The High End Market

What is going on with the high-end market in Sewickley? Why don’t there seem to be many high-end sales?

Our high-end market has been slower than normal for over a year now.  Speculation abounds as to why that is the case, but it doesn’t seem that we are alone – sales of higher end homes in many pockets of this country have slowed.  Many attribute that to the fact that our tax system was restructured to  allow for a larger standard deduction and lower marginal rates but at the cost of limiting the deduction for property and income taxes to a combined total of $10,000.  For high property tax jurisdictions such as our own, many commentators believe this has caused a slow-down in high-tax (i.e., high priced) home sales.   I have held out hope that when people filed their taxes this past Monday, maybe they would discover that they are better off under the new system despite the deduction limitation and we would see the property tax fear fade into the background.  I must admit that even as a former tax lawyer I have found the new forms a bit confusing, so I am really hoping we will see some favorable spin coming from tax preparers this week.

We may however need a general mindset adjustment. As a whole, our income taxes in PA are lower than the majority of states.  Our earned income tax here in Sewickley is only 1%, compared to 3% in the city of Pittsburgh. We do not have sales tax on clothes or food as many states do.  So while our property taxes may be on the high side, we are in a far better position overall than many residents of metropolitan areas with similar advantages to Pittsburgh.  Property taxes are just a cost of living, and if your bucket list includes the amenities of a higher-end home, the taxes are what they are.  The sooner our marketplace accepts this reality, the sooner our higher end homes will start selling again!

In the meantime, our middle and lower end market segments are moving fast and often with many offers.  Homes in these segments that are priced appropriately for condition and amenities are often selling with multiple offers, and in a very short amount of time.  These market segments are accelerating quickly in their pricing.  Waiting for the home to show up on your Zillow search is likely going to be too late.  If a move is something you’ve been considering, give me a call and we can strategize on how you can best meet your needs in this complex market we find ourselves in! 412.779.6060

49 Woodland – NEW LISTING
Located on one of Sewickley’s most sought-after streets, with sidewalks to everywhere and within a very easy walking distance to Village shops and restaurants, this home is in impeccable condition and offers an outstanding opportunity for your family!  5 bedrooms, 3.5 baths, garage attached by breezeway, newer slate roof, gorgeous private yard, large eat-in kitchen, two gas log fireplaces and so many more wonderful amenities make this home a Sewickley Village best buy! $1,775,000  See more…

 

 

213 Chestnut Road –  NEW LISTING
Beautifully remodeled Sewickley Village Victorian with four finished levels of living space, sited on a level lot with two car garage checks all the boxes!  Beautifully equipped and remodeled kitchen, wonderfully remodeled baths. Incredibly architectural detailing throughout.  5 bedrooms, 3.5 baths and a two car garage.  Added unique bonus of a lower level gameroom! $825,000.  See more…

QUICK SEARCH

I’m ready to answer any questions you have regarding your real estate needs.
 
 
Kathe Barge, CRS, ABR, CNE, SRES
Associate Broker
HOWARD HANNA
REAL ESTATE SERVICES
401 Broad Street
Sewickley, PA 15143
Cell: 412-779-6060
Office: 412-741-2200 x238
kbarge@howardhanna.com

New Homes & Taxes

April 15th always reminds me of taxes, and how high our taxes are here. Is this a disadvantage when it comes to selling homes in this area?

I always counsel my new clients relocating here from other states that property taxes are something that need to be viewed as part of an entire budget. Yes, our property taxes seem much higher than in many other regions of this country, and yes, upon first look, it can be a deterrent. But my advice to out-of-towners is to consider how much they pay each year in all forms of tax.

In Pennsylvania, we only pay a 3.08% income tax rate and here in Sewickley, we add on top of that an additional 1% on earned income only. We currently have no sales tax on food and clothing. We also have very low car registration fees at only $36/car. In some states, income tax alone can be as much as 8% – 9%, car registration fees/yearly taxes can exceed $550+/car and they do impose sales tax on food and clothing. If buyers are counseled to look at the big picture, more often than not they find that they are actually saving money when they move to Western PA, despite our high property taxes, but it does take a skilled realtor to get them over this hump.

When dealing with local buyers, property taxes are a much bigger issue. When moving up, buyers definitely have to consider taxes – they won’t be getting any new income tax breaks by just moving across town. Recently, the federal tax law changed and there is a $10,000 cap on the deductibility of the combined total of income and property taxes.  Nationwide, this seems to have created a softening in the sale of high-end homes as there is little to no subsidy for your property taxes anymore (depending on how much you pay in state and local income taxes and whether they, on their own, move you above the $10,000 threshold).  The expectation is that the lower federal tax rates will offset the reduced deduction, but for many who haven’t filed their 2018 returns yet, it’s too early to tell. My sense is that this will all settle out over the next year or two as we all adjust to the new tax rules.

In any event, whether buying or selling, it’s important to take the time to make sure that your taxes are in line with the market value of your home – if they are not you should appeal them so that inappropriately high taxes don’t become an even larger deterrent to a purchaser.

63 Thorn – NEW PRICE  Expertly remodeled, 63 Thorn paints a modern landscape on a charming traditional palate to create an exceptional home. Sited on a large lot with fully fenced back yard. The expertly designed and crafted kitchen (which is open to the family room) is flooded with light from an entire wall of windows that bring the private backyard into this warm and inviting space.  The dining room has also been opened to the back yard through an impressive wall of windows and doors, and spills effortless out onto the new back deck.  The second level is home to a new master suite with spa-like private bath.  Four additional bedrooms, two full baths and a convenient second floor laundry room complete the upper levels.  Join is for our OPEN HOUSE Sunday 4/7 1-4 pm. $1,450,000    See more….

21 Thorn Street – Beautifully remodeled classic historic home on one of Sewickley’s most sought-after streets. Kitchen is open to breakfast room and den; fabulous master suite with gorgeous new bath and private dressing room.  5 bedrooms, including developed third floor.  3.5 baths.  Convenient main level laundry. Finished gameroom on lower level. Two car garage.  Covered front and back porches. Beautiful, large back yard. New roof! An easy walking distance to Village shops and schools. $1,185,000    See more….

 

QUICK SEARCH

I’m ready to answer any questions you have regarding your real estate needs.
 
 
Kathe Barge, CRS, ABR, CNE, SRES
Associate Broker
HOWARD HANNA
REAL ESTATE SERVICES
401 Broad Street
Sewickley, PA 15143
Cell: 412-779-6060
Office: 412-741-2200 x238
kbarge@howardhanna.com

Keeping Taxes in the Right Perspective

Are rising property taxes and the cap on the ability to deduct property taxes on our federal tax returns going to hurt real estate sales?

Unfortunately, the changes in the federal tax laws may already be impacting our housing market – the higher end market, most impacted by the $10,000 cap on the deductibility of taxes, has shown noticeable slowing over last year.  Rising tax millage rates are only going to exacerbate the problem, but rising costs have long been a reality of the world we live in and are to be expected.

What we need is a mindset shift, which will be slow in coming.  We all need to step back and look at our tax package as a whole.  Pennsylvania is a comparatively low taxing state when it comes to income tax. Our state income tax rate is only 3.07% — this is impressively low when compared to many other states (note our neighbors in New York at 8.82%, West Virginia at 6.5% and Ohio at 4.997%, and the top taxing state of CA at 13.3%).   What we are saving in income tax, we are paying in part in property taxes and this needs to be kept in perspective before making bold statements about how much property tax one will or will not pay.  Additionally, the $10,000 cap on deductibility of taxes as a cap on the combined sum of property and income taxes, so those in higher income tax states will be hit much harder by this.  We really do still have it pretty good in PA!

When considering property taxes, rather than focusing on what one is not getting, buyers would be well advised to think about what you are getting.  On a $500,000 assessment, the taxes in Sewickley borough would be approximately $41/day.  On a million dollar assessment, they would be approximately $82/day.  Compare this to the cost of hotels that you stay in on vacation! If you enjoy coming home everyday to a home that feels inviting and relaxing to you, if it is a home that your family thrives in and that provides shelter and sanctuary that you love, that seems like a small price to pay, even without the tax breaks. There is a cost to living – the food we eat (a dinner out can cost more than the daily property tax rate), the gas we burn to heat our homes in these unseasonable chilly Aprils, the cell phone bills to stay in touch with family and friends.  Property taxes are just another one of those costs of living.   I think it will be a long time (if ever) before we see that tax break return.  Reframing our thinking about property taxes, keeping in mind the otherwise low taxing state we live in and the intangible benefits that you and your family receive from living in a home that you love, is my recommended course of action!

FEATURED HOMES

224 Orchard Lane
JUST LISTED — and Under Agreement!!

Fantastic newer all brick Edgeworth home, with for finished levels of living space. 6 bedrooms, 4.5 baths.  Finished lower level. Open floorplan on main level: white kitchen with granite tops open to family room with wood burning fireplace. Wide-board hardwood floors unify the upper tow levels.  Rare attached garage with large mudroom. Private back yard. $950,000.  See More…

 


102 American Way
NEW PRICE  — The living is easy in this absolutely wonderful Sewickley Ridge one-level townhome. Less than one year old and in move-in condition – ready for you to call home!  2 bedrooms, 2 baths, 2 car garage, open concept floorplan, delightful screened porch. Chic ascetic with white cabinetry, granite tops, hardwood floors. Community clubhouse with pool, tennis, Bocce court, community garden, gym, and meeting/socializing space. In Traditions acclaimed over-55 community! Why delay your downsize any longer?   $369,000    See More…

 

 

I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE
Associate Broker
HOWARD HANNA
REAL ESTATE SERVICES
401 Broad Street
Sewickley, PA 15143
Cell: 412-779-6060
Office: 412-741-2200 x238
kbarge@howardhanna.com

2018 and TAXES- Oh My!!

Any updated thoughts on the new tax legislation?

 

The new tax legislation seems to be on everyone’s mind these days, and seems to be crowding out Christmas cheer a bit.  While I do need to advise you to consult your personal tax accountant, I will tell you I have been busy prepaying my 2018 property taxes.  Under the new legislation, taxpayers will only be able to deduct a grand total of $10,000 of property and income taxes combined.  In our area, property taxes are higher than in many parts of the country, so many people will easily exceed that limit.  Paying 2018 property taxes in 2017 helps to insure the full value of their deductibility.  Of course, 2018 tax bills have not been issued yet, but if you find your 2017 bills and make a couple of calls, they will be able to tell you how to proceed if this interests you.  The taxing bodies are likely thrilled right now with the new legislation – rather than chasing late payers they are receiving their money well ahead of schedule!  Of course, if your bank escrows your taxes for you, this may not be an option you can take advantage of.

I’ve also taken the time to pay my 2017 4th quarter Pennsylvania and local income taxes now, for the same reason.  While not due until January 15th,  the $10,000 limit on the deductibility of property taxes and state/local income taxes combined will result in lost deductions for many.  This tax planning is only useful right now, when the old limits (or lack thereof) still apply through 2017.

As far as the legislation itself, I am pleased that congress raised the mortgage deductibility limit to interest on mortgage debt up to $750,000.  Interest on debt on second homes is no longer deductible (unless you use it as an investment property, in which case it can offset your rental income), and interest on home equity lines of credit will no longer be deductible.  This will definitely affect the way consumers choose to structure their home buying financing.  We will be thoroughly digesting the bill so that we can help consumers make the best financing decisions to take advantage of the tax breaks we do have left.

The $10,000 limit on the deductibility of property and state/local income taxes is not ideal, particularly because of the higher property taxes we have in the region.  There is a possibility that the limitation will make higher end homes harder to sell, but I doubt that. In the end, consumers will have to have a mindshift and think less of their personal residences as tax breaks and see them for what they really are – a home for their family to come home to every day – their personal sanctuary from what can sometimes feel like a crazy world.  And when we see our homes that way, the small piece of our property taxes that Uncle Sam no longer “pays” will seem far less important than it does in the abstract.

Featured Homes

141 Beechridge
Spectacular 22,000+SF estate nestled on 8 private acres in Sewickley. Remarkable newer custom construction.  Half-court indoor basketball court, full racquetball/squash court, complete locker room facilities including sauna, 60’x30’ heated in-ground concrete salt water pool w/ stone waterfalls, patio w/ outdoor fireplace, 5 bedrooms, 5 full & 4 half baths, 9 fireplaces, 6 garage spaces, two kitchens, wine room, roof-top observation deck, new home theater.  Simply remarkable! $4,500,000     See more photos and details….

7 Harvester Ct
Tired of looking at one “project” after another for a home that is “move in ready”? Your search is over!  This custom-built all brick colonial was just renovated with 3 new luxury baths, newer kitchen, new roof, new HVAC, new deck, new paint in modern aesthetic and more. Totally turn-key for you and your family! 4 bedrooms, 3.5 baths, 3 car garage, finished walk-out lower level, nearly 2 acre lot. $775,000.   See more photos and details…

I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE
Associate Broker
HOWARD HANNA
REAL ESTATE SERVICES
401 Broad Street
Sewickley, PA 15143
Cell: 412-779-6060
Office: 412-741-2200 x238
kbarge@howardhanna.com

PROPOSED TAX LEGISLATION vs. HOMEOWNERSHIP

What impact do you think the proposed federal tax legislation will have on homeowners?

For those of you who are unaware, the proposed tax legislation makes several changes to itemized deductions that will impact many homeowners.  First, the property tax deduction will be limited to $10,000.  In Sewickley borough, if your tax assessment is above approximately $350,000, you will see an increase in your federal income tax as a result of this itemized deduction limitation.  Additionally, while existing mortgages are grandfathered, interest will only be deductible on new mortgages of less than $500,000.

The National Association of Realtors believes these new changes could put home ownership out of the reach of many and nullify the home ownership incentive for all but the top 5% of our nation.  Home ownership is already at a 50 year low nationwide.  For many Americans, a home is the largest investment they will ever own.  Studies have also shown that at the end of the day, the net worth of a homeowner is, on average, a shocking 45 times greater than that of a renter, demonstrating how important it is to incentivize home ownership so that Americans have the needed nest egg when they retire.

My predicted impact on our local housing market is that it will soften prices over $350,000.  Without the benefit of the tax deductibility of property taxes over $10,000, mid-market buyers will qualify to buy less than they can today, and it will have a downward pressure on prices overall.  With the severe inventory shortage we have right now, this is not likely to be immediately evident, but it will likely impede the long-term growth rate.  The cap on the deductibility of interest on new mortgages over $500,000 will have a much larger impact on the market overall.  Homeowners with large mortgages will be disinclined to make the “choice” moves we are so accustomed to here in Sewickley, because a move will mean they lose the deductibility of a significant amount of interest on their grandfathered mortgage.  This will only exacerbate our inventory shortage as homeowners will be likely to just “stay put” and take advantage of the deductibility of interest on grandfathered mortgages.  Additionally , for homes priced over $550,000, buyer affordability will drop further as carrying mortgages over $500,000 will be noticeably more expensive, with the potential of exerting further downward pressure on market appreciation.  Its hard to know how any of this will help us, but then, I am not an economist – I must be missing something!

FEATURED HOMES

7 Harvester Court
Want more space between you and your neighbors? Your search is over!  This custom-built all brick colonial is sited on a nearly 2 acre lot, in a quiet, private neighborhood.  Just renovated, it features 3 new luxury baths, newer kitchen, new roof, new HVAC, new deck, new paint in modern aesthetic and more. Totally turn-key for you and your family! 4 bedrooms, 3.5 baths, 3 car garage, finished walk-out lower level.  $775,000.  Learn more…

180 Summerlawn Drive
Beautifully remodeled open concept 17 year old home on ½ acre wonderful lot in a delightful Sewickley neighborhood close to Village. Four finished levels of living space including finished walk out lower level. Kitchen with new stainless appliances open to family room.  Main level laundry.  Large master suite. Four bedrooms, 3 full and 2 half baths. Third floor great room.  New roof. $599,000. Learn more…

I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE
Associate Broker
HOWARD HANNA
REAL ESTATE SERVICES
401 Broad Street
Sewickley, PA 15143
Cell: 412-779-6060
Office: 412-741-2200 x238
kbarge@howardhanna.com