What the House Proposal Will Mean to Homeowners

By Michelle J. Lane, Realtor

By now, you have heard a lot about the House tax reform proposal (HR.1) and may be wondering how it will impact you as a homeowner and what the real estate industry is doing to protect your interests.  At a high level, those changes are:

  • Mortgage Interest Deduction is capped at a loan balance of $500,000.
  • Real estate tax deduction is capped at $10,000.
  • Tenure for Capital Gains deduction moves up from 2 of the last 5 years to 5 of the last 8.
  • Eliminates the Moving Deduction

How will this impact homeowners in the greater Boston area?

Cap on Mortgage Interest Deduction

Currently, the mortgage interest deduction is capped at a loan balance of $1,100,000. Under the House proposal, the cap would fall to $500,000.  The change applies to future impact future home buyers as the proposal maintains the cap of $1,100,000 on existing homeowners.  This will impact a great percentage of Massachusetts homeowners, particularly those in and around Boston. To make matters worse, the $500,000 cap is not indexed to inflation or home price growth, so over time, more homebuyers will be pushed into this category.  The plan would also limit the mortgage interest deduction to one principal home, ending any deductions for vacation homes.  It also will not allow you to deduct the interest on a home equity line.

Cap on Real Estate Tax Deduction

As drafted, real estate tax deductions are capped at $10,000 and that figure also is not indexed to allow for growing home values or tax rates over time.

Capital Gain Tenure

Currently, to claim the exclusion from capital gains, you must have lived in your house for 2 of the last 5 years.  This has been important to people who rent out their homes during a relocation for example. Under the House plan, a home seller will now have to have lived in the home for 5 of the last 8 years to claim the exclusion from capital gains. This will impact any home owner who sells in less than 5 years after buying their home. Roughly 20% of homeowners sell in 5 years or less due to divorce, relocation, or upsizing their home.  Imagine how this would impact those in the military.

This change would force people to hold onto their homes longer and intensify the low inventory problem.  

In Summary

Aside from these changes directly impacting real estate, the House proposal will eliminate the state and local income tax deduction.  This directly impacts all Massachusetts taxpayers who file a Schedule A for itemized deductions. Combined with the limitations on the real estate tax and mortgage interest deductions, this could push many people out of the ability to file itemized deductions.

To counterbalance these changes, the personal exemption will go from $6,350 to $12,200.  However,  the plan eliminates the deduction for dependents.  For homeowners in the greater Boston area, even with the increased personal exemption, the reduction in itemized deductions will result in a negative financial impact.

The National Association of Realtors (NAR) estimates that the impact of these changes will reduce home values by 10%.

The NAR is taking several actions to address these concerns.  They are spending millions from the dues we Realtors pay to lobby for changes to these provisions that harm home ownership.  NAR is also investing in ad campaigns in many markets to raise awareness.  Lastly, they are asking us Realtors to reach out to our representatives to express our concerns. 

This plan has not yet passed through the Senate, so there is still time for you to get involved. If you wish to reach out to your representatives, you can do that here – Take Action

And, of course, if you have any questions on all these, please ask.

Michelle J. Lane

MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

Getting Ready for a Spring Home Sale – No it is Not too Soon!

There is so much more to preparing a home for sale – and moving – then any of us think there is until we are neck deep into it.   So, the best thing to do is prepare in stages.  Below is a checklist of what to do now and over the winter to prepare for that spring sale.

  1. Clean up the yard and take some nice pictures now.  Preferably by a professional. With New England weather, you really cannot predict when in the spring the snow will be melted and your yard will be looking good again.  If you are not selling this year, it is not a bad idea to take pictures of the exterior in all 4 seasons.
  2. Clean out the attic, basement and closets. Get rid of whatever you don’t see yourself taking to the next home.
    1. Give things away to family that are nice, but you won’t take with you.
    2. Have a yard sale now if you are going to do it. Sell your items on online groups, ebay, wherever it makes sense.
    3. Bring stuff to charity. If you need help finding the charities, contact me and I will gladly give you a list of charities that take all kinds of items.
    4. Dump the rest.

 

Newton Fall Cleanout Swap Day -Oct 8th

DROPOFF & PICKUP FOR NEWTON RESIDENTS ONLY

Swapping and Donating

recycleBring along usable but unwanted belongings for swapping or donating.   Bring your stuff, or just come along & pick something up – for free! • Appliances – Bicycles – Books • Household items and non-upholstered furniture (No mattresses or couches) • NO computer monitors, NO televisions, NO hazardous materials • Pretty much anything, so long as it is usable, non-toxic, non-hazardous – and clean! Recycling and Reuse…bring along any of the following and the City of Newton will make sure that they are recycled, re-used, given to charity or disposed of safely. • Fluorescent bulbs and other mercury-containing items • Cell phones, all printer cartridges, CDs, DVDs • Clothing • Paper, cardboard, glass, metal, stiff plastic bottles (#1 – 7) • Dead rechargeable batteries

When: Saturday, October 8th, 2016 8:00AM – 2:00 PM (item drop-off until Noon) Where: Rumford Avenue Recycling Depot (off Lexington Street in Auburndale)

Website: newtonma.gov/recycling

Newton Market Update – Week of July 4

July 5, 2016 by Michelle J. Lane, Realtor

While everyone is starting their summer vacations, the market typically does as well.   As most people know, the spring market is busy because people with families are trying to stay in their houses until the end of June, but be in their new house for the start of the school year.  The window for that to happen is just about closed.  So the market is now all about people selling and buying who are not bound by that schedule.  And, naturally, many of those buyers are home hunting in between vacations.

What does that mean for the market?  For the purposes of analysis, I look at just single family homes for the past two weeks.  It seems to have slowed down the high end, with more at that end being pulled off the market.

Newton Stats

Now you might think that is because the average price of a home in Newton is just so high that there isn’t much under $1m anyway. That is true to some degree.  But if you look at the chart below, you can see that the ratio of houses on the market to those that sold is far greater on the high end.

Newton Stats 2

So the bottom line is that there is not a bad time to sell houses in the $1.5m and under range.  But the high end is a bit tougher.

In terms of available inventory, things are about the same.  This time last year, there were 131 houses on the market.  Today there are 125.  But more of those are on the high end.  35 under $1m compared to 24 today.

So, the obvious trend is that housing is becoming far less affordable in Newton.  No surprise to anyone who is watching the market or trying to buy a house.

What would it take to change that?  As we know, the real estate market goes in cycles.  Roughly 1o year cycles where it goes up for several years, plateaus for 1 or 2, goes down for 2-3 then comes back up to surpass the high of the last cycle.  Serious economic shake-ups can shift the numbers a bit, but that is the gist of it.

So we will never go back to past lows.  But to slow down or correct this upward climb, interest rates would have to go up and jobs would have to leave the area in significant numbers.  Neither seems to be happening anytime soon.  As a matter of fact, the Brexit mess has caused our mortgage rates to go down.

So if you are a buyer looking in the under $1.5m range, keep at it.  It does not appear that things will get any easier with the passing of time.

If you are a seller, there is no bad time to sell.  The withdrawal of homes on the high end is not so much because this is a bad time to sell, but because supply exceeds demand.  But yes, putting them back on in the fall is not a bad idea.

If you are trying to figure out when to sell your house and for what price, contact me to schedule a meeting.

Michelle J. Lane
MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

 

 

 

 

Newton MA 4th of July Celebration

July 1, 2016fireworks

The celebration starts July 2  at 1:00 at Albermarle Field, Watertown Street, Route 16

The Kid’s celebration starts at 10:00

KIDS MORNING

Newton Centre Playground at Tyler Terrace
10 AM – Noon
For children ages 3 – 12.

  • Grande Pet Parade
  • Teddy Bear Parade
  • Decorated Doll Carriage Promenade
  • Foot Races
FREE Ice Cream, by Cabot’s Ice Cream
Cabot's Ice Cream

Newton July 4

OPEN AIR MARKET & AMUSEMENT RIDES 1:00 – 4:00

  • Handmade and International Crafts
  • Food Vendors
  • Children’s Activities

AMUSEMENT RIDES on Saturday and Sunday (7/2-7/3) noon to 9pm

Entertainment in the Gazebo

1 – 4 pm: Performers of Patrice Peris Voice Studios of Westborough and recording artist April Forrest

Music & Dancing
Bo & Bill Winiker Band
Clark Rubinshtein, Soloist
6pm
Bring blankets and lawn chairs

Fireworks start at 9:00.

Michelle J. Lane
MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

 

How much Should you Spend on Home Maintenance?

June 30, 2016 by Michelle J. Lane, Realtor®

As a Realtor who specializes in homes that are part of an estate, I have seen a great deal of deferred maintenance in my time.

The two main reasons are:

  • these are the homes of people who lived through the great depression and have the mindset that they will fix what needs fixing, but no more. They see no point in changing things out if they are not broken.
  • The other reason is these are homes of people on fixed incomes – usually one person who has outlived their spouse for a number of years. So the money to keep the place up is not available.

The area I sell in – Newton, MA and the surrounding area – is considered affluent for the most part.  For the purposes of this article, I am focusing on what would be considered the middle or working class who own homes.  The affluent can spend far more than the rule of thumb would suggest and often do.

The generally accepted rule of thumb is that a homeowner should spend roughly 1-3% of the value of the home to maintain and improve.  Of course, that would vary depending on home values in your area.  In Newton, home prices start at $500K.  Most people are not going to spend $15K per year on tiny bungalow.  So, in expensive areas, where a high-priced home is still small, the rule of thumb is closer to the 1%.

Of course, you are not going to spend this each and every year.  But you do need to put the money aside.  When the roof or any other major component goes, you will need to have that money available to replace it.

You may be tempted to spend it on the more fun things like décor and furnishings.  That’s a lot more enjoyable than replacing a furnace or a roof – what seem like invisible improvements.  But deferring the maintenance greatly reduces the value of the property and hurts its ability to sell quickly, even in a hot market.

You are probably hearing all the stories about bidding wars, especially in the hot markets like the Boston. And you might think that any house will sell.  But bidding wars are happening with the houses that are in move-in condition.  Not on houses that need a lot of repair.  Today’s buyers just don’t have the money to make the repairs after buying a home.  And they are not able to make the repairs themselves.  All the reasons for that will be in a follow on blog post, so stay tuned for that.  This one will be long enough!

When clients have deferred maintenance on their homes, I have to explain why their home is not worth as much as their neighbors that was in better condition when it sold.  I actually have people say they don’t understand why today’s buyers are so fussy.  What’s wrong with Formica countertops and linoleum floors?  The old appliances are built better, etc.  Aside from aesthetics of the home starting to look a bit beat and shabby, it matters because everything used to build your home has a set lifespan.  Sure, we agents call all tell stories of homes that are time capsules where everything put in the house 50 years ago is still there and working.  I even sold a 1912 home with its original furnace that was still running.  But those are the exceptions, not the rule.  Everything is going to go sooner or later.

To give you an idea of when that sooner or later is, the chart in this article breaks down the Average Life Span of Homes, Appliances and Mechanicals.  This will not only help you plan for replacement of these items in your house, but should help buyers know how much they are going to have to put into a house they are buying and when they can expect to spend that money.

The contents of this chart have come from several sources, mainly a This Old House article.   http://www.thisoldhouse.com/toh/article/0,,216991-4,00.html    They even give a rough estimate of the cost to replace each item.

Average Life Span of Household Components

Appliance Items Lifespan
Kitchen Appliances 10-20 years
Central A/C 15 years
Electric Water Heater 11-14 ones that are SS lined can last longer
Furnace (Hot Air) 15
Hot Water Boiler 20-30
Thermostats 35

 

Roofing Lifespan
Asphalt / Rubber 10-25+
Wood Shingles 10-40
Metal 25-40
Clay Tile / Concrete Tile / Slate / Copper 50+

 

Flooring Lifespan
Carpeting 8-10 (I’ve seen it left unreplaced for 50+)
Linoleum / Vinyl / Laminae 25
Engineered Wood / Concrete 50
Bamboo / Hardwood / Tile / Marble / Slate 100+

 

Garages Lifespan
Garage Door 20-25
Garage Door Opener 10-15
Light inserts 20

 

Footing and Basement Lifespan
Poured Concrete / Fieldstone / Concrete Block 100+
Sump Pump 5-12
Bamboo / Hardwood / Tile / Marble / Slate 100+

 

Materials Lifespan
Wood – Floors / Doors / Cabinets / Windows / Millwork 100+
Cast Iron  – Tubs / Pipes 50+
PVC Pipe 50+
Fiberglass 10-15
Bamboo / Hardwood / Tile / Marble / Slate 100+
Porcelain – Sinks / Toilets 50
Engineered Trim 30
Insulation 100+
Hardboard / Flooring Underlayment / Softwood 30
Particleboard / Plywood 60

 

Electrical Lifespan
Accessories and Controls 10+
Copper wiring 100+

 

Exterior Lifespan
Brick / Stone / Engineered Wood / Fiber Cement 100+
Vinyl 20+
Engineered Wood / Concrete 50
Stucco 50-100
Paint 7
Mortar 25-50
Caulking 5-10
Decks 10-30
Aluminum Downspouts / Gutters 20-30
Galvanized Steel Downspouts / Gutters 20
Copper Downspouts 100+
Window Glazing 10+

 

Notice that natural materials – stone, brick, wood, cast iron, have a very long life span.  Which is why homes with these materials in abundance are worth more than homes with linoleum, carpets and fabricated materials.  There are exceptions – PVC lasts as do some engineered woods.  And this will improve over time.  But the difference is that natural materials develop a patina over time that gives them character.  Fabricated materials just get shabbier over time.  Not to discourage any one from using them.  There is not the same supply of natural materials that there once was so new construction has to move to these newer materials.  And some building codes require them.  But scarcity is another element that gives the natural materials value.

All of these life spans are averages – they will vary based on how well used items are and the climate.  And, of course, on how well you maintain the house.  A leaking roof will rapidly deteriorate interior components.  But this should serve as a good planning tool – for maintenance and for knowing what a buyer will mentally deduct to come up with the market value of your home at the time of sale.

Now there are always exceptions.  A good number of the estate homes I sell are more valuable to a builder for the land they sit on than they would be for a home buyer to live in.  So if you are thinking of selling your home and not sure where you fall, contact me before you do any work on your home and I will let you know the value of your home as it stands and with repairs and upgrades.

Michelle J. Lane
MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

 

 

 

Hazardous Waste Disposal for Newton

hazardous

Hazardous Waste Drop Off Days in Newton. Coming up Soon, mark your calendar.

2016 Schedule:
Last Saturday of the month (May – October)
Wednesdays: May 18 – June 29
September 7 – October 12
July 13
August 17

If you are thinking of selling your home anytime in the near future, please do take advantage of these days. Moving companies won’t take hazardous materials to your next place. so hazardous materials is the #1 thing sellers try to leave behind for the buyers.   When the buyers say they don’t want your old paint thinner, lighter fluid, etc,  you or your agent are stuck trying to find a home for this stuff at the last minute, or, even worse, it gets thrown in the regular trash and can cause serious problems for the trash pickup guys or the environment.

The best thing to do is first see if a neighbor could use the stuff.  If not, then mark these dates and dispose of the stuff you know you are not going to use or take with you to your next home.

The Recycling Center is at 115 Rumford Ave and is open 7:30 – 2:30.  You must show a valid proof of residency to use the recycling center.

Michelle J. Lane
MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

The Housing Shortage by the Numbers

If you are feeling like there are just not enough houses on the market this spring, you are not imagining things.  A recent article on Realtor.com outlined the problem.  In short:

From 2009 (the slump) to today new construction of single-family homes, condos, and apartment units totaled 5.6 million.  Over the same period, roughly 1.7 million housing units were deemed uninhabitable or obsolete and were demolished.  That is a net of 3.9 million houses.

In that same time period, the population grew by 17.3 million.  Given the average household size is 2.5 persons, a total of 6.9 million new housing units would be needed – a shortage of 3 million homes.  So no surprise that home ownership is down 3.7% since 2009.

Add to that the fact that incomes have grown at slow pace – 2% over the past year.  While home prices have risen by 6% in the same time period.

To give a more local perspective, below are some local comparisons from 2009 to today:

  • The median price of a single-family home in Newton grew from $939,000 to $2,124,999.
  • The median price of a condo in Boston grew from $419,900 to $829,000.
  • The median price of a condo in Cambridge grew from $489,500 to $668,000
  • The median price of a condo in Somerville grew from $364,450 to $709,950

The problem has been exacerbated by the fact that retired adults are moving back into the city.  Everyone want to live in walkable neighborhoods.  Typically, these retired baby boomers have the money (in cash) to buy up properties that would normally be bought by young families working in the city making the battle for these limited properties more frenzied.

That is not to say that prices are up everywhere.  Home values follow the jobs.  The farther you are from the Boston/Cambridge mecca of job opportunities, the less likely it is that prices have risen.  For example:

  • The median price of a single-family home in Worcester is exactly the same at $214,900, while condo prices are down.
  • The median price of a single family in a majority of towns outside the Greater Boston area are up about 5% in that same time period from 2009 to today. – from cities such as Lowell to suburban towns like Boxboro, Georgetown, Foxboro, etc.  While that is great for people looking to buy in these towns, it means the possibility of selling in one of these towns and moving closer to the city is drifting off farther into the distance.
If you want to know what has happened to home values in your town, just ask.
All this means that we need more new construction.  A problem that is not easy to solve.  Debates on this topic can be followed in the editorial section of most local papers and no one seems to have the answers.  The cost of land in these towns make it impossible for builders to create affordable houses. 40B is flawed in that a builder must just put aside 20-25% percentage of units as affordable, while the units overall could still be super expensive.
Hopefully, the state, cities and developers will come up with creative solutions – perhaps more development of micro apartments for single adults and clusters of small houses on small plots for seniors or couples starting out.
If the state is smart, they will build more and better commuter transportation so people can live in suburban towns and not feel like they are so far from the action.  These suburban towns may even need to up their game on building centers with more to do and better transportation within the town so seniors don’t need to own a car or have a driver’s license. We shall see what the next few years bring.
In the meantime, it does mean though that home buyers will have to move farther away from the city to get a property they can afford.  Or be willing to buy a home that needs a lot of updating – or both.
If you need help finding a home, just ask.  You can complete this survey to let us know what you are looking for and we will contact you to start your path to home ownership – Home Buying Survey

Michelle J. Lane

MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

 

 

 

7 Landscaping Mistakes That Wreck Curb Appeal

Outdoors Landscaping & Gardening Curb Appeal
Don’t let badly designed or maintained landscaping wreck your home’s curb appeal.
Here are pitfalls to avoid.

Clumsy, neglected, and hodgepodge landscaping not only hurts your home’s curb appeal, it can cut the value of your property and make it harder to sell.
Real estate appraisers say bad landscaping is a buyer turnoff that can increase the number of days a property languishes on the market, which also hurts prices.
Even more important, bad landscaping is a downer that hurts the way you see and enjoy your home.
Don’t let bad landscaping happen to you. Here are the seven landscaping mistakes that bust, rather than boost, your home’s curb appeal.

1. Planting Without A Plan
Some landscaping choices, such as a line of begonias, will last a season; others, like trees,
can last a lifetime. So, take time to plan and plot a yard that gives you maximum enjoyment
and curb appeal.
For the design challenged, landscape architects are worth the investment ($300-$2,500
depending on yard size). They will render elevations of your future yard, and provide plant
lists so you can install landscaping yourself.

2. Too Much Togetherness
Yes, planting in clusters looks way better than installing single plants, soldier-like, throughout
your yard. But make sure your groups of perennials, shrubs, and trees have plenty of room to
spread, or they’ll look choked and overgrown. Also, over-crowded landscaping competes
with itself for food and water, putting the clusters at risk, especially during drought.
Google how high and wide the mature plant will be, and then combine that info with the suggestions on planting labels. At first, garden beds of young plants will look too airy and prairie-like. But within three years, your beds will fill in with room to grow.

Remember: First year it sleeps, second it creeps, third it leaps.

3. Zoning Out
Don’t be seduced by catalog plants that look gorgeous on paper but aren’t suited to your
hardiness zone. You’ll wind up with plants that die prematurely, or demand winter covers,
daily watering, and other intensive efforts to keep them alive and well.
Check plant labels to see which hardiness zones are best for your plants.

4. More of the Same
Resist the design temptation to carpet-bomb your yard with your favorite plant or shrub,
which will create a boring, monochromatic landscape. Worse, your yard will look great when
your fave flowers bloom, then will look drab the rest of the year.
Mix things up and strive for four-season color. For example, combine spring-blooming
azaleas with summer-blooming roses and autumn-blazing shrubs — such as burning
bushes (Euonymus alatus). For winter color, try the red osier dogwood (Cornus stolonifera),
a hardy shrub that sports bright-red branches in winter.
Related:

5. Refusing to Bury Your Dead
Nothing wrecks curb appeal faster than rows of dead or dying shrubs and perennials. So
quickly remove your dearly departed landscaping from your front and side yards.
Spent plants that lived their natural lives are good candidates for a compost pile — if you
grind them first, they’ll decompose faster. But if your landscaping succumbed to disease or
infestation, it’s best to inter them in black plastic bags, then add to the trash.

6. Weeds Gone Wild
Weeds not only wreck the look of your landscaping, they compete with pricey vegetation for
water and food. Weeds also can shorten the life of brick, stone, and pavers by growing in
mortar cracks.
The best way to stop weeds is to spread a pre-emergent about three weeks before weed
seeds typically germinate. If you can’t stop weeds from growing, at least get rid of them
before they flower and send a zillion weed seeds throughout your yard.
7. Contain Those Critters
Deer, rabbits, and other backyard pests think your landscaping is an all-you-can eat buffet,
leaving you with denuded branches and topless perennials.
If you’ve got a critter problem:
Plant deer- or rabbit-resistant varieties. Your local extension agent can provide a list of
green things critters won’t eat in your area.
Install an electric fence around landscaping you want to protect.
Spray plants with critter repellent. After a hard rain, spray again.

© Copyright 2013 NATIONAL ASSOCIATION OF REALTORS
By: Lisa Kaplan Gordon

Condition and Home Value

I just finished reading an article about improvements that do not impact home value – and could not agree more.  Why?  Because most of these “improvements” fall under the category of maintenance – painting the house, new roof, new gutters, replacing a furnace or A/C, etc.

When you own and love a home over many years, you can become blind to the nicks, scratches, and dings – to you they are just reminders of the lives lived in the home. But deferring maintenance seriously impacts the value of your home.  Location is not everything.

Given industry estimates are that you should conservatively spend at least 1% of the value of your home on maintenance each year, you should assume that after 20 years of not replacing anything major in your home or painting or freshening up, it is worth at LEAST 20% less than the home of your neighbor who has been maintaining their home all along.