Will the Housing Market Ever Bounce Back?

March 10, 2011 § Leave a comment

Although the economy is slowly beginning to recover, housing prices are still declining.  An article from the Wall Street Journal noted that, “Home prices fell to new lows in 11 cities in December, the latest sign that the weak housing sector remains a soft spot in the U.S. economy.”  In many areas, home prices fell 1% from November to December, which raises the question, will the housing market ever be back to normal?  One factor that seems to be having a negative effect on the housing market is the continued addition of numerous foreclosures to the market.  According to the same article, “Economists at Capital Economics estimate that for the current level of demand, there are 850,000 too many homes for sale.”  However it went on to say that many economists do believe it will recover shortly and eventually “stabilize as economic growth accelerates.” 

Unfortunately for many people, the housing crash has already taken its toll.  Some people have invested so much into houses that they can now barely sell to break even.  Even as consumer confidence is on the rise, it makes one wonder if the economy will ever truly recover.



New Tax Break

March 10, 2011 § Leave a comment

Taxes.  Love them (does anyone?) or hate them, they don’t seem to be going anywhere anytime soon.  So tax breaks and new ways to take some of the tax burden off individuals is always something that catches my eye.  In a recent article from the Wall Street Journal, the author discussed the new tax rules involving gift taxes;  “For the next two years, the gift-tax exemption jumps to $5 million from $1 million for individuals and to $10 million from $2 million for couples…”.  People receiving gifts that exceed these amounts have also been cut a break, with the tax rate dropping from 55% to 35%.  In recent years, the estate tax exemption amount was raised to 5 million and amounts exceeding the 5 million mark received a tax rate drop to 35%.  I thought it was interesting to note that the only states that impose an additional state gift tax are Tennessee and Connecticut.

Ultimately it’s nice to see tax reform occurring, even if it will only affect some taxpayers.  Personally, raising the gift-tax exemption does not have an effect on me.  I’d like to see more reform occur at lower-income levels instead of at the higher level helping people with millions of dollars worth in assets.

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