February 1, 2018 Terravita Market Update
Wow! Did you see that moon event last night!? That was pretty amazing!
Almost as amazing was the exceptional month the Terravita Real Estate Market had in January. It was exceptional not only for the number of homes that went under contract at 13, but the values were up nicely as well. Even though it is a fairly small sample size with just 6 homes closing escrow, $283 is a very good average and 3 of them were over $300 per foot! This portends well for the upcoming Terravita Super Season!
Is this due to the new tax laws?
I doubt that the following is related to this recent run-up in sales and price, but while I have you, I would like to follow up on my earlier thoughts about the new income tax laws. In case you missed it, I wrote In an earlier post that I felt that the new laws restricting how much of a write off people get on property taxes may wind up helping Terravita sales. My thought being due to the changes, people in higher taxed states may want to move to areas like Terravita.
Yesterday a friend of my mine who works for one of the largest builders in the country sent me a stunning illustration of what this is like if you live in one of those higher taxed states. Somehow he remembered that I was raised in Country Club Hills Illinois which is a south suburb of Chicago, and sent me a calculation of what a person who owned a $750,000 home in CC Hills would pay in taxes (this came from an article written describing how taxes are going up another 10% in the Chicago area). Before I tell you what the taxes are, I want you to know that I did a quick survey of what the average $750,000 home in Terravita pays in property taxes and it comes out a bit below $4,000 a year. Now that you are aware, click here to see what you would pay this year for that home in CC Hills >>>> Property tax calculation
If you know someone who lives in a high tax state like California, Illinois or New Jersey forward them this email and let’s help them out of their pain!
Here are the January 2018 Terravita Real Estate Market Statistics:
The National article above came out late last week in Forbes Magazine and has good info. The industry’s most knowledgeable economist, Lawrence Yun, wrote the piece and I would guess his predictions will be right for most of the country. But I wonder if the message, and certainly the headline, could be completely the opposite reality for Arizonans.
IS IT TRUE FOR US?
One of the main points is the hindrance to home buying arising out of the new tax reforms. Yun points out that there is less incentive to be a homeowner due to reductions of both mortgage interest and property tax deductions. He said this is particularly true in high property tax states like California and New Jersey.
The Terravita demographic is one where folks have a much lower incidence of even having a mortgage and when they do it is usually small. Consequently, they are much less concerned with the mortgage interest write offs.
At the same time, the demographic is more sensitive to increases to their fixed living costs like property taxes. Suddenly not being able to deduct those taxes means a significant increase in their fixed costs. It seems to me that these tax changes could drive buyers to low tax states in general, and specifically ones with great weather like Arizona! And if you are going to leave your state, why not move to the best lifestyle community where you can easily make a ton of great new friends?! Just my thoughts… but it could happen.
For more Terravita Market Updates, click here.