Home Buyers Who Missed 8,000 Dollar Tax Credit Coming Out Ahead
July 26, 2010
Home shoppers who missed the April 30 deadline for a housing tax credit might have the last laugh. For a variety of reasons, they could end up saving more than the $8,000 they could have received from the tax refund.
In some neighborhoods and price ranges, sellers are dropping their prices because buyers are harder to find now that the credit has expired. Builders and real estate companies began offering promotions after the tax credit ended that, in many cases, are worth more than the credit.
Interest rates have dropped enough since the credit deadline that, over the life of a loan, a homeowner could easily save more than the value of the credit. “I think some folks possibly could have benefited from waiting until after the tax credit,” said Joe Jackson, a real estate agent with Keller Williams Capital Partners. “It would depend on the price point they were buying in and the market they were looking in.”
Home sales leapt in March and April during the waning weeks of the credit, especially for homes priced at less than $200,000, which appealed to first-time home buyers. Since the credit expired, home contracts and building permits have tapered off, leaving sellers with fewer buyers and, in some cases, little choice but to cut their price.
According to real estate website Trulia.com, which tracks price reductions, 30% of central Ohio homes for sale on May 1 had reduced their asking price—more than in April or March. Buyers hope they can take advantage.
Karen Kosnikowski learned days after the tax credit ended that she would have to leave her Victorian Village apartment June 30 because her landlord wanted the place. Her initial frustration at missing the tax credit changed when she started seeing price declines. “I would say five or 10 times a day, something comes in, and half of those are price drops. Sometimes, they are down several thousand,” Kosnikowski said. “So places I’ve seen before are starting to drop, or others are coming into my price range.”
A home in the Clintonville neighborhood she has toured twice, for example, dropped in May from $185,000 to $167,900. Another Clintonville home on her radar dropped from $179,900 to $167,000 after the credit expired, while a Downtown condo she visited went from $189,900 to $169,500.
“None of these went anywhere during the tax credit,” said her agent, Terry Penrod of Real Living HER. “So Karen can just wait to see how low they go.”
Kathy Shiflet, an agent in the Dublin-Hilliard office of Coldwell Banker King Thompson, has found the same thing. She represents a buyer looking for a two-story home in Hilliard. After the tax credit expired, one of two homes under consideration dropped from $156,900 to $149,900 while the other dropped from $154,900 to $149,900.
The tax credit might have something to do with it, but Shiflet thinks the season is a greater factor. “There have been reductions in prices, but traditionally, prices start to come down in June anyway,” she said, “because everyone wants to move in time for school.”
Those shopping for new homes are finding a different kind of bargain as some builders roll out incentives to keep traffic moving.
After the credit expired, Dominion Homes and Fischer Homes launched promotions for free finished basements and/or other upgrades. Either deal would be worth well above the $8,000 credit. “We expected a drop in traffic after the tax credit expired, and we saw that a little bit,” said Jon Jasper, who manages the Columbus division of Fischer Homes. “We anticipated that, and we had strategized to offer some incentives to bring people back. That promotion we’re offering with the free basement is huge in this market.”
Other builders are offering free appliances, trade-in programs, rebates and “sweat-equity” discounts that allow a homeowner to drop the price by painting, landscaping or otherwise helping to finish their home.
Mike Marshall, an agent with Buyer’s Resource Realty Services, said he represented one buyer who deliberately passed on the tax credit to wait for a better deal on a new home. “They found a new build that was so much better in price with the discounts that they gave up the tax credit,” Marshall said.
Real estate companies are also getting into the act. To compensate for the vanishing tax credit, Coldwell Banker launched its Buyer Bonus Program that awards up to $8,000 back to buyers from participating sellers.
Finally, interest rates have dropped nearly half a point since the end of April, saving buyers thousands of dollars over the life of a loan. Buyers of a $180,000 home who borrowed $173,700 in mid-April at an interest rate of 5.125% would have paid $377,442 over the next 30 years—$15,000 more than they would pay if they borrowed last week at an interest rate of 4.75%.
“I know it’s not money in your pocket right away,” said Barb Wilson, the head of mortgage lending at Newark-based Park National Bank, “but the value of the interest rate today is really better than the tax credit.”
Some real estate experts see the central Ohio housing market now settling into a normal rhythm in the absence of the stimulus, which so far has cost taxpayers $18.7 billion.
“At the end of the day, we don’t believe the tax stimulus will put us any further ahead than we would have been otherwise,” said Jerry White, executive vice president with Coldwell Banker King Thompson.
Copyright (c) 2010, The Columbus Dispatch, Ohio
Source: RISMedia
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High-End Housing Markets Home to Biggest Bargains in 2010
April 26, 2010
High-end housing markets were home to the biggest bargains for buyers in the first quarter of this year, according to a Home Hunter Report released by ZipRealty, one of the nation’s leading online-based real estate brokerages.
In one of the country’s most famous zip codes, 90210 in Beverly Hills, homes sold, on average, for 15% below asking price, or an average of $703,964 under asking. Across the country, in Miami’s Palm Beach (33480), buyers paid about a million dollars per purchase and paid an average of $198,693 under asking.
These are just two highlights revealed by ZipRealty’s report, which compares home sale prices to original list prices based on MLS data within 5,400 cities across 33 markets the brokerage serves.
Highlights from the ZipRealty Q1 2010 Home Hunter Report include:
-Zip codes in California remain the country’s “hottest” for buyer demand. California is home to nine out of ten of the country’s hottest zip codes, with homes selling above asking price in parts of the state.
-According to the total number of home searches on www.ZipRealty.com, Phoenix continues to be the most popular searched city in the country.
-Many of the country’s “coldest” markets – those zip codes where homes are selling below list price – continue to be located in South Florida. The report has shown, however, those same “cold” markets are seeing a warming trend, selling on average more than 5% closer to asking price in Q1 2010 than they were in the same time period last year. In Q1 2009, homes in the county’s ten “coldest” markets sold for an average of 77 cents to the dollar while homes in Q1 of this year in those same markets sold for an average of 82 cents to the dollar.
“Based on activity during the first 90 days of 2010, we’re seeing some indicators of a housing market recovery nationally, as buyers have been motivated by the first-time buyer tax credit, low interest rates and low prices,” said Leslie Tyler, vice president and chief home hunter for ZipRealty. “While the first-time and move-up buyer tax credits expire at the end of this month, new short sale regulations may mean more home listings will be available for buyers who are still hoping to take advantage of lower prices.”
Phoenix is Still Nation’s Most Popular City for Home Hunters
According to the total number of home searches on www.ZipRealty.com throughout Q1, the Phoenix area remains the most popular city searched. Phoenix proper and its suburbs Scottsdale, Mesa, Chandler, Gilbert and Glendale claimed more than half of the country’s top spots for most popular cities by home searches on ZipRealty.com. The metro was joined by three Las Vegas areas – two communities in Henderson (Anthem/Seven Hills and Green Valley) and the suburb Summerlin – and Orlando, Fla., to round out the country’s most popular areas for online home hunters.
For more information, visit www.ziprealty.com.
Source: RISMedia
Popularity: 1% [?]
U.S. Buyers Pay Closer to Listing Price in August, Still Negotiating Thousands in Discounts
October 11, 2009
Home buyers in much of the U.S. are still paying thousands of dollars below the home’s asking price, but had slightly less negotiating power in August 2009 than they did in July, according to the August Zillow Real Estate Market Reports. Buyers paid a median $6,525, or 3% less than the last listing price on homes bought in August, down from $7,018, or 3.3%, less for homes bought in July. Negotiating power peaked in January 2009, when buyers were paying 4.5% less than last listing price, a median of $10,096. Meanwhile, sellers continue to cut prices on unsold homes. One quarter (24.7%) of all homes listed for sale on Zillow had at least one listing price reduction as of Oct. 1, 2009. The median U.S. price reduction was 6.6% off the original listing price.
Florida home buyers again in August had the most negotiating power, with buyers in the Vero Beach metropolitan statistical area (MSA) paying 8.9%, or a median $20,974, less than the last listing price. Buyers in the Naples MSA paid 8% less than list price. The Naples, Daytona Beach, Miami-Fort Lauderdale, Ocala, Lakeland, Punta Gorda, Melbourne, Gainesville, Tampa, Jacksonville and Fort Myers MSAs also ranked, in that order, as the top markets for negotiation.
But in two California markets, buyers paid more than asking price during August. In the El Centro MSA, buyers paid 2.2%, or a median $2,479, more than asking price. In the Stockton MSA, buyers paid 1.3%, or $2,515, more.
“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow Chief Economist Dr. Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”
For more information, visit www.Zillow.com.
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Zillow: U.S. Home Buyer Negotiating Power Falls in August
October 8, 2009
Home buyers in much of the United States paid thousands of dollars below the asking price, but had slightly less negotiating power in August than in July, real estate website Zillow.com said on Thursday.
According to the Zillow Real Estate Market Reports, buyers paid 3 percent less, or a median of $6,525 below the listing price on homes bought in August, down from $7,018, or 3.3 percent, less for homes bought in July.
Buyers’ negotiating power peaked in January, when buyers were paying 4.5 percent less than last listing price, a median of $10,096, Zillow said.
Meanwhile, sellers continued to cut prices on unsold homes. One quarter, or 24.7 percent, of all homes listed for sale on Zillow had at least one listing price reduction as of October 1, 2009. The median U.S. price reduction was 6.6 percent off the original listing price, the reports showed.
Florida home buyers again in August had the most negotiating power, with buyers in the Vero Beach metropolitan statistical area (MSA) paying 8.9 percent less — or a median $20,974 — than the last listing price. Buyers in the Naples MSA paid 8 percent less than list price.
The Naples, Daytona Beach, Miami-Fort Lauderdale, Ocala, Lakeland, Punta Gorda, Melbourne, Gainesville, Tampa, Jacksonville and Fort Myers MSAs also ranked, in that order, as the top markets for negotiation, Zillow said.
But in two California markets, buyers paid more than asking price during August. In the El Centro MSA, buyers paid 2.2 percent, or a median $2,479, more than asking price. In the Stockton MSA, buyers paid 1.3 percent more, or $2,515, the reports showed.
“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” Stan Humphries, Zillow chief economist, said in a statement.
“Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August,” he said.
Source: Reuters
Popularity: 2% [?]
Builder Confidence Up, But Tax Fears Loom
September 18, 2009
NEW YORK — An index of home builders’ confidence rose in September for the third month in a row, but an industry group said Wednesday the fragile residential real estate market recovery could be cut short if a popular government tax credit isn’t extended.
The National Association of Home Builders said that its Housing Market Index, which it compiles for Wells Fargo, rose one point last month to 19 — the highest level since May 2008.
The index, which fell to an all-time low of 8 in January, has increased steadily in 2009 as the housing market picked up in many parts of the country.
According to NAHB, the rebound in builder confidence is largely due to a temporary tax credit that the government created last year for first-time home buyers. Low mortgage rates and rock-bottom home prices also helped boost confidence, the group says.
The credit, which can be as high as $8,000, was established as part of the government’s economic recovery act to help stimulate demand and revive the battered housing market.
As the market begins to show some sings of life, however, builders are becoming worried that the credit, which is set to expire Nov. 30, will not be renewed.
“The window is now basically closed for being able to start a new home that can be completed in time for buyers to take advantage of the tax credit,” said Joe Robson, NAHB’s chairman and a home builder from Tulsa, Okla, in a statement. “Builders are concerned about what will keep the market moving once the credit is gone.”
To that end, the index component that measures builders’ expectations for sales in the near future fell one point in September to 29, after rising for five months in a row.
More than 1.5 million taxpayers are expected to claim the credit, according to an NAHB spokeswoman.
Meanwhile, the National Association of Realtors said earlier this month that the credit has already brought 1.2 million new buyers into the market, including 350,000 buyers who would not have purchased a home without the credit.
White House press secretary Robert Gibbs said Wednesday that the Obama administration is evaluating how the tax credit has impacted home sales and could recommend that the President extend it.
While the tax credit has helped stabilize the housing market, falling home prices are the real reason why sales have begun to rebound, according to Mike Larson, real estate and interest rate analyst at Weiss Research.
“I believe the tax credit is the icing on the cake of this housing market recovery, not the cake itself,” Larson said in a research report.
Indeed, a government report released earlier this month showed that roughly 315,000 people have claimed the tax credit so far. However, industry analysts point out that those figures reflect a small portion of homebuyers who could ultimately claim it.
For buyers interested in taking advantage of the credit, time is of the essence.
Because it usually takes around 90 days to close on a house after a contract is signed, buyers have very little time left to act. As of Sept. 16, 78 days remain before the credit ends.
In addition to uncertainty about the tax credit, builders are also wary about a “critical lack of credit” for new home construction projects and ongoing problems related to appraisals that NAHB says are sinking one quarter of all new-home sales.
“These concerns need to be addressed if we are to embark on a sustained housing recovery that will help bolster economic growth,” said NAHB chief economist David Crowe, in a statement.
Source: CNNMoney.com
Popularity: 2% [?]
U.S. Homebuyers Paid $7,039 Less Than Listing Price in July
September 15, 2009
Amid continued falling home prices, U.S. homebuyers are negotiating even more discounts at the bargaining table, according to July’s Zillow Real Estate Market Reports. Buyers paid 3.3%, or a nearly $7,039, less than the last listing price on homes for sale during the month of July 2009. That is down slightly from 3.5%, or $7,630, in June, and substantially down from 4.6% ($10,260) in January.
Meanwhile, 22.8% of all homes listed for sale on Zillow had at least one listing price reduction as of Sept. 1, 2009. The median U.S. price reduction was 6.5% off the original listing price. Homes listed for sale on Zillow during August were listed for a median 96 days, up from 91 in July.
Florida homebuyers had the most negotiating power in July, with buyers in the Vero Beach metropolitan statistical area (MSA) paying 10.2%, or a median $23,500, less than the last listing price. Buyers in the Sarasota MSA paid 8.2% less than list price. The Naples, Daytona Beach, Miami-Fort Lauderdale, Panama City, Punta Gorda, Melbourne, Ocala, Tampa, Jacksonville, Port St. Lucie, Gainesville and Lakeland MSAs also ranked, in that order, in the top 25 markets for negotiation. There was less or no room for negotiation in some California markets that have been hard-hit by foreclosures. In the El Centro MSA, buyers paid 1.8%, or a median of $2,150, more than the listing price. In seven California markets- Sacramento, Merced, Modesto, Riverside, Stockton, Yuba City and Fresno- asking price and sale price were the same.
“The strong summer selling season in 2009 has led to a decreasing difference between the last listing price and final sale price, but most buyers are still getting some additional discount at selling time,” said Zillow Chief Economist Dr. Stan Humphries. “We expected list-to-sale price ratios to fall as the sales volume picked up during the summer, and the California markets are showing strong declines in the discount off the last listing price, relative to levels at the start of the year. This is fueled both by increased sales and high proportion of foreclosures re-sales, which are already priced relatively low.
“The fact that many Florida markets are still showing comparatively higher differences between the last listing price and final sale price suggests that inventory levels are still relatively high, keeping considerable downward pressure on prices and encouraging buyers to seek large discounts off the listing price. Overall, buyers are finding favorable conditions for negotiating prices, and now can be a good time to buy, provided homebuyers are financially prepared with healthy down payments and intend to stay in their home for a minimum of five to seven years.”
Source: RISMedia
Popularity: 2% [?]
More Home Sellers Cutting Prices
September 14, 2009
More than one in four U.S. homes for sale on Sept. 1 had their prices cut at least once since landing on the market, up slightly from a month earlier, a study showed on Friday.
As of Sept. 1, a total of 26 percent of homes had their prices reduced, up from 25 percent on Aug.1, Trulia.com said in its monthly price report.
Driving the increase was the pending expiration of the government’s $8,000 tax credit for first-time home buyers — part of the stimulus bill — and summer months which are the peak sales period, according to data compiled by Trulia.com.
The average discount was 10 percent from the original price, unchanged from August. On average, sellers dropped their price by $39,378, Trulia said.
“Housing data has shown us that sales are on the rise this summer and aggressive pricing is one of the factors driving these sales,” said Pete Flint, Trulia co-founder and CEO, in an interview with Reuters. “The other factor is the $8,000 first time home buyers credit which we believe will continue to drive a high volume of sales for the next few months.”
Home sellers looking to sell their property before the tax credit expires in November will continue to cut prices in hopes of attracting home buyers in search of discounts, he said.
Several cities have seen consistent month-over-month increases in the percentage of listings with price reductions from June 1 to Sept. 1. They include Kansas City, Missouri; Colorado Springs, Colorado; Omaha, Nebraska; Atlanta, Georgia; Indianapolis, Indiana; Memphis, Tennessee; Milwaukee, Wisconsin; and Raleigh, North Carolina, Trulia said.
Nationwide, in dollar terms, $28.5 billion has been reduced for all homes for sale on the market on September 1, up by more than $1.1 billion from June to September, the data showed.
Of the luxury homes, categorized by those costing $2 million or more, 26 percent have seen a reduction, up from 25 percent. The average decrease for a luxury home was 14 percent off the original asking price, the data showed.
For homes listed for less than $2 million, 25 percent have seen a reduction, consistent on a month-over-month basis. The deduction, however, was only 9 percent off the original asking price, the data showed.
Source: CNBC
Popularity: 2% [?]
Buyers Remain Largely in the Driver’s Seat
September 11, 2009
Homebuyers continue to drive hard bargains, holding down prices while allowing properties to sit on the market for an increasing length of time, according to Zillow.com’s market report.
Nationwide, buyers paid 3.3 percent, or nearly $7,039, less than the last listing price on homes for sale during the month of July. That is a slight improvement over June, when the discount was 3.5 percent and significantly less than the 4.6 percent discount in January.
Meanwhile, 22.8 percent of all homes listed for sale on Zillow had at least one listing price reduction as of Sept. 1. The median U.S. price reduction was 6.5 percent off the original listing price. Homes listed for sale on Zillow during August were listed for a median 96 days, up from 91 in July.
Florida homebuyers got the best deals with buyers in the Vero Beach area, paying 10.2 percent, or a median $23,500, less than the last listing prices. Other Florida cities with a percentage of discount in the top 25 nationally were Naples, Daytona Beach, Miami-Fort Lauderdale, Panama City, Punta Gorda, Melbourne, Ocala, Tampa, Jacksonville, Port St. Lucie, Gainesville, and Lakeland.
In California, the situation is swinging in the other direction. In El Centro, Calif., buyers paid 1.8 percent, or a median of $2,150, more than the listing price. In seven California markets – Sacramento, Merced, Modesto, Riverside, Stockton, Yuba City and Fresno – asking price and sale price were the same.
Source: REALTOR.org
Popularity: 2% [?]
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