U.S. Housing Values Continued to Show Stabilization in November 2009

January 18, 2010

U.S. home values in November 2009 showed continued stabilization when compared to previous months, with the Zillow Home Value Index (ZHVI) down slightly (-0.1%) from October, and down 5% from levels a year ago. The ZHVI was $190,000 at the end in November, down 21% from its peak value of $239,500 in June 2006.

But, as always, conditions vary by market. This table shows trends in twenty-five selected metro markets. Of these markets, twelve had negative monthly changes in home values in November versus only nine with negative monthly changes in October, an indication that some of the markets that have exhibited positive appreciation in recent months are seeing renewed depreciation, as we expected.

The three cities with flat or positive performance in October that turned slightly negative again in November were San Diego (down 0.1% in November after six consecutive months of gains), Seattle (down 0.1% after four consecutive months of gains) and Washington D.C. (down 0.1%). Other metros with several months of gains turned in much weaker appreciation in November and are very likely to show renewed depreciation in the coming months. These include Baltimore, Boston, Cleveland, Denver and Los Angeles.

Nationally, the percentage of homes foreclosed in the month (out of all homes) regained its former peak of 0.1% in November indicating that foreclosure activity is picking up again. Foreclosure re-sales as a percentage of all transactions remained steady at 20% but would have likely risen higher had it not been for robust sales activity fueled by the anticipated expiration of the first-time home buyer tax credit (which was expanded and extended to the end of April).

This figure shows the month-over-month and year-over-year changes in home values for the past nine years. The annualized appreciation rate continues to moderate but we think its unlikely monthly appreciation is going to break into positive territory near-term. Instead, we expect monthly appreciation to get more negative in the coming months as foreclosures continue, inventory levels stay high, and mortgage rates increase.

For more information, visit www.Zillow.com.

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5 Tips to Buying a Home on Deadline and How the Tax Credit Extension Can Help

November 24, 2009

House shopping usually slows down in the winter, as people put their home searches on hold to trim the tree, buy presents to put under it and avoid the chilly weather. This winter, however, might be different, thanks to the extended—and expanded—first-time home-buyer tax credit.sold2

“We’re going to see far more interest in the fourth quarter than we generally do because of the tax credit,” said Heather Fernandez, vice president of Trulia.com, a real estate search engine. Traffic surged on the site on Nov. 5, the day Congress approved the credit extension, she said.

The new law extends the tax credit for first-time home buyers and opens it up to some existing homeowners as well: The credit is now 10% of the home price, up to $8,000 for first-time buyers and up to $6,500 for repeat buyers. All buyers must have a binding contract on a house in place on or before April 30, 2010. The sale must close on or before June 30. 2010.

To be considered a first-time home buyer, an individual must not have owned a home in the past three years. And to be eligible, existing homeowners need to have lived in the same principal residence for five consecutive years during the eight-year period that ends when the new home is purchased. The credit is only for principal residences.

Income limits have risen as well. According to the IRS, the home buyer tax credit now phases out for individuals with modified adjusted gross incomes between $125,000 and $145,000, and between $225,000 and $245,000 for people filing joint returns.

The inclusion of move-up buyers might inspire homeowners to take action and list their house if they’ve been putting it off, said Carolyn Warren, a Seattle, Wash.-based mortgage broker and banker and author of the book Homebuyers Beware. “If somebody loves their home, it’s not going to entice them to sell. If they’ve had it on the back of their minds and really would like to move up, it might push them into doing it sooner than later,” Warren said.

The credit isn’t expected to have as large of an effect on move-up buyers as it has on first-time buyers, according to the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. The maximum tax credit is about 4% of the average purchase price for first-time buyers, but about 2% of the average purchase price for move-up buyers.

“We estimate that the first-time home buyer tax credit will result in a 10% increase in home sales from March through November of 2009,” said Thomas Popik, research director for Campbell Surveys, in a news release. “We’d expect the effect of the proposed tax credit for current homeowners to be about half as large—from December until the tax credit expiration in the spring of next year, it might be 5% of 3 million transactions, or about 150,000 incremental home sales. Incremental sales to first-time home buyers could be an additional 300,000, for a total of 450,000 incremental sales due to the tax credit extension.”

Tips for buyers
Interested in buying a home and claiming the home-buyer tax credit? Below are five tips:

1. Don’t procrastinate. Start searching for a home now. Getting an early start will give you a better chance of finding the right house before the credit deadline. Before you start house hunting, get preapproved for a mortgage, said Eddie Fadel, a Miami-based mortgage banker, and do a realistic assessment of what you can afford. Buyers who have to sell an existing home should price it aggressively from the beginning to drum up interest and get a buyer as soon as possible.

2. Don’t count on another extension. The credit won’t be available forever, Fadel said. If you want to take advantage, be sure to make that spring deadline.

“This is a medication for the housing crisis. Once the patient—which is the housing market—cures, there will be no medication needed,” he said.

3. Mind the interest rates. Mortgage interest rates are low right now, but will likely rise next year. Higher rates will affect your monthly mortgage payments, thus the affordability of the house you are buying. Average rates on the 30-year fixed-rate mortgage have been hovering around 5%, but when the government stops buying large amounts of mortgage-backed securities, rates could rise.

4. Communicate with your lender. Throughout the process, make sure you’re communicating with your lender regularly; if there’s a piece of documentation you’re asked for, get it turned in as soon as possible, said Doug Heddings, a New York-based real estate agent with Charles Rutenberg Realty. Good communication is important in making sure the loan closes on time. And think twice before pursuing a short sale if you want to make the credit deadline. That’s where someone sells a home for less than what he or she owes on a mortgage, with permission of the lender. The process can be lengthy and unpredictable because the homeowner’s lender has to approve any deal, and can be complicated when there is a second mortgage associated with the property.

5. Don’t take shortcuts. Don’t forgo any of the steps you would normally take just to make the tax credit deadline. Make sure the house is a good fit for your needs and get a home inspection. Skipping steps could cost you in the long run.

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

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Reuters: Existing Home Sales Seen at Highest Since July 2007

November 20, 2009

Sales of existing U.S. homes likely rose for second consecutive month in October, reaching their highest level since July 2007, according to a Reuters poll, as buyers scrambled to take advantage of greater affordability and a first-time home buyer tax credit.

The survey of 29 economists predicted sales of previously owned homes climbed to a seasonally adjusted annual rate of 5.70 million, the fastest pace since 5.73 million units were sold in July 2007 and up from 5.57 million units in September.House

Forecasts, however, ranged widely, from as low as a seasonally adjusted annual rate of 5.26 million to as high as 6.00 million units.

Existing home sales have been on an upward trend for most of this year and an increase in October would mark the sixth gain in seven months. Home sales typically pick up in the spring as warmer weather boosts activity, but the momentum continued into most of the summer and fall.

Consumers have come out in droves to take advantage of the federal government’s $8,000 first-time home buyer tax credit — part of the stimulus bill — which was originally set to end November 30.

The Obama administration recently extended the $8,000 first-time home buyer tax credit, added a $6,500 credit for home owners buying a new residence and increased income limits. Eligible borrowers must sign contracts by April 30 and close by June 30.

The lowest mortgage rates in decades and high affordability have also helped the housing market find some footing after a three-year slump. Home price declines have been moderating in many regions of the country and in some areas they have risen.

Improvement in the housing market bodes well for the U.S. economy, as it points to better demand in the sector where the first signs of the recession took root. But with distressed properties making up a high proportion of sales, there is widespread uncertainty about the sector’s long-term outlook.

To be sure, there is still a huge supply of unsold homes on the market and millions of more foreclosures are in the pipeline, which should continue to pressure prices.

The economic outlook is also crucial for housing demand and many potential buyers are staying sidelined due to unemployment or fear of losing their jobs. The U.S. Labor Department said the unemployment rate reached a 26-1/2-year high of 10.2 percent in October. Access to credit also remains tight.

While existing home sales are predicted to rise in October, declines are expected in the months following. Recent data indicates a sector that is still on shaky ground. The Commerce Department said new U.S. housing starts in October unexpectedly fell to the lowest level in six months, dropping 10.6 percent.

Existing home sales tally the number of previously constructed homes for which a sale closed during the month.

The National Association of Realtors will release U.S. existing home sales data on Monday at 10 a.m. (1500 GMT).

Source: Reuters

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Existing Home Sales Surge in Many States in Third Quarter

November 16, 2009

Most states continued to experience rising existing-home sales in the third quarter 2009, with prices moderating in many metro areas, according to the latest survey by the National Association of Realtors®. Total state existing-home sales, including single-family and condo, increased 11.4% to a seasonally adjusted annual rate of 5.30 million units in the third quarter from 4.76 million units in the second quarter, and are now 5.9% above the 5.01 million-unit pace in the third quarter of 2008. Sales increased from the second quarter in 45 states and the District of Columbia; 28 states and D.C. saw double-digit gains. Year-over-year sales were higher in 32 states and D.C.

Lawrence Yun, NAR chief economist, said the tax credit is a significant factor. “We can’t underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector,” he said. “It’s given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal.”

During the third quarter, 123 out of 153 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the third quarter of 2008, while 30 areas had price gains.

The national median existing single-family price was $177,900, which is 11.2% below the third quarter of 2008; the median is where half sold for more and half sold for less. Distressed sales- foreclosures and short sales- accounted for 30% of transactions in the third quarter, which continued to weigh down median home prices because they sell at a discount relative to traditional homes.monday lead web

“The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market,” Yun said. “Foreclosures will continue to come on the market, but rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 5.16% in the third quarter from a record low 5.03% in the second quarter, but was dramatically lower than the 6.32% average rate in the third quarter of 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said he is encouraged by recent actions in Congress. “Extending and expanding the tax credit to more buyers through the middle of next year is the right medicine,” he said. “Congress understands the impact of housing on the economy, so consumers who aren’t able to complete a transaction before the end of this month now have a second chance but must have a contract in place by April 30, 2010.”

The biggest sales gain between the second and third quarters was in North Dakota, up 42.3%; followed by Rhode Island which rose 26.5%; and Pennsylvania, up 25.6%. The largest single-family home price increase in the third quarter was in the Cumberland area of Maryland and West Virginia at $122,100, up 19.2% from the third quarter of 2008. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price increased 14.3% to $115,600, followed by Oklahoma City, at $144,100, up 9.1% from a year ago.

“The wide range of market performance and reversals around the country, ranging from double-digit gains to double-digit losses in both sales and prices, underscores just how local real estate truly is,” Yun said. “The wide changes and mix of numbers also indicates a market in transition, hopefully to one that is becoming more balanced and stable.”

Median third-quarter metro area single-family home prices ranged from a very affordable $61,400 in the Saginaw-Saginaw Township North area of Michigan to $566,000 in the San Jose-Sunnyvale-Santa Clara area of California. The second most expensive area in the third quarter was San Francisco-Oakland-Fremont at $538,100; followed by the Anaheim-Santa Ana-Irvine area of California at $498,800.

Other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $70,700, and Lansing-East Lansing, Mich., at $86,600.

In the condo sector, metro area condominium and cooperative prices- covering changes in 55 metro areas- showed the national median existing-condo price was $178,000 in the third quarter, down 15.4% from the third quarter of 2008. Four metros showed annual increases in the median condo price and 51 areas had declines.

The metros experiencing condo price gains were San Diego-Carlsbad-San Marcos, at $215,100, up 13.3%; followed by the Cincinnati-Middletown area, up 2.0% to $119,700; the Toledo, Ohio, area, where the median price of $130,400 rose 1.7% from the third quarter of 2008; and the Indianapolis area at $114,400, up 0.8%.

Metro area median existing-condo prices in the third quarter ranged from $67,600 in Las Vegas-Paradise, Nev., to $432,800 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was New York-Wayne-White Plains at $297,500, followed by Boston-Cambridge-Quincy at $293,700. Other affordable condo markets include Reno-Sparks, Nev., at $81,300 in the third quarter, and Jacksonville, Fla., at $91,600.

Northeast

Regionally, existing-home sales in the Northeast surged 16.7% in the third quarter to a pace of 930,000 units and are 6.9% higher than a year ago. The median existing single-family home price in the Northeast declined 9.4% to $244,500 in the third quarter from the same quarter in 2008. The best price gain in the region was in Buffalo-Niagara Falls, N.Y., where the median price of $119,700 rose 4.8% from the third quarter of 2008; followed by Manchester-Nashua, N.H., at $237,600, up 2.6%; and the Pittsburgh area, where the median price rose 1.5 percent to $124,600.

Midwest

In the Midwest, existing-home sales jumped 13.2% in the third quarter to a pace of 1.20 million and are 5.2% above a year ago. The median existing single-family home price in the Midwest was down 5.5% to $150,200 in the third quarter from the same period in 2008. After Davenport-Moline-Rock Island, the next strongest metro price increase in the region was in Cedar Rapids, Iowa, where the median price of $145,700 was 7.6% higher than a year ago; followed by Bismarck, N.D., at $157,200, up 7.5%; and Ft. Wayne, Ind., where the median price rose 6.9 percent to $102,500.

South

In the South, existing-home sales rose 11.3% in the third quarter to an annual rate of 1.97 million and are 5.9% higher than the third quarter of 2008. The median existing single-family home price in the South was $160,000 in the third quarter, down 7.9% from a year earlier. After Cumberland and Oklahoma City, the next strongest price increase in the region was in Shreveport-Bossier City, La., at $152,300, up 8.6% from the third quarter of 2008; Jackson, Miss., at $141,200, up 4.6%; and Durham, N.C., where the median price rose 3.6% to $184,300.

West

Existing-home sales in the West increased 5.6% in the third quarter to an annual rate of 1.19 million and are 4.6% above a year ago. The median existing single-family home price in the West was $224,000 in the third quarter, which is 16.4% below the third quarter of 2008. The best metro price performance in the West was in Yakima, Wash., where the median price of $158,400 rose 2.7% from a year earlier; the Denver-Aurora area at $229,100, up 1.8%; and the Kennewick-Richland-Pasco area of Washington, where the median price rose 0.7% to $172,200.

For more information, visit www.realtor.org.

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Written by djumper · Filed Under Real Estate Blog 

Could Home Prices See a Double Dip?

October 29, 2009

Home price numbers have ended their free-fall, but a lot housing experts are still concerned about a possible double-dip.

Integrated Asset Services, which tracks troubled properties, says its House Price Index fell .2% in August. It’s the second down month in a row for the index, which saw a 2.8% rise in this year’s first quarter.For Sale

The slowdown, however slight, is ominous, says Dave McCarthy, president and CEO of Integrated Asset Services. That’s because there’s a “shadow inventory” of foreclosed properties that remain unlisted and unsold that could throw a monkey wrench in the housing recovery. “We know there’s a sizable inventory of bank-owned homes out there that will be listed at some point, and that could ignite a new wave of stress in the housing market,” McCarthy says.

According to Integrated, several of the nation’s hardest-hit areas may already be feeling the strain. The index reports two of the country’s most distressed counties—San Joaquin in California (Stockton) and Lee in Florida (Fort Myers)—both of which were down nearly 50% from their high-water marks, fell another 7% in August.

Integrated’s numbers are very similar to those reported by real estate info site Zillow.com. It’s numbers, released today, say housing prices nationally were down .1% in August, versus July. Zillow was only slightly less downbeat than Integrated on prices going forward. “Nationally, we may see September turn in a positive month-over-month change in home values but, thereafter, values are expected to start dropping again, and we expect them to keep dropping until sometime in the spring of this coming year, at which time we will have reached a true bottom in home values nationally,” Stan Humphries, the firm’s chief economist says.

Humphries is particularly concerned about the expiration of the $8,000 first time home buyer tax credits on Dec. 1. Without them, buyers may be less anxious to buy.

The Southern California market, which led the nation into the boom and the bust, is still showing signs of improvement, says researcher MDA DataQuick. September was the 15th month in a row with a year-over-year sales gain, although last month’s was the smallest of those increases, the company says.

The median price paid for a Southern California home was $275,000 last month, the same as in August and down 10.9 percent from $308,500 in September 2008. It was the smallest year-over-year decline since November 2007. The region’s overall sale price has held steady on a month-to-month basis since the 7-year low of $247,000 hit in April of this year. The median price peaked at $505,000 in mid-2007.

Source: BusinessWeek

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Written by djumper · Filed Under Real Estate Blog 

$8,000 Tax Credit’s Hoops Frustrate House Hunters

October 16, 2009

This summer, Brian Smith decided he should buy a house. Prices were at record lows; “for sale” signs were common, and, most important, he could get a tax credit of as much as $8,000 for first-time buyers if he bought before December. But four months later, after looking at more than 40 houses and condominiums, Smith quit his search in frustration.

“Honestly, my heart was so broken,” said Smith, an associate at a financial-investment company. “I hate that I am going to miss out on the tax credit. But it’s better to wait and get the place you need and want than to get a place and not be happy with it.”

As the Nov. 30 deadline nears for the first-time home buyer tax credit, no hard numbers suggest how many buyers are in Smith’s position. But interviews with real estate agents, lenders and buyers suggest that the number of first-time buyers who are encountering challenges is rising.

At least some are learning they must play by a whole new set of rules from just a few years ago. Stung by a real estate meltdown fueled with free-flowing mortgages and runaway prices, regulators have reacted to the downturn by forcing lenders to be stingier with loans.Frustration

Buyers in Orlando, one of the hardest-hit markets in the country, must compete with multiple offers on bargain properties. Short sales can take months to finalize. Foreclosed houses often need repairs that disqualify them from federally backed mortgages. And, amid the free-falling prices, deal-killing appraisals often fall short of sales prices.

Smith found monthly fees on the condos he was interested in would have cost more than mortgage payments. He endured a trail of “junk” houses that needed new roofs and other repairs. Some of the foreclosed properties had no power, and he had to view them by flashlight or cell phone light. And finally, the four-bedroom pool home he wanted the most failed to meet federal lending rules.

“In a nutshell, it’s a whole different world out there,” said Judi Northrop, the Equilliance LLC loan officer who worked with Smith. She said he was a great candidate for a mortgage, but the days of someone with a pretty credit score skating through the process are over. Now lenders want documents to address every note in a mortgage application.

The real estate industry continues to hope that the tax incentive will revive the sagging market. A study released earlier this month by the Fisher Center for Real Estate and Urban Economics at the University of California showed the credit has spurred sales. The supply of homes priced at less than $300,000 decreased by 26% compared with a year ago; and the amount of homes priced within the $300,000 to $500,000 range dropped by only 18%. Study author Kenneth T. Rosen, lead researcher on the study and Chairman of Rosen Consulting Group, credited the federal tax break.

In the Orlando area, it’s not clear how many first-time buyers are hitting snags while investors and others scoop up bargains. Though sales overall for the year are up 45% from last year, the percentage of home sales with prices from $300,000 to $500,000 grew more during the last year than home sales under $300,000, according to a review of data from the Orlando Regional Realtor Association. Investors are definitely making their mark, said Les Simmonds, president of the association. “Multiple offers are there because investors are getting back in the market,” Simmonds said. “Traditional buyers coming in are going to find they’re in that mix with those bids. The frustration is understandable.”

Until the tax credit emerged, buying a home had not been on Smith’s to-do list for a long time. In 2002, he considered purchasing a house but “chickened out” after declines in the stock market. For years, he rented from a roommate. Smith, who was earning $39,000 at his job in Maitland when he started his search, targeted homes priced at $100,000—about $28,000 less than the area’s median price. His loan officer said he could have afforded more, but he wanted to play it safe. Early in his hunt, he found a real estate landscape defined by foreclosures and distressed properties, which constitute about half of the sales in the Orlando market. Of the 20 houses or condos he had seen by June, only two had people still living in them.

Northrop recalled that one of the houses Smith zeroed in on was in such rough shape that the drywall was missing in some places and only the studs showed after owners did not complete a renovation. Smith was getting a Federal Housing Administration-backed loan because those mortgages require down payments of only about 3%, compared with 10% or 20% for conventional loans. Those loans also require solid houses instead of makeover candidates.

Troubled house hunts aren’t unique to Smith. Orlando resident Darby Miller said he has found the market so competitive that one house had 12 offers by the time he looked at it. The biggest problem, he said, was that he did not qualify for a state program that would have given him the $8,000 tax credit money upfront to use as a down payment. “At this point, it’s very inconvenient,” Miller said. “I’m going to have to draw from funds I didn’t really want to use.” For Smith, any condos and houses that were in his price range and in good condition quickly disappeared from the bargaining table. Two months into his search, Smith had made no offers. “By the time I’ve said I’m interested, they’re gone,” he said. “Someone got to them before me.”

(c) 2009, The Orlando Sentinel (Fla.).

Distributed by McClatchy-Tribune Information Services.

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1.4 Million Families Have Taken Advantage of First-Time Home Buyer Tax Credit

October 8, 2009

With the First-Time Home Buyer Tax Credit deadline quickly approaching, the Internal Revenue Service recently reminded potential home buyers they must complete their first-time home purchases before Dec. 1, 2009 to qualify for the special first-time home buyer credit. The American Recovery and Reinvestment Act extended the tax credit, which has provided a tax benefit to more than 1.4 million taxpayers so far.tax credit

The credit of up to $8,000 is generally available to home buyers with qualifying income levels who have never owned a home or have not owned one in the past three years.

The IRS encouraged all eligible homebuyers to take advantage of the first-time home buyer credit but at the same time cautioned taxpayers to avoid schemes that help ineligible people file false claims for the credit. Currently, the agency is investigating a number of cases of potential fraud and is using computer screening tools to identify questionable claims for the credit.

Because the credit is only in effect for a limited time, those considering buying a home must act soon to qualify for the credit. Under the Recovery Act, an eligible home purchase must be completed before Dec. 1, 2009. This means that the last day to close on a home is Nov. 30.

The credit cannot be claimed until after the purchase is completed. For purchases made this year before Dec. 1, taxpayers have the option of claiming the credit on their 2008 returns or waiting until next year and claiming it on their 2009 returns.

For those considering a home purchase this fall, here are some other details about the first-time home buyer credit:

-The credit is 10% of the purchase price of the home, with a maximum available credit of $8,000 for either a single taxpayer or a married couple filing jointly. The limit is $4,000 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $80,000 or more.

-The credit reduces the taxpayer’s tax bill or increases his or her refund, dollar for dollar. Unlike most tax credits, the first-time home buyer credit is fully refundable. This means that the credit will be paid to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

-Only the purchase of a main home located in the United States qualifies. Vacation homes and rental properties are not eligible.

-A home constructed by the taxpayer only qualifies for the credit if the taxpayer occupies it before Dec. 1, 2009.

-The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on the taxpayer’s modified adjusted gross income (MAGI). MAGI is adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the range is $75,000 to $95,000. This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

-The credit must be repaid if, within three years of purchase, the home ceases to be the taxpayer’s main home. For example, a taxpayer who claims the credit based on a qualifying purchase on Sept. 1, 2009, must repay the full credit if he or she sells the home or converts it to business or rental use at any time before Sept. 1, 2012.

Taxpayers cannot take advantage of the credit even if they buy a main home before Dec. 1 if:

-The taxpayer’s income is too large. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.

-The taxpayer buys a home from a close relative. This includes a home purchased from the taxpayer’s spouse, parent, grandparent, child or grandchild.

-The taxpayer owned another main home at any time during the three years prior to the date of purchase. For a married couple filing a joint return, this requirement applies to both spouses. For example, if the taxpayer bought a home on Sept. 1, 2009, the taxpayer cannot take the credit for that home if he or she owned, or had an ownership interest in, another main home at any time from Sept. 2, 2006, through Sept. 1, 2009.

-The taxpayer is a nonresident alien.

Source: RISMedia

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Time May Be Running Out to Get Home Buyer Credit

September 14, 2009

Barring a last-minute extension from Congress, first-time home buyers aiming to take advantage of an $8,000 federal tax credit are running out of time to get a deal in place.

With the time it takes to arrange financing, inspections and the other steps that go into closing a home purchase, home buyers should have a contract no later than the end of October, but preferably within the next few weeks, local real estate agents and lenders say.

The deal has to be completed no later than Nov. 30 to qualify for the credit.

Agents and bankers say they expect they’ll be able to handle the anticipated added workload without delays, but that buyers shouldn’t chance it. Most advise having a home under contract by Oct. 15.

“We are doing purchase loans in under 30 days right now,” said Sharon Decker, director of mortgage lending for Fifth Third Bank. “But if there is a big surge (in applications), all the lenders will be behind the 8-ball.”

The market for lower-priced homes in Louisville has already seen a surge and the final days of the housing credit could bring a wave of last-minute buyers making offers for starter homes, said Jan Scholtz, president of the Greater Louisville Association of Realtors.

After being outbid on two houses, Gina Scarpino, a 24-year-old hair stylist, recently found one in Schnitzelburg. With someone else making an offer the same day, she agreed to pay $124,000, less than $1,000 below the seller’s asking price.

“It was actually super-difficult because everyone was looking to buy a house with the tax credit,” she said. “They are being snapped up.”

But while the market for starter homes has improved because of the credit, it’s rarely come to bidding wars, said John Oldfather, Scarpino’s real estate agent. He noted there are still more than 3,800 listings for houses priced from $75,000 to $200,000 in Louisville, as of Monday. “And we don’t have that many buyers in the market,” he said.

The $8,000 credit is available typically to first-time home buyers, but can also be used by anyone who hasn’t owned a home for at least three years prior to the purchase. As a credit, the buyer’s tax bill is reduced by $8,000; buyers whose tax bill isn’t that big will collect the money in the form of a government refund.

Source: Courier Journal

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Written by djumper · Filed Under Real Estate Blog 

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