Home Builders Using Homebuyer Tax Credit?

March 7, 2010 By

Builders looking to cash in on homebuyer tax credit?

New housing stats rose 21 percent in January from a year ago, the Census Bureau said today, to a seasonally adjusted annual rate of 591,000.

That’s up from a record low pace of 479,000 units per year seen in April, but still well off the 1 million to 2 million-a-year range that’s been the norm for five decades. During the last boom, housing starts peaked at 2.07 million in 2005.

Single-family home stats were up 36 percent from a year ago, to a seasonally adjusted rate of 484,000 per year.

Single-family home starts, which typically exceed 1 million a year when the economy is not in a recession, hit an all-time high of 1.72 million in 2005 before plunging to 445,000 last year.

Analysts said builders may be putting up homes on “spec” to beat the expiration of a federal homebuyer tax credit, currently limited to homes under contract by April 30 and closing by June 30.

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What Are Home Values In Mesa Arizona Doing in 2010?

February 24, 2010 By Leave a Comment

Case-Shiller Monthly Change Nov 2009-Dec 2009

According to a new study released by Standard & Poors – the Case-Shiller Index – Phoenix appears to be showing a slight increase overall in home values actually showing a slight increase. This could be a good sign for what home values in Mesa are doing or going to do in 2010. But overall, what is the national real estate market doing 2010?

Using data compiled in December, Standard & Poors released its Case-Shiller Index Tuesday.  The report shows home prices down just 2.5% on an annual basis, a figure much lower than the 8.7% annual drop reported after Q3.

According to Case-Shiller representatives, the housing market is “in better shape than it was this time last year”, but some of the summer’s momentum has been lost. 15 of 20 tracked markets declined in value between November and December 2009.

Meanwhile, it’s interesting to note the 5 markets that didn’t decline — Detroit, Los Angeles, Las Vegas, Phoenix and San Diego.  Each of these metro regions were among the hardest hit nationwide when home prices first broke.  Now, they’re leading the pack in price recovery.

For some real estate investors, that’s a positive signal.  But we also have to consider the Case-Shiller Index’s flaws because they’re big ones.

As examples:

  1. Case-Shiller data is reported on a 2-month lag
  2. The Case-Shiller sample set includes just 20 U.S. cities
  3. There’s no “national real estate market” — real estate is local

That said, the Case-Shiller Index is still important. As the most widely-used private sector housing index, Case-Shiller helps to identify broader housing trends and many people believe housing is a key element in the economic recovery.

If the markets that led the housing decline will lead the housing resurgence, December’s data shows that full recovery is right around the corner.

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Housing Construction Permits up In January 2010: Why?

February 19, 2010 By Leave a Comment

National Housing Starts 2010Sometimes, headlines for housing can be misleading and this week gave us a terrific example. Last week we say news about housing starts being up. But what is the real story about this story?

On Wednesday, Feb 17 2020, the Commerce Department released its Housing Starts data for January 2010. The data showed starts at a 6-month high.

A “Housing Start” is a privately-owned home on which construction has started.

Headlines on the Housing Starts story included:

  • U.S. Housing Starts Hit 6-Month High (Reuters)
  • U.S. Economy Receives Home Building Boost (Shepparton)
  • Housing Starts Post Sharp Rebound (ABC)

Based to the headlines, the housing market looks poised for rapid growth through the Spring Market.

The real story, though, is that although Housing Starts increased by close to 3 percent last month, the growth is mostly attributed to buildings with 5 or more units.  This includes apartments and condominiums — a sector of the housing market that’s notoriously volatile.

If we isolate Housing Starts for single-family homes only, we see that starts grew by just 7,000 units last month and have failed to break a range since June 2009.  January’s tally is slightly below the 8-month average.

Perhaps more interesting than the Housing Starts, though, is the Commerce Department’s accompanying data for Housing Permits. After a 5-month plateau that ended in November, Housing Permits posted multi-year highs for the second straight month.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

One reason permits are up is that home builders want to capitalize on the federal homebuyer tax credit’s dwindling time frame.  Sales are expected to spike in March and April and more homes will come online to deal with that demand.  Home buyers in Mesa should shop carefully, but with an eye on the clock.

As the tax credit’s April 30, 2010 deadline approaches, competition for homes may be fierce.

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Mesa, Scottsdale, Phoenix Rank 36 in Best Commute According To Forbes Magazine

February 17, 2010 By Leave a Comment

The Best and Worst Work Commutes 2010Well it is official – Mesa, Scottsdale, and Phoenix ranked in 36th place as having the best commute for commuters according to a recent Forbes Magazine article.

It gets even better for Mesa and our commute time as we have only an average commute time of 44 minutes whereas according to the Census Bureau, 2.8 million people commute to work 90 minutes or more each day, in each direction.

Now, your daily commute may not be as long, but time spent in cars, trains and buses is time away from work and from family. Drive-time can affect a person’s Quality of Life and it’s one reason why Forbes Magazine’s Best and Worst Commutes is worth reviewing.

Measuring travel time, road congestion and travel delays in the 60 largest metropolitan areas, Forbes ranks city commutes from best-to-worst with Salt Lake City topping the list and Tampa-St. Petersburg finishing it.

The Top 5 Commutes, as compiled by Forbes:

  1. Salt Lake City, Utah
  2. Buffalo-Niagara Falls, New York
  3. Rochester, New York
  4. Milwaukee-Waukesha-West Allis, Wisconsin
  5. Albany-Schenectady-Troy, New York…36. Phoenix-Mesa-Scottsdale AZ

The bottom 5 are Tampa-St. Petersburg, Detroit, Atlanta, Orlando, and Dallas-Forth Worth.

Long commutes shouldn’t deter you from moving to a particular city, but the potential commute should be consideration. Before making an offer on your next home, make a rush-hour commute to work from your potential new neighborhood.  Then imagine doing it every day.

You can read the complete Forbes list of Best and Worst Cities for Commuters on its website.

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How Rising Consumer Sentiment Is Linked To Higher Home Prices

February 12, 2010 By Leave a Comment

University of Michigan Consumer Sentiment Aug 2008-Jan 2010Consumer Sentiment has been on the rise since last February (Feb 09) and it’s something to which Mesa home buyers should pay attention.

The affordability of your next home may hinge on consumer confidence.

As the economy recovers from a near-the-brink recession, many of the elements of a full recovery are in place.  Business investment is returning, household spending is expanding, and financial systems are gaining strength.

Consumer confidence is at a 2-year high.

What’s missing from the recovery, though, is jobs growth.  Another net 20,000 jobs were lost in January. Data like that hinders economic growth.

That said, twenty-thousand jobs lost is a much better figure than the several hundred thousand that were shed per month throughout early-2009, but it’s still a net negative number.  Not only does household income drop when Americans lose jobs but so does the average American’s confidence in his or her own economic future.

This is one reason why jobs growth is so closely watched by Wall Street — jobs are linked to higher confidence levels which, in turn, is believed to spur consumer spending.

Consumer spending represents 70% of the U.S. economy.

As confidence rises, it could be good news for the economy, but bad news for home buyers. More spending expands the economy and, all things equal, that leads mortgage rates higher.

Same for home prices. More confidence means more buyers which, in turn, squeezes the supply-and-demand curve in favor of sellers.

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Arizona Foreclosures: Severity Of The Foreclosure Crisis Depends On Where You Live

February 11, 2010 By Leave a Comment

Foreclosures concentrate on 4 statesForeclosures stories dominate the national housing news. This is especially true for the Phoenix news stations that I have been watching for the past several years.

It seems at least one foreclosure-related story makes its way to the front page or the nightly news just about every week day.

But for as much as the foreclosure filing statistics can be astounding — over 300,000 homes were served last month alone — the prevalence of foreclosures depends on where you live.

As reported by RealtyTrac, just 4 states accounted for more than half of the country’s foreclosure-related activity last month.

  • California : 22.7 percent of all activity
  • Florida : 14.9 percent of all activity
  • Arizona : 6.7 percent of all activity
  • Illinois : 5.7 percent of all activity

The other 46 states (and Washington D.C.) claimed the remaining 49.9%.

However, just because foreclosures are concentrated geographically, that doesn’t make them less important to homebuyers in Gilbert and around the country.  There’s been more than 1.4 million foreclosure filings in the last 12 months and that’s a figure that can’t be ignored.

Distressed properties now play a role in one-third of all home resales.

Therefore, if you’re in the market for a foreclosed home, here’s a few things to keep in mind.

  1. Properties are usually sold “as-is” and may not be up to living standards. Be sure to physically inspect the home before buying it.
  2. Buying a home from a bank is rarely as streamlined as buying from an individual homeowner. Be prepared for delays and long closings.
  3. Foreclosures aren’t always listed for sale publicly. Ask your real estate agent how to access the complete foreclosure inventory.

In order to use the $8000 federal home buyer tax credit, you must be under contract for a home by April 30, 2010 and closed by June 30, 2010.  That doesn’t leave much time to find a bank-owned home and make it to closing.  If you’re serious about buying foreclosures, it’s probably best to start your search soon.

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Mortgage Approvals Are Getting More And More Scarce

February 9, 2010 By Leave a Comment

Federal Reserve Quarterly Lending Survey 2007-2009

The economy’s improving but lending standards are not. Nationally, banks are making mortgage approvals harder to come by.

Underwriting guidelines are tightening.

The data comes from the Federal Reserve’s quarterly survey to its member banks.  The Fed asks senior bank loan officers around the country to report on “prime” residential mortgage guidelines over the most recent 3 months and whether they’ve tightened.

For the period October-December 2009:

  • Roughly 1 in 4 banks said guidelines tightened
  • Roughly 3 in 4 banks said guidelines were “basically unchanged”

Just 2 of 53 banks said its guidelines had loosened.

Combine the Fed’s survey with recent underwriting updates from the FHA and generally tougher standards for conventional loans and it’s clear that lenders are much more cautious about their loans than they were, say, in 2007.

Today’s Tempe home buyers and would-be refinancers face a bevy of new borrowing hurdles including:

  • Higher minimum FICO scores
  • Larger downpayment requirements for purchases
  • Larger equity positions for refinances
  • Lower debt-to-income ratios

So, if you’re on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later.  It doesn’t necessarily matter that mortgage rates are low, or that there’s an up-to-$8,000 home purchase tax credit for households that qualify.  With each passing quarter, fewer and fewer applicants are eligible to take advantage.

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Walking Trails and Bike Paths Desired Over Golf Courses?

February 7, 2010 By Leave a Comment

If the ideal fantasy of a dream retirement home is a high class contemporary overlooking the championship golf course in the desert, you better be ready for some mighty small barbecues: with regards to retirement living, golf courses are out.

The seniors of today are considering bike paths and walking trails as the ultra-modern greens and fairways. Blame it all on the economic climate. The recession has taken its toll not just on retirement savings but also on the traditional concept of a retirement home.

Downsizing is really a trend that’s taking hold among just about all home buyers, but it really is really apparent among the 55-plus crowd that includes the older seniors. And that downsizing includes housing aspirations in retirement. While “warmer climate” was the reigning factor in choosing where to retire in the first boomer survey Del Webb conducted in 1996, today “cost of living” is the most important consideration on where to locate. Although Florida, Arizona and California remain Top 10 retirement destinations, the trend is giving other states a chance to draw even more retirees.

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Pending Home Sales Suggest Stronger Spring Market – Don’t Be Fooled

February 3, 2010 By Leave a Comment

Pending Home Sales (June 2008-Dec 2009)The Pending Home Sales Index rose slightly in December, climbing 1 percent from November. While this may seem like good news for all concerned, what’s waiting behind the spring market is surely some type of decline if things do not change.

Expected to change are the conditions with which are helping home buyers buy home now.

  • FHA home loans are still allowing 6% seller concessions – as it currently stands, this will cease after April 2010 where only 3% seller concessions will be allowed.
  • The $8000 home buyer tax credit for first time home buyers or the $6500 repeat buyer tax credit will be ending as of April 30, 2010. You can guarantee yourself this tax credit if you qualify if you have a home under contract by the end of April as long as you close by the end of June 30, 2010.
  • The Fed’s are threatening to cease buying mortgage backed securities which will likely drive home mortgage interest rates up. Some predictions are that rates will be above 6% by the end of the year.

What are all of these items pointing to: if you are sitting on the fence about whether to buy or not, and you are qualified to buy – you may want to contact me to get your home search underway. You don’t want to get caught with deteriorating buying conditions when you want to start your home buying process if you don’t have to.

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Do You Want $6500 In Tax Credit For Buying A New Home?

February 1, 2010 By Leave a Comment

Not only is it a great buyer’s market for real estate, it is also a great time to sell your home and buy a new one. Everyday, the news seems to indicate that this is one of the best real estate markets for first time home buyers with affordable home prices, lower mortgage interest rates, and the federal home buyer tax credit.

Lost in all of this news is the fact that the same federal regulation that introduced in the $8000 first time buyer tax credit also authorized a $6500 home buyer tax credit for current homeowners who meet certain qualifications.

If you happen to be a current homeowner who has lived at your residence for 5 consecutive years out of the last 8 you may qualify to get a $6,500 tax credit just as one incentive to purchase a new home.

Qualifications of the Repeat Home Buyer $6500 Tax Credit

Tax Credit Eligibility Includes:

  • You must have a signed sales contract by April 30, 2010 and close on your home by June 30, 2010,
  • being subject to income limits, $125,000 for single buyers and $225,000 for couples, and
  • the sale price of the home being purchased cannot exceed $800,000.

The good news is that, you won’t have to sell your current residence to be eligible for the $6,500 tax credit. However, if you do not choose to find yourself in trouble with two mortgage payments you should think of listing your property on the market as soon as possible while you look for a new home.

Contact me asap if you are considering this $6500 sales tax – time is running short. The sales cycle in your market may be longer than other areas and you do not have the luxury of time if you want to take advantage of this housing tax credit and lower mortgage interest rates.

Current sales cycle in Mesa – 91 days.

Filed Under: Mesa News
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