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Housing Rebound? Let's See

Tue, 01 Dec 2009 20:52:00 -0400

The news is so up and down these days! Here’s a quick breakdown of the recent housing news and what it means for you…

The National Association of Realtors home resales figures for October showed, as expected, a real boost from the First Time Homebuyer credit as people rushed to get to the closing table under the uncertainty of whether the federal tax credit would be extended. (It was.) Existing home sales surged 10.1 percent to 6.10 million units, seasonally adjusted, compared to the 4.94 unit level recorded in October 2008. This was the highest activity level in resales since February 2007.

Lawrence Yun, NAR chief economist, warned that the heavier than expected October sales will probably spell declines during the month of December. Some potential home buyers will take a break for the holidays, while others will gather their resources for a spring onslaught of the housing market before the homebuyer tax credit program expires in the spring.

NAR also reported that certain areas have received such a strong surge of buyers that multiple bids are frequently coming in. Some of these hot markets include metro Washington, D.C., parts of Florida, and the Southwest. First Time Buyer inventory is becoming tight in many cases, however, because many retail buyers are still reluctant to run the risk of waiting for a Short Sale. Just be sure that your first time buyers are qualified and that your will not need to seek loans to wait out FHA or other seasoning requirements for your Buyer’s loan.

Unsold inventory is down 14.9 percent from a year ago. The average days on market has dropped from 8 months in September to 7 months in October for MLS listed properties. The median residential home price is now $173,100, which is down 7.1 percent from a year ago. Distressed property makes up 30 percent of the market.

These indicators are showing that in many markets, you should be focusing on newer homes. People are going to be a little more wary of buying an older house when there could be a newer one coming on the market due to a foreclosure or short sale for the same price or even slightly less. Of course if you are in a market full of older homes, this isn’t as big of a factor. Areas like south Florida and Las Vegas where new housing exploded between 2000-2007, you’re going to want to avoid the older homes.

Many experts believe the housing market is not out of the woods and that there will be a double-dip in the housing recession. Prices are expected to continue to fall in many markets by another 5 to 10 percent by spring. Harvard economist, Howard Glaeser, for example, believes that cities in the cold, industrial Northeast and Midwest will never fully recover from the housing crisis; the Sunbelt will gradually sop up the oversupply of homes because these areas of the country are still going to continue to grow. (See “Will Your Hometown Be a Boomtown Again?” in Money Magazine (November 25, 2009).)

Reason for pessimism is seen in the foreclosure statistics. The Mortgage Bankers Association said last week that a record-high 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. Driven by rising unemployment, fixed-rate loans made to borrowers with good credit accounted for nearly 33 percent of new foreclosures last quarter. That compares with 21 percent a year ago.

The Wall Street Journal points out that it is new construction and new home sales that are tied to measures of economic health in the GDP calculation, not home resale. Thanksgiving week the Commerce Department reported that new home construction dropped 10.6% in October to 529,000 units on an annualized basis, the lowest level since April. This poor showing in the new housing market caused many economists to lower their estimates of the 4th quarter's GDP to around 3% instead of 3.5%. This is just another indication that the economy is still weak and that we cannot count on a steady improvement in the resale housing market necessarily. There are plenty of bumps, twists and turns in the road ahead. And that means there are plenty of opportunities coming up!

Best regards,

Tim
www.OwnATexasHome.com

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Recap of new Extended Homebuyer and Homeowner Purchase Tax Credit!

Sun, 08 Nov 2009 21:03:00 -0400

Here's a good recap of the hopefully to be exteneded NEW Homebuyer and Current Home Owner Purchaser tax credit (The President still has to sign this). The homebuyer credit has been voted by congress to be extended, beginning December 1, 2009 and expiring on April 30, 2010. The details are the following: (1) First-Time Buyers a. $8,000 tax credit ($4,000 for married couples filing separate) b. Must not have owned a property in the last three years c. Expiration of credit = April 30, 2010 d. Binding Contract Rule = Contract executed by April 30, but can close as late as July 1, 2010 e. Income Limits = $125,000 (single) and $225,000 (married couples) with $20K phase out f. Purchase Price Limit = $800,000 (2) Subsequent Purchaser a. $6,500 tax credit ($3,250 for married couples filing separate) b. Must not have owned a property in the last three years c. Expiration of credit = April 30, 2010 d. Binding Contract Rule = Contract executed by April 30, but can close as late as July 1, 2010 e. Income Limits = $125,000 (single) and $225,000 (married couples) with $20K phase out f. Purchase Price Limit = $800,000 For a detailed breakdown of the current tax credit and the new, access the following link: http://www.realtor.org/fedistrk.nsf/files/government_affairs_tax_credit_ext_chart_110409.pdf/$FILE/government_affairs_tax_credit_ext_chart_110409.pdf To stay current with updates to this topic please click on the "Subscribe" button below.

Senators agree to extend home-buyer tax credit

Fri, 30 Oct 2009 07:49:00 -0400

By Stephen Ohlemacher, Associated Press Writer WASHINGTON — Senators agreed Wednesday to extend a popular tax credit for first-time home buyers and to offer a reduced credit to some repeat buyers. The tax credit provides up to $8,000 to first-time home buyers but is set to expire at the end of November. The Commerce Department said Wednesday that new home sales fell 3.6% in September, and some industry representatives blamed uncertainty about the tax credit. Senators agreed to extend the existing tax credit for first-time home buyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev. The tax credits would be available to home buyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers. Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash. Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening. Popular bills like the one to extend unemployment benefits often attract amendments that would have a difficult time passing on their own. Republicans were demanding that they be given a chance to offer amendments to restrict federal aid to the beleaguered community activist group ACORN and on requiring that people receiving unemployment insurance be processed through E-Verify, an Internet-based system that employers use to check on the immigration status of new hires. Majority Democrats have refused to add the amendments. If the Senate passes the bill, it would go to the House, which passed a similar bill extending unemployment benefits last month. House leaders have also said they support extending the tax credit for home buyers. Sen. Chris Dodd, D-Conn., has been negotiating for several weeks with Sen. Johnny Isakson, R-Ga., to craft an extended tax credit for homebuyers that would pass the Senate. Lawmakers didn't release a cost estimate for extending the tax credit, though similar proposals were projected to cost about $10 billion. Industry representatives said uncertainty about the tax credit is hurting new home sales. September's decline was the first since March. It takes 45 days to 60 days to close on a house, making it unlikely a sale made today would be consummated by the end of November, said Lucien Salvant, spokesman for the National Association of Realtors. "Buyers right now have an incentive to hold off, not knowing whether the credit will be extended," Salvant said. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit. The tax credit for money-losing businesses is a favorite among Republican lawmakers. Businesses could get tax refunds by using losses from 2008 and 2009 to offset taxable profits made in the previous five years. Under current law, they can only offset profits from the previous two years. The provision would help a variety of industries, including retailers, manufacturers and home builders, though it's expensive. "It's clearly a way to put cash in the hands of some major economic players," said Clint Stretch, a tax policy expert at Deloitte Tax. A similar proposal that was ultimately dropped from the economic stimulus package enacted in February would have cost nearly $20 billion over 10 years. Lawmakers are working to reduce the price tag. Because people are so strapped for cash, this is a good way to get refunds when businesses need them for operating expenses, said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation. Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. For details on how you can own your own Texas Home go to come visit us and read our special reports, view our properties available and you can even order your own Dream Home.

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