House Ways and Means Committee Chairman Dave Camp published a draft tax reform plan last week that could change the tax landscape for both homeownership and rental housing.
Under its provisions, the mortgage interest deduction cap would be gradually trimmed back from $1 million to $500,000, and the deductions for property taxes on owner-occupied homes would be eliminated. Deductions for other state and local income, sales and personal property taxes would also be eliminated. And a significant increase in the standard deduction would reduce the number of taxpayers who itemize — and thus could benefit from the mortgage interest deduction — from 30% to 5%.
The plan would also change the capital gain exclusion rule for the sale of a principal residence by extending the ownership and use period test from the current two years out of five to five years out of eight. And taxpayers would only be able to use the exclusion once every five years.
The proposal retains the Low Income Housing Tax Credit, but it makes several changes to the affordable housing credit. One change involves extending the 10-year credit claim period to 15 years, which would reduce syndicated credit prices. However, the 70% present value formulation would be adjusted to remain at 70% over the 15-year period. The draft would also repeal the national unused housing credit pool.
Members and the NAHB staff are still analyzing the potential impact of the provisions in the 900+ page discussion draft; you can read more about it here. We will be sure to keep you updated on Congressional action on the tax code. Contact: J.P. Delmore, 800-368-5242, x8412 or Rob Dietz, x8285.
Sales of newly built, single-family homes rose 9.6 percent to a seasonally adjusted annual rate of 468,000 units in January from an upwardly revised pace of 427,000 units in the previous month, according to data released last week by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the strongest sales pace since July of 2008.
“The fact that the cold weather that hit much of the country didn’t stop home buyers from going out and purchasing a piece of the American dream is a great sign,” said NAHB Chairman Kevin Kelly. “However, the very low supply of new homes on the market and the continued concern of available buildable lots still have builders cautious about getting ahead of themselves.”
“We saw a weaker sales number in December 2013 than was previously trending, and I think much of January’s increase is due to sales catching up with pent up demand,” said NAHB Chief Economist David Crowe. “Still, there is little doubt that historically low interest rates, affordable home prices and a healing economy are bringing buyers back into the marketplace.”
Regionally, new-home sales were generally strong with three of the four regions posting large gains. The South, the West and the Northeast showed improvement with respective increases of 10.4%, 11.0% and 73.7%. New-home sales in the Midwest fell by 17.2%.
The inventory of new homes for sale remained steady at 184,000 units in January, which is a 4.7-month supply at the current sales pace. Read NAHB’s press statement. New and existing home sales statistics. Contact: Paul Lopez, 800-368-5242, x8409.
The new GovNow web portal for New Hanover County is now available. Contractors should be able to create user ID’s and search for building jobs on-line at:
The 2014 Inspections Fee Schedule will be effective next Monday. Inspection fees will still be charged for projects with building permits issued prior to March 1, 2014.
The First Monday Code Talk for March 3 is cancelled as the county will be busy with the implementation of the new One Solution permitting system. They will be scheduling additional outreach programs in the near future.
The Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB), showed a slight weakening as the index declined four points to 50 in the fourth quarter of 2013. It is, however, the eighth consecutive reading of 50 or above.
The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that a number of 50 indicates that the same number of respondents report conditions are improving as report conditions are getting worse.
The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums. The MPI component tracking builder and developer perceptions of market-rate rental properties has been the strongest of the components recently, remaining above 50 for 13 straight quarters, but dipped four points in the fourth quarter to 60; while the component for low-rent units fell three points to 47; and for-sale units declined four points to 46.
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, dropped two points to 38, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.
“Multifamily developers are still seeing demand for apartments, as the MVI shows,” said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, Calif., and chairman of NAHB’s Multifamily Leadership Board. “However, the cost and availability of labor is putting pressure on the ability to bring new units online.”
“This quarter’s MPI results are in line with NAHB’s forecast that calls for increased production of new apartments in 2014, but at a slower pace than last year,” said NAHB Chief Economist David Crowe. “The results are also in line with recent downturns in other economic indicators, due to unusually severe weather in parts of the country that disrupted supply chains and affected confidence in several sectors of the economy.”
Historically, the MPI and MVI have performed well as leading indicators of U.S. Census figures for multifamily starts and vacancy rates, providing information on likely movement in the Census figures one to three quarters in advance.
For data tables on the MPI and MVI, visit www.nahb.org/mms.
The very important 2014 election season is in full swing. Candidate filing closed on Friday, February 28 and now we have the final list of candidates which will go before voters first at the May 6 primary and then at the general election on November 4.
The 2014 election will elect candidates to a range of offices including US Senate, US House of Representatives, NC Senate, NC House of Representatives, and various County Commissions including Pender, New Hanover and Brunswick. These elections will be critical to the real estate industry as these elected officials will have an impact on the continued housing recovery.
For a full list of candidates who have filed for office, please visit the following Board of Elections sites:
The House of Representatives will soon consider the NAHB-supported H.R. 3370, the Homeowner Flood Insurance Affordability Act. This bill addresses serious affordability concerns due to dramatic flood insurance premium increases. If not corrected, these increases will continue to severely impact the construction, remodeling and sale of homes in many communities across the nation. This bill will provide certainty and financial stability to the National Flood Insurance Program.