In our Gulf Shores Real Estate News for April 2015:
Renters Squeezed By Higher Gulf Shores Housing Costs
Renters are being squeezed in the Gulf Shores housing market by a disproportionate growth in rental costs on one side and stagnant income on the other.
New research finds that rent growth is far exceeding wages, according to the National Association of Realtors.
The NAR reviewed data on income growth, housing costs and changes in the share of renter and owner-occupied households over the past five years across the country. Lawrence Yun, NAR chief economist, says the disparity between rent and income growth has widened to unhealthy levels and is making it harder for renters to become homeowners.
Income Not Keeping Up With Gulf Shores Housing Costs
In the past five years, typical rent rose 15 percent while the income of renters grew by only 11 percent. The gap has worsened in many areas as rents continue to climb and the accelerated pace of hiring has yet to give workers a meaningful bump in pay.
The share of renter households has been increasing and homeownership in the Gulf Shores housing market is falling. Those financially able to buy a home in recent years were insulated from rising Gulf Shores housing costs since most take out 30-year fixed-rate mortgages with established monthly payments.
Moreover, a typical homeowners’ net worth climbs because of upticks in home values and declining mortgage balances. The result has been an unequal distribution of wealth as renters continue to feel the pinch of increasing Gulf Shores housing costs every year.
Meanwhile, current renters seeking relief and looking to buy are facing the same dilemma: home prices are rising much faster than their incomes. With rents taking up a larger chunk of household incomes, it's difficult for first-time buyers – especially in high-cost areas – to save for an adequate downpayment.
NAR's research analyzed changes in the share of renters and homeowners, mortgage payments, median home prices, median household income for renters and the rental costs in 70 metro areas. Even with the tax benefits of owning versus renting, affordability is still the major stumbling block for many who would like to enter the Gulf Shores housing market as an owner rather than a renter.
Speaking of taxes and the benefits of owning versus renting, we're devoting the rest of this month's newsletter to the subject of taxes…
Some Last Minute Moves for Taxes
Here we are, time to do taxes, and this is no April fools joke.
With just two weeks left of tax-season 2015, here are a few actions worth taking to save you money on your 2014 taxes, jumpstart savings for you or a relative, or possibly get a tax break on health coverage for 2015.
- Contribute to an IRA. You have until April 15th to contribute to a 2014 traditional IRA, potentially reducing your taxable income. The maximum deductible contribution is $5,500 for those under age 50 and $6,500 for those age 50 and older. Your deduction will be limited based on income and whether you or your spouse has a retirement plan at work. Do you own a small business? Then you might be eligible for higher income and contributions limits through a simplified employee pension (SEP) IRA. Go to irs.gov and search for IRS Publication 590, “Individual Retirement Arrangements,” for details on contributions and income limits.
- Contribute to the IRA of a young relative or someone else starting out. Lower-income workers of all ages will benefit in three ways: more savings, less taxable income, and, if they're not medically insured through your plan or one at work, a larger insurance premium tax credit.
- Apply for health-insurance coverage. Taxpayers in states with state-run health-insurance Marketplaces who didn't realize they would owe a penalty for lack of coverage in 2014 can take advantage of extended sign-up periods for 2015 coverage, through April 17th or even later. They may find themselves eligible for income-based tax credits to use toward premiums.
Don't Let Tax Identity Theft Happen to You
While we're on the subject of taxes, let's look at a growing problem and hopefully help you avoid calamity.
Tax-related identity theft can turn your life upside down and take years to resolve. You may know of someone who has had this happen to them. Someone submits an electronic tax return containing personal information about the person along with a bogus return address. The mess takes piles of paperwork, a tax advocate, and can take years to resolve.
Fortunately, consumers are more aware of the problem, and the IRS has made strides to educate the public, help victims, and prevent a recurrence. Here's some advice to flag potential problems:
I.D. Protection Tips
Protecting sensitive information in the first place and following up quickly to minimize the damage are paramount. Healthy skepticism can go a long way. For instance:
Ignore e-mails and social media purportedly from the IRS. The IRS will NEVER contact taxpayers by e-mail, text message, Facebook, Twitter, or other social media. Nor does it send e-mails stating that you're being audited or getting a refund. That's a "phishing" scam, which you should report at email@example.com.
Confirm the authenticity of letters from the IRS. Check the agency's official contact page.
Check the URL of "IRS" tax information pages. The agency's website begins with www.irs.gov. Others are fakes.
If You Become a Victim
Hundreds of thousands of people have been victimized by identity thieves. To help those taxpayers, the IRS is:
- Assigning victims a unique personal identification number. It must be included on their tax returns. This has given a lot of people peace of mind. It means faster processing and a speedier refund.
- Speeding up victim case resolution. Because resolving I.D. theft cases can take up to six months, the IRS has assigned more employees to sort through the details and streamline the process.
- Lending an ear. The IRS now has a dedicated section on its website devoted to the problem. In addition, it has implemented a special phone number for victims. The IRS Identity Protection Specialized Unit is available at 1-800-908-4490.
If you haven't already filed your taxes, good luck over the next two weeks. And remember, filing an extension for your taxes doesn't mean an extension to pay. You still must submit what you think you'll owe whenever you get around to filing or face penalites and interest from April 15th to the day you finally pay up.