“Do you mean to tell me Katie Scarlett O’Hara, that Tara, that land doesn’t mean anything to you? Why, land is the only thing in the world worth workin’ for, worth fightin’ for, worth dyin’ for, because it’s the only thing that lasts.”
This is one of the greatest Real Estate lines ever uttered on screen. When Scarlett O’Hara’s father Gerald begs his daughter not to give up their estate after the Civil War, he had a point. Remember when you kicked yourself for selling that vacant plot of land right before a huge developer announced plans for a major residential construction project in your backyard?
$29 Million Modernist Mansion for Sale in Miami Beach via Forbes.
Tip #1: Never sell into a down market.
I have lived in Real Estate Gold Country in the San Francisco Bay Area since 1971. In that time I have witnessed at least 5 major boom and bust cycles as a homeowner, business reporter and conference speaker. Real Estate is a religion in California, and not just because the views are great. Fact is folks have made and lost huge fortunes buying and selling Real Estate in the Golden State.
Dr. Ken Rosen, Chair of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, and a consultant to the Urban Land Institute, correctly predicted many Real Estate turndowns over the years. In fact, he once told me to sell our high priced home in the Bay Area, take the profits and buy again at a lower price. But I had to seriously consider: Would I want to live in an apartment at my age while waiting for the eventual turnaround? The point is if you buy something you love, you can afford to stick around for the turn-around. Our home is now worth twice the original price. We never would have had the opportunity to buy anything nearly as great as our home at a lower price.
Tip #2: Do not let interest rates dominate your timing.
Many of you reading this article may not remember the sky high interest rates choking the economy back in 1981. Real Estate was in the toilet thanks to mortgage interest rates charged to buy a home topping 20 percent. (Now they hover around 4 percent.) Nothing was moving and home builders were going bankrupt by the brick load. But as sure as Newton’s Law of gravity, what goes up does come down, and savvy optimists know that.
True story: During that high interest rate induced crash in Real Estate, I interviewed Dolly Toms, the then President of the local Board of Realtors, on my weekend KCBS Radio Real Estate show. When I asked her why anyone would buy a house from her with interest rates at 20 percent, she smiled and said without missing a beat, “they could go to 21 percent”. Dolly was eternally optimistic, which is why she was one of the most successful Real Estate agents in California.
And Dolly gave me one more tip about home buying and interest rates. “Sales go up, not down, as interest rates rise, because buyers, who fear they will go still higher, jump in to buy.” So if you are worried your home may not sell in a rising interest rate environment, no need to fear. There will be plenty of panicking buyers hoping to close before rates make yet another jump.
Tip #3: Keep Uncle Sam in mind.
The new tax law will certainly create many winners and losers in Real Estate. And as is always the case, politicians are happy to find a way to tax Real Estate. During the heated Congressional debate last year over how Real Estate should be treated in the new tax law, the term SALT was constantly bandied about. No…not the SALT Nuclear treaty. It was about how to treat “state and local taxes”. In the hands of greedy politicians were mortgage interest and property tax deductions…not a big deal if you live in low property value states such as Iowa. But home owners in expensive states such as California and New York took a big hit.
In fact it was so bad that many members of Congress from those states did not support it, fearing voter punishment at the polls. And buying a home this year will likely be more expensive if you live in a high tax state because deductions are now capped at $10,000 for couples and $5,000 for married taxpayers filing separately. And the new tax law makes it less likely some first time home buyers will take the plunge, now that big tax breaks no longer exist.
So check with your accountant. And remember that famous quote from the late Illinois Senator Everett Dirksen. “Don’t tax me and don’t tax thee. Tax the guy behind the tree.” Washington is always looking for a way to take your money, and Real Estate is an easy target.
(Brian Banmiller is a national Business reporter for CBS News Radio, writer and public speaker. The former television business news anchor in San Francisco can be reached at firstname.lastname@example.org.)
This article was originally published on April 4, 2018.
CBS News Radio national business journalist Brian Banmiller has spent more than 40 years in the news industry, covering business, politics and the economy on television, radio and in print. Currently, his “Banmiller on Business” reports are delivered to an audience of millions nationwide.
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