Happy New Year! It’s a chilly start to 2013, but things aren’t necessarily freezing up in the real estate market, in our neck of the woods anyways. It’s been a crazy week to say the least. It could just be me, but all the bustle on Capital Hill feels a bit like a circus, and even today, after we’ve supposedly avoided the "fiscal cliff", it sounds like we’ve only postponed the sequester for two months. I’ll give you a quick update on our local market, and explain how some of the recent “fiscal cliff” decisions will affect the real estate market for the new year.
How’d our local Hudson market end up for 2012? Once again, it was better than last year. We had 31 sold listings, up from 29 last year and 19 new actives, up from last year as well. Despite all that is set to happen in 2013, experts still forecast a 1-2% increase in home values, and in some areas as much as 5-6%. Our local unemployment rate at 4.3% is well below the national average at 7.7% and total employment in St. Croix County is up 2.2% from last year as I stated in my last blog post. Certainly this will help keep our local real estate market growing. Also, the Federal Reserve remains committed this next year to keep mortgage interest rates at historic 40 year lows. Some recent decisions decided on Capital Hill the last few days will also likely impact the real estate market overall.
1. Payroll Tax Increase
Pretty much everybody will be paying 2% more in payroll taxes on the first $113,000 of earned income. Higher taxes for everyone isn’t exactly a recipe that inspires people to spend more money, however, it’s unlikely that this 2% increase will be a deal breaker in determining whether or not someone will buy or sell their home.
2. The Mortgage Debt Forgiveness Act Extended
The Mortgage Debt Relief Act will last until Jan. 1, 2014. This news is a huge relief to homeowners who need to sell their homes, but were worried about paying taxes on forgiven mortgage debt.
3. Raising the Threshold on the “Wealthy”
The threshold for higher taxes that Obama wanted was raised from $250,000 to $450,000. Income taxes above that level are back to Clinton-era levels. This is a relief to those who fall within the $250k-450k gap who expected their income tax to rise under Obama.
4. The Debt Ceiling
The most disconcerting factor in all of this perhaps is that we’ve seemingly avoided falling off the cliff, but for how long? The country’s long-term budget problems are still staring us in the face, and we could be facing another credit rating downgrade depending on how we address the national debt ceiling.
Apparently though after all the “fiscal cliff” dealings, unresolved issues etc., the stock market shot even higher today. So I’m going to remain hopeful that our elected officials will be able to address our national debt crisis, and that consumers will remain confident so we can continue to see steady growth in the housing market. Here’s to a hopeful 2013. Until next time, feel free to contact me if you have any questions about the local Hudson market.
I have been involved in real estate for nearly 20 years working as an assistant, hostess, closer, accounting and now licensed REALTOR for over 13 years. I serve the St. Croix Valley including: Lakeland, Afton, Stillwater, Woodbury, Hudson, Roberts, Hammond, Baldwin, Spring Valley, New Richmond, Somerset, River Falls, and Prescott. Contact me at realestatewimn.com.