Recent New Home Sales Surge Nationally Despite Slowly Rising Mortgage Interest Rates and Possible Fed Tapering

real estate investment

As we head towards the end of 2013, and into the start of 2014, there are some noteworthy national trends in real estate that are worth watching. These primarily center on the increasing likelihood of rising mortgage interest rates, as well as the possibility of the Federal Reserve beginning to taper, or slow down, its long-running bond buyback program. Both trends could foretell significant changes in the real estate market nationally in 2014.

In spite of these emerging trends, there are some other numbers worth noting in terms of the national real estate market that could also impact the coming year. One of these is that new home sales surged in October 2013 by 25% from the previous month, according to a report released by the U.S. Department of Commerce.

According to Keith Gumbinger, Vice-President of the mortgage information site HSH Associates, “It may very well be that a lot of folks are feeling better about their prospects and buying a new home.” In addition, Gumbinger also stated that there has been a general ease of financing for buyers, as “builders are motivated to get folks into homes.” Finally, Gumbinger also said that inventories of existing homes are thin in several markets, prompting people to build new homes rather than buy old ones.

The largest trend, however, in the coming year will center on the very real possibility of rising mortgage interest rates, especially since the Fed is currently weighing whether or not to start with tapering, or reducing the amount and scale to the Fed has been buying back bonds and securities since the 2008 financial crisis. The key to any real impacts will center on job and wage growth in the economy as a whole, and rising home prices will also have an impact as to whether or not there will be more buyers and sellers on the market in the coming year. At this point, it is too early to state how much of an impact this will have on the market, even though mortgage rates, from a more historical perspective, still remain low by comparison.

In view of these emerging trends, as well as recent surges in both home prices and new home sales nationally, there has never been a better time to find the home of your dreams, right here in the Great Smoky Mountains! Please feel free to browse our available inventory of properties, and see the many varieties of properties that we currently have here in the Smokies! Let us help you realize your home ownership dreams today!

 

Here Are A Few of My Featured Properties:

Private Log Cabin w/Amazing Mtn. Views! Enjoy privacy, mountain views and great outdoor spaces in this Sevierville log home that sits on over four acres! Type: Single Family Home Location: Sevierville,TN Price: $359,900 Get more information >
Luxurious Cabin w/Amazing Mtn. Views! Luxurious, scenic, 3 BD/4.5 BA, 2,600+ sq ft log cabin with spectacular views of the Smokies and a virtual bird’s eye view downtown Gatlinburg and surrounding areas! Type: Single Family Home Location: Gatlinburg, Tennessee Price: $369,900 Get more information >
Unique Sevierville Home w/Large Backyard Beautiful, masonry-style, 3 BD/2.5 BA, 3700+ sq. ft. home located within minutes to Dollywood! Type: Single Family Home Location: Sevierville,TN Price: $299,900 Get more information >


The Jason White Team
Century 21 Four Seasons Realty
1441 Wiley Oakley Dr
Gatlinburg, TN 37738
Toll Free: 877-678-2121
Fax: 865-436-7227
Email: jason@jasonwhiteteam.com
Website: www.SmokyMountainLifestyle.com

Tools for Real Estate Investment 101: Self-Directed IRA’s and Your Real Estate Investment Needs

Real Estate Deals

As home prices continue their gradual trend of rising during 2013, there are various investment tools that can be utilized by potential buyers and/or sellers in considering whether or not to invest in real estate, especially here in the Great Smoky Mountain real estate market. Today, we will focus on one of these investment tools, which has gained popularity in recent years, namely that of the self-directed IRA (Individual Retirement Account).

A Self-directed Individual Retirement Account (IRA) is not your typical IRA since it allows the account owner to invest in a wider set of assets than those offered by custodians and trustees of traditional IRAs. This separates a Self-directed IRA from other types of IRAs since the account holder can decide what permissible investments to put his or her money into without having the custodian or trustee set a limit on what investments to pursue, hence the term “self-directed.” In other words, the account holder is limited only by the rules set by the Internal Revenue Service (IRS) and of course, his or her choice of investments. In addition, the custodian or trustee is also in charge of facilitating all other transactions that involve the Self-directed IRA.

Some potential advantages of using a Self-directed IRA include, but are not excluded to, the following:

1.) Having a Self-directed IRA allows an account holder to purchase properties anywhere that’s allowed by law. Almost every type of real estate is permissible such as residential and commercial property, real estate options, and the like.

2.) Purchasing property can also be done without paying all the required capital. For example, account holders can participate in a limited liability company (LLC) that directly invests in real estate.

3.) Many account holders have already taken advantage of the current buyers’ market where property prices are low and foreclosure rates are high. They can attest to how they’ve benefited from their diversified portfolio within their Self-directed IRA.

4.) Usually, real estate investments purchased within a Self-directed IRA are intended as long-term investments. This means that once an account holder buys a property, they will hold onto it until its value appreciates and is ready to be sold. In other words, the “buy-low, sell-high” concept is well suited for this type of IRA.

5.) Selling an IRA-owned home lets the owner avoid paying capital gains tax if the proceeds are rolled back into the IRA. This especially applies to those who rehab properties in rundown condition and flip them for quick profit.

However, there are limitations as to what a Self-directed IRA can do, including, but not excluded to, the following:

1.) The Self-directed IRA cannot purchase real estate from a “disqualified person” either directly or indirectly. It also prohibits a “disqualified person” from using a property purchased within a Self-directed IRA. A “disqualified person” includes, but is not excluded to: Your spouse, your lineal ascendants/descendants and their spouses, plan fiduciaries (including advisors, custodians, and administrators), an entity (i.e., estate, corporation, etc.) where you own at least 50% of the voting stock, directly or indirectly, and anyone providing services to the plan.

2.) The purchased property cannot be used by the account holder – not even for a night. Only qualified people may use it and this does not include one’s relatives. Unless the account holder is 59 and a half years old and retired, then living in the investment property is deemed illegal.

3.) Account holders and family members cannot buy or sell property directly from their IRA. Likewise, it is also forbidden to buy or sell directly from the companies or enterprises that they own.

4.) Borrowing or lending money from the IRA is not allowed, and the IRA cannot be used to lend money to family members or as collateral for any type of loan.

5.) IRA funds and personal accounts cannot be combined or co-mingled.

6.) Those involved in the servicing of the Self-directed IRA account are not allowed to participate in any transaction that involves the account.

With a Self-directed IRA, you will have to find a reliable custodian or trustee to open an account and comply with the IRS requirements, and set up the account with a bank or other financial institution. When an investment property has been selected, the account holder would then authorize the custodian to pay a deposit from the Self-directed IRA by signing an authorization form. After which, the account holder must complete the necessary documents and forward them to the custodian or trustee. The closing agent will then coordinate the remainder of the transaction and release any additional funds required.

Finally, Self-directed IRA’s, like any other investment in real estate, do involve a lot of risk. First, it is recommended that one invests only 25 percent at the most if you are not inclined to be a “risk taker.” With the prices of properties at their current levels, you can probably find one that you may like. Second, keep in mind that the Self-directed IRA is making the investment — not you or anyone else. You can’t simply take the cash flow that you earn from your investment property since the custodian or trustee is in charge of it through your IRA. Third, be sure to leave enough funds in your Self-directed IRA to cover unexpected expenses related to your property, such as tenant turnover, maintenance and repairs. This will put you in a safe position should you incur any “additional” costs. Finally, please always seek the advice of qualified real estate investment professionals that can help you find the properties that would be best suited for your overall retirement goals. Like anything else, always ask questions, and make sure to get as much as information as you can before using this investment tool, or any other investment tool, before deciding to act on it.

With this basic knowledge and understanding of a potentially powerful investment tool for real estate, why not see what the Great Smoky Mountains real market can offer you today? Please feel free to browse our available properties, and let one of our buyer specialists help realize your home ownership dreams today! Come and see what the Great Smoky Mountains can offer you today!

Here Are A Few of My Featured Listings:

Nice Ranch-Style Home in Sevierville! Beautiful, well-maintained, 1,300+ sq ft, 3 BD/2 BA ranch-style home located in Sevierville, is walking distance to the nearby Pigeon River, along with being mins. to Dollywood, Pigeon Forge, and downtown Sevierville! Type: Single Family Home Location: Sevierville,TN Price: $159,900 Get more information >
Beautiful Private Cabin w/City View Beautiful, private 4 Bedroom/3 Bathroom cabin located just below Ober Gatlinburg w/a 20-mile view! Type: Single Family Home Location: Gatlinburg,Tennessee Price: $195,000 Get more information >
Great Views & Privacy This three level cabin has consistently produced right at $30k a year in rental income every year since 2007! Located on a private lot it features a great view and a lot of windows and deck space for enjoying the scenery Type: Single Family Home Location: Pigeon Forge Price: $279,900 Get more information >


The Jason White Team
Century 21 Four Seasons Realty
1441 Wiley Oakley Dr
Gatlinburg, TN 37738
Toll Free: 877-678-2121
Fax: 865-436-7227
Email: jason@jasonwhiteteam.com
Website: www.SmokyMountainLifestyle.com