POTENTIAL CHALLENGES FOR THE REALEIGH-DURHAM REAL ESTATE MARKET

It never fails.

A city starts up the growth curve of a formidable real estate market and local government finds yet another way to pull additional financial benefit from these changes at the expense of the homeowner.

What is Tiff complaining about, you ask?

Answer: The North Carolina Home Tax. This tax, which is currently being considered in the state legislature, would impose an additional 1% fee to the seller upon the sale of a North Carolina residence. It is, essentially, a tax on the equity in our homes.

Example: Neil and Joanna move to the Triangle for a new job and purchase a home for 200k. Neil is unexpectedly transferred for work, and they have to sell their home 3 months after their move. Well, with this new tax, not only will they incur the typical closing costs on the sale of their home (which already include a $2 per $1000 revenue tax paid to the state … $400 in our example), but they will also have to pay the state another 1% tax on the sales price (i.e. another $2100 if they sell their home for 210k). Hmmm…$2500 for the privilege of selling their home. Sounds steep to me. Visit www.itsabadidea.org for more information on the NC home tax.

Another challenge facing North Carolina home-builders and homebuyers is increased impact fees. These impact fees are typically charged to the builder or developer of a new property or subdivision to cover the additional infrastructure capacity costs (i.e. “impact”) that tend to go along with an increase in population. These may cover the cost of more road maintenance, more schools, or any of a slew of other costs. The intent is to cover the additional burden the city will have in maintaining the locality in light of the population increase.

These costs are, of course, passed on to the end-buyers of new homes by way of higher builder pricing on these properties. Seems to make sense at first glance, but after a bit of thought, does it seem fair to have new homebuyers carry the full burden of the cost to maintain a growing city that has many more current residents that will also benefit from city improvements? Every resident of the city will benefit from the roads, schools and other improvements, so it seems these costs would be better allocated across the entire population, or in some other equitable fashion.

Numerous trade organizations, including the North Carolina Realtor Association and the Association of Homebuilders are fighting for better solutions to these challenges. I’ll be sure to keep you posted.

I know, I know…

I’m usually the bearer of GOOD news with regard to the Raleigh-Durham-Chapel Hill real estate market, but I feel it’s my duty to report on both the good and the (potentially) bad. I am now stepping down off of my soapbox (temporarily), but I hope that this brief discussion has helped to keep you abreast of changes in our local market.

The good thing is that the Raleigh-Durham real estate market remains strong and very affordable despite pending changes. Even with increased impact fees and proposed home sales taxes it will be a long long time (if ever) until returns on Raleigh-Durham real estate investments suffer.

For more information, or for additional insight into the many POSITIVES of investing in Raleigh-Durham-CHapel Hill real estate, vist my website and real estate blog at www.tiffanyelder.com

Until next time...

Tiffany Elder, MBA
Broker-Associate/Realtor
Realty Executives Triangle Southpointe
tiffany@tiffanyelder.com

www.tiffanyelder.com

"Real Estate: It's not just WHERE you live; it's HOW you live."