Big drop in speculation - tell me something I didn't know!
by Kaushik Sirkar, Chandler REALTOR®
Chandler AZ Real Estate
Many parts of the country recently experienced a big real estate boom. Now those parts of the country are likely somewhere between a real estate 'flat' and a semi-bust. What drove the boom? Investors and second home buyers in many cases. The term investor - its an interesting one. In dictionary.com, the first definition is as follows:
| 1. | to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value. |
Yes, technically I guess then all the people who bought homes in hopes of a quick profit were investors. But I'd just as soon call them speculators......and these are the folks who are apparently no longer investing, errr, speculating in the droves that they were. Check out this article from money.cnn.com.
Investment home purchases dropped by nearly 30% in 2006. I would expect investor purchases will drop further in 2007. Interestingly enough, second home sales actually increased in 2006. But alas, many of our friends, the investors (or speculators, if you will) have gone into hiding.....This is definitely the case the in the Phoenix market. The few prospective investor clients I've had recently...have been just that...prospective!
Thanks for Reading :)
Kaushik Sirkar, Chandler Realtor®
http://www.homesphx.com
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I am lucky enought to be in one of those vacation home markets, and I can tell you that our homes and condos are moving. Our second home owners are investors too, but they are not looking for a quick buck. They like the appreciation they get, but most of them prefer not to rent their vacation homes to other people. They like to keep them for their family and friends and realize the appreciation one day, should they sell. However, if they don't rent, they probably cannot qualify to do a 1031 tax deferred exchange, so they do get hit with a tax bill. The long term capital gain is only 15% right now, and if they haven't rented there is no depreciation to recapture (which would be taxed at 25%) so that helps!
I figure if they are lucky enough to have made the money and have it available to pay the taxes, then they need to bite the bullet and do it!