January 2019 Newsletter

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Happy New Year! We are looking forward to a prosperous housing and retiree market to serve our industry in 2019.  For developers and communities alike, the retiree market continues to be a tremendous economic boost.

We are constantly looking at ways of helping better serve our members. Whether it’s through monthly industry updates in our newsletter or digital marketing or becoming one of our certified AARC Seal of Approval communities, we want to help grow your business or destination. Also, don’t forget to share your latest news with us!

The AARC is pleased to announce that Chattanooga, Tennessee, has been chosen as the site for our 2019 annual conference to be held, November 6-8.  This vibrant city will play host for an exciting event, filled with industry leaders sharing techniques, trends, and research that is timely and can be integral in your approach for retiree recruitment. Visit the Conference Page to learn more about the conference and our host city.

Again, thank you for choosing the AARC as part of your business!

Sincerely,

Rachel Baker Chair, The AARC


Augmented reality is becoming a widespread real estate tool

Jim Dalrymple, Inman.com | November 30, 2018

A new survey found that 14.1% of consumers have used either augmented or virtual reality in their home searches

Virtual reality has been struggling to break into the mainstream since Nintendo unveiled its not-so-great Virtual Boy console in the 1990s, but new research shows that in the real estate industry the technology is now, finally, making some serious inroads.

New survey results, from virtual home staging startup Rooomy, show that 14.1 percent of consumers have used either virtual reality (VR) or augmented reality (AR) when searching for a home. Though fairly small in an absolute sense, the number shows that the technology has reached a significant number of homebuyers.

And though Rooomy has not conducted similar previous research — meaning it’s hard to specifically quantify the technology’s growth — the company believes VR and AR are growing in popularity. As an example the company, pointed Inman to its collaboration this year with Sotheby’s International Realty, which produced Curate, a mobile AR app.

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Virtual reality typically presents a viewer with an entirely digital world. Augmented reality, on the other hand, usually superimposes digital elements on an image of the real world. The most popular example of the latter technology is probably Nintendo’s Pokémon GO game, though companies like Rooomy are using it to show would-be homebuyers what a house might look like with various types of furnishings. The pitch is that virtual staging is cheaper, easier, and more flexible than hauling couches and dressers in and out of homes.

The use of VR and AR technology is part of a trend toward increasing reliance on digital tools in real estate more generally. Rooomy’s research also found that seven out of 10 people have toured or viewed a home online before viewing it in person. In addition, more than 27 percent of the survey’s respondents used apps to alert them about new listings, and more than a quarter used the web to compare mortgages.

The survey included 1,500 respondents who were either looking for, or recently found, a home.

Roomy2Rooomy also believes there is room for expansion and disruption in the real estate tech space. Though 56.5 precent of respondents haven’t used AR or VR in any capacity (including outside of real estate), the company said in a statement, the survey found that people have difficulty visualizing home interiors and are interested in better imaging technologies.

“The survey indicates,” Rooomy said in a statement, “that people are becoming increasingly more comfortable with using technology in regard to the home renting/buying process.”


Treasury, IRS Give Big Win to Real Estate Professionals in Qualified Business Income Rule

National Association of Realtors | January 22, 2019

national-association-of-realtors-e1344955443369WASHINGTON (January 22, 2019) – Late last week, the Treasury Department and the Internal Revenue Service issued final regulations regarding the new 20 percent deduction on qualified business income. As Americans begin preparations for the 2018 tax filing season, real estate professionals have been uncertain about the true impact of the 2017 Tax Cuts and Jobs Act on their respective businesses. Friday’s ruling from Treasury and the IRS, however, signaled a significant victory for the real estate industry and for many of the National Association of Realtors®’ 1.3 million members.

“Friday’s ruling is a result of several months of advocacy and collaboration between NAR, our members, and the administration,” said NAR President John Smaby, a second-generation Realtor® from Edina, Minnesota and broker at Edina Realty. “These final guidelines will allow real estate professionals to benefit from the Section 199A 20 percent pass-through deduction, a move that will empower Realtors® to expand their operations and provide improved services to consumers and potential homebuyers across the country. The National Association of Realtors® is grateful for the openness and transparency encouraged by Treasury and the IRS, and we thank them for their hard work to ensure the real estate community was heard throughout this rulemaking process.”

A central component of the new tax law is a reduction of the corporate tax rate – from 35 to 21 percent. However, since nine out of ten American businesses are structured as pass-through entities rather than corporations, the Section 199A provision provides critical tax deductions for small businesses and self-employed independent contractors, which is how many real estate professionals are classified.

Within the 247-page rule issued last Friday, three major provisions for real estate professionals stood out as critical victories for members of the National Association of Realtors®.

Most importantly, the regulation clarifies that all real estate agents and brokers who are not employees but operate as sole proprietors or owners of partnerships, S corporations or limited liability companies are eligible for the new deduction, which can be as high as 20 percent. This includes those whose income exceeds the threshold of $157,500 for single filers and $315,000 for those filing a joint return.

Second, the rule simplifies the process that owners of rental real estate property must follow to claim the new deduction. As written in the Tax Cuts and Jobs Act, only income that is from a “trade or business” qualifies for the 20 percent write-off. However, because this distinction was not clearly defined by Congress when crafting the law, various court rulings and prior IRS guidance have caused confusion among tax professionals in determining which rental properties were merely investments and which could accurately be considered a business enterprise.

NAR strongly urged Treasury and the IRS to simplify the rules in order to give millions of rental real estate owners certainty surrounding their ability to qualify for this new deduction. Friday’s final regulations included a bright-line safe harbor test requiring at least 250 hours per year spent on maintaining and repairing property, collecting rent, paying expenses and conducting other typical landlord activities.

Finally, within the proposed regulation released last August, those who had exchanged one parcel of real estate under Section 1031 for another parcel were unfairly denied deduction eligibility. However, NAR and multiple additional trade groups concerned with commercial real estate were vocal in highlighting this shortcoming. In a positive resolution to the situation, Treasury and the IRS recognized the initial ruling was misguided and corrected the policy in Friday’s final guidance.

“NAR maintained consistent and coordinated communication with Treasury and the IRS throughout this rulemaking process. The finalized ruling, which represents a tremendous win for real estate professionals across the country, is a direct result of that engagement,” said Shannon McGahn, NAR Senior Vice President of Government Affairs. “We are thrilled to see our members emerge from this process so favorably, and we thank Treasury and the IRS for all of their hard work in ensuring consistency and clarity within these policies as America’s 1.3 million Realtors® begin filing their 2018 tax returns in the coming weeks.”

The National Association of Realtors® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.


Home prices rise at a slower pace: S&P Case-Shiller

Diana Olick, CNBC.com | January 29, 2019
  • Home values increased 5.2 percent annually in November, down from 5.3 percent in October, according to the widely watched S&P CoreLogic Case-Shiller National Home Price Index.
  • The 10-city composite annual increase also fell to 4.3 percent, down from 4.7 percent in the previous month.
  • The 20-city composite saw a 4.7 percent annual gain, down from 5.0 percent in October.

Home values increased 5.2 percent annually in November, slowing from 5.3 percent in October, according to the widely watched S&P CoreLogic Case-Shiller National Home Price Index.

The 10-city composite annual increase also fell to 4.3 percent, down from 4.7 percent in the previous month. The 20-city composite saw a 4.7 percent annual gain, down from 5.0 percent in October.

Home price gains have been slowing since last spring, as higher mortgage interest rates cut sharply into affordability. The gains are slowing the most in large metropolitan markets, where home prices had overheated over the past three years.

Las Vegas, Phoenix and Seattle continue to see the highest year-over-year gains in the index’s 20-city composite. Las Vegas home prices were 12 percent higher compared with November 2017. Phoenix saw an 8.1 percent annual increase, and Seattle’s gains came in at 6.3 percent. Seattle had been seeing double-digit price increases in 2017. Just seven of the 20 cities reported higher price increases in the year ended in November 2018 versus the year ended in October 2018.

“The pace of price increases are being dampened by declining sales of existing homes and weaker affordability,” said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices in a release.

Sales peaked in November 2017 and then began falling as mortgage rates rose. After rising steadily, rates began to drop again in November 2018, following a change in policy at the Federal Reserve. But the rate on the popular 30-year fixed mortgage is still higher today than it was one year ago.

“Housing market conditions are mixed while analysts’ comments express concerns that housing is weakening and could affect the broader economy. Current low inventories of homes for sale – about a four-month supply – are supporting home prices. New home construction trends, like sales of existing homes, peaked in late 2017 and are flat to down since then,” added Blitzer.

Rising wages and continued growth in employment are all favorable, he added, and with prices moderating and rates currently not rising, the spring market could see a slight boost.

“Slower price growth will help would-be buyers feel like their goal isn’t moving away faster than they can catch up. Against incomes rising at a roughly 3 percent pace, 4 percent home price growth is nearly at just the right pace,” said Danielle Hale, chief economist at Realtor.com.