Posted in Finance, General Real Estate Market, Real Estate, tagged $6500 tax credit, $8000 tax credit, economy, first time home buyers, Home Buyers, home sales, Home Sellers, home selling, housing market, real estate market, repeat home buyers on April 30, 2010 |
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Today is the end of the First Time Home Buyer and Repeat Home Buyer tax incentives. To take advantage of one of these incentives, you have to be under contract by the end of the day today (I’m available- call me ). As we move into the months ahead, we’ll obviously be very interested in whether or not the somewhat improved housing market will continue. When the incentives were created, the theory was that they would serve as a means to jump-start the economy since so much is dependent on the housing market. Once that happened, the improved market should be able to survive and flourish without the need for a housing tax incentive.
Since that time, home sales have improved, including new home sales. We’re also seen a lot of chatter in the media about better numbers measuring both market metrics and consumer sentiment. The stock market, long viewed as a leading indicator of the overall economy, continue to rise in anticipation of a healthier economy. No doubt the unemployment numbers, the continued fall of housing prices and the expectation of continued home foreclosures are keeping the economy from taking off at a rapid pace, but the mood of the country does seem to have improved since last year.
We won’t have a realistic measure of whether housing will be able to sustain its improved performance until we get sales reports from the middle of the year. I wouldn’t trust April figures to predict a trend because of the effect of the ending on April 30 of the tax incentives, and May will likely not be trustworthy as a bellweather, either. However, by June or July, I think we’ll be able to take the measure of the improving economy’s effect on the housing market and vice-versa. People tend to isolate phenomena like the tax incentives and predict the effect on the market from just that one thing. The problem is that there are always many things going on in the world that have effects on the economy and markets so that to have any hope at all of predicting the future, you have to take into account the combined effects of all those variables working together and assume those that are changing are going to continue to change at a stable rate. Unless your crystal ball works better than mine, that’s a pretty tall order.
So just settle back, watch what happens ,and don’t pay much attention to the real estate sales numbers for a couple of months. I’m optimistic that more of us will begin to see better days, and that will be a welcome relief.
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Here are a couple of things to keep in mind if you plan to buy a house soon (or know someone who does). First, the deadline for the First Time Homebuyer Tax Incentive of $8,000 and the Repeat Homebuyer Tax Incentive of $6,500 is near. You’ve got to have your home purchase under contract by the end of this month, and have it closed by the end of June. The closing part is not likely to be a problem if you’re buying a resale home, but if you want a new home, it may have to be a completed or close-to-complete home. For more details on qualifications and dates for these incentives, click HERE.
Also, as expected, mortgage interest rates are starting to go up. According to Chris Ayer, a Lake Norman, NC area Coldwell Banker Mortgage rep, “Rates are about 0.500% higher in some cases than they were at the beginning of the year.” The Fed has ended a program that helped to keep rates low and they’re starting to react. The jury is still out on the question of private investment stepping in to take the Fed’s place, but I would not count on it anytime soon. Chris suggested a good article in Yahoo Finance about this situation. You can see it by clicking HERE.
Nothing focuses the mind like running out of time. I’d say it’s time to FOCUS, and let’s get those houses under contract! Call me if you need help on this.
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Real estate agents make a living helping people buy and sell homes. For quite awhile, there have not been nearly enough home buyers or serious sellers to keep us agents happy. There are always some buyers and sellers out there, and we’re thrilled when we get to help someone, particularly since the funky market has made it more difficult to get from an offer to a successful closing than ever before. We just would like more, please!
We’ve had high hopes that the extended tax credits for first time home buyers and new tax credit for repeat buyers would heat up the market substantially. We have seen some degree of improvement lately- about what you’d normally see in the spring around here. Yet, there doesn’t seem to be a lot of interest focused on the benefits of the tax credits. I think we did get some a real boost last fall for the first round of these credits, but projections now are showing limited response to the current, and likely last, round of tax incentives for home buyers. This is in spite of historically low mortgage interest rates and low housing prices. Housing won’t be this affordable again for a long time.
As most understand, the future hangs mostly on the recovery of the economy and the (un)employment numbers. We’re always hoping for a magic bullet, but this time it looks like the bullet is traveling at a donkey’s pace.
HERE is a link to a good Bloomberg Business Week article that pulls all of the variables together.
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Posted in Finance, General Real Estate Market, Real Estate, tagged $6500 tax credit, $8000 tax credit, first time home buyers, Home Buyers, Home Sellers, home selling, Mooresville, mortgage loans, mortgage rates, repeat home buyers, Troutman Library on November 13, 2009 |
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Lemons to lemonade. Black cloud with a silver lining. Silk purse out of a sow’s ear.
There are a number of expressions that we sometimes hear when someone finds something good in an othewise bad situation. For example, I work with the Citizens for a Troutman Library. When the new library was designed, the architect estimated the cost to be well over $1,000,000. Then the economy went south. When we put it out to bid, we were able to get a contract for under $800,000. That allowed us to move ahead with construction. In another example, the Town of Mooresville has lately been getting some needed re-paving of streets done, largely because paving prices are substantially lower than normal, and that’s the best use of our town funds now.
This same silver lining can help some people move ahead with their plans for buying a house or trading up (or down). Right now, 30 year mortgage interest rates can be had for under 5% with good credit. Right now, many first time buyers can get a tax credit of up to $8,000 and many repeat buyers a credit of up to $6,500. Right now, home prices are historically low. (Sellers, if you’re moving in the same market, you’ll enjoy the same discount on the house you buy that you may have to give to get yours sold- so that’s no reason to wait.)
Do you think this silver lining will last forever? Well, we know the home buyer tax credits will end by the middle of next year. We know that mortgage interest rates have been held artificially low due to government buying our own bonds, and that will likely go away next year. We see that in other parts of the country that are ahead of us in the downturn-upturn cycle, that prices are starting to edge back up. I’d say now is really a remarkably good time to make a move, if that’s part of your long-term plan.
Who’s ready for some lemonade? Oh, by the way. I help people buy and sell houses.
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I just read that the Home Buyer Tax Credit has now passed the House and the Senate, both by overwhelming votes and will go to the President for signature in the next few days. President Obama has already said he would sign the bill when it comes to him. This extends the deadline for first time home buyers. They must be under contract by April 30, 2010 and closed by the end of June. It also ups the qualifying income level from $150,000 to $225,000 for a married couple. In addition to first time home buyers, it provides up to $6,500 tax credit for home owners who are selling a home they’ve occupied for 5 of the last 8 years so that they can purchase another, likely move-up, home. This last detail is the first to address the fact that the first time home buyer tax credit has been successful in driving sales, but left out those who need more space, or need to move to a new location and couldn’t get the numbers to work for them to make the move. This should significantly improve the home resale market and new home market while the tax credits are in place.
Hopefully, there will be enough sales to be a catalyst for overall improvement in the economy. It would appear that our federal legislators, having studied the issue, have concluded that we’ll be helping our economy more than hurting it with this spending. If the economy does improve over the long haul, that will greatly increase income and other tax revenues and help to pay back these huge investments our government has made in keeping us afloat and getting us out of the recession.
Here’s a good US News report on the details of the bill.
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Posted in Finance, General Real Estate Market, Real Estate, tagged economic recovery, first time buyer tax credit, first time home buyer tax credit, first time home buyers, Iredell County Real Estate, Lake Norman Real Estate, mooresville real estate on October 30, 2009 |
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News reports are telling us that the Senate has agreed in principle to extend the first time home buyer tax credit, allowing it to act as an incentive to first time home buyers who go under contract by end of April, 2010 and close by end of June, 2010. They’re also working on the possibility of further extending an incentive to existing home buyers who have been in their homes at least 5 years. They maximum credit for them would be $6,500. The House had already agreed on the value of extending the tax credits. Now, the Senate is working on details of a bill to move this along. HERE is a USA Today article with additional details. So, now we’ll have some more time through the Spring of next year to see if these tax credit incentives have been an important catalyst for healing the economy or just a crutch to keep it from sinking further. It may be that the tax credit extension is the necessary bridge to a time when employers can start hiring again, since there is some evidence that the business to business spending levels are starting to increase. HERE’S some further detail in The Charlotte Observer on the state of the economy overall and predictions for recovery.
Wondering where all that government recovery money is going? You can go to http://www.recovery.gov to see.
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