Home sellers are making huge profits. So why aren’t more people selling?

Real estate mogul: Trump's tax plan is great for rich entrepreneurs

It’s a great time to sell your home. So why aren’t more homeowners doing it?

Sellers profited about $54,000 on average at the end of 2017, according to Attom Data Solutions. That’s a 10-year high and means sellers were bringing in an average return on investment of nearly 30%.

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But selling a home in this market is the easy part. Finding a home to move into? Not so much.

A dismally low supply of homes on the market has made house hunting difficult in many cities. The lack of available homes has driven up prices, leading to bidding wars and homes selling for well above asking prices. While that’s good news for sellers, it’s bad news when they become buyers.

“It is fun and exciting to see a huge appreciation in your home,” said Allie Howard, a Redfin real estate agent in Seattle. “But what scares [sellers] is not wanting to be stuck in a rental scenario when homes continue to appreciate and they get concerned they will be priced out.”

West Coast home sellers have seen the largest gains, with those in San Jose, California, experiencing a 91% return on investment at the end of 2017. San Francisco home sellers saw a 73% return.

Related: Is 2018 the year to buy a house?

Seattle is also a booming market for real estate sales.

Nicole Rendahl recently sold her four-bedroom Seattle home for $400,000 more than she paid for it in 2008.

She purchased the home for $1,199,000 and just sold it for $1.6 million in November. The sale closed in seven weeks.

“It went through multiple price reductions before we purchased it,” she recalled. “We were fortunate of the price reduction, we couldn’t afford it when it was originally listed.”

She and her family are now looking to upgrade, but they haven’t been able to find the perfect house.

They recently lost a bidding war, but Rendahl is hopeful that more inventory will hit the market soon. Her goal is to find and move into a place by the end of the summer.

Owners are staying in their homes for a little more than eight years, on average. From 2000-2008, the average tenure was four years.

And new homes just aren’t being built fast enough to keep up with demand. Only around one million new homes are currently hitting the market — that’s well below the historic norm of 1.5 million.

Not having a home to move into means more people are staying put, and that has ripple effects throughout the housing market.

“The longer home ownership tenure is a central piece to why the housing market is behaving as it is where home prices are rising fast and there is an inventory logjam,” said Daren Blomquist, ‎senior vice president, communications at Attom.

Historically, buyers in starter homes tend to trade up after a few years to a bigger house — frequently after starting a family. But if they can’t find a home to move into, they will stay in the starter home longer. The lack of buyers trading up makes it particularly tough for first-time buyers to break into the market.

Calculate: How much house can you afford?

“It is a bit of a chicken and egg situation. If builders built more homes, homeowners might move up, but because homeowners aren’t moving up, the builders aren’t seeing as much demand for new homes,” said Blomquist.

Buyers may also be facing higher borrowing costs this year since interest rates are expected to rise.

The average rate on a 30-year fixed mortgage has been below 4.5% since January 2014. Higher mortgage rates could also keep homeowners in their homes longer if they purchased when rates were at historic lows.

“It impacts the affordability equation,” said Cheryl Young, senior economist at Trulia.

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Article source: http://rss.cnn.com/~r/rss/money_realestate/~3/mfqu7L25N80/index.html

Why you want Amazon to be your new neighbor

Cities woo Amazon to become second HQ

Amazon has narrowed down its hunt for a second home to 20 locations. And the chosen city is likely to get an economic jolt — particularly to its housing market.

The company announced in September that it plans to open a second corporate headquarters, and a nationwide bidding war soon broke out. Some cities offered massive tax breaks, while others got creative with their courtship. Tuscon, Arizona, sent a giant cactus to CEO Jeff Bezos and one Georgia town pledged to name an area “The city of Amazon (AMZN).”

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The second headquarters is expected to cost at least $5 billion and create as many as 50,000 high-paying jobs — no wonder cities rushed to lay out the welcome mat.

The selected city will get an immediate boost to jobs and wages, said Javier Vivas, director of economic research for Realtor.com. It will also push up home prices and lead to new home construction in neighborhoods within commuting distance from the headquarters location, he added.

When a big company moves into a new town it tends to have a ripple effect on the local economy: job creation strengthens, some wages increase and home prices rise.

Just look at what happened in Reno, Nevada, after Tesla opened a massive battery factory: Home prices have soared 43% since the fall of 2014, following the start of construction on the Gigafactory, according to Daren Blomquist, senior vice president of communications at ATTOM Data Solutions.

The same phenomenon occurred when Apple moved its headquarters to a new location in its home city of Cupertino, California. In the three years following the project’s approval, homes located within a mile of the new campus appreciated three percentage points faster, on average, than the rest of the county, according to Realtor.com.

Related: 3 ways tax reform will hit home values

Just how much home prices will rise in Amazon’s chosen city will depend on a variety of factors: the existing inventory, recent home price performance, demand and the space available for new construction.

Of the 20 cities, those that have seen more modest home price growth than others on the list stand to gain the most, according to Blomquist. He pointed to Pittsburgh, Indianapolis and Columbus, Ohio, as the markets that could see the biggest gains.

“The impact in markets where there has been single-digit appreciation … we could see a jump, at least in the short term, to double digits of 10%-20% or even more appreciation for the first year,” he said.

In places where housing is already in limited supply and building regulations are prohibitive — like New York and Boston — home values could rise even more with a surge of new residents to staff the new headquarters.

For instance, home prices in Boston have jumped 8.4% in the last year to a median home value of $568,300, according to Zillow. If Boston becomes the new home of Amazon, it would be “chaos,” according to Fernando Ferreira, an associate professor at Wharton School at the University of Pennsylvania.

“The housing market would be three times worse than it already is,” he said.

Markets with existing inventory and space and fewer obstacles to building will be able to more easily handle the need for new home construction, experts said.

The big winners in the chosen city will be current homeowners who will likely see their home appreciation rise when Amazon moves in.

“If you are in a larger house and ready to downsize or move, this will be a pure gain for you,” said Stijn Van Nieuwerburgh, professor of finance and director of the Center for Real Estate Finance Research at New York University Stern School of Business.

Another indirect advantage for the winning city: Rising home values will likely to lead to higher property taxes, which could help boost a city’s budget and services.

“As property taxes and revenues go up, that can go to schools and improve their quality and better fund programs … and infrastructure,” said Van Nieuwerburgh.

Related: In booming economies, food banks are busier than ever

On the downside, a big jump in home prices means renters or wanna-be homeowners in the selected city could lose out, potentially forcing some long-time residents out of the city.

“If you are a first-time homebuyer in the selected city, this is bad news,” said Van Nieuwerburgh. “Property prices will go up and you will have to borrow more.”

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Article source: http://rss.cnn.com/~r/rss/money_realestate/~3/x8-8yYf3cos/index.html

3 ways tax reform will hit home values

Rush to pre-pay property taxes

The recent surge in home values could slow thanks to the freshly passed tax overhaul.

Sweeping tax legislation was signed into law by President Trump at the end of 2017, and experts said some of the changes, including a lower threshold on the mortgage interest deduction, a cap on the state and local deduction and a higher standard deduction, could be a drag on home appreciation.

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“In a way, the federal government is extracting itself of its encouragement of home ownership,” said Jonathan Miller, president of real estate appraisal firm Miller Samuel.

The hit to home prices will depend on location.

“There are clear winners and losers,” said Adam Kamins, senior economist at Moody’s Analytics. “States in the Northeast and along the coasts are hit pretty hard, and states in the South and Mountain West come out ahead.”

Home prices nationwide are expected to be around 4% lower over the next 18 months compared to where they would have been absent any tax changes, according to report from Moody’s Analytics.

But that 4% decrease will be unevenly distributed. Homeowners in high-taxed states and expensive housing markets could face the brunt of the impact thanks to the scaled-backed deductions on mortgage interest and property taxes.

For example, home prices in Westchester County, a New York City suburb, and Essex County in New Jersey, could be 11% below where they would have been without the tax legislation, according to Moody’s. In Manhattan, New York, and Lake County, Illinois, the difference could be a 10% decline.

Here are a few forces that could drive down home prices:

1. Lower mortgage interest deduction could keep high-end buyers on the sidelines

The new tax law, which is now in effect, lowers the amount of interest on mortgage debt that can be deducted to $750,000 — down from $1 million.

That makes it more costly for buyers of expensive homes to borrow.

Plus, the mortgage interest deduction is less valuable under the new tax code. In order to take the deduction, homeowners must itemize. But because the standard deduction has increased to $24,000 for couples, fewer people are expected to.

The smaller cap means only 14.4% of homes are worth enough to make itemizing advantageous, according to Zillow. Shrinking tax breaks could force sellers to factor that into their asking price.

… and sellers reluctant to sell

The lower cap applies to new mortgages. That means mortgages closed before December 15, 2017 are subject to the old $1 million threshold, which could mean homeowners with mortgages above $750,000 have less incentive to trade up to a bigger home, adding more pressure to the already tight housing supply.

2. Property tax cap makes buying less attractive

The new tax law also places a $10,000 cap on the amount of state and local property taxes — plus income or sales taxes — filers can deduct.

Real estate agents in high-taxed markets frequently tout the ability to write off property taxes to potential buyers. But that selling point won’t be as strong as it used to be. More than four million Americans pay more than $10,000 in property taxes alone, according to ATTOM Data Solutions.

In some counties, more than half of residents pay at least that much. In Westchester County, 73% of homeowners pay above the new cap in property tax, according to ATTOM.

“By setting a $10,00 cap nationwide, you are placing high-cost markets on the same plane as low or middle-cost markets,” said Miller. “Every homeowner has a dollar amount they can afford or want to spend on a purchase. The more these other costs rise, the less room there is for payment of principal and interest.”

3. Home loans could get more expensive

Experts also worry that adding an influx of cash through tax cuts while the economy is at full employment could increase inflation pressure, which may lead the Federal Reserve to increase interest rates, sending mortgage rates higher.

Mortgage rates have been sitting below 4% since mid July, which has helped offset the rise in home prices. But if rates move higher, borrowing becomes more expensive, putting high-cost homes out of reach for many buyers.

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Article source: http://rss.cnn.com/~r/rss/money_realestate/~3/PhPvJHWgr78/index.html

Homeowners: Here’s what’s in the tax bill for you

Republicans reveal final tax plan details

Republicans on Friday unveiled the final version of their tax bill, and it has new restrictions for some homeowners.

Senate and House Republicans have reconciled their versions of tax legislation and the final plan shrinks some popular deductions. Lawmakers aim to vote on the bill next week and then send it to President Trump’s desk.

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Here’s a look at what the changes could mean for future and current homeowners:

Downsized mortgage interest deduction

New homebuyers would now only be able to deduct interest on the first $750,000 of mortgage debt on a newly-purchased home.

That’s down from the current $1 million threshold, but higher than the $500,000 limit the House proposed in its tax overhaul in November.

Current homeowners would not be affected by the lower cap.

The deduction has helped make home buying more affordable for some homeowners. While the median home price nationwide is currently $254,000, buyers in some cities face much higher price tags.

The lower limit could make it harder for house hunters in expensive cities. For instance, in New York City, nearly 64% of mortgages on homes sold this year were over $750,000, according to data from ATTOM Data Solutions. And in San Francisco, 58% of home loans exceeded the new cap.

Some experts worry the increased threshold could keep people from selling their homes, which could squeeze the already short supply of housing.

“The mortgage interest deduction change will put downward pressure on prices as well as sales,” said Joe Kirchner, senior economist at Realtor.com.

Current homeowners might hesitate to trade up to a more expensive house if the price tag is too high to take full advantage of the deduction.

The new cap would also apply to mortgages on second homes. The original House bill wanted to eliminate the deduction on second homes.

Less reason to itemize

Homeowners must itemize their taxes if they want to claim the mortgage interest deduction. But since the final bill calls for nearly doubling the standard deduction, far fewer Americans are expected to itemize come April.

“In my generation, before we had a home we took the standard deduction, but as soon as we bought a home we started itemizing because that mortgage interest deduction was so significant,” said Kirchner. “Now with the higher standard deduction very few people will itemize. It will virtually eliminate the deduction on a practical level.”

The final tax bill also eliminates the deduction for interest on home equity loans. Currently that’s allowed on loans up to $100,000.

Limit on property tax deduction

Taxpayers will no longer be able to fully deduct state and local property taxes plus income or sales taxes.

Instead, the legislation allows individuals to deduct up to $10,000 in state and local income and property taxes or state and local property and sales taxes.

That means homeowners living in high-tax states like New York, California and New Jersey could see an increase in what they owe Uncle Sam in April.

Nationwide, 4.1 million Americans pay more than $10,000 in property taxes, according to data from ATTOM Data Solutions.

Tax break stays for home sellers

Both the House and Senate bills originally wanted to scale back a tax break for homeowners when they sell their home for a gain.

Taxpayers will still be able to exclude up to $500,000 (or $250,000 for single filers) from capital gains when they sell their primary home, as long as they’ve lived there for two of the past five years.

Earlier tax reform proposals would have increased the live-in requirement to five out of the last eight years.

CNN’s Lauren Fox and Phil Mattingly contributed.

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Article source: http://rss.cnn.com/~r/rss/money_realestate/~3/PmBrXAhvZ_Q/index.html

For many, the rent is still too damn high

Detroit makes housing affordable with tiny homes

Millions of Americans can’t afford their rent.

Nearly half of all renter households — almost 21 million — were considered cost-burdened in 2016, according to a new report from Harvard’s Joint Center for Housing Studies. That means they pay more than 30% of their income to cover their housing, which includes utilities.

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Some renters are in an even tighter jam: 25% of renter households pay more than half of their income for housing.

The good news is that the number off cost-burdened renters is dropping. In 2014, 21.3 million renters were shelling out more than 30% for housing.

Losing such a big chunk of your paycheck to housing can have a long-term impact on savings and force tough spending decisions. It can also worsen inequality among renters, the report found.

“It can mean trade offs for other areas of your budget, like food, health care expenditures or transportation,” noted Jonathan Spader, a senior research associate at JCHS. The amount of money the lowest-income renters had left to spend after paying their housing dropped 18% from 2001 to 2016.

Related: How tax reform could make housing affordability even worse

The improving economy and rising wages have helped ease the cash crunch for some renters. But the influx of more high-income renters has also played role in the reduction.

Affluent renters have driven almost 30% of renter growth in the past decade. In 2016, more than 18% of renter households earned at least $100,000 — up from 12% in 2006.

This shift, along with high building and land costs, has caused developers to focus on bringing more high-end units to market, which pushed up the median asking price for new apartments 27% between 2011 and 2016.

That’s left lower-income renters in a bind since the supply of affordable rentals for low- and moderate-income households has not kept up with demand.

“We’ve seen fewer and fewer rental units available at lower price points,” explained Spader. “There are two primary challenges, one is to expand the availability of rental assistance and the other is to find ways to increase the construction of new rental units that are made available at lower price points.”

The lower your income, the more likely you are to feel squeezed by your rent.

Middle and low-income renters are the most likely to pay a disproportionate share of their income to cover rent, according to the study. Over the past 15 years, more than half of the growth in cost-burdened renters has been among those earnings less than $30,000.

“As you move up the income spectrum the level of cost burden decreases,” said Spader. “But the other trend that comes out is that the cost burden is the most severe at the lowest income levels.”

Tool: How much house can you afford?

The number of renters earning between $30,000 and $45,000 paying at least 30% of their income jumped to 50% last year, up from 37% in 2001. It jumped to 23% from 12% for those earning $45,000-$75,000

Among those earning less than $15,000, 83% are considered cost burdened.

Where you live can also play a role in how much of your paycheck is dedicated to housing. More than half of renters in California, Colorado, Florida, Hawaii and New York are housing cost burdened. Cities that have seen their population count pop have also seen rent prices soar. For instance, the median rent in Denver has increased at twice the national pace.

The states with the fewest share of cost-burdened renters include Montana, North and South Dakota and Wyoming, the report found.

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Article source: http://rss.cnn.com/~r/rss/money_realestate/~3/omkMd8gwgmQ/index.html

This is how long it takes to sell a house

How to sell a $16 million fixer-upper

Three weeks.

That’s how long it takes to sell a home these days, according to the National Association of Realtors.

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Five years ago, the median number of days on market was 11 weeks.

Low housing supply has pushed up home prices and created multiple offer situations and bidding wars throughout the country.

“The inventory shortage and the growing economy and job creation has increased the interest in homebuying,” said Lawrence Yun, chief economist for NAR. “There is just not enough inventory; people need to fight over the few homes available on the market.”

Historically, roughly 1.2 million new homes hit the market every year, he said, and so far this year, only 800,000 have been built. “It’s been below that in prior years, and in the past decade greatly lower than that. Today’s shortage is largely explained by a decade of underproduction.”

In some hot housing markets, three weeks is an eternity.

“If we make it three weeks in our market, there is something wrong,” said Darlene Umina, a real estate agent in the Boston area. “These days, you know within the first weekend whether the price was right.” The median home price has shot up almost 9% in the past year to $561,300 in Boston, according to Zillow.

Related: How much home can you afford to buy?

John Kasprzyk sold his home in Waltham, Massachusetts, in September in less than a week. The home hit the market on a Wednesday and he had an all-cash, inspection-free offer that was $41,000 above his asking price before the end of the weekend. It was one of 11 offers he received.

“We knew the market in that area was hot, but we didn’t expect a cash offer to be this high,” Kasprzyk said. “It was a big relief to walk away with equity.”

He purchased the home five years ago for $455,000 and sold it for $630,000.

Across the country in San Francisco, one of the hottest markets in the country, real estate agent Erin Thomas has had buyers show up to an open house and hand her an offer. Offers well above the list price with no contingencies are common. “It can be very exhausting for buyers,” she said.

To be successful, house hunters need to be prepared with a loan pre-approval letter, know their budget and home must-haves and be ready to dedicate their weekends and evening to touring homes — and battling crowds.

Calculate: What will your mortgage payment be?

Earlier this year, Umina hosted an open house where she had to stand outside to greet potential buyers because it was so packed. She ended up with 18 offers on that home, three were all cash.

To help get their foot in the door, buyers in Denver have increasingly been adding escalation clauses to their offers, where buyers pledge to beat a competing offer up to a certain amount.

Denver’s market has been on fire recently, with home prices jumping more than 7% in the last year.

Steve Thayer, owner of Keller Williams Action Realty in Denver, said he’s sold more than a dozen homes in less that two weeks so far this year — many of them going after one weekend. He’s also gotten a few blind offers from buyers before they’ve even seen a home.

“One of the challenges in this market is getting to Saturday [for the open house], he said. “People are begging to see the house early and before it’s ready to show.”

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Hurricanes could bring another disaster: Foreclosures

Puerto Rico one month after Hurricane Maria

As life slowly returns to normal in hurricane-ravaged parts of Texas, Florida and Puerto Rico, housing experts and consumer advocates worry another crisis is on the horizon: Foreclosures.

Already, legal aid groups are working with people who are struggling to make mortgage payments on homes made uninhabitable by the storms, while paying rent somewhere else.

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Although most mortgage lenders are offering grace periods for homeowners in disaster zones, the real trouble begins when those grace periods run out.

“I’m anticipating a wave of problems coming in February,” said Amir Befroui, a foreclosure specialist for Lone Star Legal Aid based in Houston. “It’s going to get worse before it gets better. We’re in the calm before the storm.”

Roughly 4.8 million mortgaged properties were in the paths of Hurricanes Harvey, Irma, and Maria, representing nearly $746 billion in unpaid principal balances, according to financial data firm Black Knight. In September, the number of loans that were more than 30 days past due rose 48% in Irma-affected areas and 67% in Harvey-affected areas, Black Knight found. The firm has not run the numbers for Puerto Rico yet.

Consumer advocates and government agencies are now trying to prevent those delinquencies from turning into lost homes and broken neighborhoods.

Soon after the storms hit, government-backed mortgage giants Fannie Mae and Freddie Mac instituted a three-month suspension of foreclosure sales, late fees and credit score reporting, and allowed mortgage servicers to work out forbearance plans that could delay payments for up to a year.

Those measures help, but historically haven’t been enough to solve the problem.

After Hurricane Sandy hit New York and New Jersey, homeowners still had trouble resuming payments once their forbearance period ended, according to a 2013 report by Legal Services NYC.

Related: Devastating hurricanes dealt corporate America a major blow

For many, months of postponed payments were suddenly due all at once after that grace period ended, creating an insurmountable burden.

The other problem: Mortgage servicers tend not to release insurance payments until homeowners have a contractor lined up to make repairs. That’s a daunting task at a time when construction companies have months-long waiting lists due to a surge in demand, and homeowners need money immediately in order to clean out their homes and avoid further damage.

“You just have to go through this really bureaucratic process just to get some funds flowing,” said Joseph Sant, director of homeowner services for the non-profit Center for New York City Neighborhoods. “When there’s a disaster on a large scale, mortgage servicing companies are an integral part of the recovery process. After Sandy, they were just not ready to play that role.”

In New York, state regulators worked with Fannie and Freddie to avoid large payment spikes for homeowners. The state also worked with mortgage servicers to reduce some of the stringent requirements placed on insurance payouts, like getting detailed estimates from contractors and multiple inspections. But those actions came months after Sandy hit, and neither Texas nor Florida or Puerto Rico have taken similar measures yet.

anna rosalez harvey flooding
Anna Rosalez looks out at her flooded home in Southeast Houston after Harvey’s waters receded.

For Anna Rosalez, a medical administrator in Houston whose home took on four feet of water, the process has been suffocating. She has flood insurance and found a contractor through a family contact. But the insurance company wants all the expenses itemized before it will release the funds to fix the house — which she says still won’t cover the full cost.

Meanwhile, Rosalez and her husband are living in a hotel, which the Federal Emergency Management Agency will stop paying for on Nov. 27. Her mortgage forbearance ends this month, too. So she’ll have to resume her monthly payments of $893, on top of everything else.

“We’ve had to spend money that we don’t have just to keep going every day,” says Rosalez, 60. “It’s very frustrating, very tiring.”

Last week, consumer advocacy groups sent a letter to Fannie, Freddie and other agencies in the mortgage business asking that particularly hard-hit homeowners be able to hit pause on their mortgage payments for up to two years. The groups also recommended that servicers immediately give homeowners $10,000 to fund urgent repairs.

The Federal Housing Finance Agency, which regulates Fannie and Freddie, responded by allowing affected homeowners to extend their loan terms and issuing guidance for servicers to release more insurance money upfront.

Related: Puerto Rico sees and opportunity to reimagine the island

National Consumer Law Center attorney Alys Cohen says that’s progress, but it doesn’t free homeowners from the burden of finding a licensed contractor in order to get the insurance money they need before rebuilding.

In addition, the policy changes don’t cover the approximately 40% of mortgages that are owned by private investors and banks. In Puerto Rico, that percentage is even higher. The island was already in bad economic shape before the storm and had a mortgage delinquency rate three times the national average.

Nate Hendricks is a Florida-based law firm operations manager who started the Puerto Rico Legal Project this past summer to defend homeowners facing foreclosure. He said the fact that many mortgages are held by smaller, local banks makes it more likely that lenders will move to foreclose.

Banco Popular, for example, is one of the biggest banks on the island and is only offering a three-month forbearance. In its last earnings call, it reported a $70 million increase in its quarterly loan loss allowance on the island, driven largely by mortgages that are delinquent and expected to go into foreclosure.

“There needs to be a moratorium, and then they need to set up special courts to hear these properties,” Hendricks says. “Because there’s going to be a slew of them.”

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Who’s affected by the mortgage changes in the House tax bill

What's in the GOP proposed tax plan

It could become even harder to buy a home in expensive cities.

House Republicans unveiled a massive tax bill on Thursday that includes a limit on how much mortgage interest homeowners can deduct — capping it on mortgage debt up to $500,000. That’s down from $1 million today.

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The lower limit would not impact existing homeowners, but would apply to all new mortgages, if the bill passes.

While the median home price across the U.S. is currently $254,000, according to the National Association of Realtors, there are markets across the country where that wouldn’t even buy one-bedroom apartment.

So far this year, 5.4% of all loans originated were more than $500,000, according to data from ATTOM Data Solutions, or about 325,000 loans.

Washington, D.C., had the highest percentage among the states with loans above the $500,000 threshold at 35.1%, followed by Hawaii at 15% and California at 11.5%. Delaware, Massachusetts and Washington state round out the top six at around 9%.

Related: What’s in the House tax bill for people

The deduction helps make home-buying more affordable. Buyers across the nation are facing higher prices as home shortages push prices up. Competition is fierce in many markets, leading to bidding wars and a lack of affordable homes.

The top four counties in the U.S. with the highest number of loans over $500,000 are in California. Home prices have skyrocketed in The Golden State, specifically in the San Francisco Bay Area, Los Angeles and San Diego.

In Los Angeles, prices have increased roughly 7% in the last year to $633,400. Almost 30,000 buyers have originated a mortgage for more than $500,000 so far this year — the most in the country, according to ATTOM.

Related: What’s in the House Republican tax bill for businesses

The tax overhaul would also nearly double the standard deduction, which could mean fewer people itemize their deductions. In order to claim the mortgage interest rate deduction, homeowners need to itemize. The Tax Policy Center estimates that the percent of filers who claim the deduction would fall to 4% from 21%.

Along with capping the mortgage interest deduction, the bill would preserve the deduction for property taxes, but only up to $10,000. According to ATTOM, a little more than 4 million Americans have a property tax bill above this threshold.

The mortgage interest deduction cap will likely become a point of contention as the bill moves forward. The home building industry has come out swinging against the plan and home builder stocks took a hit on Thursday after the bill was unveiled.

Jerry Howard, CEO of the National Association of Home Builders said in an interview on CNBC on Thursday that there are 7 million homes on the market right now that are over $500,000 and that the cap would devalue the homes.

“When house values start to go down in one market, it spreads to the next market and the market next to that and another market and the next thing you know you have a housing recession.” he said.

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Aston Martin is getting into… luxury real estate?!

See the best Aston Martin ever

Aston Martin is getting into the real estate business.

The British luxury automaker, which is closely associated with the James Bond movie franchise, announced it’s partnering with a property developer to build a new 66-story residential tower in Miami, Florida.

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The companies broke ground on the new Aston Martin Residences on Wednesday, and expect the building will be finished in 2021.

A move into luxury real estate may seem unusual for an automaker that’s built a global brand based on its high performance cars. But Aston Martin is trying to branch into new sectors outside its traditional niche.

Just weeks ago it announced it was collaborating with Triton Submarines to build a handful of luxury submarines with a price tag around $4 million each. Last year, it unveiled a powerboat. It has even collaborated on high-end baby strollers.

Aston Martin says it is being very picky about the projects it collaborates on to avoid diluting its brand.

“Partnerships only happen if it’s the right partner,” said Marek Reichman, Aston Martin’s chief creative officer.

The new curved luxury building, which is shaped like a sail, will feature 391 condos, pools, a virtual golf room and two cinemas. The residences, which range from 700 to 19,000 square feet, are priced from $600,000 to upwards of $50 million.

Aston Martin Residences Miami condo florida
Aston Martin is contributing to the design of this new building, the Aston Martin Residences.

Related: China shuts down billionaire’s golf courses

The project is being led by property developer GG Business Developments.

GG CEO German Coto said partnering with Aston Martin would help elevate the status and design of the building.

“We realized we needed a brand that would take the whole project to a new [level],” he said.

aston martin residences miami 2
The Aston Martin Residences are set to be complete in Miami in 2021.

Aston Martin will design the common areas shared by residents, which will feature “grey and black carbon fiber furniture.” It will also work on some exterior elements.

The automaker is licensing its name for use on the building.

GG, which has already received $150 million in deposits, expects it will make about $1 billion from the condo sales.

aston martin residences miami 1
The Aston Martin Residences will have a prime spot by the water in Miami.

It’s not the first automaker to get into Miami real estate. Another 60-floor tower in the area carries the name of Porsche Design.

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How to buy your first home

Money guide for Millennials

How do I buy a home? –Alison

The real estate market is soaring.

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But Millennials shouldn’t feel pressure to get in on the action, according to financial experts. They’re the largest group of homebuyers in the market today.

Buying a home is one of the most — if not the most — significant purchases of your adult life. So, you’ll want to make sure you’re really ready.

Here are three steps that’ll help you do that:

Sort your money out

First and foremost, get your finances in order before skipping off to find your dream home. This means understanding your total income and what it can buy.

While there are lots of online calculators out there to give you some quick numbers, approach with caution.

“Calculators online can be deceiving in that they don’t consider all expenses,” says Brett Spencer, a financial planner with D3 Financial Counselors.

The general rule according to experts is to spend no more than 30 to 38% of your monthly (pre-tax) income on housing costs. This includes all costs involved in homeownership — from monthly loan payments to insurance. But you may need to err on the conservative side if your expenses are high.

Next you’ll need to figure out exactly how much you should have saved.

Sure, you’ll need enough to afford a down payment on the house — typically about 20% of the purchase price. In some cases you might be able to put down significantly less, though you’ll probably be required to pay mortgage insurance as well.

But having a down payment isn’t enough. You may also need savings to cover a couple months’ worth of mortgage payments that the bank will expect to see, plus enough to cover home insurance and possibly mortgage insurance, and also closing costs — between 2 to 5% of the purchase price — before you get to the closing table. Plus, you want to make sure you have enough to buy furniture, still pay your monthly expenses, and cover emergencies, too.

While that sounds daunting, a little careful planning can get you there over time. Budgeting is a big part of the process, so allocate what money you’ll need by setting up a savings account toward getting your future house.

So where do you find the savings?

If you’re living paycheck to paycheck, it’s time to get comfortable and take a close look at your budget to figure out where you can cut back. Financial planners recommend sitting down with a professional to look through your finances and form a game plan.

Elizabeth Miller an adviser with Summit Place Financial suggests living in a low-rent apartment to save for the down payment on your future home.

“Save any extra income — put aside bonuses or incentive payments you earn,” says Miller.

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Shop around for your mortgage

Since a home is a pretty big purchase, you’re probably going to need a loan. But there are a wide variety of mortgage options to choose from. Work with a professional mortgage provider before house shopping to go over the options and figure out what you qualify for.

It’s probably a good idea to stick to the basics. The most common mortgage is a fixed interest rate over a number of years — usually either 15 or 30. The main benefit of a fixed rate is consistency, meaning steady payments over the life of the loan. While 15 years of payments will save you money on interest and allow you to pay off your loan sooner, spreading the loan out over 30 years might make the monthly payments more affordable for you.

The mortgage qualification process is called pre-approval. If you get pre-approved for a mortgage of a certain amount, the lender will give you a letter that you can present to sellers to show you have access to the money for the home you’re bidding on.

To move forward with the pre-approval process you’re going to need good credit, at least some money to spare, and a steady job.

Keep in mind, mortgage lenders will require protection in case you default on paying your mortgage.

“As a first-time buyer, you usually add insurance to your mortgage,” says Miller.

But a higher down payment could spare you the added expense of insurance. According to Miller, most lenders will want a down payment of at least 20% to avoid paying for mortgage insurance.

Find a home

It’s finally time to shop for your dream home. When looking at a house, put the time in to get familiar with the place. And know that while you’re shopping around, just because you make an offer does not mean you’re committed to buying that home.

Pay attention to the layout and structure of the house. Hire a good home inspector, and ask lots of questions about the property. These are your first line defenses against a bad buy, according to experts. Spending a little more money on help in finding the cracks can save you a lot down the road. Knowing the facts before signing a contract can also help you negotiate a lower price on the property or walk away from thousands of dollars in repairs.

If you find problems with your future house, let the seller know and ask for a discount. The last thing you want is a property with a lot of problems that you didn’t anticipate.

“Educate yourself on the real estate market and read and understand the terms of the contract” says Sarah L. Carson a financial consultant with Fulcrum Financial Group. “Use your head, not your heart.”

Got a money question for Broke No More? Ask us here to be included in a future column.

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