeowners most often encounter are your:
Each of these layers will have their own tax rate, making the calculation of your property taxes even more confusing. And by the way, the value used to determine your taxes isn’t necessarily your home’s appraised value, it’s something called the assessed value.
An Aside for Assessed Values
Property tax assessments are often one of the most confusing concepts for most new homeowners. However, you need to have a handle on it in order to understand your property taxes. The assessed value absolutely is what your taxes are based on, but there’s no set way for any tax jurisdiction to determine this number.
In some places, your property’s assessment and your home’s market value may be more or less the same, in others, the assessment is a stated percentage of the market value. In addition, these values might be updated yearly, every other year or only when the home is resold. If you meet certain requirements, you can also have your assessment frozen so that your taxes can only increase if the rate itself increases (and even then, there are a few states that will freeze your actual tax rate).
Put another way, knowing how your property assessment will work is kind of the key to how everything behind the scenes works. Without that, all the layers of government grabbing at your wallet are pretty meaningless. Fortunately, if you’re just looking to simple math, this figure is provided for you by your taxing bodies. We recommend you call or drop into your local tax assessor’s office to get a detailed explanation of your specific tax situation as every taxing body may be slightly different.
Wait, What’s a Mill Levy?
You’ve probably seen the term “mill levy” tossed around if you’ve been reading up on property taxes. A mill levy is just another way to describe the tax rate that’s being applied to your real property’s assessed value. One mill is equal to a buck per $1,000 of the real estate’s assessment, or 1/1,000 of a penny. The mill rate that determines your tax is set by the taxing authorities themselves.
For example, let’s say your property is assessed at $250,000 (by whatever method). If your county mill levy is 5, then for every $1,000 of assessed value, your bill goes up $5. In this case, that’s a very reasonable sounding $1,250. Remember, though, this is just one layer of the tax layer cake. You’ll need to add all the layers together to get your actual tax bill. Get your calculator ready and pour yourself a stiff drink – this could take awhile!
Need More Information About Your Property Taxes?
There’s no better or more reliable source for tax information than the people on the ground nearby. That might mean CPAs, real estate agents, home appraisers or even a mortgage pro. They can help you make more sense out of your tax bill if something specific is confusing. And don’t worry, finding the best of the best among these professions is simple with HomeKeepr. Just ask your community for recommendations and before you know it, you’ll be elbow deep in answers to your most burning tax questions.