Nov 23

You’re Not Investing in Real Estate?

You’re Not Investing in Real Estate?


Most real estate professionals are independent contractors, which means they’re largely on their own when it comes to putting money away for retirement. One way to prepare for the future is to buy investment property. Having an appreciating asset like that gives you something to sell when you’re no longer working, but only about 30 percent of REALTORS® own investment property.

That’s one reason why NAR will be making it a priority in the coming year to help educate its members about ways to prepare for retirement.

The association launched a class earlier this month on working with real estate investors and becoming one on your own. And going forward, it will offer other resources.

“We find that our members work very hard for 30 years and in the end they don’t have anything to show for it,” NAR President Bill Brown says. “That’s why we’d like our members to start thinking about the future now.”

NAR’s effort on retirement is a top story in the latest Voice for Real Estate news video. The video also looks at the recent jump in mortgage interest rates. Although they’re still historically low, they are moving up quickly. After being at around 3.5 percent for many months, over the last few weeks they’ve risen to about 4 percent. That’s driven in part by a rise in bond yields, which are pricing in anticipated stimulus action in Washington under a new Administration and Congress. “Any time interest rates rise, it is a hindrance to home buying,” says NAR Chief Economist Lawrence Yun.

Yun thinks that will be partly offset by positive growth stemming from any stimulus effect of the federal policy changes (like reduced taxes, deregulation, and increased infrastructure spending). Also working in favor of today’s market is relatively strong job and wage growth. As long as these indicators stay positive, negative effects of higher rates will be offset to a degree.

The video also looks at what is expected to happen in Congress over the next month, during the lame-duck session, as lawmakers finalize last-minute legislation. NAR Deputy Chief Lobbyist Jamie Gregory says the agenda will likely be minimal, focused mainly on passing a short-term measure to fund the federal government until lawmakers and the Administration start tackling big-ticket items early next year like tax reform and reform of the secondary mortgage market.

The video also looks at what coming tax reform could look like for commercial real estate. Among other things, look for changes to be proposed for the expensing of business interest, treatment of carried interest, 1031 tax-deferred exchanges, and depreciation of property assets. Also, look for broad reductions in tax rates and more infrastructure spending.

Also covered in the video is a look at a bifurcation in commercial real estate markets, with smaller markers continuing to see increased transactions while in larger markets transactions are slowing down.

—By , REALTOR® Magazine

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