Your Hudson Real Estate Pulse: What's The "Fiscal Cliff" Got To Do With It?

Dare I write a blog about the looming "fiscal cliff" ahead? I know hearing that term one more time may push some of you right on over that proverbial cliff. It really is annoying, constantly hearing about what this mayhem could all mean, being at the mercy of our elected politicians we hope will make the right decisions for our future. It's no doubt how we handle the fiscal cliff ahead will affect the economy, but the real estate market has it's own cliff looming ahead.

HSH.com wrote a helpful article here explaining 5 things to watch out for in the real estate market. I'll touch on each of these points:

1. The Mortgage Interest Deduction Expires

Our elected politicians haven't voted to extend the tax breaks yet, so it's possible that the tax break could expire and interest accrued on certain mortgage debt would no longer be deductible. Interest on loans of up to $1,000,000 are deductible. The limit will likely be lowered, but nobody knows what that magic number will be.

2. The Mortgage Debt Forgiveness Act Expires

This "Act" is set to expire by this years end. It means that unpaid mortgage debt is up for grabs by the IRS, as in taxable income. This certianly will be tough on some homeowners who are in or plan to engage in a short sale.

3.Tax-deductible mortgage insurance

Mortgage insurance is tax deductible, at least until 2013. If Congress lets this expire, homeowners won't be able to deduct mortgage insurance.

4. Operation Twist Expires

Yet again, this "Operation" is set to end starting 2013. This program was designed to lower long term interest rates. However, the Federal Reserve has continually and recently claimed it will keep interest rates very low until almost 2016 in hopes to encourage borrowers to purchase homes.

5. Foreclosure reviews

Request for a foreclosure review is also set to expire at years end.

These five points are certainly pushing many to make some real estate decisions before year's end in fear of higher rates, fees etc. This being said, many real estate experts still aren't extremely concerned about this so called real estate "fiscal cliff". They believe that even with the possible changes, the housing market at worst will grow slower, but certainly not go back to where we were years ago. Homeowners could see their costs go up with the loss of certain breaks and benefits, but again, we don't know how this will all pan out until Congress and the President make some decisions. So no need to panic. Until we find out what decisions our politicians make, let's check in on how the local Hudson real estate market ended up in November. 

Good news, we added 32 new actives, significantly higher than November last year, as well as 28 sold listings, compared to only 22 last November. Let's hope Congress and the President can work together to make the right decisions for the economy as a whole, and in turn we see a continued real estate market recovery like we have been. Until next time, feel free to contact me if you have any questions about the local Hudson market.

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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.