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What's happening in real estate?
[American Thinker] It sure seems that the fizz has left the bottle. Commentators who really don’t know what they’re talking about are blaming high mortgage interest rates. Really? Right now, rates are at about 7.5% — kind of, depending on the borrower’s credit score, the down payment, and the actual type and condition of the property being purchased. When I bought my house almost forty years ago, rates were at 9%.What really happened, and what no one wants to talk about, is that just about five years ago, rates were really low...artificially. Low rates naturally increase buyers’ purchasing power, which tends to drive up prices. A lot of recent purchases were consequently done at greater than the actual value, being based on prior and subsequent market statistics. Many folks have since found themselves upside-down because they owe more than their house is worth...but at least their payments are not supposed to be too severe. Should they want to or should they have to move, they’ve got some serious things to consider. Residing underneath this situation is the peril of government meddling with market-driven economic realities. Had rates never been knocked down to around 3% by economically challenged politicians, there would never have been such a price bubble, and today’s market would be fairly normal. But such is not the case, and a lot of homes are gathering dust on the shelf. An agent I used to know would often say that there’s never anything wrong with a property that lowering the price can’t fix. Another issue involves the tax on capital gains. Many agents are rather poor at understanding the ins and outs of tax consequences, as is the public in general. An old friend wanted to pick my brain before he went to sell some rental units that he had inherited from his mother. He thought it unfair for an agent to charge about the same percentage commission on a particularly valuable property as on a fairly small house. I told him that first off, it’s a lot more work marketing a tenant-occupied apartment building than it is to sell a nicely vacant single-family residence (SFR). Also, he would get about a 20% discount on the commission — as well as all other costs associated with the sale, which are deducted from his capital gain basis. Posted by: Besoeker 2025-06-04 |
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