Property taxes, home costs on the rise
Costs for renting or owning a home are increasing. Rents and costs of ownership are rising.
For example, property taxes have increased $13 billion — or by nearly 3 percent — over the past year, according to a new analysis by the National Association of Home Builders.
“Property tax collections — including commercial real property taxes and personal property taxes — totaled more than $503 billion over the past year. Property taxes are critical to communities' financials, making up 38.9 percent of state and local tax receipts,” the NAHB reported.
“Gains for state and local non-property tax collections have outpaced increases in property tax receipts in recent years because such non-property taxes experienced the greatest declines during the recession,” NAHB notes on its blog, Eye on Housing.
“The impact pushed the property tax share of total receipts from the four major sources from a high of 44.9 percent in the third quarter of 2010 to just below 39 percent for the second quarter of 2015.”
The current share is close to the pre-housing boom (2001-03) average of 38 percent, NAHB economists pointed out.
Q. Are mortgage applications rising?
A. Mortgage applications are up significantly, according to a report from the Mortgage Bankers Association.
On Oct. 7, the MBA reported: “The Market Composite Index, a measure of mortgage loan application volume, increased 25.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index increased 26 percent compared with the previous week.
“The Refinance Index increased 24 percent from the previous week. The seasonally adjusted Purchase Index increased 27 percent from one week earlier. The unadjusted Purchase Index increased 27 percent compared with the previous week and was 49 percent higher than the same week one year ago.”
Q. Are home sales increasing now that mortgage rates are lower?
A. Sales are a bit sluggish in most areas. A report from the National Association of Realtors states: “Pending home sales retreated in August but remained at a healthy level of activity and have now risen year-over-year for 12 consecutive months.
“A modest increase in the West was offset by declines in all other regions. Based on contract signings, the Pending Home Sales Index decreased 1.4 percent, moving from 110.9 in July to 109.4 in August but is still 6.1 percent above that of August 2014.”
According to Lawrence Yun, NAR's chief economist: “Even with the modest decline in contract signings, demand continues to outpace housing supply and elevates price growth in numerous markets.”
Q. Is homebuying affordability improving?
A. A recent report from RealtyTrac and Clear Capital revealed:
“Buying a home was at the most affordable level in two years in the first quarter of 2015 despite the average U.S. home price increasing at more than twice the pace of the average weekly wage nationwide over the past year.”
Q. How is the housing market expected to shape up during the remainder of this year?
A. Prospects look good at this point. Here's what Fannie Mae economists say:
“Continued positive consumer spending and other solid domestic fundamentals are expected to offset recent market volatility and support modest improvement in U.S. economic growth in the second half of the year. Data released throughout the past month generally showed improving economic activity, despite heightened anxiety on Wall Street.
“Real consumer spending ticked up in July, and the August jobs report was solid. Full-time employment surpassed its pre-recession peak, and both average hourly earnings and the average workweek saw an increase, indicating a strong gain in personal incomes that should support continued consumer spending.
“On balance, growth in the second half of the year is expected to come in higher, albeit modestly, than the first half.”
Q. Is it a good idea to purchase a home warranty contract for a newly constructed home?
A. The answer is no in most cases. The chance of benefiting from a home warranty plan is very slim — certainly not worth the fee charged for the service.
Warranty plans are primarily for older homes where appliances and operating systems are likely to need repair or replacement. If a new home is purchased, the builder will probably take care of problems that might surface.
• Email Jim Woodard at storyjim@aol.com.
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