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Homeownership

NAR continues efforts to protect the MID

(HOMEOWNERSHIP) With no currently formed tax proposal on the table, much political uncertainty and anxiety remains surrounding MIDs.

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taxes provisions mid reform

Whenever the United States enters into a new political administration, there is no guarantee that a previous president’s policy priorities will be kept intact.

However, one policy that has been held over many a president’s administration is the Mortgage Interest Deduction (MID), which was enacted in the 1950s.

That may change soon.

With the newest administration pushing hard for tax reform, the MID could come onto the chopping block, to the chagrin of the National Association of Realtors (NAR), who has been protecting it for many years.

“We would have strong objections over any effort to cap or eliminate the MID,” spokesperson said. “It’s our hope that leaders in Congress will move forward [with tax reform] with homeowners in mind.”

NAR took the opportunity to testify before the Senate Finance Committee earlier in October to urge senators to keep the current MID alive as written in the federal tax code.

With talks in August of trying to cap the MID by Treasury Secretary Steven Mnuchin, NAR has been very interested in what this era of potential tax code overhaul could mean for homeowners and buyers.

The MID started in the middle of the 20th century as a way to make home buying and ownership more accessible and attractive for the middle class. According to economist Bruce Bartlett, the MID offered the new middle class of the 1950s a new way to “reduce their tax liability.”

The MID does this by allowing a homebuyer to write of interest accrued on a home loan as a deduction on their federal income taxes. A homebuyer then would able to consider this information when they look at how much they can borrow and how much they can afford to invest in a home.

If the MID was removed, or capped, this could change how much your potential homebuyer would spend in taxes.

The Tax Foundation, a nonpartisan tax policy research institute, found that a cap on the MID would essentially raise taxes sharply on the the highest income–the 1 percent–income bracket.

The middle class may experience a small increase as well, but only a tenth of one percent. This cap would also increase revenue in Uncle Sam’s pocket, to the tune of $95.5 billion after the first decade of a cap being enacted.

But to every policy there is another element, outside the areas of dollars, cents, and percentages: the human element. The targeting of the MID during a tax reform could send the wrong message about the faith in many American’s dream goal of homeownership.

It could impact the market for real estate agents and Realtors alike with smaller incentive and ability to buy a home.

Time will only tell if the NAR is successful in protecting the Mortgage Interest Deduction from tax reform efforts.

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Alexandra Bohannon has a Master of Public Administration degree from University of Oklahoma with a concentration in public policy. She is currently based in Oklahoma City, working as a freelance filmmaker, writer, and podcaster. Alexandra loves playing Dungeons and Dragons and is a diehard Trekkie.

Homeownership

Hemp could be the next sustainable building material to catch on

(REAL ESTATE) Hemp has been introduced as a building material after becoming legal to grow in America, but will it be the next popular green building material?

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hemp concrete hempcrete

Although mud and daub type building structures date back thousands of years, interest in concrete made from plant materials has increased due to the interest in sustainable architecture.

Research into more sustainable buildings materials have led to the development of bio-composite concrete of hemp and lime, which has been registered in the United States as Tradical Hempcrete® by American Lime Technology Products company.

This green product is also sold as precast walls with structural framing. The hemp lime product alone had issues with fire safety, rotting under wet conditions, and the lack of ability to perform as a standalone structure due to its poor load-bearing qualities.

Different framing structures have been introduced worldwide to improve the capacity of the building material to be used in larger buildings, although ironically these high rise buildings have been found to be less energy efficient which seems to defeat the purpose of green building.

Hemp or bamboo stalks as the structural frame combined with the hemp/lime concrete mixture are the currently preferred construction materials, and are used by companies such as Hemp Architecture in England, described in an Architectural Review article on alternative building materials.

Growing hemp for construction purposes was never criminalized in in Europe, and hemp-constructed homes as well as businesses have flourished in France and the United Kingdom
Other building projects have continued in the United States, though custom homes using hemp based products such as James Savage’s home in Stuveysant, NY are the exception rather than the rule.

The main impasse to American hemp-based construction was growing hemp was not legal in the United States until recently, and the majority of hemp construction products are imported from Canada. Although these products are fire and pest resistant, as well as economically friendly, the main appeal may be the appeal of the drug culture stigma more than the practicality of the building materials.

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Homeownership

The Granny Pod could be the alternative to nursing homes (and why people will soon demand bigger back yards)

The Granny Pod looks like a guest house and sits conveniently in any backyard – they plug right up to existing plumbing and electrical and allow both caregiver and senior to have their own space while remaining connected.

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I’ve spent most of my life living everywhere but the United States, and from what I’ve seen in other cultures, when couples tie the knot parents come with the marriage! That doesn’t necessarily mean the parents live with the kids (although I’ve seen that in countries like Japan, Korea, and Turkey), but I feel safe saying that it’s a given the kids will taken in/take on/take over their ailing parents at some point in said parent’s lives (Italy for example).

I’m not sure the US is set up that way. The big business of senior living facilities and nursing homes tells me otherwise.

But that might be changing thanks to the Granny Pod and similar mono-living facilities that can be installed in a person’s backyard (which is why we suspect people may demanding bigger back yards in coming years).

Close, but not TOO close

MedCottages or “Granny Pods” seem to be a viable solution for taking care of elderly family members without giving up the independence Americans put so much emphasis on.

A recent story explains that Reverend Ken Dupin created the MedCottage as an alternative to nursing homes, as 78 million baby boomers head toward retirement.

These 12 feet by 24 feet pods can sit conveniently in any backyard and plug right up to one’s existing plumbing and electrical. The pods allow both caregiver and senior to have their own space while remaining connected.

Retiree support for Granny Pods

For its part, AARP, the lobbying group for aging Americans, has gone on record to assert that local zoning laws pose one of the biggest obstacles to making such dwellings a practical solution to caring for aging family members in what it calls “accessory dwelling units.”

AARP spokesperson, Nancy Thompson said “the MedCottage has some of the features the organization advocates in accessory dwelling units, but not all of the universal design features that could be useful for people of all ages.” She does add that it’s a step in the right direction for accessory dwelling units.

No more condo fees

I’m no social worker, but studies bear out that human contact is vital as we grow older. Even in a worst case scenario (when an individual living in a nursing home is alone in their room for much of the day), they at least meet other patrons at lunch or dinner, and at whatever social outings are plugged into a daily schedule. For all the close circuitry and monitoring the Granny Pod offers, I don’t know if it takes the place of human contact, so hopefully families will remember the ties that bind them and do more than just monitor a screen to see if Granny is okay.

Another benefit of the Granny Pod is that once it’s paid for and installed, that’s it – no more monthly rent or condo fees that can deplete a retiree’s resources.

Granny Pod starting a movement

According to the Washington Post, other companies seeking to make similar structures are Seattle-based FabCab (whose name comes from Fabulous Cabin), and San Francisco-based Larson Shores Architects, which designs what it calls “Architectural Solutions for the Aging Population,” or ASAP, and its “Inspired In-Law” dwellings” demonstrates that assisted living facilities aren’t the only item on the menu.

As this type of structure catches on, it may threaten nursing homes and even retirement condo villages, and could influence the sizes of yards builders offer in coming years. Industry practitioners should be aware of the trend, and be able to offer this type of setup to clients who are actively considering options for their parents (the solution may just be a bigger back yard).

#GrannyPods

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Homeownership

Real estate association launches impactful video – I’m not crying, you are

(HOMEOWNERSHIP) The dream of owning a home is under assault – one real estate association has launched a massive awareness campaign that is truly meaningful.

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real estate association video

The Ontario Real Estate Association (OREA) has launched a new site, KeepTheDreamAlive.ca to lobby locals to “keep the dream of home ownership alive.”

America is not the only nation with diminishing affordability conditions, rising prices, and limited inventory. No, Canada is experiencing a similar market, and OREA is taking action to make sure those people hoping to own have the chance to do so.

“Millennials want to own homes but it’s never been tougher to achieve,” the organization notes. “Rising home prices have pushed home ownership out of reach. All their hard work and saving just isn’t enough to compete with rising prices.”

The KeepTheDreamAlive.ca site offers homeownership statistics and makes it easy to email their candidate to express the importance of the dream of ownership.

The video is moving. Prior to watching, we assumed it was another feel-good video about how neat homeownership, but to end it in broken dreams is more realistic than what you’ll see here in America.

We hope that changes. In America, the National Association of Realtors (NAR) is extremely realistic with data and they have long been very vocal on people being squeezed out of the market. And the major real estate sites paint a sunny picture of home searching and making the dream come true, but none reach as far as OREA has, to express that homeownership is simply out of reach for otherwise qualified people.

Send a link to this story to your local and state Associations as they consider their plans for marketing outreach next year. Perhaps it’s time to empower local homeowners to contact their representatives, lest they remain unaware of the big picture.

While NAR has repeatedly noted that three things will alleviate the pressure on the market (investors putting inventory on the market, builders stepping up production, and more current homeowners opting to sell), overall awareness that homeownership is out of reach for many can put a spotlight on these conditions in each market.

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