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NOVEMBER #3

REAL ESTATE NEWS


FORALLOFYOURREALESTATENEEDS
RR

2011

Best Home Fixes For Your Money


Lastweekwelookedatsixoftheworsthomefixesfor yourmoney,basedonthepercentageofthecostyou wouldrecoupwhenyousoldyourhome.Thissixworst fixeswere(1)homeofficeremodel,(2)backuppower generator,(3)sunroomaddition,(4)luxurymaster bedroomsuiteaddition,(5)bathroomaddition,and(6) luxurygarageaddition.Allofthesereturnedlessthan 54%ofyourinvestment.So,whatarethetopprojects thatretainedtheirvalueatresale?Thetop10fixesare below,withtheaveragecostandtheaveragepercentof costrecoupedwhenthehomewassold.

1) Entry/FrontDoorReplacement(withasteeldoor) 73%oftheaveragecostof$1,238wasrecouped 2) AtticBedroom(convertingunfinishedatticspace intoabedroomandbathroom)72.5%ofthe averagecostof$50,148wasrecouped 3) MinorKitchenRemodel[installingnewcabinetfaces (leavetheboxes),replacingsomeappliances,and replacinglaminatecountertops]72.1%ofthe averagecostof$19,588wasrecouped 4) GarageDoorReplacement(motorized)71.9%of theaveragecostof$1,512wasrecouped 5) DeckAddition(wood)70.1%oftheaveragecostof $10,350wasrecouped 6) SidingReplacement(vinyl)69.5%oftheaverage costof$11,720wasrecouped 7) WindowReplacement(vinyl)68%oftheaverage costof$11,319wasrecouped 8) WindowReplacement(wood)67.5%ofthe averagecostof$12,229wasrecouped 9) BasementRemodel(finishabasementtoan entertainingarea)66.8%oftheaveragecostof $63,378wasrecouped 10) MajorKitchenRemodel(guttingyourentirekitchen andrebuildingit)65.7%oftheaveragecostof $57,494wasrecouped

This 5,500 square foot home contains 4 bedrooms and 5 bathrooms and sits on a 101,060 square foot lot. This home features fantastic ocean views, a movie theatre, a separate media room, large exterior decks, a pool and an outdoor entertaining area complete with a fire pit and surround sound. The address: 3556 Sweetwater Mesa Road, Malibu, CA Asking Price: $13,500,000 History: Purchased in 2005 for $6.55 million Current Owner: Matthew Perry Theres More: This is the third home that Perry has tried to unload in the last few months; he also listed a Hollywood Hills estate for over $5.6 million and a West Hollywood condo for just under $3 million. WhatsYourTwoCents? AccordingtoarecentNewYorkTimesStudy,42%of thosepolledblamelendersforthehousingcrash, while29%blameregulators.Also,45%ofrespondents thinkthegovernmentshouldbedoingmoretohelp thehousingmarketand53%ofthosepolledthinkthe governmentshouldhelpthosehavingtroublepaying theirmortgages.

BUYER STATS - Over the past year


The median first time homebuyer was 31, had a median income of $62,400, and purchased a 1,570 square foot home costing $155,000; the estimated median monthly mortgage principal and interest payment was $794. The average repeat buyer was 53 years old, earned $96,600, and purchased a median 2,100 square foot home costing $219,500, with an estimated median payment of $1,006. The median downpayment for all home buyers was 11% (5% for first-time buyers and 15% for repeat buyers). First time homebuyers made up 37% of all buyers. 78% of buyers said their home is a good investment, and 45% believe its better than stocks. Of the first-time buyers who had a downpayment, 79% used savings, 26% received a gift (typically from a parent), 7% received a loan from a relative or friend, 9% sold stocks or bonds and 8% used funds from a 401(k). Of those who bought with a loan, 94% of first time buyers used a fixed-rate mortgage. 64% of all buyers were married couples, 18% were single women, 10% were single men, and 7% were unmarried couples 1% responded other. Buyers searched a median of 12 weeks and visited 12 homes before successfully purchasing a home. 73% of buyers said transportation costs were important in choosing a location for a new home. First-time buyers plan to stay at their new home for 10 years compared to 15 years for repeat buyers.

SELLER STATS - Over the past year


The typical home seller was 53 years old with an average income of $101,500. The average home was on the market for 9 weeks. Sellers moved a median distance of 20 miles from the home they sold. 46% of sellers moved to a larger home, while 23% downsized and the remainder moved to a similarly sized home. Sellers were in the home they sold for an average of nine years. In this time, the typical seller realized a gain of $26,000 (a 16% increase). Sellers who stayed in their homes longer, (between 11 and 16 years), averaged a median gain of $57,900, or 39%. The median sales price for a home sold with a real estate agent was $215,000 - compare this to the median price for a home sold directly by the owner - $150,000. Keep in mind, the median income of sellers who did not use an agent was $82,500, compared to a median income of $101,500 for sellers who used an agent.

Reader Question: What housing expenses are tax deductible? This reader specifically asked about his owner-occupied home, so lets tackle that (investment properties are treated differently). The IRS allows for taxpayers to deduct the interest on loans on your main home (first mortgage, second mortgage, equity lines, etc.) and a vacation home up to $1 million (thats up to $1 million in loans, not $1 million of interest). However, the IRS also states that you may not deduct interest on more than $100,000 of home equity debt. In addition to mortgage interest, you may typically deduct your real estate taxes and points from a loan. These items would show up on Schedule A (as itemized deductions) of your tax return. Keep in mind that you may be able to deduct these expenses a lot depends on your specific situation as well as the numerous caveats and exceptions in the tax code; it is best to talk to your accountant or tax preparer.

Real Estate Trivia


Q. During what months of the year do most people move from one home to another? A. Most moves occur between the months of May and September (when a lot of children are off from school). Q. What is the most common street name in the US? A. Second Street. First Street might be the logical answer, but many towns use Main Street instead of First Street. Q. Who is the largest landowner in the USA? A. The US Government.
Theinformationinthisnewsletterisnotmeantaslegal,financial,oranyothertypeofrecommendation.Pleaseconsultaqualifiedprofessionaltodiscussthedetailsof yourindividualsituation.