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SENIORS, looking for LOWER TAXES and a HIGHER QUALITY OF LIFE?

The 2006 issue of Carolina Living magazine continues to rate South Carolina as one of the most affordable and best states in which to live or retire. Despite the focus this year on property taxes, South Carolina still has some of the lowest taxes in the nation for retirees.

Comparing the tax burden of other southeastern states, families with an annual income of $60,000 will pay, per individual:

  1. $1,518 -
  2. South Carolina

  3. $2,434 – Georgia
  4. $3,330 – North Carolina
  5. $3,424 – Florida
  6.  

In a cost of living comparison, South Carolina real estate market prices are consistently ranked 3% to 10% below the national average. Only on Hilton Head Island do prices exceed the national average by some 4%.

  1. As for property taxes (which are soon to be radically changed downward under new state laws in late 2006), a $200,000 home is presently taxed as follows:
  2. $1,275 – Camden (lowest in SC)
  3. $3,032 – Newberry (highest in SC)
  4. $2,000 – SC average
  5.  

Another advantage for SC retirees is that their social security income is not taxable under state law. The South Carolina state income tax deduction for those 65 and older is $15,000 (single) and $30,000 (joint). Note: Social security income is taxable under federal law in all 50 states. (Source: The South Carolina Association of Realtors®)

One of the most challenging and interesting questions posed by seniors is, “When is the best time to sell our big house? We’ll be retiring soon and want to make sure we maximize our equity in order to purchase a smaller home and have money left over”.

This question is intriguing since seniors today are: (1) more savvy than ever about maximizing their equity; and (2) equally savvy about market trends and timing their sale to hit the peak of the market for their big house.

Market trends impact timing a sale. Lots of factors impact a property’s salability including supply and demand, the economy, and demographics. For baby boomers wanting to unload their 4,000+ square foot house, all three components may become problematic in the next few years.



The generations poised to purchase move-up homes in the next decade are typically more conservative than their parents. Many of these twenty and thirty-something’s pride themselves on not entrenching themselves in massive debt (like their parents did). Instead, they purchase modest common-sense houses without a lot of fluff and conversely build up their 401(k)s and savings with the mortgage payments they save (totally polar to their mortgage-laden parents).

The bottom line is that it’s doubtful that baby boomers will be able to as effortlessly unload these large homes on the generations that follow compared to how they initially embraced purchasing these large homes. Or to do so may require a price softening and/or incentives to attract these buyers to the plethora of homes available. While the supply may be abundant, the demand may be miniscule.

The next factor to impede the sale of large homes is the economy. Predicted to soften into a slump or possible recession by 2007, rising interest rates will mean fewer buyers and a generally tougher time for all sellers. Home affordability will continue to be under pressure due to rising purchase prices. Couple with this inflation-sensitive increases in utility costs that drive up monthly bills for heating and cooling and the large home may slip from the affordability category for many potential buyers.

In order for most senior consumers to maximize their equity when selling their large home, timing the sale on the high-side of the market is critical.

Timing. When it comes to selling your large home, razor-sharp timing can make the difference between moderate equity and ample resources for retirement, investment, and/or college tuition.

So how can you locate and track the information you need to sell at the peak of the market?

While there are myriad resources, three indicators can assist even the financial novice in interpreting market conditions:

Comparable properties: Hire a real estate consultant to track the listing and sale of comparable properties like yours. By the time you’ve received information over two to three months, you’ll be able to track the following:

Comparable properties: Hire a real estate consultant to track the listing and sale of comparable properties like yours. By the time you’ve received information over two to three months, you’ll be able to track the following:

Are the pace of sales picking up? If so, it could indicate a shortage of available properties, thus as increase in overall prices.

Are sales slowing down? If so, it could indicate that the market has peaked for your type of home and it could be wise to sell quickly to maximize profit.

Are prices beginning to soften for homes comparable to yours? If so, this could also signal a peak in the market and a signal to sell now or wait (possibly years) for the price to plateau again.

Interest rates and the overall stability of the economy: Once rates begin to rise markedly, it decreases the number of potential buyers for homes which has often has even greater impact on the purchase of homes on the higher end of the price spectrum.

Here’s why. Many potential buyers for large homes are those moving up either due to expanding family size or increased financial affluence. In either case, higher interest rates mean higher monthly payments, parting with larger down payments and paying more closing costs. Couple that with the fact that rising interest rates will impact the speed at which move-up buyers can sell their current home, and you’ve got a potential market gridlock.

Selling your “Big House” presents myriad marketing and timing problems but both can be overcome by an intelligent choice of your Realtor for this critical job. Larry Mitchiner stands ready to help if and when the need arises. Call (864) 306-3006.

Research and objectivity are only part of the homes picture. Need
help filling-out the rest? Just e-mail me, admin Skillin. I’ll try my best to help!

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