The Real Estate Spoon

Think you missed the $8000 tax credit?  Relax.  If you miss the Nov. 30 deadline, you’ll likely get a reprieve.

An extension and expansion of the popular tax credit is expected to give both new and move-up buyers a tax incentive to buy a home until at least April 30, 2010, longer for military personnel.

And it could come as early as this week.

An overwhelming 85 to 2 roll call vote in the U.S. Senate this week to cut off debate on the first-time home buyer tax credit measure and others pretty much seals the deal on legislation President Obama has already agreed to sign.

If passed into law, the new tax credit would extend the existing credit for first-time homebuyers, worth up to  $8,000!

The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000.

The maximum allowed home purchase price would be $800,000.

A home buyer must have a sale agreement in hand by April 30 and close escrow by June 30, 2010

We’ve been getting a lot of calls recently about the possibility of Congress extending the First Time Home Buyer Tax Credit.  As of right now, I’d give it 50/50 odds.  Certainly, if you are in a position to buy by December 1, I’d strongly encourage you to pursue it, but for those who can’t buy by then, there might still be some hope.

This past weekend, I was featured in an Austin American Statesman article talking about this topic, and how the tax credit is impacting the market:

Agents are hoping for tax-credit extension
AMERICAN-STATESMAN STAFF
Saturday, September 19, 2009 “It’s fairly normal for our market to slow down in autumn,” said Jay Gohil, chairman of the real estate board. “Although we’ve been encouraged by stable home prices and volume in recent months, we are clearly not out of the woods completely.”

Sales pending to close in September were up 10 percent. If all 1,980 transactions are completed, September’s sales total would be 18 percent higher than that of September 2008. Gohil and other Austin-area agents said they’re hoping the federal government extends an $8,000 tax credit for first-time homebuyers that is set to expire Nov. 30.

Associations representing real estate agents, mortgage brokers and builders have been lobbying for an extension, saying the housing industry needs the help. Congressional leaders are pushing for a six-month extension of the credit. The IRS said on Friday… (Get Full Blog Post)

FROM YAHOO! NEWS: The U.S. housing market is rebounding faster than expected. Home resales in July posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires Nov. 30. Sales jumped 7.2 percent and beat expectations, the National Association of Realtors said Friday.Sales hit a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. It was the fourth-straight monthly increase and the strongest month since August 2007. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.

The home sales report was another sign that the U.S. economy is on the verge of a long-awaited recovery after enduring a brutal recession and the worst financial crisis since the Great Depression.

Economic activity in both the U.S. and around the world appears to be leveling out and “the prospects for a return to growth in the near term appear good,” Federal Reserve Chairman Ben Bernanke said Friday.

O.k., I’ll admit it. When discussing the Central Texas real estate market, I use the word “slowdown” very loosely.  While the number of sales dropped, prices have remained strong, and have even seen nice increases over the past few months.

The truth is, Austin still remains an amazing investment location with abundant opportunities.  Our home buyers that heeded our advice and have purchased a home over the past year, are certainly seeing the results of their steadfastness, as prices have started to really push up.  While the nay-sayers were warning of impending doom in every locale within the U.S., I reminded buyers that real estate is a LOCAL business, and that Austin real estate is, for the most part, completely independent of the state of other real estate markets.

Regardless…  The latest national monthly real estate numbers are in, and across the country, sales activity is actually UP, and has been going up for the past three months!  Did you hear that on the news?  Probably not, because it’s not exactly in line with the doom & gloom stories that sell newspapers.  The fact is, however, that sales increased by 11% in June, which is no small gain.  While I’m yet to proclaim devastated markets such as Michigan and Ohio as being out of the danger zone, I think the news is more evidence that real estate markets with strong fundamentals, such as what we have in Central Texas, will continue to see steady growth, and are poised to see some incredible growth over the next five years.

While it’s no secret that Austin home sales have been getting stronger and stronger over the past few months, there is now evidence that much of the country is catching up. According to the U.S. Commerce Department, home sales throughout the country shot up 11% in the past month.  In fact, housing sales have now increased 3 months in a row, which is a solid indication that things are getting back on track.

What does this mean for first time home buyers?  In my opinion, this is a even further indication that this is the best time there has ever been to buy a first home.  As housing sales increase, you should see a direct correlation in the overall state of the economy.  As the economy improves, you should then see a direct correlation in home values.  In other words, buyers can buy now at low prices, and watch their home value steadily increase as the economy improves.  Even better, with low interest rates and the $8000 tax-credit, it’s a pretty amazing time to be in the market.

Okay, so you are pre-approved for a loan.  Now what?  Should you immediately jump into touring every home that meets your wish list?  Unless you have extremely specific requirements, I’d highly recommend that you start researching areas & neighborhoods, before you start looking at homes.

If you’re looking for a 3 Bedroom home, priced between $150,000 and $200,000, the reality is that you would have nearly 700 homes on the market that meet your criteria.  Obviously, it would…  Get Full Blog Post

Here’s an interesting statistic.  When surveyed, 1000 first time home buyers said that they anticipated living in their first home for a total of 10 years.  In a similar survey, 1000 first time home sellers (meaning that they were currently living in their first home) were selling the home after an average of only 4.5 years of ownership.

I think that this is a really informative survey, and over the years, I’ve found these results to be pretty consistent with what I’ve seen from my clients.  Most first time home buyers…  Get Full Blog Post

Most first time home buyers ask us how many homes they should anticipate looking at during the home buying process.  While this can vary quite a bit based upon the buyer’s wish list, we generally find that most of our clients never need to see more than 15.

While touring homes is usually the most exciting part for home buyers, it’s also the easiest.  The negotiations, contracts & closing process are the confusing parts.  These days, buyers are armed with ample research resources to learn most details about a home, prior to ever stepping foot in it.  Assuming that…  Get Full Blog Post

We are starting to hear more and more rumors that interest rates are going to be creeping up over the next year.  This shouldn’t be too surprising to anyone.  Interest rates have been at historic lows, because the federal government had to stimulate the economy.  They needed people to spend money, so they took the proactive measure of lowering rates.  The economy, at least in certain parts of the country, is really starting to show signs of recovery, so now the Federal Reserve has to start worrying about inflation.  Unfortunately, one of the only ways to curb inflation is to raise interest rates.

Don’t be surprised if…  Get Full Blog Post

Breaking news!  First time home buyers can now qualify for a down payment assistance program, which relieves the burden of having to make a 3.5% down payment.  This program is being backed by the State of Texas, and will cover up to 5% of the home’s purchase price or $6,000, whichever is less.  For instance, on a $150,000 home, a buyer is entitled to receive a full $6,000 to go towards a down payment, which would mean little to no out of pocket expenses for the buyer!

This program has JUST been announced and details are still coming in.  There is no word yet, if this is a permanent loan program or if it will expire later this year.  Either way, it’s an exceptional opportunity for those first time home buyers who are having a difficult time trying to save for a down payment!  Because the details of this program are still in the works, please call for the latest information.