Home prices have been crashing in English-speaking countries including Canada, New Zealand and Australia.
Now, the most recent data show that house prices have peaked in the US, and are trending down.
It’s in the headlines too.
Bloomberg Headline:
Australia House Prices Record Steepest Drop in Four Decades
- Sydney again led declines, falling 2.3%; Brisbane dropped 1.8%
- Housing market seen remaining under pressure from rate hikes
Hong Kong’s South China Morning Post:
Home prices poised to fall in Hong Kong, Australia, Canada, France and the US as global central banks raise interest rates
The most recent data show that prices have now peaked in the US too.
After the last peak in 2006, house prices gently turned down almost two years before the crash. Over about six year, the Case Shiller index dropped 28% from its peak. So far this time, prices are down only a couple of percent.
The house price bear market last time lasted about six years. If the pattern repeats, owners should have time to get out well above the bottom, even if prices are down from their highs.
Taxes
Many owners have large gains and would face a large tax if they sold. The desire to avoid paying tax is often a primary reason property owners that should sell, don’t sell.
A good solution for many is a tax-exempt Sec. 664 Real Estate Shelter Trust.
A property owner contributes property to the trust. The trust then sells the property, tax-free. The proceeds become AUM, and the advisor invests the trust assets.
If you think a Sec. 664 Real Estate Shelter Trust could be right for one of your client situations, please reach out to us. You can use the form on our website to schedule a meeting with us, or call our office and ask for Connor or Ryan.