Key Takeaways After your parents or grandparents pass away, you may expect to receive some type of inheritance, whether it's old jewelry, leftover retirement account assets, or even a home. While inheriting a home can be a blessing, it can also come with hidden downsides. With the "Great Wealth Transfer†underway, this is an issue many Americans could face in the coming years. During this period, a staggering $124 trillion worth of wealth is expected to transfer through 2048, with most of that wealth going t ...

Inheriting a home with no mortgage can be a major boost to your finances. However, there’s a notable caveat: Deciding how to make the most of the inheritance can be really stressful. Jasmin is one of many Americans in this hypothetical situation. Must Read Her mom passed away, leaving Jasmin — an only child — with a fully-paid off home valued at $300,000 and the common dilemma of deciding whether to sell the property or rent it out. On paper, Jasmin is fortunate. Many Americans inherit much less — the ...

Core Insights - Lower-income Americans face concerns about retirement funding, as Social Security only replaces about 40% of pre-retirement income, necessitating additional income or savings [1] Group 1: Items to Sell Before Retirement - Selling a second car can generate cash and reduce expenses related to insurance and registration fees [2] - Timeshares may incur more costs than benefits, and selling them can provide financial relief, even if no money is gained from the sale [3] - Family heirlooms that children do not want can be sold to free up cash for retirement and alleviate the burden on heirs [4] - Poorly performing investments should be reviewed and potentially sold to claim losses on tax returns, thus reducing tax liabilities [5] - Selling a home and downsizing can generate cash for retirement while potentially lowering property taxes and maintenance costs [6]

Core Insights - Homeownership is a significant recurring expense for many individuals, impacting both working years and retirement [1] - Paying off a mortgage before retirement can simplify financial management in later life by eliminating monthly payments [1][4] Group 1: Benefits of Homeownership in Retirement - Stability is a major advantage of owning a home in retirement, as it protects against lease non-renewal by landlords [3] - A paid-off home can provide valuable equity, which, while not ideal to rely on, can serve as a financial backup in emergencies [3] - Eliminating mortgage payments reduces financial stress during retirement [4] Group 2: Drawbacks of Homeownership in Retirement - Homeownership can introduce unpredictable costs, such as maintenance and repairs, which can significantly impact retirement savings [5] - For example, a $12,000 home repair could consume one-fifth of an annual retirement income of $60,000, highlighting the financial risks involved [6] - Renting may offer more predictable housing costs and avoid unexpected repair expenses, providing a more stable financial situation [7][8] Group 3: Personal Considerations - Emotional factors, such as attachment to a family home or neighborhood, can influence the decision to own a home in retirement beyond financial considerations [9]

Core Viewpoint - D.R. Horton Inc. (DHI) is expected to report its first-quarter fiscal 2026 results on January 20, with performance reflecting a balance between maintaining volumes and addressing affordability-driven demand constraints [1] Financial Performance - In the last quarter, DHI's earnings missed the Zacks Consensus Estimate by 7.6%, while total revenues exceeded the estimate by 2.4%. Both metrics showed declines of 22% and 3.2% year-over-year, respectively [2] - The Zacks Consensus Estimate for the upcoming quarter's earnings per share (EPS) has decreased to $1.96 from $1.97, indicating a 24.9% decline from the previous year's EPS of $2.61. The revenue consensus is set at $6.71 billion, reflecting an 11.9% year-over-year decline [3] Revenue Expectations - DHI anticipates total revenues for the quarter to be between $6.3 billion and $6.8 billion, down from $7.61 billion reported a year ago. The Homebuilding segment, which contributed 92% of total revenues in fiscal 2025, is expected to see a decline due to fewer homes closed, with an estimated 17,100 to 17,600 units compared to 19,059 units in the same quarter last year [5] - Homebuilding revenues are predicted to decline by 11.5% year-over-year to $6.34 billion, with home closures expected to be 17,483 units, down 8.3% year-over-year. Rental Property revenues are projected at $186.4 million, indicating a 14.4% decline from the previous year [6] Margin Analysis - DHI expects gross margins to be pressured by lower average selling prices (ASPs), elevated incentives, and higher lot costs. The home sales gross margin is anticipated to be between 20% and 20.5%, down from 22.7% in the prior year, with a predicted contraction of 260 basis points [9][13] - The company has noted that lot costs continue to be a structural headwind, with year-over-year increases expected to impact closings for several quarters. While construction cycle times have improved, the benefits to margins from efficiency gains are likely to be limited in the near term [11] Orders and Backlog - For the fiscal first quarter, net sales orders are predicted to increase by only 1% year-over-year to 18,012 units, with backlog units estimated at 11,314, indicating a 2.8% growth from a year ago. The value of the backlog is expected to be $4.35 billion, reflecting a 1.1% year-over-year increase [14] Earnings Prediction - The current model does not predict an earnings beat for D.R. Horton, with an Earnings ESP of -8.67% and a Zacks Rank of 4 (Sell), indicating lower odds of an earnings surprise [15]

Core Insights - The article discusses the trend of younger generations, particularly Gen Z and millennials, acquiring homes from their baby boomer and Gen X parents at discounted prices, providing them with an entry point into the housing market [1][2]. Financial Implications - Kwame, a 23-year-old, is offered to buy his parents' home valued at $380,000 for $200,000, resulting in $180,000 in built-in equity, but he expresses concern about becoming house-poor despite the discount [2]. - The difference between the fair market value and the sale price is considered a gift of equity, which has implications for gift taxes, Medicaid eligibility, and mortgage structuring [3][4]. - The gift exceeds the $19,000 annual gift tax exclusion, necessitating the filing of IRS Form 709, although his parents may not owe taxes unless they exceed their lifetime exemption of $13.99 million in 2025 and $15 million in 2026 [4]. - Capital gains taxes are unlikely on the sale portion, as the gain should fall below the $500,000 exclusion for married taxpayers filing jointly, given the sale price of $200,000 [5]. - Kwame's cost basis in the home will be $200,000, which could lead to larger capital gains if sold later, but he may qualify for an exemption if it remains his primary residence [5]. Medicaid Considerations - The article highlights that Kwame's parents should consider the potential impact of the property transfer on their future Medicaid long-term care eligibility, as there is a five-year look-back period for asset transfers [6][7].

Business Overview - Citi Trends focuses on the core African-American customer[6, 22] - The company operates approximately 590 stores with each store being around 12,000 sq ft[12, 15] - Citi Trends' sales are approximately $750 million[12] - The product margin is approximately 39% excluding one-time costs[12, 13] Recent Trends and Strategies - Citi Trends marked down approximately $26 million in unproductive inventory to create open to buy for fresh product[23] - The company is focusing on improving retail fundamentals and building foundational best practices[23, 24] - The company aims to offer branded values at 50% to 75% off MSRP[28] Path to Value Creation and Future Growth - Citi Trends is in the "Repair" phase in the second half of 2024, with plans to "Execute" in the first half of 2025, "Optimize" in the second half of 2025, and achieve "Growth" in 2026 and beyond[30] - The company aims for sales growth of approximately 4% to 6%[44] - Citi Trends is targeting square footage expansion of approximately 6% to 10%[40, 44] - The company projects EBITDA of $40 million or more[44]

Core Insights - Warren Buffett's purchase of his home in 1958 for $31,500 was primarily for family memories rather than financial gain [1][4] - In his 2010 letter to shareholders, Buffett acknowledged that while his home appreciated to between $1.2 million and $1.5 million, it was a financial underperformer compared to Berkshire stock [2][3] - Buffett emphasized that a house is not an automatic wealth-builder and should be treated as an investment if one aims for financial returns [5][6] Real Estate Market Context - The current median home price is approximately $410,000, with historically high mortgage rates, leading many buyers to stretch their budgets for "starter homes" [7] - Buffett's long-term residence in the same home for nearly seven decades contrasts with the trend of buyers seeking larger, more expensive properties [6]

Core Insights - January is identified as the best month for homebuyers to save money, with potential savings averaging $23,400 compared to purchasing in May, the most expensive month [1][2][3] Pricing Analysis - The average price per square foot in January is $178.60, with February following at $183.70. Prices increase monthly, peaking at $194.20 in May before declining again [5] - The breakdown of monthly per-square-foot costs is as follows: - January: $178.60 - February: $183.70 - March: $187.90 - April: $190.50 - May: $194.20 - June: $193.40 - July: $190.30 - August: $189.70 - September: $187.40 - October: $189.40 - November: $188.10 - December: $187.40 [5] Market Dynamics - The share of first-time homebuyers reached a record low of 21% last year, significantly below the long-term average of 38% since 1981, attributed to high home prices [2] - Fewer buyers in the winter months may lead to more negotiating power for buyers, although the number of available homes is also lower [7]

Core Insights - The housing market is shifting, with increased inventory providing more options for buyers, while buyer activity remains soft, leading to longer market times and slightly lower prices compared to last year [2][3] Financial Preparation - Prospective buyers should take a comprehensive look at their financial situation, including assets and liabilities, to prepare for homeownership [4][5] - Reviewing credit reports is essential as credit profiles significantly influence mortgage options, interest rates, and overall borrowing costs [5] - It is advised to connect with a lender early to understand realistic expectations and necessary improvements for financing [6]