Mon, Jul 26, 2010

The Home Buyer Tax Credit proved to be a valuable stimulus to the troubled U.S. housing industry. The only catch: those who qualified had to be under contract by April 30, 2010, and close by June 30 (editor’s note: at press time, the federal government had extended this closing deadline to September).

In the months leading up to the contract deadline, existing home sales increased steadily and, according to NAR data released in May, they jumped 7.6% from March to April, showing a 22.8% increase from April 2009 figures.

Now, with both tax credit deadlines past, real estate professionals can help maintain the recent momentum by keeping buyers motivated. Truth is, the tax credit was one of many incentives to enter the market in the past two years—and several of those advantages still exist for qualified buyers. It's still a great time to buy for many reasons:

Low Home Prices
Although there is widespread agreement in the industry that the housing market has reached the bottom, home prices aren’t expected to spike upward. Instead, they’re likely to skip along the bottom into 2011. They will continue to decline in some markets and creep up in others. As long as buyers remain diligent in the home search over the coming months, possible pricing fluctuations won’t have a dramatic effect on their property options.

Low Interest Rates
Interest rates on 30-year, fixed-rate mortgages hit a five-month low of 4.93% in May, and as of early June the rates were holding steady below 5%. Financial concerns over the growing debt crisis in Europe have stemmed discussions in the U.S. of raising rates. The historically low rates will save home buyers thousands and thousands of dollars over the life of a loan, which arguably is reason enough to enter the market.

Other Tax Benefits
The U.S. Home Buyer Tax Credit was temporary, but there are other tax benefits that buyers can continue to count on for the foreseeable future. Property taxes, mortgage interest payments and mortgage insurance premiums are qualified deductions that can help reduce many homeowners’ tax liability. For eco-conscious homeowners, purchasing energy-efficient appliances and making other green upgrades can mean a tax credit up to $1,500. For more information, be sure to visit www.irs.gov or consult a tax professional.

Tax credit or no tax credit, homeownership is part of the America dream—and it’s alive and well.

Written by Margaret Kelly, CRB,  chief executive officer of RE/MAX LLC.

With the scheduled closing deadline for the home buyer tax credits, existing-home sales slowed in June but remained at relatively elevated levels, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.

Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.74 percent in June from 4.89 percent in May; the rate was 5.42 percent in June 2009.

The national median existing-home price for all housing types was $183,700 in June, which is 1.0 percent higher than a year ago. Distressed homes were at 32 percent of sales last month, compared with 31 percent in May; it was also 31 percent in June 2009.

NAR President Vicki Cox Golder said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value REALTORS® bring to buyers and sellers in this market.”

A parallel NAR practitioner survey shows first-time buyers purchased 43 percent of homes in June, down from 46 percent in May. Investors accounted for 13 percent of sales in June, little changed from 14 percent in May; the remaining purchases were by repeat buyers. All-cash sales were at 24 percent in June compared with 25 percent in May.

Total housing inventory at the end of June rose 2.5 percent to 3.99 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.3-month supply in May.

“The supply of homes on the market is higher than we’d like to see. But home prices are still holding their ground because prices had already overcorrected in many local markets,” Yun said. Raw unsold inventory remains 12.7 percent below the record of 4.58 million in July 2008.

Single-family home sales fell 5.6 percent to a seasonally adjusted annual rate of 4.70 million in June from a level of 4.98 million in May, but are 8.5 percent above the 4.33 million pace in June 2009. The median existing single-family home price was $184,200 in June, up 1.3 percent from a year ago.

Single-family median existing-home prices were higher in 10 out of 19 metropolitan statistical areas reported in June in comparison with June 2009. In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged.

Existing condominium and co-op sales slipped 1.5 percent to a seasonally adjusted annual rate of 670,000 in June from 680,000 in May, but are 20.5 percent higher than the 556,000-unit pace in June 2009. The median existing condo price was $180,100 in June, which is 1.4 percent below a year ago.

Regionally, existing-home sales in the Northeast rose 7.9 percent to an annual level of 960,000 in June and are 17.1 percent above June 2009. The median price in the Northeast was $244,300, down 1.2 percent from a year ago.

Existing-home sales in the Midwest dropped 7.5 percent in June to a pace of 1.23 million but are 11.8 percent higher than a year ago. The median price in the Midwest was $155,900, down 0.1 percent from June 2009.

In the South, existing-home sales fell 6.5 percent to an annual level of 2.01 million in June but are 11.0 percent above June 2009. The median price in the South was $163,600, unchanged from a year ago.

Existing-home sales in the West dropped 9.3 percent to an annual pace of 1.17 million in June but are 0.9 percent higher than a year ago. The median price in the West was $221,800, up 1.5 percent from June 2009.

Great news for home buyers!  Mortgage interest rates continue their decline to historic lows with 30 year conventional, fixed rates around 4 3/8% and 15 year at around 4%.  FHA has also eased requirements.

 Right now is the perfect storm for home buyers. Historic low interest rates, extremely low home prices and motivated sellers. Buyers who can buy right NOW have an incredible opportunity!

If you would like information on how you can now purchase a home and take advantage of this once in a lifetime opportunity, please contact me - I'm here to help!

Homebuyer tax credit closing deadline extension filibustered

A Senate bill that would have delayed the closing deadline for the homebuyer tax credit until September 30 has been filibustered. All 40 Republicans and one Democrat voted against allowing the bill to move to the floor for debate, effectively killing it. The June 30 deadline to close on contracts entered into before May 1 and still qualify for the homebuyer tax credit remains in force.

U.S. homebuyers are less likely to purchase a foreclosed property today than they were a year ago, according to a new survey conducted by Trulia and RealtyTrac. Some 45 percent of U.S. homebuyers say they are at least somewhat likely to purchase a foreclosure today compared with 55 percent who said the same a year ago.

Only 1 percent of homeowners with a mortgage say walking away from their home would be their first option if they are unable to pay their mortgage, while 59 percent say they would not consider walking away no matter how much their mortgage was underwater. More than two-thirds of homeowners (69 percent) say modifying their loan terms is their first choice if they aren’t able to pay their mortgage.

The survey also finds that fewer homeowners have a negative view toward foreclosure properties this year (78 percent) compared to last year (85 percent). Homeowners who believe there are negative aspects to purchasing a foreclosed home say they are most concerned that there will be hidden costs (68 percent), that the process is risky (49 percent) and that the home could lose value (35 percent).

Tue, May 25, 2010

Please let me know if anyone has thoughts on what/who this might be!! 

A professional home inspection can not only provide a great education about the home’s systems, but also be a crucial tool in negotiating the most equitable price on the home, according to HouseMaster, one of the first and largest home inspection franchisors in North America.

“Our experience and research shows that approximately 40% of resale homes have at least one defect that can cost a home buyer a minimum of $500 to repair,” said Kathleen Kuhn, President of HouseMaster.“A home inspection by a professional and qualified home inspector is an excellent tool to encourage home sellers to make repairs or make further price adjustments as a result of conditions noted in the inspection report.”

According to the National Association of Realtors (NAR), in 2009, a record 47% of homes sold were purchased by first-time buyers. Tax credit incentives from the federal government of up to $8,000 and historically low mortgage rates continue to attract first-time buyers to the market. A professional home inspection not only educates buyers on the condition of the home but can minimize costly surprises down the road. HouseMaster provides the following tips to ensure that first-time buyers make an educated decision when purchasing a home and get the best price possible.

1. Inspect the Inspector. Only hire a home inspector with an excellent reputation and credentials. Ask how long the company has been in business, ask about specific formal training and ongoing education the inspector has and verify the inspector carries professional liability insurance also known as “Errors & Omissions” (E&O). If the company doesn’t carry this insurance, it could indicate a poor track record or lack of experience.

2. Ask for a sample of a report. The credentials of the inspection company and the quality of the final inspection report will be important. A poorly prepared report without pictures or clear, concise details addressing all the various systems and accessible elements of the home is less likely to be taken seriously by a home seller.

3. Inspect ancillary systems. It’s hard for first-time home buyers to know what they need, so be sure to ask what additional services the company offers. If the home you are considering has a septic system for example, a professional home inspection company may offer septic system inspections or can coordinate that service for you. Generally, the company will offer you a multiple services discount as well as the added convenience of only having to attend one inspection appointment. Other common services offered by home inspectors are termite inspections, mold screening, water testing and radon testing.

4. Go along on the inspection. Ask the inspection company if they encourage buyers to tag along on the inspection. If the inspector discourages you from going along and asking questions, find another inspector. A home inspection is not simply a laundry list of what is wrong with the home. In addition to documenting issues and needed repairs that may exist, a professional home inspector will also show the new buyer how to operate the various systems in the home and provide tips on improving energy efficiency and maintaining the home in general. And being present during the inspection will make the final written report that much more meaningful.

RISMEDIA, April 21, 2010

It's been a long time since we've seen the Wall Street Journal run a front-page article suggesting that the national economy appears to be rebounding faster than most analysts forecast. But that happened last week.

And over the past couple of years, we haven't seen retail sales -- a key barometer of consumer confidence -- jump by almost two percent in a single month. But we saw that last week as well.

And then there's real estate: The latest Federal Reserve "beige book" on economic conditions nationwide, issued last week, said something we haven't heard in a long, long time. Housing activity is up in 11 of the 12 bank districts.

All of this, of course, sounds like promising news for home sales in the coming months. In fact, Freddie Mac's economists see total sales this year at least 10 percent higher than last year, even with the possibility of higher mortgage interest rates.

But there are complications in the mix: The Fed's "beige book" report essentially said, yes, housing is on an upward path at the moment, but what happens to sales after the home purchase tax credits expire mid-year?

Will expansion elsewhere in the economy be able to sustain sales and prices?

Lawrence Yun, chief economist for the National Association of Realtors, has similar concerns. In his latest commentary, Yun says steadily rising employment will be essential to keeping housing positive once the credits disappear.

The employment report for March was encouraging: 162,000 net new jobs, Yun noted, even in hard hit sectors like manufacturing. Yun's forecast model projects one million additional new jobs this year, plus another two million next year.

But even that sort of rebound in employment won't be enough to replace the 8.2 million jobs lost in the recession years. So the unemployment challenge is likely to be with us for a few years -- at best.

Meanwhile, though foreclosures remain troublingly high, the rate of delinquencies on existing mortgages may have actually peaked and could be headed downward. Equifax and Moody's Economy.com report that the percentage of home loans thirty days late dropped in the first quarter - the first decline in four years.

And in major housing markets that took hard hits during the bust, signs of recovery continue to multiply. For example, in the six counties of Southern California, home sales were up 33 percent in March over February, and were up five percent over 2009 levels, according to MDA Data Quick.

Even median prices were on the rise -- by 14 percent over year-earlier levels.

RISMEDIA, April 7, 2010—Pending home sales rose in February 2010, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of Realtors.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in February, rose 8.2% to 97.6 from a downwardly revised 90.2 in January, and remains 17.3% above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”

The PHSI in the Northeast rose 9.0% to 77.7 in February and is 18.9% higher than February 2009. In the Midwest the index jumped 21.8% to 97.9 and is 18.7% above a year ago. Pending home sales in the South increased 9.2% to an index of 107.0, and the index is 17.5% higher than February 2009. In the West the index fell 4.8% to 98.0 but is 14.6% above a year ago.

“Anecdotally, we’re hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit,” Yun said.

• More Info: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

• IMPORTANT NOTE: Per the IRS website, "because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405."

    2.  2009-10 Move-Up Buyer Tax Credit

• Who It Helps: Current homeowners who have lived in the home they are selling, or have already sold, as their principal residence for five consecutive years of the last eight years who closed escrow between November 7, 2009 and July 1, 2010, so long as they are in contract on or before April 30, 2010.

• How It Helps: Eligible homeowners can receive a tax credit of as much as $6,500, depending on income. You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.

• More Info: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

• IMPORTANT NOTE: Can't e-file to collect this one, either - see #1, above.

• Who It Helps: Homeowners who invested in making their homes more energy-efficient in 2009 and 2010.

• How it helps: Offers them a 30 percent tax credit on qualifying purchases of energy-efficient furnaces, windows and insulation.

• More Info: http://www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home#energy

• Who It Helps: Homeowners who bought a home in 2009, and put less than 20 percent down on their homes. These are the folks whose lenders required them to pay for PMI, or private mortgage insurance.

• How It Helps: Allows them to deduct the costs - upfront and monthly - of PMI.

• More Info: http://www.irs.gov/pub/irs-pdf/p936.pdf

• More Info: http://www.irs.gov/individuals/article/0,,id=179414,00.html

On top of these above-and-beyond tax credits, deductions and exemptions, longtime and brand-new homeowners should also look forward to claiming meaty tax deductions for basic closing costs (origination fees, taxes and points - oh my!), property taxes and mortgage interest deductions.

As always, talk to your tax preparer to see if you qualify for any of these tax perks.  And don't delay - the countdown to April 15th is on.

Written by Tara-Nicholle Nelson
Trulia's In-house Consumer Advocate

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