Real Estate Information Archive

Blog

Displaying blog entries 11-20 of 279

Improve or UpLevel your Rental Property - Appeal to Tenants

Thursday, November 10, 2022
by Tom Stachler,ABR,CDPE - Group One Realty Team

Uplevel Your Rental Property to Better Appeal to Tenants

Your rental – whether it’s a Home, an apartment, or a vacation rental – needs to be consistently occupied by tenants to be profitable. Fortunately, finding tenants is easier than ever – more people are renting than ever before, says a Policygenius report. Moreover, Rent prices are soaring nationally, meaning you can pull in good rent.

Still, just because finding tenants is easy doesn’t mean you can keep them. Tenant turnovers are a thing and can cost you thousands of dollars in lost revenues yearly. And then there are problem tenants – people who don’t pay rent on time, damage your property, and are bad house guests in general.

An appealing, top-tier property typically solves all these problems by attracting “high-quality” tenants – people who want to live there longer, are willing to pay more, and generally don’t make a mess. Here, Tom Stachler offers some suggestions on how you could upgrade your property to make it more desirable:

Make it pretty

Beautifying the property’s interiors and boosting the curb appeal will always score brownie points with tenants. You don’t necessarily need to spend a huge amount of money on this (although you can). Some affordable aesthetic upgrades are giving it a fresh coat of paint, planting a garden, deep cleaning the interiors (and carpet), putting up a painting, getting new curtains, and letting in more natural light.

Provide in-demand amenities

Functional upgrades let you command a premium price for your rental. Some in-demand amenities are washers, dryers, furnishing, extra-spacious rooms, home offices, patios, luxury kitchens, luxury bathrooms, landscaping, high-speed internet, and air-conditioning. Do your research and calculate the ROI before you make expensive upgrades.

Get good reviews

If you own a vacation rental, good reviews mean everything, and good PR (which involves bad review management) will make you significantly more profitable. People will flock to a property with good reviews and hosts who care. A single bad review can scare people off. Bad reviews are less of a worry for traditional landlords, but landlord review sites do exist and are worth keeping an eye on.

Be responsive to repair (and other) requests

Regularly maintaining and repairing your property is one of your obligations as a landlord. Too many landlords are tardy or lax about it, though. Needless to say, nothing turns a tenant off like a crack in the wall, a leaky faucet, or chipped paint crucial. Being responsive to help requests is essential to keeping tenants on, long-term.    

Advertise with high-quality pictures and a digital brochure

Advertising is essential if you want to find more tenants. To make a bigger impact, be sure to include high-quality pictures to allow people to visualize your property (and imagine themselves living there). Making a PDF brochure to showcase your property can be worthwhile. You can include key details about the home alongside pictures. You could email the file to potential tenants. You can quickly edit a PDF online to add pictures and text, change the page order, and more – all without having to print anything out. Simply upload the PDF file online, make changes, and download it again.

Make an LLC to be more credible (and protect yourself)

Establishing a limited liability company for your investment property offers multiple advantages. It makes you look more professional and organized, for one. For another, it protects you and your assets from litigation. To form an LLC, you can hire a lawyer or use a formation service (which is much cheaper). If you go with the latter option, read reviews to find the best service available.

Find good partners

Working with professionals can make your property easier to manage. Although it can be a bit of an investment, it can pay off in the long run (and save you time). You could, for instance, hire a property manager to take care of everything in your stead. You could hire a cleaning crew and handymen for maintenance and repairs. Last, but not least, you could partner up with an experienced realtor to find more desirable tenants faster.

Conclusion

When everything is said and done, being a landlord is being a part of the service business. Focus on being a good host, partnering with the right people, advertising yourself, and safeguarding your assets by forming an LLC. Your reward will be a steady, passive source of income that only grows with time.

 

Tom Stachler is a licensed Real Estate Broker in the State of Michigan.  Contact us for Investment/Income and Commercial Property Inventory listing and purchase assistance.  We have apartment, duplex and single family income properties as well as vacant and built out commercial property.  

Thank you Melanie Nelsen for your contributions

Add Comment

The top interior colors to paint your home for 2022

Friday, May 13, 2022
by Tom Stachler,ABR,CDPE - Group One Realty Team

The top interior colors to paint your Home for 2022

Do you want to increase the value of your Ann Arbor home and sell it even faster? Painting your home is a great way to start as it can help you attract potential buyers. The first thing that a potential buyer sees is the color of the house. And in real estate, first impressions count. 

If you’re feeling lost and don’t know where to start, we've got you covered with this guide to the top interior colors to paint your Ann Arbor home this season.

1.     What colors should you go with?

Choose light/neutral colors for your home’s interior. Why’s that important? Every home buyer is looking at the cost and they don’t want to buy a house that they must spend additional money to fix or paint. Also, color is a very subjective subject. Some people prefer bright colors while others prefer neutrals/darker tones. So, what neutral colors are the best?

  • White

You can’t go wrong with white as it adds that clean look. The color white is your best bet for rooms like the kitchen. Since you do all your cooking there, who wants to have a dirty kitchen? According to research, home buyers are more likely to buy a property when the kitchen walls are painted white.

  •    Gray

Gray is a great color as it can complement other decors that have bright and colorful accents such as a green chair or metallic red lamp. These neutral hues allow potential buyers to see themselves in the home, as a result, they are even more likely to buy a home. Always paint your ceiling white as it will make the room look bigger and brighter. 

  •     Blue

When it comes to the bedroom try to stick with blue. A deep shade of blue indicates sleep to potential buyers. Research also shows that blue bedroom walls help you sleep longer and better. Any color you choose should enhance the mood you’re trying to achieve. If you can set the tone right that this place is for relaxation/sleeping you’ve hit the jackpot. Don’t be afraid to stage your house to make it more appealing to potential buyers. Home staging can lead to increased offers. 

Once you have picked your paint colors try to pay attention to the paint finish too. Matte finish hides any imperfections in walls as it absorbs light rather than reflects it. This will make your walls appear smooth and new. This is a great choice for bedrooms, dining rooms and living rooms. However, use it only for quick touch-ups as it’s not very durable in the long term. 

Who doesn’t want their home to look brand new? A satin finish is a great choice as it’s very durable and can be used in hallways or family rooms. If your kid’s room wall is destroyed don’t worry, satin paint can easily be cleaned. It will make the room look more modern due to its smooth surface. However, avoid scrubbing the walls as it can make the walls lose their sheen. A simple wipe will make all the difference.  

                 2.     What colors should you avoid?

When you’re selling your home, you want to avoid colors that are extremely bold like orange, red or yellow. They can come across as cheap and can leave a bad impression. Research has also indicated that orange is the least-liked color in the world - this is your sign to avoid it. Use data to create a competitive advantage. If you can create high demand, it will enable you to have control over the price of your property. Don’t underestimate the power of prepping your home before putting it on the market.

Don’t have time to paint your home before selling? Try Improovy’s on-demand home painting service, which provides a complete selection of painting services. They offer interior and exterior house painting, deck painting, fence painting, and porch painting.  Or visit our website list of contractors that have more painters and other tradespersons to assist in your repair or remodeling needs.

If you’re looking to sell your home, there’s never been a better time. Our latest report for Ann Arbor and Washtenaw County shows that both new and carryover buyers are waiting to pounce on the brightest and best of this year’s class new listings. 

Contact Tom Stachler, Broker today for a valuation. 

Add Comment

Standing Water on Your Lawn - Consider French Drains

Tuesday, April 26, 2022
by Tom Stachler,ABR,CDPE - Group One Realty Team

What Are French Drains?  

Occasionally I recommend creating a french drain.  It is not high tech and is something a landscaper, excavation company or homeowner can install, depending on what the owner wishes to spend on the project and their willingness to maybe do some or part of the work on their own.  

There are different types of french drains, but the one used most often for standing water in yards basically consists of a trench lined with plastic or gravel and filled with a corrugated black drainage pipe surrounded by more gravel and then covered with sand and top oil and either grass or river rock or decorative stone to enhance your landscaping on the surface. 

Sometimes the tops are left open on these drains and they are used with river rock and plantings on the surface the the water seems in from the sides and the surface just as well.  The idea is to channel water from areas with poor soil or lower elevations to a release point at a lower elevation or drainage ditch.  Homeowners can contract with a contractor or do the work themselves often digging by hand or renting a mini excavator, neighbors tractor with backhoe attachment or a bobcat for the day.  

To some degree, trenches leading from active downspouts are a form of a french drain as well and help to channel the roof run off water away from the foundation walls.  Always good to keep water draining away from the foundation.  

Feel free to contact us with any questions or Check out this interesting article for more info.  

French Drains: Are They Worth It?
https://realestate.usnews.com/real-estate/articles/french-drains-are-they-worth-it

 

tom stachler is a state of michigan licensed real estate broker & builder working and marketing homes, houses, income property and condos in the ann arbor, saline, dexter, ypsilanti, milan and surrounding communities. check out this website for property for sale and other realty related issues or concerns. 
 

Add Comment

Housing Report - Statistics for Ann Arbor and Rest of Washtenaw County Michigan

Friday, April 1, 2022
by Tom Stachler,ABR,CDPE - Group One Realty Team

Report for March 2022

Although inventory shortages continue to restrict sales, both new and carryover buyers (who have been looking since last year) are waiting to pounce on the brightest and best of this year’s class new listings. And they all want to lock in with their deals before interest rates rise further than they have.

Expect to see a similar pattern of sales and sharp price increases with lots of bidding wars in the first half of this year. The market will settle in the second half as this year’s best listings sell off and the remaining inventory quality fades.

Higher interest rates reduce affordability which hurts buyers and sellers equally. Any buyers and sellers who are thinking about moving in the near future, should do what they can to do so sooner rather than later. 

Click here for the Report pdf

Add Comment

Modular Sustainable High Tech Green Homes

Friday, February 4, 2022
by Tom Stachler,ABR,CDPE - Group One Realty Team

HOMES OF THE FUTURE - NEW IDEAS

Modular concepts are rapidly becoming more popular as they distance themselves from the manufactured Home type image in the past.  Home designs are now far more customizable that they ever were in the past with manufactures building 6 sided box components to drop into a designed plan to construct larger projects.  Each pod would maybe be different sections of the home, apartment building or hotel and commercial buildings.  

One of many options is S2A Modular Builders offer savings over conventional stick built homes and use low voltage lighting, solar, Tesla Powerwall or other grid saving technologies.  I recently attended a info webinar and you might want to view it for more overall info and resources.  The link to the recent webinar that here to click on though I do not know how long it will stay up.  

Elon Musk is involved in a company called Boxabl and you can watch a YouTube video about them here to see more about smaller and sustainable housing options.  Some of this is being fueled by the popular tread in CA to have an accessory building or study apartment.  

We have a project coming up that has not been announced yet near the Huron River.  If interested, please reach out to us to get on the news update list.  

 

Tom Stachler is a State of Michigan licensed Broker and builder selling homes, commercial and income property in the Ann Arbor, Ypsilanti, Saline, Dexter, Brighton and other surrounding communities.  Contact us today to learn more about current inventories, modular sustainable building options, or other real estate related goals or matters that we can help with.  

real estate sustainability modular manufactured home house accessory building options ideas trends tesla powerwall solar panel ideas boxabl s2a modular builders gallery of homes apartment buildings tom stachler thomas realtor construction projects land development

Add Comment

Symptoms of Covid Omicron

Saturday, January 15, 2022
by Tom Stachler,ABR,CDPE - Group One Realty Team

Health experts are quickly learning about the characteristics of the new omicron variant that is driving a record-breaking spike in COVID-19 cases, including some of the symptoms it causes.

It isn’t always the case that a new version of the virus brings about a new batch of symptoms. “The symptom differences between people infected with one variant or another are usually much more similar than they are different,” says Scott Roberts, M.D., assistant professor and associate medical director of infection prevention at Yale School of Medicine. And for the most part, that seems to hold true with omicron. But researchers and medical professionals have noted a few small differences between omicron and its predecessors.

For instance, loss of taste and smell appears to occur less often in omicron infections. It’s something health experts are hearing anecdotally; there are also early studies that support these observations, though University of Michigan infectious disease physician Laraine Washer, M.D., says there’s not enough population-level data yet to know for sure. Backaches and night sweats have also been associated with omicron. “But ultimately, we haven't detected any clear difference between omicron versus delta,” Roberts says. “We've been advising people just to wait until the data comes out.” More Info Here

The one big difference that we're anecdotally hearing [is] there's much less loss of taste and smell with the omicron variant compared to delta.

— Scott Roberts, M.D., assistant professor and associate medical director of infection prevention at Yale School of Medicine

Milder symptoms but more contagious

What’s becoming clearer, however, is that omicron, while highly contagious, appears to cause more mild, coldlike symptoms. “Many people are presenting with sore throat, nasal congestion, headache, muscle aches,” Roberts says.

Data collected so far show that individuals infected with omicron are significantly less likely to be hospitalized than those infected with delta, even though hospitalization rates are at an all-time high due to skyrocketing case counts. They’re also less likely to require intensive care. This is not the case for everybody, experts caution. Some patients experience serious symptoms with omicron, like trouble breathing, Washer notes. “We are still seeing people end up on ventilators and having severe disease,” Roberts adds.

Health experts are trying to determine whether omicron’s less severe symptoms are a product of the variant itself or a reflection of a majority-vaccinated population that is better able to blunt some of its worst effects. The vaccine-plus-booster regimen is about 75 percent effective against symptomatic disease, and protection against severe disease is likely higher, researchers report. Both Roberts and Washer say the majority of people who are hospitalized with COVID-19 are unvaccinated.

Another explanation: Lab studies suggest that the omicron variant does not replicate as well in the deep lung tissue — an area notoriously damaged by delta and other variants — rather, it thrives in the upper airway. “Perhaps that is why we're not seeing as severe disease,” Roberts says.

Signs of omicron infection can come on quickly

Another noticeable difference between omicron and other coronavirus variants is how quickly the symptoms hit. Fever, sore throat and fatigue caused by omicron are more likely to show up about three days after a person is infected, whereas symptoms caused by delta, alpha and others typically emerge about five or six days after infection, Washer says.

Getting sick soon after exposure can help people better pinpoint when and where they became infected. “But it also means that the increase in viral load that's causing symptoms comes on pretty fast,” Washer says. “And you may actually be infectious to others even before those symptoms develop.”  

Omicron’s shorter incubation period, as it’s called, could lead to new testing guidelines, Roberts points out. Current recommendations advise individuals to wait at least five days after having contact with a COVID-positive individual before taking a test. “They may shorten that to as little as three days after getting exposed just to be sure,” he says.

Cold and flu season adds to confusion

While milder symptoms are better in many respects, omicron will make it more difficult for people to tell what’s COVID-19 and what’s just a cold — or the flu or a whole host of other respiratory illnesses that circulate this time of year.

Most Common Symptoms of COVID-19

People with COVID-19 report a wide range of symptoms. The most prevalent are:

  • Fever or chills
  • Cough
  • Shortness of breath or difficulty breathing
  • Fatigue
  • Muscle or body aches
  • Headache
  • New loss of taste or smell
  • Sore throat
  • Congestion or runny nose
  • Nausea or vomiting
  • Diarrhea

Source: Centers for Disease Control and Prevention

Roberts says the solution is to “take any symptom seriously, even a mild symptom.” And if there’s a change in how you’re feeling, take an at-Home test — if you can find one. Rapid antigen tests can tell you whether you have a COVID-19 infection in about 15 minutes with a swab of the nose or throat. Home tests are in short supply because of high demand, though the federal government has pledged to make them more accessible in the coming months.

If your test comes back positive, health officials recommend a minimum five-day isolation period. After five days you can be around others again while wearing a mask, as long as you are fever-free and feeling better. And don’t forget to tell your health care provider that you have COVID-19. Depending on your medical condition and drug availability, you may qualify for treatment to make sure the disease does not progress to a more dangerous state. Also, be on the lookout for worsening symptoms. Trouble breathing, pain or pressure in the chest, and confusion require immediate medical care.

Even if your antigen test is negative, Roberts advises caution. “I think if you're having signs of respiratory virus infection right now, more likely than not it's COVID,” he says. A PCR test (short for polymerase chain reaction), administered at a doctor’s office or testing site, can confirm your suspicions. Another option to consider if you test negative for COVID-19 but have a fever is a flu test, Washer says, since there are also treatments specific to this illness that can help you feel better.

Preventive measures key in omicron fight

Finally, don’t forget all the preventive efforts that can help you dodge an omicron infection in the first place. Health experts still encourage avoiding crowded gatherings and poorly ventilated indoor spaces. Keep a physical distance between yourself and others not in your household, and wear a mask when you’re out in public.

“One thing I would emphasize is omicron is different than delta, in that even if you're vaccinated, even if you're boosted, you really need to protect yourself by wearing a high-quality mask, especially when you're indoors,” Washer says. The Centers for Disease Control and Prevention has do’s and don’ts for selecting and wearing a mask. With the current surge in COVID-19 cases, many experts are recommending medical-grade masks, such as KN95s and surgical masks, instead of cloth ones.  

When it comes to omicron, “I think we still have a lot to learn,” Washer says.

 
 
 

How to Protect Against the Omicron Variant

 
 
Add Comment

Merry Christmas Everyone !

Sunday, December 19, 2021
by Tom Stachler,ABR,CDPE - Group One Realty Team

Hey it's Christmas Week already.  I just wanted to wish you a very Merry Christmas and the best of luck in the coming New Year.  Keep smiling and let me know if I can every do anything for you.  Be well.

 

 

Holiday video wishing you a very Merry christmas and happy new year.  From Tom Stachler real estate broker for real estate one ann arbor michigan. selling homes, condos, vacant land and commercial and income properties in and around the ann arbor, saline, ypsilanti, dexter, chelsea and surrounding areas. 

Add Comment

Life is full of Magic !

Friday, December 17, 2021
by Tom Stachler,ABR,CDPE - Group One Realty Team

I wanted to wish everyone a wonderful holiday season and the best of luck in the coming New Year.  Some of you know I like to travel and explore whenever I get the time and am always looking for interesting places to visit.  

The other day I came across an interesting article on the internet and just thought to share that with you here in this link providing views of some of our planets naturally magical places. Check it out .  

It is time for new year resolutions and mine is to strive to think positive and be helpful and kind to others.  There is too much anger and division presently in our communities currently and lets all hope and pray for better days going forward.  Be well!  

Add Comment

STUMP REMOVAL: HOW TO GET RID OF TREE STUMPS

Sunday, August 22, 2021
by Tom Stachler,ABR,CDPE - Group One Realty Team

After the recent storm damage over these past few weeks, I thought this information might be helpful.  

 

Stump Removal: 4 Ways to Get Rid of Tree Stumps

A tree in your landscape can be a thing of beauty. But after it’s gone, the stump left behind is not so beautiful. It’s a tripping hazard, can damage your lawn mower as you try to mow around it, attract insects, and let’s face it — sawn-off trunks just don’t look great! Stump removal is your only option.

But unfortunately, removing that stub of a tree that’s left is more difficult than you might think. It’s connected to a root system that once anchored a tree, keeping it upright in all kinds of wind and weather. In fact, the root system of most trees roughly mirrors the size and height of the tree itself, spreading as far out and down as the branches reached out and up.

After the tree is gone, those roots are still attached to the stump, clamping it firmly in place in the ground. The roots will eventually decay, returning nutrients to the soil, but the stump itself can take as long as 10 years to break down. Do you really want to work around that eyesore for the next decade?

Unless you lead with your checkbook, there’s nothing “easy” about stump removal.  But if your willing to trade-off waiting time for expense, there’s a number of ways to eliminate the stumps for very little cost. Here are a few different methods to choose from.

stump removal

Stump Grinder

The most common method of stump removal is grinding, but that job is about as far from DIY as you can get. You’ll need to hire a tree service who’ll use a specialized stump grinder, a machine resembling a torture machine from the scariest horror movie you can imagine.  The toll features a spinning circular grinding blade that is plunged into the ground again and again to chew up the stump and reduce it to sawdust.

It happens fast, but the average cost for having a stump ground is $300, and prices can go as high as $900. If you have several stumps to deal with, you can pay an hourly rate, but at $150 or more an hour that can add up quickly.

stump removal

Manual Tree Stump Removal

For the hearty do-it-yourselfer, digging out a medium-to-small sized stump can be done in an afternoon. Here are the steps.

 

  1. Dig around the stump with a pointed shovel to expose the roots. Extend the hole a few feet out from the stump to give yourself room to maneuver.
  2. Cut through the exposed roots. It helps to have a variety of tools on hand, to get through compacted soil and different sizes of roots. Good tools for this part of the project include a lopper, pruning saw, ax, and digging bar.
  3. Continue to work your way through roots and soil until you can rock the stump back and forth.
  4. Push the trunk to one side with a pry bar and cut through the exposed roots. Repeat, making your way around the trunk to get at the roots on all sides.
  5. Continue until the root ball is cut free. Remove and fill the hole with soil.
stump removal, chemical stump removal

Chemical Tree Stump Removal

Stump removal chemicals are sold online and in Home improvement stores. They generally contain potassium nitrate, which speeds up the microbial process of decomposition. They may be in liquid form or a powder, to which you add water. You will want to keep kids and pets away while the chemical is doing its work.

 

  1. Purchase stump removal product.
  2. With a chainsaw, cut off the stump as close to the ground as possible.
  3. Drill multiple 1′ holes 10″ deep in the top of the stump. Drill a few more holes slanting inward from the side of the trunk. These will provide air to help fuel decomposition.
  4. Pour the chemical in the top holes, according to directions.
  5. Cover the stump with a tarp and wait 4-6 weeks. The wood will become spongy.
  6. Chop out the softened wood with an ax and fill the hole with soil. Depending on the size of the stump, you may need to repeat the steps.

Stump removal

Burning Tree Stump Removal

This is particularly effective when used as a second step after the chemical removal method. Instead of chopping out the remaining wood, burn it! If you’re starting your removal with fire, you’ll find that it works best on older, drier stumps. If yours was cut very recently or it is still putting out shoots then it’s still fairly green and won’t burn as well. For obvious reasons, follow all safety precautions, have a properly rate fire extinguisher handy, and  keep kids and pets away from the stump as it smolders.  The process is as follows:

 

  1. Check with local authorities for fire burn restrictions.
  2. With a chainsaw, cut off the stump as close to the ground as possible.
  3. Drill multiple 1′ holes 10′ deep in the top of the stump. Drill a few more holes slanting inward from the side of the trunk to intersect with the holes drilled down from the top.
  4. Pour kerosene or fuel oil into the holes. Do NOT use gasoline! Wait 2 weeks to let it soak through the wood. For a large trunk, repeat and wait another 2 weeks.
  5. Clear away debris from around the trunk and lay down bricks or rock to create a fire ring. Have a hose at the ready, as well as a large fire extinguisher rated to work on fuel oil and wood.  (An ABC rated extinguisher covers all types of fires).
  6. Using sticks and kindling, build a fire on top of the trunk. Once lit, the fire will burn out as the sticks are consumed, but the trunk will ignite and start to smolder.
  7. The trunk will continue to smolder for days. Check on it a couple of times a day, and stir up the embers if needed.
  8. Once the fire is completely burned out and the area is cool, rake out the ashes and fill the hole with soil.

 

There’s no reason you have to trip over an ugly stump in your yard for the next decade. Just pick your plan of attack and evict that memory of a tree gone by.

 

 

 

Tom Stachler is a state of Michigan licensed real estate broker and builder working in Ann Arbor, Saline, Ypsilanti, Brighton and their surrounding communities.  Call us today to put our 30 plus years of experience to work for you.  

Add Comment

How Much Will Benefits Increase Next Year?

Sunday, July 25, 2021
by Tom Stachler,ABR,CDPE - Group One Realty Team

Social Security COLA 2022: How Much Will Benefits Increase Next Year?

Due to rising inflation, beneficiaries could get their biggest raise in over a decade

 
 
social security cards and hundred dollar bills

ISTOCK / GETTY IMAGES

En español | Social Security beneficiaries could get a 5 percent cost-of-living adjustment (COLA) in 2022, the highest since 2008, due to the recent burst of inflation.

"The COLA will no doubt be higher than it has been for the last decade, probably in the 5 percent or higher neighborhood because of rising prices,” says David Certner, legislative counsel and director of legislative policy for government affairs at AARP.

Any estimates are preliminary, and the actual COLA will depend on changes in prices between July and the end of September. The Social Security Administration typically announces the amount of the annual adjustment, if any, in October. The increase in benefits typically goes into effect in January.

Rising prices

Estimates for the 2022 COLA range from 4.5 percent from Moody's Analytics to 6.1 percent from The Senior Citizens League. Economist Bill McBride, who writes the finance and economics blog Calculated Risk, estimates the 2022 COLA at 5.5 percent.

In contrast, the increase that went into effect in January 2021 was 1.3 percent, or an average of about $20 a month for individuals. A 5 percent increase would boost the average monthly benefit by about $77.

Rising prices in 2021 are the driving force behind the higher COLA estimates. “It's the energy prices that are causing havoc,” says Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League. A gallon of unleaded gasoline costs an average of $3.16, up from around $2.20 a year earlier. Oil demand collapsed last year at the onset of the pandemic, and it takes time to ramp up production again. Now, with businesses reopening and people traveling more, demand is growing. Supply just hasn't caught up yet.

"Higher prices reflect the disarray caused by the pandemic,” says Mark Zandi, chief economist at Moody's Analytics. The price of airline tickets, for example, has surged 24.6 percent in the past 12 months ending June 30, as travelers scramble to get seats on flights that had been cut back by COVID-19 restrictions. Used car prices have jumped 45.2 percent in the past year, because the supply of new cars fell sharply during the pandemic. Zandi expects the inflation rate will decline to about 2 percent in 2022 as supply and demand even out.

Nevertheless, higher prices take a significant toll on retirees. Social Security benefits rise only once a year; inflation rose 1.1 percent in June alone. “Those with modest Social Security benefits are the ones who really have trouble,” Johnson says. Other retirees have had to tap more of their savings than they had planned because the Social Security benefit didn't keep up with 2021's hot inflation, she says.

 

How the COLA is calculated

The actual COLA will depend on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W, an official measure of the monthly price change in a market basket of goods and services, including food, energy and medical care. The Bureau of Labor Statistics tracks both the CPI-W and its better-known cousin, the CPI-U — the Consumer Price Index for All Urban Consumers — which is a broader measure of retail prices.

The CPI-W rose 6.1 percent over the 12 months ended in June. In October, the Social Security Administration will compare the CPI-W for July, August and September 2021 with the CPI-W for the same period in 2020. The percentage change from last year's third quarter to this year's third quarter will be the COLA amount for the following year.

The COLAs for the past 10 years have averaged 1.7 percent, with increases ranging from zero in 2015 to 3.6 percent in 2011. The most recent year beneficiaries received a COLA of more than 5 percent was in 2008, when there was 5.8 percent increase.

Since Congress initiated automatic annual COLAs in 1975, there have been three years — 2009, 2010 and 2015 — in which benefits didn't increase at all. There is no COLA if inflation stays the same or declines year-over-year. The single biggest increase was 14.3 percent in 1980, which went into effect in January 1981.

History of Social Security COLA Increases, 1975-2020

chart showing the history of social security cost of living increase adjustments for every year between nineteen seventy five and twenty twenty

Cost-of-living adjustments go into effect in January of the following year. Social Security publishes a complete chart of annual COLA increases.

Social Security is funded by a payroll tax of 12.4 percent on eligible wages — employees pay 6.2 percent and employers pay the other 6.2 percent (self-employed workers pay the entire 12.4 percent). Next year, the maximum amount of earnings subject to the Social Security tax, currently capped at $142,800, will also be adjusted for inflation. The money paid in by today's workers goes to cover current benefits, with any excess going into the Social Security trust fund.

You might not see all of the increase in your benefit payment. If your Medicare Part B premiums are deducted from your Social Security (as is the case with 70 percent of Part B enrollees), a Medicare rate increase could offset all or part of the COLA.

 

 

Tom Stachler is a licensed real estate broker working in Ann Arbor and the surrounding communities of Saline, Dexter, Ypsilanti, Milan, Brighton and more.  Please click on the informational Links above for further assistance with homes and condo for sale, commercial real estate and residential income property.  

Add Comment

Displaying blog entries 11-20 of 279

Syndication

Categories

Archives