REALTOR RUMINATIONS

The very popular and effective First Time Homebuyer Tax Credit has been extended and updated to cover both home-buyers and home-sellers.  Due to expire on November 30th, the credit has been extended until April 30, 2010 and is more inclusive that it’s predecessor.

Rules remain the same for the first time homebuyer:  they cannot have owned a home in the past three years and the home they are purchasing must be the primary residence.  The tax credit remains at $8000; however, income limits have been increased to $125,000 for singles and $225,000 for married couples filing a joint return.  Congress has also added an $800,000 price limitation on the home that is being purchased.

An incentive for current homeowners has been included in the new bill.  For a homeowner who uses his home as his principle residence and who has lived in the home consecutively for five of the last 8 years there is a $6500 tax credit for homes sold by April 30, 2010.

The new bill has also added a flexibility provision in that a home must only be under contract by April 30, 2010 and must close by July 1, 2010 for the buyer or seller to be eligible.  In a fraud prevention measure an executed contract must be included with the income tax return.

The House of Representatives on Monday voted to extend the First Time Home Buyers Tax Credit for an additional year past the November 30, 2009 ……..for military personnel, foreign service officers and intelligence officers who are currently serving overseas or who have been deployed outside the United States for at least 90 days during the current calendar year.  Estimates are that approximately 350,000 military personnel and an unknown number of foreign service and intelligence officers may be affected by the extension.  For more information HR Bill 3590 contains the actual language of the bill.

An article by Margaret Jackson in Sunday’s Denver Post suggests that many renters are tripling up. She cites a survey by MyNewPlace.com that shows searches for one bedroom apartments have fallen dramatically with three bedroom apartments have escalated.  While renting is one option owning your own home has many advantages over renting; tax deductions and equity growth being two of the major ones. Add the First Time Homebuyers Tax Credit and owning becomes even more attractive.  Talk to a mortgage lender to see if you qualify and then give me a call.

For the first time this year the average sold price of a single family home in up year on year from a year ago.  For September the average sold price for a home in the Denver Metro area was $274,433 while the average price for September 2008 was $260, 118 an increase of 5.2% .  For this year the average price is up 16% from January’s average price of $230,878.

Median home prices have also shown an increase.  For September the median price of a home sold was $225,000 up from January’s figure of $181,500.  That is an increase of 19%.  The median price in September 2008 was $216,500 a year on year increase of 3.8%.

In the advertising blitz about the $8000 tax credit for first-time home buyers don’t overlook the tax savings available if you remodel your current home.  There is a national tax credit of 30% of the cost, up to $1500 if you install a variety of energy-saving products.  Those products include insulation, windows and doors, roofing, heating, ventilating and air conditioning systems, tankless water heaters, and alternative-energy generators such as solar panels and wind turbines.  It would be a great idea to consult your tax advisor before starting work to make sure that you understand the full scope of the tax credit.

The latest S&P/Case Shiller home price indices have been released and its more good news for the Denver Market.  The index shows a 1.5% increase for July over June and  a sixth straight month of increase for our market.  The index measures the residential housing market in  20 metropolitan regions across the US.  For a detailed look at the Denver region and all other regions go to http://www2.standardandpoors.com/portal/site/sp/en

In a recent Forbes article by Peter T Kilborn Parker, Colorado was ranked #4 in the list of the 25 best places in the USA to move.  Looking at factors like populations of 25,000 or over, the number of people who were born out of state or abroad, who had moved to town from a considerable distance within one and five years and who had moved for a job, towns across the United States were rated. 

As a general rule the towns that ranked highly had twice the incomes, twice the home values and home sizes, twice the college degrees, twice as many youth and half as many elderly, and twice the number of residents who vote Republican.

Read the complete article at http://www.forbes.com/2009/07/07/relocate-relocation-cities-lifestyle-real-estate-affordable-moving.html

  Just as afternoon rains keep the fields green, the Real Estate News continues to show an up trending, strengthening market.  The average sold price for a single family home in Denver has increased from $230,878 in January to $283,312 in June while the median price has increased from $181,500 to $237,500.  The news for condos is also good with the average sold price increasing from $148,509 in January to $161,939 in June while the median price increased from $113,000 to $139,837.

  Forbes magazine recently touted Denver as the best place to buy a home.  Their report ranked the 25 largest metro areas on the basis of change in price per square foot, frequency of real estate transactions, and how evenly distributed home sales activity is in a metro area.  They said “While the majority of the nation’s housing markets are still working toward a bottom, some cities are boasting fundamentals that make them good places to buy a home now.”  They went on to say “Denver scores very well in terms of being able to bring people into a stable housing market,….It has better growth potential than most cities today.”  This is the second month in a row that Denver has been rated number one.

  The Forbes rankings seem to be geared more toward each market’s current and future potential as a place to buy a home as some of the cities at or near the top (not Denver) are among those hardest hit by the recession. 

  In another monthly trending report the S&P/Case-Shiller index showed Denver home prices increasing for the second consecutive month.  The monthly index reveals how the 20 major cities are faring in the already battered residential market.  While the 20 city index shows home prices down 0.6% in April and off 18.1% since April 2008, Denver showed a 1.5% increase in prices in April with a 4.9% decrease from a year ago the best showing for any of the major cities in the index.    As a comparison, the two hardest hit cities remain Phoenix and Las Vegas where home prices have lost more than half of their values since their prices peaked.

  Foreclosures remain the primary threat to a complete housing recovery.  Homes that are in foreclosure threaten neighborhood stability and overall appeal especially if their exteriors are not maintained.  In addition, in neighborhoods where there are a lot of foreclosures crime rates have risen and in extreme cases squatters have occupied vacant foreclosures.  Once a foreclosed home is sold that sale effects future home values as their below market sale makes it difficult for non-foreclosed homes that are sold to appraise.    On the bright side of foreclosures many of those homes are in good shape and represent excellent investments for the savvy homebuyer.  As with any home purchase use an active, full-time Real Estate Professional to assist you in the purchase. 

The most asked question that Tanne and I get is “Should I sell my home now?”.  The answer that we give is “It Depends”.  Contrary to the negative real estate news inundating us daily there is good news and let me illustrate it with an example.

Your family has outgrown your 3 bedroom 2 bath home.  Your home will sell now for $250,000 down 10% from what it would have sold 2 years ago.  You have a 30 year fixed mortgage at 6.25% for $220,000.You can afford a $350,000 home and can get a $315,000 30 year mortgage for 5.00%.  The best news on the sale of your home is that with the $8000 First Time Homebuyer Tax Credit there are more potential buyers for your home than there have been in the past five years.  The low interest rates and the Tax Credit together have created a sense of urgency to buy unseen in many years.

Now let’s work the numbers to see if a sale and move-up buy makes sense for you.  If you sell your home for $250,000 now you have foregone the 10% gain you had two years ago or $25,000.  On the buy side the new home is also devalued 10% or $35,000.  That gives you a net “gain” of $10,000 in relative value. Your current monthly mortgage payment (principle and interest) is $1354.58.  With the lower interest rate for your new mortgage your new payment will be $1690.99, a monthly increase of $336.41.

Is this a good deal?  Individual homeowners must look at their financial situations and make a determination based on their wants and their needs.  What is clear, however, is that even in the current down market there are advantages to homeowners who want to sell and move up.    Before you rule out selling—especially if there are compelling reasons to sell– do the math, consult a Real Estate Professional and make an informed, rational decision based on your situation not on the real estate market in general.

Before you disregard this Tax Credit opportunity because you know that you are not a First-Time Homebuyer make sure that you are aware of all of the facts!  The 2009 version of this bill has added several improvements over the 2008 edition.

· A first-time homebuyer is defined as anyone who has not had any ownership interest in a home in the three years previous to the day of the 2009 purchase.

· Tax Credit Increased from $7500 to $8000

· Home purchase must be between January 1, 2009 and December 1, 2009

· Any home purchased for $80,000 or more qualifies for the full credit.  Homes less than $80,000 get a credit of 10% of the cost of the home.

· Adjusted Gross Income (AGI) restriction of $75,000 for a single filer and $150,000 for married couples filing a joint return.  For singles and married couples with income in excess of the restrictions the credit phases out at $95,000 for singles and $170,000 for married couples.

· The property must be a principal residence and must be located in the United States.  A principle residence is generally defined as one that you live in more than 50% of the year.

· The property may be single-family detached, a condo or a co-op, a townhome, or a new or existing dwelling.

· If the home is held for three years then the tax credit does not have to be paid back. 

  We know that we have given you the very basic facts about this program.  As with anything from the government that could effect your taxes  we advise you to consult a tax professional to determine the full tax impact that any home purchase you make might have. 

  One general observation about the housing market in Colorado.  Mortgage rates are the lowest that I have ever seen them and in general home prices are lower than they have been in  past 20 years.  What better time to consider buying a home!