With another year coming to an end and 2017 looking to bring excitement, as well as political uncertainty, you may be asking yourself………”Is now the time to sell real estate at The Jersey Shore?”
ABSOLUTLEY!! Allow me to explain why I see an excellent opportunity to make profit in real estate by selling relatively soon.
The three primary reasons I see incentive to liquidating, especially a secondary home, in this environment are:
- Stock Market Surge
- Lofty Financial Services Bonuses
- Personal Tax Liabilities
Since December 31, 2015 the stock market has surged over 14% to date (December 13, 2016) with the majority of those gains, 8.6%, coming since the election. Wall Street likes the idea of having a
“pro business” president in the White House and has no qualms about showing their excitement. I believe that one of the primary reasons a Trump administration is so attractive to Wall Street is because of his $1 Trillion/10 Year Infrastructure plan that he has said he would like to implement in his first 100 days in office. Creating jobs, rebuilding roads, bridges, tunnels, hospitals, etc. before it becomes more expensive to do so, and infusing that capital into the economy by using American based companies, is a recipe for a successful 2017 stock market.
With the stock market showing no signs of slowing down, it only stands to reason that Wall Street bonuses will be increasing as well. “Goldman Sachs (GS) set aside $3.21 billion in the third quarter for salaries, benefits and expected bonuses for its employees. That’s 36% more than how much it set aside in the same period a year ago.” (http://money.cnn.com/2016/10/18/investing/goldman-sachs-bonuses-compensation-earnings/) This is a clear indication that many of these financial advisors, analysts, executives, and share holders will now have increased disposable income to invest in secondary properties here at The Jersey Shore.
This information is vital in trying to determine what the 2017 real estate market will look like. Let’s take the premiere luxury Jersey Shore real estate communities of Mantoloking and Bay Head New Jersey. Mantoloking is made up of 70% white collar workers with 58.4% of the workers coming from the Finance, Insurance, Real Estate, and Services Industries. Bay Head is comprised of 61% white collar workers and 48.24% are in the Finance, Insurance, Real Estate, and Services Industries. http://mls.realist.com/index.jsp). This is why the stock market surge and the Financial Services bonuses are excellent indications into 2017 being an outstanding opportunity to sell property here at The Jersey Shore.
Selling secondary properties will trigger a “taxable event” and realizing that timing and planning are the two strongest ways to potentially minimize that liability, can alleviate that burden. One way to defer those taxes on any potential gains is through a 1031 Exchange. This basically involves the selling of investment property and reinvesting the proceeds into a “like kind” asset. By doing so, you are deferring the taxes that would normally be due to the U.S Government. As with most things in life timing is important. The way I see it, getting a property on the market early in the year is crucial to maximizing your options as to what to do with any potential profit. The benefits are low inventory, more serious buyers, and time.
Historically the first quarter of the year inventories tend to be low. In my opinion that gives a property a chance to stand out and therefore an edge. A “tire kicker” is less likely to be coming around in the middle of January and February just to tour beach houses. If a potential buyer is willing to come out in the frigid temperature than it is my guess that they are more serious. As for the timing of the listing the earlier the better! An early year listing gives you two distinct advantages:
- The Ability to Adjust
- Tax Benefits
After you are listed if a property comes on the market and attempts to compete with you on price you can do a price adjustment. This benefits you because that new property typically doesn’t have that luxury. Now let’s assume that the property is listed in January and relatively soon after receives an expectable offer. We go through all the necessary process and close the transaction in early March. If a 1031 Exchange is not the avenue that would benefit you the most, than any gains that are acquired through the sale could be reinvested into some other vehicle and potentially earn a higher yield.
* As I am not an accountant I strongly advise you to consult with your personal accountant as to what strategies would best suit you and your needs*
In conclusion, I believe that the incoming President Elect and his background will keep the Wall Street population moving in a bullish direction and, in turn, put larger bonuses in the pockets of those who are in the Finance, Insurance, and Real Estate Industries. This will benefit The Jersey Shore real estate market because of the added discretionary income and the desire to be a part of the elite who already live in these shore towns. As a result, getting your property listed as early as possible will ensure you the opportunity to showcase it first and be at the forefront of the market.
Please contact Jeffrey Roberts to discuss a personalized comparative market analysis and for macro conditions concerning your local market.