Tag >> Home Buying
Realtors' group sees ‘slow, sustainable growth' in sales activity NEW YORK - Better news from the U.S. housing industry sent stocks higher Tuesday, including an increase in the number of people with contracts to buy homes. The National Association of Realtors, a trade group, said its index of sale contracts rose 1 percent in December. It was the ninth improvement over the past 10 months as buyers scrambled to take advantage of a first-time homebuyer tax credit before it was set to expire last November. "It's a slow, sustainable growth," said Daniel Penrod, senior industry analyst for the California Credit Union League. "Most people would prefer a quick rebound but that's not likely to happen." The home sales report was the latest bit of encouraging news on the economy. Stocks rose on Monday after a surprisingly strong reading on the manufacturing sector, and on Friday the government reported that the U.S. economy grew at an annual rate of 5.7 percent in the final three months of 2009, a faster pace than expected. Homebuilder stocks rose sharply after D.R. Horton Inc. posted its first profit since 2007 during its fiscal first quarter. Much of its $192 million profit during the October-December period came from a tax gain, but its revenue rose because of a 36 percent jump in home sales. Orders increased 45 percent. The reports brought a positive tone to the market, which stumbled in late January as concerns arose that the recovery might be stalling and that the market's 10-month advance was running out of gas. The Standard & Poor's 500 index fell 3.7 percent in January, its worst month since hitting a 12-year low nearly a year ago. According to preliminary calculations, the Dow rose 111.32, or 1.09 percent, to 10,296.85. The S&P 500 index rose 14.13, or 1.30 percent, to 1,103.32, while Nasdaq composite index advanced 18.86, or 0.87 percent, to 2,190.06. Bond prices inched higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, dipped to 3.64 percent from 3.66 percent late Monday. Click here for the rest of the article. Story by Associated Press
Sales of existing home sales in Central Texas rose 5 percent in December from the previous December, bringing total sales for 2009 to 19,005, down 6 percent from 2008, the Austin Board of Realtors reported. The median price was up 6 percent in December, to $194,000, but throughout 2009 it slipped 1 percent, to $188,480, the board said. Sales climbed dramatically in October and November as buyers rushed to take advantage of the original Nov. 30 deadline for first-time homebuyer tax credit, which has since been extended and expanded to repeat buyers through April. "However, increases in sales volume beyond November and figures that have improved steadily throughout the year indicate that, while some demand was driven by the tax credit deadline, a sustainable recovery is also underway in the real estate market," said John Horton, the board's chairman. "We're seeing encouraging news from many sources that 2010 will be an improvement over 2009, and I think this report is one more indicator the outlook is beginning to brighten." Homes stayed on the market longer in December, an average of 88 days compared with 85 in December 2008. The number of homes on the market declined, with December's 8,079 listings down 5 percent from the previous December. from Statesman.com
Posted by: gardnergroup in Tax Credit, Home Buying on
Jan 20, 2010
HUD is now allowing "monetization" of the tax credit. What does that mean?
It means that HUD allows buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.
Under HUD's guidelines, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans of up to $8,000. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.
Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement. In addition, approved FHA lenders can purchase a home buyer's anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.
More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site. You can find more information on the Federal Housing Tax Credit here.
According to a January article from Realty Times, investors are once again gaining confidence in real estate as a solid investment. Low interest rates, low home prices, and a wealth of properties on the market are all contributors to this trend. To read the entire article, click here.
Austin-area home resales jumped 58 percent last month from November 2008 as buyers scrambled to take advantage of low mortgage interest rates and a tax credit for first-time buyers. But local experts don't expect those big percentage gains to continue. Sales could slow next year, they said, anticipating rising mortgage interest rates and the end of the tax credit, which Congress recently extended through April and expanded to additional buyers. November's percentage increase was the biggest in more than a decade and followed a 38 percent jump in October, according to the Austin Board of Realtors. However, the 997 sales in November 2008 were unusually low, reflecting the worsening economic downturn at the time. Last month, 1,576 homes were sold, the board said. The median price was $179,900, down 2 percent from a year ago. "The numbers are certainly welcome news," said David Reed, a senior loan officer with Austin-based Land Mortgage. "Fifty-eight percent is huge, even if you factor in the extra selling days in November compared to last year." With the median price holding relatively steady, "it's even better news still," Reed said. But the market isn't in the clear yet. More challenges are ahead because of "minimal prospects for short term improvement in the local economy and our job market," said Eldon Rude, local director for Metrostudy, a housing research firm. He said he doesn't expect the market to show strong growth "until the employment picture brightens and consumer confidence strengthens." Rude said the sharp increase in November resales "was definitely tied to the availability of the tax credit but was also related to the significant slowdown in sales activity late last year as the U.S. recession took hold." With the extension, first-time buyers may still qualify for up to $8,000, but other buyers can get up to $6,500. Buyers must have a house under contract by the end of April and close on the sale by the end of June. Year-over-year sales were up 31 percent in the Dallas area, also one of the biggest increases on record; 32.8 percent in Houston; and 52 percent in San Antonio. Reed said he thinks the tax credit alone wasn't enough to spur the Austin area's November surge. He said that interest rates of less than 5 percent also were a factor, as was the specter of rising rates. Reed predicted that interest rates will move into the mid- to high 5 percent range by the end of next year's first quarter. Some real estate agents voiced optimism about 2010. "It just seems like the numbers are going steadily up, along with the economy," said Nell Hurtado, an agent with JB Goodwin Realtors. "People have a different attitude. They're more upbeat about the economy." Reed said he still foresees "a positive year for sales growth in 2010 - just nothing like a robust November we just had." From statesman.com snovak@statesman.com; 445-3856
Posted by: gardnergroup in Home Buying on
Dec 23, 2009
A first time home buyer recently asked whether he should consider a duplex over a single family home and what was meant by saying location, location, location. My answer follows: In Austin I believe there are only a few scenarios where a duplex makes sense, and the following are a some examples: - * The buyer needs a tenant to share in the payment to make a monthly payment comfortable when a condominium is not suitable for the buyer's lifestyle.
- * The buyer has parents who need to be near for health reasons, and the family cannot afford separate residences near one another.
- *The buyer picks up a duplex in a predominantly single family area - usually in an older part of town and with single family on both sides of the duplex- and holds on to hold the land as an investment using the dual rents of the duplex to pay for it because the dirt in that area is appreciating at a minimum of 15% annually across period of time. In this example, the owner would eventually be looking for a buyer who wants to convert the duplex to single family at sale or possibly demolish the structure and build a single family home.
The downside to duplexes, at least in Austin, is the appreciation differential when compared with single family. Duplex appreciation is for the most part tied to the rents it can bring, while single family areas will go up based on other considerations that are not constrained by income production potential. I have seen duplexes appreciate at 1%-2% annually from a bust to boom cycle - say a 5 year period - where single family in the same area appreciated at an average of 8%-10%. Even when you take into account the rental income and tax implications of both properties, were you to live in one side of the duplex, the single family comes out ahead as an investment, albeit in some cases only marginally, and was probably a more enjoyable place to live. In that same cycle, keep in mind there would have been single family areas that went up as much as 16%-18%, in which case the single family would FAR outpace the duplex in appreciation. The tough part is finding that area...which brings me to location. The old location, location, location axiom simply means you can always change the house - from a cosmetic remodel to a demolition and re-build - but you can't change where the house is. Location is always paramount in a purchase. This is true when considering one neighborhood over another - you may only be able to afford a fixer upper in what would be considered a great location in a given city, where in an average or poor location in town you can buy a home that has everything you want. For example, a home in a cul-de-sac, backing to greenbelt on a large lot that comes with laminate counter tops, cheap carpet and linoleum flooring but is the same price as a home in the neighborhood that backs to a busy road where noise is a significant issue but that comes remodeled with granite counters, plush carpet and tile flooring at the wet areas may be the more desirable purchase. Brandon Gardner
Tax credit for buyers, low mortgage rates lead to biggest surge in 4 years.By Shonda Novak
AMERICAN-STATESMAN STAFF
Thursday, November 19, 2009 Central Texas existing-home sales jumped nearly 38 percent in October as buyers took advantage of a federal tax credit for first-time homeowners and favorable mortgage interest rates. It was the biggest year-over-year percentage gain in more than four years and encouraging news for a housing market that struggled for much of 2009. But one housing expert cautioned that the market will remain challenging until the region starts growing jobs again. "We're still in an environment where the Austin region is losing more jobs than are being created," said Eldon Rude, local director for Metrostudy, which conducts housing research in Austin and 32 other markets nationwide. "There remains a lot of uncertainty out there." The Austin Board of Realtors reported Wednesday that 1,823 single-family homes were sold last month, compared with 1,322 in October 2008. Pending sales - transactions expected to close in November - were up 47 percent, an indicator of another strong month. D'Ann Petersen, an economist with the Federal Reserve Bank of Dallas, said the $8,000 tax credit "likely has a lot to do with the large increase, and we may be accelerating sales that would have occurred in the spring" into this year. "Still, it is a positive sign and confirms some bottoming out that we've seen in housing statistics and have been hearing from in our anecdotal surveys," she said. Much like the Cash for Clunkers rebate program spurred car sales earlier this year, the tax credit has drawn hundreds of thousands of first-time buyers nationwide into the market. The credit was set to expire Nov. 30 but recently was extended through April 30, with a new provision that allows a smaller credit for some move-up buyers. Last month, 64 percent of sales were for homes priced between $100,000 and $249,999 - a typical range for first-time buyers. The median price was $182,000, down 5 percent from a year earlier. Experts say the tax credit, along with low mortgage rates, will continue to feed sales in the coming months. "Home prices have softened a tad, but I think people are also looking at current interest rates," said David Reed, senior loan officer with Integrity Home Mortgage. "In October 2008, buyers were seeing mortgage rates of nearly 7 percent. October 2009 buyers could find 4.875 percent at most any lender. That's a huge difference." And Reed said that Austin continues to do better than many other cities. Dallas-area home sales were up only 11 percent last month, for example, the first gain since September 2008. After being down sharply in the first half of the year, Austin-area home sales have been improving since July. But some experts are cautious about the Austin economy. Major high-tech employers have cut manufacturing jobs. And construction jobs have disappeared with the slowdown in commercial development. Rude noted that traffic from relocation buyers - people moving to Austin for new jobs - is down significantly. While the expanded tax credit widens the pool of potential buyers, Rude said, "until we see a resumption of positive job growth, we don't expect the (housing) market to show real signs of strengthening." from statesman.com
Posted by: gardnergroup in Home Buying, Finance on
Nov 18, 2009
Updated Nov. 17, 2009, to add more information on the new legislation from http://www.irs.gov/newsroom/article/0,,id=204671,00.html New legislation, the Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law: - Extends deadlines for purchasing and closing on a home.
- Authorizes the credit for long-time homeowners buying a replacement principal residence.
- Raises the income limitations for homeowners claiming the credit.
Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return. For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009. Several new restrictions apply to homes purchased after Nov. 6, 2009. - Purchasers must attach a properly executed settlement statement to their return.
- No credit is available if the purchase price of the home exceeds $800,000.
- The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
- A dependent is not eligible for the credit.
- The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first audit a taxpayer's return. Known as math error authority, this authority applies, retroactively, to credits claimed on original and amended 2008 returns, as well as to claims yet to be filed.
Additionally, there are new benefits for members of the military and certain other federal employees: - Members of the uniformed services, members of the Foreign Service and employees of the intelligence community serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.
- In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community.
More information on these new benefits for the military, Foreign Service and intelligence community serving outside the U.S. is available. General InformationHomebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit: - Applies only to homes used as a taxpayer's principal residence.
- Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
- Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
The credit is claimed using Form 5405, which you file with your original or amended tax return. For 2008 Home PurchasesThe Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year. For 2009 Home PurchasesThe American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. However, the new Worker, Homeownership and Business Assistance Act of 2009 has extended the deadline. Now, taxpayers who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July 1, 2010. [Added Nov. 12, 2009] For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase. First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options. Questions and AnswersMore information is available in the question and answer section. Related Items
from Forbes.com Though home prices in many areas still have room to drop, economists say some of the country's real estate markets are showing early signs of repair. A two-year slide in values has eased its stomach-turning pace, and some analysts expect the national market to bottom out by mid 2010. That's the good news. But just as subprime lending, the housing bubble and the country's subsequent wave of foreclosures had distinct consequences in separate areas of the country, the recovery will also look dramatically different by region. When prices do rise, they'll inch, rather than soar, and some areas won't match their pre-bubble prices for a decade, according to home price forecasts by Moody's Economy.com. Read the rest of the article here
The director of the Real Estate Center at Texas A&M University said it appears Texas has reached the bottom of the housing market. Mark Dotzour said the inventory of unsold new and existing homes around the state is in good shape. "I feel now is the time to buy a house in most Texas cities," said Dotzour, in the center's online newsletter, RECON. "Housing affordability has never been higher, and I never thought I would see 5 percent mortgages in my lifetime. If you plan to live in the house for at least two or three years, now is the time to buy." The economist also said the time is right to build a house because construction costs are low, mortgage money is cheap and there are plenty of contractors available to do the work. Dotzour predicts mortgage rates will remain low as long as the federal government keeps purchasing most of the residential mortgages. However, he said the housing recovery could be adversely affected by Washington's intervention in the areas of health care, taxation, cap and trade and the rewriting of accounting and legal standards. Austin Business Journal - by Jennifer Dawson Houston Business Journal
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