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On Feb. 2 the National Association of Realtors' Chief Economist, Lawrence Yun, said home sale statistics are skewed by the federal home buyer tax credit that sent some shoppers scrambling for a closing in 2009, and others racing to get in on a 2010 expanded and extended version of the federal break.
In fact, Yun said, pending home sales have stabilized and are up from those reported last year. The First Time Homebuyer Tax Credit threatened to sunset at the end of November in 2009. That caused an upswing in the number of homes sold. Then, the tax credit program was extended and expanded. The April 30 deadline for the extension is looming and home sales are again on the rise. The swings can be confusing.
In an NAR press release, Yun said, "These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years."
According to NAR, the Pending Housing Sales Index (PHSI) is a good market indicator. Following is a brief look at its recent performance.
Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010. He expects new home sales to remain low, but existing home sales should rise to about 5.6 million this year. In 2009 there were 5.16 million existing-home sales. The increase in sales could help stabilize the market overall. It's simply a matter of supply and demand.
The federal government's extended and expanded home buyer tax credit continues to boost home sales throughout the United States, according to a report published by the National Association of Realtors. For the ninth consecutive month since 2001, pending home sales showed a marked increase.
According to a Dec. 22 NAR report, existing-home sales were up in November "as first-time buyers rushed to close sales before the original November 30 deadline. People hoped - but no one could be sure the tax credit would actually be extended by Congress. It was, and when it's all said and done, about 4.4 million households will claim the tax credit before it expires.
The question is, will pending home sales be self-sustaining when the tax credit expires in April 2010? Housing market experts are warning there will be a natural drop in pending and actual home sales as the rush to take advantage of the home buyer tax credit wanes.
What is the Pending Home Sales Index?
The Pending Home Sales Index is a leading indicator for the housing sector. It's based on pending sales of existing homes. A sale is considered "pending" when the contract's been signed but the transaction isn't yet closed. An index of 100 is equal to the average level of contract activity during 2001.
News of a sharp increase is based on contracts signed in October. The pending sales report published by NAR on Dec. 1, showed a 3.7 percent increase from September 2009. It was 31.8 percent higher than October 2008 when the housing sales crunch was sorely felt throughout America. In September the index was recorded at 110. In October, the index had increased to 114.1.
Celebrate, but be Wary
The market has been historically slow for the past year, so while the increase is good news, it is still reflective of a sluggish economy and a rebound-in-progress. NAR Chief Economist Lawrence Yun again credits the government's housing stimulus package for unleashing "a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future."
The Northeast saw the greatest increase in October - 19.9 percent above September and 44.2 percent higher than it was a year ago. The Western housing market didn't fare quite as well. In fact, the index fell 11.2 percent from September to October. It's still 21.9 percent higher than it was a year ago.
The inevitable end of the tax credit is likely to cause a dip in pending sales as buyers rush to lock in their deals. The American job market continues to be weak, and that is a major factor affecting home sales. While the federal stimulus money has helped, it will not completely correct the market alone.
"Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families," Yun said in the NAR report.
A Kinder, Gentler Tax Credit
Rushed home shoppers are breathing a little easier now that the Worker, Homeownership, and Business Assistance Act of 2009 has extended the famous home buyers tax credit. The extension is actually better than most home shoppers hoped for. The dust has settled and there's great news in the details of the revised program for people who need assistance qualifying for and purchasing a principal residence.
Not only can first-time homebuyers qualify for a tax credit of up to $8,000, repeat home buyers could receive a tax-credit windfall of up to $6,500. Can we hear a "hallelujah?"
Here's the low-down:
In order to qualify for an $8,000 tax-credit, the purchaser must have purchased the home between Jan. 1, 2009 and on or before April 30, 2010. If a binding sales contract is in place by April 30, 2010, a purchase completed by June 30 may qualify.
Uncle Sam's gift to repeat homebuyers (this is new to the tax-credit package) is a $6,500 tax credit if the purchaser has owned a home for five consecutive years out of the prior eight years. The transaction has to take place between Nov. 6, 2009 and April 30, 2010. Binding sales contracts signed by April 30 will likely qualify if the sale is closed by June 30.
Limitations
Now, like most governmental gifts associated with tax credits, this one has some stiff limitations. The income limits have changed since the original stimulus package was announced. There are some important sales dates to remember.
1. Sales occurring after Nov. 6, 2009 and on or before April 20, 2010
2. Sales occurring between Jan. 1, 2009 and Nov. 6, 2009
Income limits for sales occurring after Nov. 6, 2009 and on or before April 20, 2010 are as follows: $125,000 for individuals and $225,000 for married couples filing jointly.
The income limits for sales occurring on or after Jan. 1, 2009 and on or before Nov. 6, 2009 are $75,000 for individual taxpayers and $150,000 for married couples filing jointly.
Homes priced over $800,000 aren't eligible for either credit. Some expanded tax credit benefits are afforded members of the military, the foreign service and the intelligence community. For a detailed description of those benefits visit the official Homebuyer Tax Credit website.
More good news: homes purchased in 2010 can be claimed on an amended 2009 income tax return.
Sorry, Kids
The federal government had some concern when young - like, 3-year-old - children purchased homes in 2009 and claimed the tax credit on their parents' behalf. The original deal didn't specify how old the purchaser had to be - only that the purchaser had to meet income and homeownership requirements.
The new draft requires home purchasers be 18 or old. They can't be claimed on someone else's return and it's likely the IRS will be sticklers about this given the eyebrows raised when fraudulent claims were discovered this year.
Neither of these tax credits have to be repaid, unless the qualifying home is sold again - or stops being the buyer's principal residence within three years of the initial purchase (you can't buy a home, live in it for a few months and then rent it out).
Taxpayers will be required to submit a copy of the HUD-1 settlement statement and IRS Form 5405 to claim either tax credit.
Contact us today to find the perfect qualifying home and claim your stimulus tax credit.
More Cash for Homeowners and a Little Something for Mother Nature TooIf you're feeling left out of the home buyer's tax-credit plan because you already own your home; or, if you didn't get to cash in on the "Cash for Clunkers" stimulus incentive, never fear, the Obama Administration is proposing a new program that will warm your holiday heart (and hopefully your home).
On Tuesday, President Obama unveiled a plan for a new stimulus program called, "Cash for Caulkers."
Huh?
This program will offer homeowners a hand up by reimbursing them for energy-efficient appliances and insulation. It's all part of the master plan to bolster the country's economy.
Of course, homeowners aren't the only consideration here. (Hard to imagine, isn't it?) There's also the environment to consider, natural and renewable resources to protect and jobs to be created if all goes as planned.
Steve Nadel, director of the American Council for an Energy-Efficient Economy, is helping to write the bill. He suggests a homeowner could receive up to $12,000 in rebates.
Now you're listening, aren't you?
Let's see, if you cashed in on an $8,000 tax credit, live in a state (like Utah) that awarded new homebuyers a $6,000 grant, and collect $12,000 for loving Mother Earth - that's, uh, $26,000.
It's not too late to buy a home, and the energy incentive would almost make it a wise, wise move right now.
The logic behind this proposal is to create jobs, same families money, reduce pollution and encourage the development of new, innovated energy resources.
A Little Something for Everyone
There are two elements to this program:
1. money for homeowners for efficiency projects
2. money for companies in the renewable energy and efficiency space
Private contractors (faction that has suffered dramatically during the recent economic crisis) may be able audit homes for energy efficiency. They could buy the necessary materials to make a home efficient and get paid to install it - therefore creating a new entrepreneurial opportunity for thousands.
The thought being tosses around now is a 50% rebate on the cost of equipment and the cost of installation up to $12,000. But wait, there's more: participating families would save money on energy bills too.
This proposal is still in the early planning stages. It's not clear how the money will be disbursed, how much cash individuals will have to come up with up front, how they will prevent the fraud issues that crept into the housing stimulus package or just how much of a chunk big business will get.
Stay tuned!
Got the Small (Old) Bathroom Blues?Take a Hot Bath and -- Relax
So your bathroom has all the finesse of a broom closet and the money in your wallet is fit for a thrift store fix. Even if your bathroom is small and your budget is thin, you can use creative (translation: cheap) methods to make the most of the space you have.
Go Retro
Suffering from a 70s style décor that has outlived the ages? Carefully evaluate the good points of your space - those that are salvageable - and begin to build your decorating scheme around them. Don't hate your space, learn to love it and it will love you back regardless of its decade of origin!
Do the fixtures really need to be replaced? Or will they scrub up to wear their age well? Sometimes aged tile will work right into the right color scheme to create a warm and friendly atmosphere. Get out the color palette from your local paint store and consider the colors that will bring out the best in the fixtures and other assets available to you.
Decide in advance what kind of a feel and appeal you're going for. Want the room to seem more spacious? Use bright colors, large mirrors and lots and lots of lights.
Small Doesn't Mean 'Dungeon'
Looking for a cozy den ambiance (note: broom closets are not cozy)? Dry darker, rich colors that enhance existing fixtures and décor. Shop antique shops, thrift shops, yard sales and more to find the perfect decorations to don on your walls. Buy complementary towels, wash cloths and inexpensive soap dishes, etc. to create a rich, warm appeal.
Want a chandelier over that old claw foot tub? HDTV.com Start at Home suggests creating a candle chandelier for use during a hot soak.
If You've Got it, Flaunt It
If you have artistic talents, consider creating your own mural on the wall, another suggestion from HDTV.com. Your design will be original, less expensive, and more meaningful to you.
Renting?
Just because you're renting a home, you don't have to live with the former tenant's bad taste. If the landlord refuses to let you take a brush to the walls, try using fabric instead! It's easy to remove and won't permanently change the walls.
Rental Decorating Digest calls this a quick fix, "Placing fabric on your walls is a simple process, as a matter of fact, it is just like wallpapering except you are using fabric and starch which allow you to easily remove and reuse as needed."
If you're a renter, focus on decorations you can take with you when you buy that dream home. Only buy the things you really love and start a collection you'll carry with you for a lifetime.
Inspire
Inspirational quotes on walls are all the rage right now. One of the best tools you can use to create removable lettering is the Cricut® found at craft stores everywhere. Purchasing a Cricut® of this purpose is only sane if you have plenty of rooms to embellish. Consider borrowing one from a friend or check your local library or a nearby university or college library to rent or use on the premises.
Get creative today and get rid of those old, small bathroom blues?
Is your bathroom just beyond repair? Contact us today. It's time to move and we have an amazing selections of homes with bathrooms you'll love to live in.
October Home Sales Continue Rising Trend
The National Association of Realtors is reporting yet another major gain in the uptrend of sales of existing homes. In a Nov. 23 report, NAR announced a surprising gain in October 2009 sales and declining inventories destined to stabilize falling home prices.
The association continues to credit the Fed's First-Time Homebuyer Tax Credit for October's strong statistics.
According to NAR, existing-home sales surged 10.1 percent to a seasonally adjusted annual rate of 6.10 million units in October. Single-family, townhomes, condominiums and co-ops are inclued in the count. There were only 4.94 million like home sales in October 2008. This year's numbers show a 23.5 percent increase over last year for the same month. "Sales activity is at the highest pace since February 2007 when it hit 6.55 million," the report said.
Lawrence Yun, NAR chief economist said he is surprised by the gain, but expects a decline in sales once the rush to beat the Nov. 30 deadline for the First-Time Homebuyer Tax Credit has past. "With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer," he said.
A revised version of the tax credit has extended federal assistance through April 30. Yun projects homebuyers will continue to push to take advantage of thousands of dollars in savings by meeting the extended deadline.
The economist also credits historically low interest rates for the increase in sales. Freddie Mac is reporting a national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95 percent in October from 5.06 percent in September. The rate was 6.20 percent in October 2008. Last week, Freddie Mac reported the 30-year rate dropped to 4.83 percent.
The national median existing-home price for all housing types was $173,100 in October, according to the NAR report. That's down 7.1 percent from October 2008. Foreclosures and other distressed properties are being absorbed by a hungry market of new potential homebuyers and that can distort the median price numbers overall.
If you're looking for a great deal on a home and a chance to take advantage of the extended tax credit, contact us today!
As many Americans rearrange their lives due to the threat or execution of home foreclosure, most Americans are forced to take a better look at our financial practices.
Banks are holding tighter to their money. Lenders are looking closer at borrowers’ credit histories, assets, employment histories and overall ability to repay debt. The federal government is doing the same thing to banks. We’re all checking each other out. Now is the time for you to evaluate your own financial scenario and decide just what you can really afford to buy.
Take off the rose-colored glasses. Let’s look at this realistically. Why not let us help you analyze your current financial situation? We’ll help you determine just how much you can afford to pay for housing-related costs each month. We’ll also help you determine how much you should be willing to pay for a home. If you’re not quite ready, but know you want to buy a home in the future, we can help you take steps toward your next home purchase.
Even though homes are essentially on sale right now, this is no time to abandon all reason and take on a debt you can’t really afford. The real estate market - like every other financial market in the world - is fickle. we encourage only good, sound, sustainable investments for solid buyers.
How much home can you afford?
There are many different lending programs for homebuyers today. As the country goes through a recovery period, credit will be tight for awhile and a loan will be harder for some people to get. However, home loans are absolutely still available and lenders are eager to help people buy properties.
Check Your Credit
When you begin shopping for a home loan, check your credit report for any potential problem areas. Your ability to get a home loan and the interest rate you pay will be directly impacted by your credit score.
Federal law entitles you to one free credit report from each agency per year. Get your free reports at www.annualcreditreport.com or contact one of the following agencies:
Debt-to-Income Ratio Important
In general, lenders want to see a total 41 to 45 percent debt-to-income ratio including your housing expenses. Housing expenses include the cost of private mortgage insurance (PMI) if your down payment is less than 20 percent as well as taxes and homeowners insurance.
Make a list comparing your debt and income when you first start shopping for a home loan. How much do you think you can you comfortably afford to pay on a home loan? Never hide expenses that don’t show up on your credit report. False reporting when applying for a home loan could lead to foreclosure on your home loan. When researching the cost of your home loan, ask about:
In order to calculate about how much home you can buy, visitour website’s handy Mortgage Calculator located on the full details page of each property listing. Try different scenarios to calculate and recalculate the total price you can afford to pay for a home.
We list homes in every price range. You can search for homes on our website right now. You can even set your own search criteria to ensure you are looking at all of the properties within your price range! We are here to help.
Take a Walk to Higher Home Values
Homes in "walkable" communities are becoming more and more popular, according to an August 2009 study released by CEOs for Cities. Not only are they more popular, homes located in these urban areas are showing a marked increase in value.
The study, entitled, "Walk the Walk," concludes, "More than just a pleasant amenity, the walkability of cities translates directly into increases in home values." CEOs for Cities defines walkable neighborhoods as "those with a mix of common daily shopping and social destinations within a short distance."
The study maintains houses with "above-average levels of walkability" sell for a premium of about $4,000 to $34,000 over houses with just average levels of walkability in the typical metropolitan areas studied.
The Walk the Walk study turned defining a community's walkability into a fine science and explores the connection between home values and walkability as measured by a Walk Score algorithm and other mathematical and scientific equations and controls.
Bottom line: People like to walk and more people are creating designer lifestyles that allow them to live without a car. They want to walk to stores, schools, parks and to places that provide them with the services they need. And, they are willing to pay.
"The property value premium for walkability seems to be higher in more populous urban areas and those with extensive transit, suggesting that the value gains associated with walkability are greatest when people have real alternatives to living without an automobile," the study said.
The study's measure of walkability focused on the benefits of walking along with better accessibility in general.
The report concludes, "This research makes it clear that walkability is strongly associated with higher housing values in nearly all metropolitan areas. The choice, convenience and variety of walkable neighborhoods are reflected in housing markets and are the product of consumer demand for these attributes."
As the nation watches the housing market with baited breath, it's good to know people are still looking to a bright future and focusing on ways to increase home values through research and without speculation.
CEOs for Cities -- a national cross-sector network of urban leaders from the civic, business, academic and philanthropic sectors - is calling for urban leaders to pay close attention to walkability "as a key measure of urban vitality and as impetus for public policy that will increase overall property values - a key source of individual wealth and of revenues for cash-strapped governments in a tough economy."
The read the full study, follow this link: Walk the Walk.
Light Up Your Holidays with Earth-Friendly DecorationsThe holiday season is upon us and it's time to get out the holiday lights! Why not give a gift to the earth this year by pledging to use only energy-efficient lighted decorations?
Energy Star, a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Commerce, is helping Americans save money and protect the environment by highlighting energy saving products and holiday lights are on the list!
"If all decorative light strings sold in America this year were ENERGY STAR qualified, we would save over 2 billion kWh per year and reduce greenhouse gas emissions equivalent to nearly 300,000 cars!" according to the Energy Star website at www.energystar.gov.
Many manufacturers of decorative lights have partnered with the government organization to guarantee lighting that consumes 75 percent less energy than conventional incandescent lights strands. Many of the qualifying decorations feature LED technology.
Let's get technical. LED is an acronym for "light emitting diodes." Small sources of light are illuminated by movement of electrons through a semiconductor material. They're energy efficient and can use up to 90 percent less energy than an incandescent bulb. Yet, they produce just the same amount of light!
LED lights pose less of a fire threat because they are cooler to touch than regular lights. Worried about the cost of purchasing all new holiday lights? LED lights can actually last up to 10 times longer than incandescent lights. They're durable and really pretty shock resistant because they don't have moving parts, filaments or glass. When you invest in lights manufactured by companies who have partnered with Energy Star, you will also get a three-year warranty. These products are tested by an independent company. Energy Star has some tough lifetime and electrical requirements.
Some lights in your collection may have actually been produced by partner manufacturers. If you're not ready to replace all of your holiday lights, try replacing a few strands every year. You'll be surprised how much energy you save and, over time, all of your lights will be energy-saving LED lights.
To find out which manufacturer's products are qualified by Energy Star, follow these steps:
1. Go to www.energystar.gov
2. Click on the "Products" tab
3. Scroll down the page to "Lighting"
4. Click on "Decorative Light Strings"
5. On the right-hand side of the page click on the "Manufacturer List" link
You can also follow this direct link to Energy Star qualified partners. On this website you will find many, many energy-saving tips and all kinds of products manufactured specifically to be energy efficient.
Free Market Report Offers Inside Track on Utah Real Estate
If you are a Utah real estate investor, you're going to love this. By Utah real estate investor, I mean anyone who is considering the purchase of a home or property in Utah. One of the most important steps you can take as you plan for the buying process is to watch the local market with great care.
Utah real estate sellers, this is for you too! Timing is everything when you place Utah real estate on the market.
The Prudential Utah Real Estate Free Market Report will help you stay in touch with the real estate market in any zip code with monthly reports delivered right to your inbox!
Easy to Find, Easy to Use
The Free Market Report is a new feature on the Prudential Utah Real Estate website. Simply visit www.pureutah.com. Click on the tab in the upper right hand corner of the page that says, "Rates and News." Here you will find information about Utah real estate rates and news (obviously), a direct link to our PURE Blog, and a link to our Free Market Report request form. Can't decide exactly where you want to be? Request reports from several different areas.
You can unsubscribe from the service any time you want to - or add new locations as often as you want to. These updates are absolutely free.
In your Monthly Market Report you will receive a market snapshot for the area you specified including detailed statistics provided by Zillow.com.
Search for homes, look for active real estate listings on a comprehensive map, or review the area's market history by reviewing inactive listings. You can also:
Prudential Utah Real Estate is proud to be able to provide you with the smart resources you need to stay on top of the Utah real estate and investment game!
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Joel Carson is president and owner of Prudential Utah Real Estate in Salt Lake City, Utah. For more information visit http://www.pureutah.com.
