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(edited from a Bloomberg article)
Some call the SALT deduction a giveaway to the wealthy. The optics are bad. But the deduction for state and local taxes (SALT) actually serves a purpose. That’s why it’s been law since the first federal income tax under President Abraham Lincoln in 1861.
* The SALT deduction combats–imperfectly—tax competition, which is a destructive race to the bottom in taxes and government services. A state that slashes tax rates and balances its budget by simultaneously reducing services to the poor wins two ways: It gets an influx of businesses and residents from higher-tax states, and it chases away poor people, who make their way to those high-tax states that are losing their tax base, an unsustainable dynamic.
* The SALT deduction restrains tax competition by subsidizing high-tax states: the pinch that taxpayers in those states feel from high state and local taxes is eased by the break they get on their federal returns.
* Voters in low-tax states sometimes ask why the federal government should be subsidizing states that choose to impose high taxes: some of the benefits of high-tax states’ higher spending are shared by people in low-tax states. The safety net for the poor. The roads and other public infrastructure available to residents and visitors alike. When you add up all the flows, high-tax states on average contribute more to the federal coffers than they get in return.
* Restoring full SALT deductibility would reduce federal tax revenue a lot making it less popular. It’s also true that most of the benefits would go to high earners, but that’s not necessarily a permanent condition. State governments constantly weigh how much they can tax their richest residents without driving them away. Since the revised tax law enacted in 2017, the effective state and local tax burden on rich people in so-called ‘blue’ states has gone up.
* Some rich people are bailing out of their states although Congress wisely left the full deduction in place for corporate income taxes because corporations are more mobile than individuals.
* If the SALT deduction cap remains in place, state governments are going to be forced to stanch the bleeding by cutting taxes on their rich residents. Rich people can move; they will be OK whether the cap stays or goes. Restoration of full SALT deductibility isn’t for their sake and wouldn’t make much difference to them in the long run. It’s the high-tax states like New York and California that need help.
“It’s wrong for people to be taxed on the federal level for money they no longer have because it was taxed away at the state or local level. This adverse consequence of double taxation between
federal and state tax systems in a federal system has not received proper attention. Mitigating double taxation has been a fundamental building block of both the international and interstate tax order.” – William Barker, Penn State Dickinson Law School. Barker asks whether it wouldn’t be better if Congress went beyond restoring full deductibility of state and local taxes from their taxable income and give taxpayers an outright credit on their federal taxes for whatever they paid in state and local taxes, limited to some percentage of their total federal tax liability?
Personally, I believe that if the full SALT deduction is not re-instated, those who may be short-term beneficiaries will regret the long-term consequences. When tax laws don’t factor in cost-of-living differences ultimately they will fail. Killing the goose that lays the golden egg is never wise. Collecting more taxes on less almost always nets less.
I feel terribly for so many buyers right now – and their agents – as they navigate the hyper-competitive, increasingly less affordable markets throughout most of the USA. Not only are they competing in a low-interest environment with significant pent-up demand, under-supply, under-building, increased consumer savings and credit scores, Spring optimism, a clear path to the end of the Covid nightmare as vaccine administration soars, inflation, rising prices, institutional investors competing with them……possibly even more daunting is GEN-NEXT, a large group of potent homebuyers reliant on inherited or transferred wealth…..and no, they are not necessarily just millennials in age.
Many of my peers in their 50’s are dealing with aging parents right now. Realistically, many of them will – and are already – inheriting from their parents as they reach the end of life. If the average US lifespan is around 80 years old, and the average age of giving birth is approaching 30 years old, you do the math. Inheritance is not something merely assigned to the super-rich. The average American has a net worth of around $177,000 at death. In wealthier cities, this number jumps automatically, often driven simply by real estate values. Regardless of the size of the inheritance, this cash infusion is often the driver of heirs to buy a home.
Wealth amongst the wealthier – not necessarily just the rich – is often distributed well before death. Sometimes this is done so for taxation and estate planning purposes, but often it is done to help kids get going in life, especially as they form families. Few can afford to gift a kid $5 million, but many more can afford to gift $25,000. Many trusts require young heirs to spend on investments, education, or real estate, not Ferraris.
My point is that while we are all clearly aware of the GREAT WEALTH TRANSFER – over $750 billion per year in the US alone – we may not be as aware that the beneficiaries will be of ALL age groups, anywhere from super-young grandkids, all the way up to those in their 70’s and older. It has started already and will grow notably. GEN-NEXT is an age-agnostic demographic!
Remember in the ‘old days’ how we used to call a limo service? That service evolved into UBER…..but much of the traditional model remains. There is still a car and a driver: it’s just the way we connect with that service that changed and became (mostly) more efficient.
Remember in the ‘old days’ how we used to do building applications with rainforest’s worth of paper and a tiresome Xerox machine to make copies? Now, most of this is done digitally, an evolution of a traditional practice. So much of the technology that we see today is a lot more evolutionary than revolutionary. Most technology that humans love in the luxury marketing arena improves traditional models, but it does not replace them. It can make them more efficient and yes, even more enjoyable. My dentist’s efficiencies are fueled by the new technology he uses, but he has not been replaced by a computer. Would YOU let a machine-operated drill near your mouth?
In the ‘old days’ I used to put together a folder with a list of useful resources for the home – or delivery menus – print up thousands of copies, bind them and then mail them to my clients. They would keep these in a kitchen drawer and refer to them when needed. When the digital world became more prevalent, I evolved this into a DIGITAL version that allowed our clients to access this information from the palm of their hands. The product or intent was not replaced…..it merely evolved. When you get an AMAZON package, that box was wrapped by a human…..not too dissimilar to the human that used to wrap your box in a retail store. In the past year, the many ZOOM calls provided the technology that allowed us to meet remotely, but without the humans using and driving them they – and Zoom – would not exist.
Think of all the systems and marketing touchpoints in your world and how they too have evolved over time. How can you improve what you do? How can you make things more seamless and efficient? How can you save time and aggravation? We don’t have to replace or eliminate things to make them better. Evolution fueled by technology is nothing terribly new, but when it is intelligently structured – with a thoughtful human touch – it is good for everyone.
Have a nice day!
Alex Daigh of COMPASS New York identified yesterday one area of the real estate equation that is still extremely annoying, frustrating, and cumbersome …… the actual physical moving part.
Yes, in between the cracks there are some outstanding movers. But many are notoriously annoying at best. Getting an accurate quote can often be challenging – to put it kindly – and often additional fees and add-ons are presented at your most vulnerable moment. Insurance by the pound seems like a joke at best. Some movers have invented gun-to-your-head negotiation skills. Often big tips are mandatory, aside from enormous hourly fees that you can be almost 100% certain are not being passed onto the heroes that do moving work, probably one of the toughest physically draining jobs.
This is one area where we agents can shine. Identifying local movers that are outstanding is something our clients will truly appreciate, possibly more so than anything else. I have stopped referring to ‘bargain movers’ as they are not too dissimilar to bargain real estate agents…..you pay for what you get! I have my ‘go-to’ movers but unfortunately, they are not 100% consistent. One day in the future this is an area we at COMPASS will have to resolve if we truly wish to capture the hearts of our clients. It’s an opportunity of a lifetime!
Have a WONDERFUL Wednesday!
Yes, a few weeks ago the COMPASS brand turned 6 years old. Originally named “Urban Compass”, the brand name, logo, and graphics were changed in early 2015 when we were merely around 300 family members in total.
The speed at which Compass’ brand name recognition has grown – especially amongst home buyers, sellers, landlords, developers and renters, specifically in more luxury markets around the nation – in the past 6 years is quite remarkable. The brand name recognition amongst those monitoring the financial markets has been further accelerated since our IPO a month ago. The TOP 5 luxury brands in the world are: Gucci, Chanel, Hermes, Christian Dior, and Louis Vuitton: all are at least 75 years old. According to Statista, there is only one brand amongst the world’s TOP 20 Most Valuable Worldwide Brands that is 10 years old…..the majority have been around much longer. Of the Top 25, only seven are not one-word name brands.
“Compass is a simpler, more universally memorable brand name that speaks directly to the connection between people and technology that is so central to what we are building,” Matt Spangler, February 2015 when discussing the shift from URBAN COMPASS to simply….COMPASS.
A powerful brand name is possibly your most competitive advantage: imagine Coca-Cola without its brand name…..it would be merely just another soft drink. A brand with a distinct personality drives value perception. A brand has to evoke a perception, a story. COMPASS’ brand speaks to modern luxury. It speaks to the next generation of luxury, regardless of age. It speaks to a mentality. Boldly broadcasting our best-looking properties promotes an identity and association that has tremendous value to ALL properties we market. The brand sets the tone. A brand has to speak its own unique language. The COMPASS brand speaks to simplicity, the new language of modern luxury that is more about authenticity and simplicity than gilded opulence or stodgy heritage. It speaks to contemporary, tech-fueled efficiencies and A-grade service.
When a newly built Condominium comes to market called for example “THE PRETTY CONDOMINIUM”, many locals may identify it after many weeks of advertising and marketing. But it would cost many millions of dollars to achieve the same recognition and quality association that you achieve if you were to brand-associate the building, eg: “THE FOUR SEASON’s Pretty Condominium”. That association INSTANTLY messages to the consumer years worth of advertising and personal experience no brand can ever hope to achieve without massive investments in money and time.
Imagine the value of the COMPASS brand when 20,000-plus in the COMPASS family are messaging that brand name multiple times per day, if not by the hour. Here are some examples:
* If every Compass agent sends out one social media post per day with the name COMPASS attached to it…..that’s over 7 million posts per year. If each social media post is exposed to on average 500 people, that’s 3.5 BILLION impressions.
* Imagine if every COMPASS family member sends 25 emails per day (I’m being kind!) with the COMPASS brand name attached….that’s close to 200 million impressions per year: that’s pessimistic knowing how much we email.
* Now add in T-shirts, print and digital advertising, billboards, mugs, video, public relations e, 6-million-plus website visits per month, yard signs, office signage, ticker-tape appearances, Robert’s book (coming out this week), etc…..you get the picture.
The COMPASS brand is now delivering MILLIONS of impressions ….daily. And Consistently. While all of this is very impressive, you may be asking the obvious question: “What’s in it for me?” As agents and teams, we are all our own individual brand and that is empowering and extremely valuable. Creating your own unique and differentiating identity is great. Attaching that identity to the COMPASS brand multiplies its effectiveness dramatically. It is a brand association/endorsement that speaks of invaluable marketing aspects – INSTANTLY – that is impossible to replicate.
BRAVO to our multiple teams of creative and marketing geniuses around the country who consistently and brilliantly build and nurture the COMPASS brand and maintain its high-quality standards every single day. THANK YOU!
by Leonard Steinberg
I am often troubled when people say about others who are in a bad way in their lives or careers: “Well, that’s what happens when you make poor choices!” Yes, it’s absolutely true, most predicaments are a direct result of choices. And yes, poor choices mostly lead to bad outcomes. But the biggest problem is that many people have never been taught HOW to choose, or they do not consult experts – or those with great experience – before they make a choice. Are you well versed on HOW to make choices?
Yes, it’s true many people make OBVIOUSLY poor choices that with just a wee bit of common sense are easily and wisely answered. But often people make uneducated or poorly informed choices. Sometimes this is a result of laziness. Often it’s because they don’t know what questions to ask of themselves and others or they are embarrassed to ask or they guess fueled by arrogance. Or they don’t pause to do the necessary homework. Going ‘with your gut’ is great, adding in thorough research and consideration is much more reliable.
Making choices via trial and error is a part of growth. Much time and aggravation and heartache and suffering could be avoided if we were better educated on HOW to make those choices. Mentors, managers, parents, teachers, solid education that teaches rationalization skills not just information, etc. are critical components in a well-lived life. Learning how to do research by consulting multiple sources and not relying on just one is helpful. All of this takes work and time. But this time spent may be your best investment.
So next time you are confronted with a choice (and all of us are, multiple times during any day) before you make that choice, ask yourself are you REALLY well enough equipped to make that choice wisely? Do you need an opinion from someone you really trust or someone who can help you navigate by asking the right questions? Have you done the correct, thorough research and fact gathering? Sometimes a simple pause is all you may need to choose wisely.
And maybe next time you attribute ‘poor choices’ to someone down on their luck or in serious trouble, try to understand whether they had the opportunity to be adequately equipped to have the ABILITY to make good choices. There is no excuse for poor choices, but often there is an explanation.
Remember: No one succeeds alone!
by Leonard Steinberg
These days the number ‘trillion’ seems more and more commonly used…..when did that happen? We can all agree that a billion dollars is a lot of money, but a THOUSAND billion – or a trillion – is a mammoth amount of money!
Remember when the headlines around the world screamed how APPLE had become a TRILLION dollar company. That was in August, 2018. Today, just about 33 months later, Apple is now valued at over TWO trillion dollars. Yikes! Alphabet, Amazon, Microsoft all have a trillion-dollar-plus market cap too. To put this number into perspective: Just 16 countries in the world have a GDP of $1 trillion or more.
Around the 2008/9 financial crisis – one of the worst in history – an $831 billion stimulus package was designed to juice the economy through tax cuts, credits, and spending on programs such as health care, infrastructure, and education. The coronavirus emergency plan of March 2020 cost more than twice that package and equaled nearly 10% of all US GDP.
The average home price in 2010 was around $270,000….today that is over $400,000. Some say assets should double in value every ten years to keep up with inflation…..they may have a point! One thing is for certain, during inflationary times, real estate is a good thing!
Recently I felt like a real genius as some of my tech stocks performed miraculously well. It is easy to feel this way when markets rise relentlessly. But real genius is required when markets are not performing this well across the board. Many of us were able to do unimaginably well during a very challenging environment this year….that may be a much bigger achievement than doing well when everything is easy.
They say you learn who your true friends are when times get tough: the same is true in business. During the toughest times, people reveal their true selves and also reveal their capabilities. Those who can perform well in tough times are often better equipped to do even better when everything is going well. Sometimes they don’t do as well performance-wise, but their consistency is more reliable and stable. Sales figures alone are not the measure of ability. Often during tougher times, the best of the best are planning and structuring things for the future, laying the foundations for future growth and success. Often they have more patience and a longer term view.
It is during the toughest times that we have the capacity to tap into our inner genius and draw out the strength, calm, rational thinking and deliver impressive results…..not immediately, eventually.
What are your thoughts and when do you tap into your inner genius? Please do respond.
Article by Leonard Steinberg
Yesterday’s hero, Today’s ZERO? That’s brutal, and my somewhat feeble attempt at rapping…. but it serves to remind us all that when we lament the loss of some people’s fortunes – or careers – we should know that new fortunes are being created simultaneously.
One peek at the equity markets and you can be certain those invested in technology stocks are not only doing well…..they are doing REALLY well, while those who were airline or hospitality magnates might not be doing so well right now. Fortunes come and go. Careers come and go. Very few people maintain their career-leading status their entire lives. Some may not even want to. Take a look at the list of Hollywood titans from 5 years ago: today several of those bold names are almost invisible. Helen Hunt used to be in three movies a year, and today that is no longer the case. Many ‘faded fortunes or careers’ still leave their ‘victims’ quite well-to-do though, so please don’t cry for them Argentina!
Twenty years ago, certain real estate agents and brokerages dominated certain markets: today, many of them are non-existent, or largely minimized. Things change. Careers change. Fortunes come and go. As the planet evolves, so too do the beneficiaries. Who knew of Elon Musk or Jeff Bezos 25 years ago? Who knew of Compass …..or Warby Parker, Uber, or Zoom a decade ago? Of course there are several professionals, leaders and brands that have been around for many decades and continue to thrive, mostly because they evolve and adapt quickly……like Walmart, Target, etc who saw the threat of e-commerce early and adjusted with great speed as if their lives depended on it.
In this reality-check lies a reminder for us as agents to adapt, re-educate ourselves, evolve and continuously be on the lookout for new trends and opportunities…..and the next generation of successful clients whose real estate needs may require your expertise and guidance.
If there was one single lesson I learned from my decade in fashion it was to be continuously looking forward to the NEXT trend (while maintaining my business as it was). Opportunity lurks always, anytime. In this lies tremendous opportunity and growth potential. And the ability to replace lost business.
by Leonard Steinberg
|In this world where we are forging, maintaining, and nurturing relationships via virtual meetings, let me be the one to say this out loud and clear: I HATE IT! Soon it will be time to take the ZOOM out of ZOOMationship and replace it with REAL!|
Yes, virtual meetings do work in several instances, and I look forward to continuing them where appropriate and effective. Yes, without Zoom, BlueJeans, GoogleMeet, etc, we may never have survived the Pandemic Lockdown and I’m eternally appreciative. But I’ll never be convinced – EVER – that a virtual digital meeting can replace the spontaneity, creativity, energy, and human interaction of a face-to-face meeting. NEVER! EVER! Yes, I may be wrong about this maybe because I’m an old fuddy-duddy, but I don’t care. There, I’ve said it.
Working from home in a digital, virtual bubble is possible and many of us are thriving doing so in these extraordinary times. But there will come a time when COVID will be manageable and even eradicated. Maybe then we will fully realize that quality, substantive relationships that help build and fuel careers require face-to-face reality. Small facial gestures, mini-interruptions, other body languages, and a whole host of elements only possible in face-to-face interaction matter in developing real understanding and connection. Yes, we will continue to incorporate virtual meetings forever moving forward (we had done so pre-COVID) but when we meet again face-to-face(it’s coming soon) we may realize that quitting the office altogether is simply a bad and unsustainable idea.
Thought that this article would be interesting to actually everyone!