Real estate is hot ... don't get burned: how CPAs can help clients survive a tough market.
Journal of Accountancy › Vol. 196 Nbr. 1, July 2003
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Real estate is hot ... don't get burned: how CPAs can help clients survive a tough market.
If the 1990s were noted for irrational exuberance in the stock market, certainly the early 2000s will be remembered for hysteria in real estate. How hot is it? Sales of existing homes in the western United States rose 5.1% to a record-breaking annual rate of 1.66 million units changing hands in January 2003--3.1% stronger than January 2002--according to the National Association of Realtors (NAR). With it went the median existing-home price, which soared to $219,600--an amazing 10.4% spike from the same month a year earlier. In the Northeast the median existing home price was $175,000, up 14.9% from a year ago. With the stock market still in the doldrums, it's no wonder people are considering home buying a better bet. But is it?
Whether the exuberance in today's residential real estate market is rational or not, only time will tell. In the meantime, how should CPA/financial planners advise their clients in this volatile climate? Should clients buy houses and "flip" them like so many poker chips? Can houses be expected to yield returns like other investments? This article answers those questions and highlights some of the areas where CPAs can guide home buyers and sellers to a smooth transaction. RECORD LOW INTEREST RATES A home is a place to live, not an investment. Randi Grant, CPA/PFS, CFP, a p...See the full content of this document
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