5 to Watch: January 2011
News and trends that we're keeping an eye on this month.
January 1, 2011
1. Who’s Using the MID?
Households headed by persons between 35 and 45 years of age are the largest takers of the mortgage interest deduction, NAR research shows. Based on IRS data from 2008, these households take an annual average deduction of $13,829, compared with $9,577 for households headed by persons 65 and older and $8,799 for households headed by persons under 26. Reasons for this? Typically, home owners in the 35–45 bracket still have many years left to go on their mortgage, and a relatively high proportion of their monthly payment goes to interest. Also, their houses tend to be larger than those of the very youngest home owners, so their mortgage and interest payments are higher.
2. Straight Facts on Medicare Tax
What’s the deal with the 3.8 percent Medicare tax you’ve been hearing so much about? That’s what the NATIONAL ASSOCIATION OF REALTORS® is hoping to clarify through a new video and brochure. The tax, which will apply to some investment gains of high-income households starting in January 2013, is expected to generate an estimated $210 billion to help shore up Medicare. The tax will affect people differently based on their financial circumstances. For most, the impact is expected to be limited. The tax will be applied to investment income (capital gains and rents after deductions, dividends, and interest) of single people with income of at least $200,000 and married couples with income of at least $250,000. To learn all the facts, visit REALTOR.org/realtormag and search for “Medicare tax.”
3. Banks, States Near Deal on Foreclosure Fund
Home owners who can prove they lost their home in an improper foreclosure could receive compensation from a fund set up by major lenders to help inoculate the banks from thousands of individual lawsuits stemming from the improperly processed foreclosures identified in late 2010. Details of the fund in mid-November were still being worked out between state attorneys general, who’ve been investigating improper foreclosure processing by the country’s largest lenders, including Bank of America, JP Morgan Chase, and Wells Fargo. Among the details to be finalized are whether banks would take a new stab at modifying the mortgages of home owners whose foreclosure was processed improperly and whether the modifications would include write-downs of the principal.
4. Home Is Still a Good Investment
Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000—a 24 percent increase—while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent. That’s according to NAR’s latest survey of home buyers and sellers, available at REALTOR.org/research. “Eighty-five percent of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks,” says Paul Bishop, NAR vice president of research. “This indicates the long-term view of home ownership as a fundamental goal and value remains sound.”
5. Going Beyond Dot-Com
The Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit corporation that approves top-level domains like .gov and .edu, passed rule changes two years ago that could result in a big expansion of these names in 2011. The new policy effectively throws open the door to any group that wants to have its own top-level domain and has the institutional strength to operate, police, and pay the costs of the name in accordance with ICANN’s rules. “We are opening up a new world,” said Robert Gaetano, one of ICANN’s board members, at the time the rule changes were approved. Operating a new top-level domain won’t be cheap or easy: Applications cost more than $100,000, annual subscription costs will be tens of thousands of dollars, and the operator has to have advanced technical capabilities. Organized real estate is certainly interested. NAR announced two years ago that it was looking into a top-level domain for real estate, and some MLS executives have expressed an interest in doing something similar for the MLS system.
Updated: August 19, 2019