Money Management

A crash might benefit buyers — but is that really likely to happen? 

It’s pretty fair to say that the start of 2023 is not the ideal time to be buying a home. Although home price gains have been slowing down, housing prices are still elevated on a national level. In fact, as of December, home prices were still up almost 7% on an annual basis, according to CoreLogic.

Not only is housing still expensive, but mortgage rates are high, too. So all told, today’s buyers face big challenges with affordability.

And then there’s inventory — a factor we can’t forget about. As of late December, there was only a 2.9-month supply of available homes for sale on the market, according to the National Association of Realtors. It normally takes at least a 4-month supply of homes for sale to meet buyer demand. And any time you have a commodity in short supply, its price tends to rise and stay elevated until supply is able to catch up to demand.

Meanwhile, a good 53% of prospective home buyers today are hesitant to purchase a home due to fears that the real estate market will crash, according to a recent survey by Cinch Home Services. But are they right to think that the market is about to take a dive? Well, maybe not.

Why a near-term housing market crash is unlikely

When the value of any given commodity plunges, it’s usually due to there being way too much supply and not nearly enough demand. That’s not what today’s housing market looks like, though.

Rather, today’s market lacks inventory, and that alone has been keeping prices up. And because there’s such an extreme lack of inventory, we’re unlikely to encounter a scenario anytime soon where the demand to buy homes exceeds the supply of those available. Because of this, we shouldn’t expect a real estate market crash in 2023.

This isn’t to say that the housing market won’t ever take a dive. But let’s think back on the past year. Home prices managed to show gains throughout 2022 even as it got more expensive to borrow via a mortgage loan. And if soaring mortgage rates didn’t cause a steep decline in buyer demand last year, then it’s reasonable to assume that buyer demand will hold steady this year, too.

Should you hold off on buying a home?

You may want to wait on purchasing a home because property values are still high and mortgage rates are still elevated. But you shouldn’t necessarily delay a home purchase due to fears about a near-term housing market crash if you’re financially and mentally ready.

Nobody wants to buy a home only to see its value fall. But if you buy a home you can comfortably afford, then near-term changes in its value shouldn’t really matter to you all that much.

Remember, you’re not buying a home to get rich quickly — or at least you shouldn’t be. You’re buying a home so you have a place to live. And if you can afford that right now, then you shouldn’t necessarily let fears of a real estate crash get in your way.

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Do you qualify for this type of stimulus relief? 

For the first time since 2019, there were no new stimulus payments sent out by the federal government last year.

Despite strong demand for another direct payment and despite surging inflation, lawmakers in Washington, D.C. have not passed a stimulus bill since the American Rescue Plan Act was signed into law shortly after President Joe Biden took office in 2021.

The IRS recently issued a news alert warning taxpayers their tax refunds may be lower due to the absence of new stimulus aid last year. But, in the same release, the taxing authority did point out that one type of COVID-19 aid authorized by the stimulus bill is still available to claim this tax-filing season. Here’s what it is.

This tax credit is available during the 2023 filing year

The stimulus relief authorized by the American Rescue Plan Act that the IRS explained is still available in 2022 relates to a specific kind of tax credit that was expanded by the COVID-19 legislation.

“Taxpayers may still qualify for temporarily expanded eligibility of the Premium Tax Credit, a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace,” the IRS news release read. “To get this credit, taxpayers must meet certain requirements and file a tax return with Form 8962, Premium Tax Credit.”

The Premium Tax Credit was first authorized by the Affordable Care Act, but during the 2021 and 2022 tax years, eligibility was expanded. This expansion came in the form of an elimination of a rule that prevented taxpayers from qualifying for the Premium Tax Credit if their incomes exceeded 400% of the national poverty line.

Since more people were made eligible for the credit by the COVID relief bill, the IRS wants to ensure that those who benefit from the rules change will get this extra money when they file their 2022 taxes if they did not already get the additional help covering insurance premiums throughout the year.

Other stimulus-related tax credits are expiring

It’s good news that this stimulus relief is still available, but several other key changes made by the American Rescue Plan Act are not as favorable.

In addition to the fact there was no direct payment authorized into people’s bank accounts in 2022, the expansions of both the Earned Income Tax Credit and the Child Tax Credit have expired. The IRS warned these factors would result in “a significantly smaller refund compared with the previous tax year,” for many tax filers.

It’s important to be aware that fewer credits may be coming to you, while also ensuring that you claim your Premium Tax Credit if you qualify under the expanded eligibility rules the American Rescue Plan Act created. If you aren’t sure how to handle these tax changes, working with a professional might help as you submit your tax returns this year.

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Pet ownership is a wonderful but expensive responsibility. 

My family had a dog from the time I was in kindergarten until I was in college, and I always knew that once I was able to, I’d get a dog of my own. I didn’t want to rush it, though; I was happy to wait until the situation was right so I could provide the best life possible for my pup.

That time finally came three years ago. My husband and I both had stable jobs working from home with a sunny backyard and a healthy emergency savings built up. We decided we were ready, so we started looking at pet rescues for a dog we could bring into our family. And it didn’t take long for a little bow-legged dachshund mix to catch our eye. The first time we met her, she promptly curled up in my lap and fell asleep, sealing the deal. Welcome home, little one.

Even though I grew up with a dog, I knew there would be curveballs I wasn’t expecting when bringing home a dog of my own as an adult. I’m so glad my husband and I planned ahead of time and worked the cost into our budget, because there were still expensive lessons to be learned once we became full-time dog owners. Here are a few of them.

1. Various pet-related fees add up

We knew to expect certain new expenses that come with owning a dog, from the adoption fee to vaccinations to food and treats and toys. But there were still a few fees that I hadn’t thought about before we adopted our dog.

For one thing, our city requires all dogs to be registered, and the license fee costs $12 per year. Luckily, this is a very manageable cost, but it’s something I didn’t know about ahead of time and could have easily forgotten to do.

Our city also requires payment to use the public dog parks, which we only found out the first time we visited one and saw the payment sign. A day pass costs $5, and an annual pass costs up to $35. Again, this is a pretty minimal fee and one we’re happy to pay, but I hadn’t factored it into our pet-owning costs ahead of time.

2. Not all issues require a vet visit

This is one that I assume most pet owners have gone through. When we first brought our pup home, every little irregularity was a cause for concern, and we ended up making several unnecessary vet visits to ease our minds.

One time, we took her in because of a raised, pinkish bump under her arm that wasn’t going away. Turned out to be a bug bite. Another time, we made an appointment because it seemed like she was licking her paws excessively. That’s when we learned she probably has seasonal allergies that pass after the weather changes.

We’ve since learned that we can relax a little bit with the medical concerns. Dogs eat weird things sometimes and get sick, but it doesn’t always require a visit with the vet. We’re now much more prudent and monitor a situation for a little while before making an expensive appointment.

3. Get pet insurance ASAP

We brought our dog home in early February of 2020. A month later, the world locked down, and a lot of our plans went out the window. One of those plans was getting pet insurance; it just didn’t seem like a priority at the time, since our new pup was only a year old with a clean bill of health, and we had a lot bigger concerns to deal with.

By the time spring rolled around, our dog started skipping her back legs while she walked, which we found out was a genetic issue where her kneecaps move out of place. It’s not painful for her, but it will likely lead to surgery someday. Unfortunately, since we waited on getting pet insurance, it’s now considered a pre-existing condition that won’t be covered by a policy. If I could do things over, I’d get pet insurance in place as soon as we brought our dog home, before any issues had time to pop up.

Protect the things that give you joy

I’m so happy we made the decision to get a dog, and any frustrations are made totally worth it by the love we have for this silly creature. I’m also really happy we prepared before bringing our dog home, because pet ownership is an expensive responsibility, and there will almost always be surprise expenses to contend with.

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Don’t lose out on interest. 

Sometimes we break up with bank accounts, and that’s perfectly okay. It’s a good idea to reevaluate your banking needs from time to time (and as your financial circumstances change), and since banks change their offerings, you might find a better interest rate or fewer fees with a new bank. That said, if you have a money market account (or MMA) and are considering taking your money out of it while leaving the account open, proceed with caution.

Money market accounts have features of both checking and savings accounts. You’ll earn interest on the money kept in one, as you would with a savings account. And just like with a checking account, you’ll be given easy access to the money in one. Money market accounts often come with check-writing capabilities, an ATM or debit card, or sometimes both. Best of all, MMAs are a safe place for your money, as they fall under the protection of FDIC insurance if your bank is covered by it (this means up to $250,000 kept in one will be returned to you should your bank fail). Sounds like a pretty good deal, right? Here’s why it’s worth keeping yours funded — or closing it outright if you’re changing accounts.

You could be charged fees

Some money market accounts have a minimum balance requirement to keep the account free of fees. Bank fees are worth avoiding under all circumstances, so if your MMA is one that will charge you a monthly fee for falling under that minimum, and you’re planning to keep the account open while removing some money from it, ensure that you’re leaving enough cash in place.

You won’t earn as much interest

Another reason it pays to keep your MMA funded if you have one is that you’ll miss out on the chance to earn extra money on top of your existing money — your account’s APY, or annual percentage yield. This comes into play with a money market account in two different ways.

First, the more money you keep in the account over a longer period of time, the more money you will make on it, thanks to the wonder of compound interest. For example, if you keep $10,000 in your MMA and earn 4% APY on it, without adding additional money to it, in a year, you’ll have $10,407.42. Wait another year without adding to the account, and you’ll earn that 4% APY on $10,407.42, giving you an additional $416, for a total of $10,831.43 — and so on.

The second way you could lose out by removing money from an MMA is if your account has a minimum balance requirement to earn the highest APY, as some do. If you withdraw money from the account and your ending balance is below the threshold, you’ll find yourself earning a lower APY.

It’s okay to move your money around

All of this isn’t to say that if you’ve got a chunk of money (perhaps your emergency fund?) in a money market account, you absolutely must leave it there. Like I said above, your banking and financial needs are likely to change over time. And these days, high-yield savings accounts are paying APYs comparable to the best MMAs, so if you don’t want to worry about minimum balance requirements and don’t care about having ATM or check access to your cash, switching to one of these could make sense for you. Just keep in mind that defunding an MMA without actually closing the account could result in losing some precious cash (in the form of fees or lower APY) as a result.

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This Dave Ramsey advice could be helpful for tax filers.  

It’s officially tax filing season.

If you haven’t gotten started on your returns yet, you may want to get moving — at least according to finance expert Dave Ramsey. Ramsey recommends filing your taxes well before the April deadline, and he offers several reasons why you should take swift action.

The big question is, should you listen to him?

Here’s why Ramsey says to file your taxes early

Ramsey identified six big reasons to submit your tax returns as early as possible in the filing season:

You can make sure your return is processed in a timely manner: Ramsey explained that millions of Americans had to wait to have their returns processed in 2022 due to backlogs at the IRS. He believes early filers are less likely to find their refunds delayed because they’ll get their returns in before the deluge of forms filed near the deadline. You won’t be stressed about meeting the deadline: Ramsey said you’ll be less stressed if you just act early to get your forms out of the way. He suggests “giving yourself a fake deadline — well ahead of Tax Day” in order to encourage yourself to get it done. You may get a larger refund: According to Ramsey, if you submit your returns early, you’ll have more time to ensure you’re taking every opportunity to save by taking every deduction and credit available to you. You’ll reduce your risk of identity theft: Scammers sometimes file fraudulent tax returns to get refunds they don’t actually deserve. If you file early, Ramsey believes you can reduce the chance that an identity thief submits a return in your name before you get a chance to. “Filing early may not completely get rid of the threat of identity theft, but it can protect your refund,” he explained. “If thieves file a return using your Social Security number before you do, the IRS will kick out your return since their records show you’ve already been paid.”You have time to make plans for paying your taxes: Not everyone gets a refund, and if you end up owing money, Ramsey said early filing can be especially important. “The more time you have to come up with the money, the less likely you are to bust your budget or drain your emergency fund,” Ramsey explained. Getting time with a tax professional will be easier: Finally, Ramsey said it will be easier to get help — and sometimes cheaper to get help — if you work with a tax professional early during the filing season.

For these six reasons, Ramsey said early filing is the best approach for most people.

Is Ramsey right?

Ramsey is absolutely right that there are huge benefits of early tax filing. Completing your forms can be complicated and there’s little reason to put things off to the end when you’ll run out of time to solve problems that arise.

So, get started ASAP If you haven’t already and get your forms submitted so you can get your refund deposited into your bank account ASAP or your tax bill paid on time if you owe.

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Airbnb isn’t right for everybody. Here are some other options. 

Airbnb has transformed the way we rent properties, whether you’re a host or a guest. At heart, since its launch in 2007, it has made it much easier and safer for individuals to safely rent out rooms or properties. But it isn’t perfect. Hosts complain of poor communication, being blocked from the site for no reason, issues with difficult guests, and damage to their property, among other things. There’s even a website called AirbnbHell.com where people can rant about their experiences.

Some hosts have had enough of what they see as overly guest-focused policies and are looking for other options. If you’re one of them, here are five worth checking out.

1. Vrbo

Owned by travel giant Expedia, Vrbo — which stands for Vacation Rental by Owner — is one of the biggest competitors to Airbnb. It boasts 2 million rentals on its website, compared with Airbnb’s claim of 6.6 million listings worldwide, and is now the main face for several big names in property rentals, including HomeAway.

Size aside, the biggest difference between Airbnb and Vrbo is that Vrbo only lists whole homes, so guests don’t have to share the property with anyone else. If you have a property and want to attract families or larger groups, it may make sense to use Vrbo. Vrbo hosts can choose between five different cancellation options. The strictest gives no refunds at all while the most relaxed lets guests cancel 14 days before the start of their stay and still get a full refund.

2. RedAwning

RedAwning says it’s a “powerful marketing engine for vacation rental listings” with a mission to help property owners maximize revenue. Essentially, a listing on RedAwning could translate into listings on hundreds of different sites, including Airbnb, Vrbo, TripAdvisor, and Booking.com.

RedAwning won’t charge you any setup costs, but it will take a percentage of 10% or more from your earnings. That charge goes towards promotion, as well as things like help with high quality photos, advice on setting up and managing your rental, and coverage of up to $3,000 for accidental damage. This is important because most homeowners insurance policies don’t cover rentals.

READ MORE: What Airbnb Hosts Need to Know About Renters & Homeowners Insurance

3. OneFineStay

OneFineStay is all about luxury and what it calls the “wow factor.” It promises to bring the benefits of a five-star hotel, including a concierge service and full housekeeping, to your vacation rental. It lists around 5,000 homes, chalets, and villas on its site. Every listing is carefully vetted and OneFineStay staff will greet guests in person.

For hosts, the benefits are that the company says it will screen guests, give them 24-hour care, and take a hefty security deposit in case of damage. However, it also asks for exclusivity so you can’t list your property elsewhere. Plus, according to a Forbes article, it could take a cut of as much as 50% from the rental fee.

4. FlipKey

Owned by Tripadvisor Rentals, FlipKey says it lists over 800,000 properties in 190 countries. As a host, the big advantage is that Tripadvisor is a big name in travel and has built a community of millions of users. It’s free to list your property and you’ll pay a 3% processing fee. Tripadvisor Rentals has a host hub page with lots of information to help owners manage their rentals.

5. Plum Guide

As the name suggests, Plum Guide is looking for the best of the best. Think of it as a Michelin Guide to holiday rentals. It’s an exclusive site that doesn’t accept many homes — indeed, according to its website, only the top 3% of properties make the cut. It’s looking for luxury properties that will meet the needs of what it calls “discerning travelers.” To that end, both the property and host are carefully vetted as part of its listing process.

Unlike OneFineStay, the Plum Guide doesn’t require exclusivity and will actually help you sync calendars across multiple platforms. According to its website, it charges a 3% service fee as well as a one-time joining fee of 300 pounds (around $360) per listing when your first guest books. That fee covers assistance with photos and text, and potentially also a home visit.

Bottom line

If you own a property and are looking for an extra source of income, renting out your space can be a good way to boost your bank account balance. But it may not be as easy as it sounds. It’s a good idea to research what platforms might suit your hosting style, so you can reduce the hassle and maximize your profits.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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