foreclosure crisis. "As [foreclosures] are put up for sale, we may see some further dampening in home prices," he said.
Builders, expects home prices to remain stable for some time. "We're in for a period of wandering around zero [price gains]," he said, "with some months up and some down but with the general trend slightly upward." Home builders have regained some of their confidence lately with new home sales and permits both posting big gains. "Starter home builders in the central part of the country are most confident," said Crowe. "They're least optimistic in the bubble states like California, Nevada, Arizona and Florida, and the auto industry areas."
An upturn in the confidence level of both buyers and sellers was ushered in by federal stimulus programs, according to Yun, especially the homebuyer's tax credit and the Federal Reserve's move to purchase mortgage-backed securities. That made it easier to obtain financing. "The stimulus program stopped the bleeding," he said. "What we now have to see is whether consumers view price stabilization as permanent."
First-time buyers A hot market segment.
Historically low interest rates. Attractive home prices. Impressive inventory. And now an $8,000 tax credit for first-time buyers that can be used as a downpayment on a home. Whats not to love about this unique scenario for first-time homebuyers in Florida? Its no wonder this demographic is growing monthly. Lets look closer at why the first-time buyer market is so strong:-
1. $8,000 tax credit. Its hard to say No to free money, and thats basically what the federal government is offering with very few strings attached. Better yet, the money can be used as a downpayment, thanks to FARs efforts to pass legislation in Tallahassee in April.
2. Other government incentives. The 2009 American Recovery and Reinvestment Act opens doors to affordable homeownership to people who had not been able to qualify for loans or hand over large downpayments.
3. Interest rates. Hovering around 5 percent, this means monthly payments are less than even last year for the same home.
4. A buyers market inventory. Nothing needs to be explained here. Everyone wants options and choices when making the most expensive purchase of a lifetime.
5. Price. Floridas median sales price for existing homes in March 2009 was $141,300 - $60k down from $201,700 the year before. Do the math.
6. Look whos buying. In March 2009, first-time buyers accounted for more than half of all home sales nationally, with activity concentrated in lower price ranges, according to NAR.
7. Spending power. Many younger buyers have high starting salaries out of college. Talk about Bright Scholars!
8. Lifestyles. Many adults in their 20s are marrying, starting families and ready to purchase a home.
9. No contingent sales. First-time buyers dont have to sell a current residence in order to complete the transaction.
Given low home prices, plentiful supply, and affordable interest rates, its been an optimal time for entry-level buyers with a long-term view, says Lawrence Yun, chief economist for the National Association of Realtorsฎ (NAR).
An NAR practitioner survey in March showed first-time buyers accounted for 53% of transactions.
NAR President Charles McMillan says first-time buyers are crucial at this stage of a housing recovery. The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down, according to their needs, he says.
Another recent study, the CENTURY 21 Homebuyer Survey, shows that Generation Y buyers (born between 1979-1994) are purchasing first homes at a younger age than their Generation X (born between 1965-1978) and baby boomer (born between 1946-1964), counterparts.
Research also indicates that Generation Y consumers want to live close to where they work and socialize but also be near friends and family. Most prefer living in the city or at least in close proximity.
If potential homebuyers have never owned property, they typically welcome professional assistance during the purchase process. When working with younger buyers, the most important thing is to educate them, says Lynn Savits, a 25-year sales associate with Coldwell Bankers Aventura office. They need to understand the housing market, the process of getting a mortgage and all the steps in the transaction and they want you to be there the whole way.
WASHINGTON Congress extends higher mortgage loan limits On Thursday, October 29, 2009 the U.S. Congress passed a congressional resolution to extend the current higher Fannie Mae, Freddie Mac and FHA loan limits through 2010. The present, higher loan limits expire at the end of 2009 and revert to previous lower limits. The move still needs to be signed by President Obama, which is expected shortly. The National Association of Realtorsฎ (NAR) thanked Congress for speedy action. NAR commends both houses of Congress for their quick action in continuing these higher limits during a time for recovery in the housing market and national economy, says NAR President Charles McMillan. The higher limits, along with the homebuyer tax credit extension, are necessary to keep the markets moving at this critical time. Home sales have shown significant movement upwards in the past six months, and reduced inventory in some segments of the housing market, but not in all. Home purchases in the middle-income and higher brackets have not moved much, and those markets must improve before we can experience a fully sustained housing recovery. These higher loan limits will help motivate qualified homebuyers to purchase in those markets, McMillan said. The resolution would extend the present loan limits for FHA, Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000.
WASHINGTON Nov. 5, 2009 Tax credit extension passes House and Senate The $8,000, first-time homebuyer tax credit has not yet been extended beyond its Nov. 30 end date, but its very close to gaining a longer life. The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obamas signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow. Until the president signs the bill, however, it is not law. In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past eight years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000. After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program a downpayment and closing costs assistance program relating to the federal tax credit automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund. For more information on the Florida Homebuyer Opportunity Program, visit the Homebuyer Center on floridarealtors.org: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm Also check www.floridarealtors.org for updates as theyre released; and, after the tax credit extension becomes law, details on the new program.
WASHINGTON July 7, 2009 Mortgage info available at your fingertips Although the mortgage lending crisis put a serious squeeze in the housing market, the situation has also produced attractive low borrowing rates for prospective homebuyers who can qualify for a mortgage. Moreover, the federal government has offered an $8,000 tax credit for first-time homebuyers through Dec. 31, 2009. What should a person know about securing a home mortgage, and the different types of mortgages available? A spin on the information highway will turn up a bevy of answers. Several Web sites provide tips and information about qualifying for a mortgage. Here is a sampling of sites:-
Bankrate.com: www.bankrate.com/brm/green/mtg/mort1a.asp Good primer on different types of mortgage borrowing.
Federal Deposit Insurance Corp.: www.fdic.gov/consumers/looking/ Features guidelines and tips for securing a mortgage.
Home Loan Learning Center: www.homeloanlearningcenter.com/MortgageBasics.htm Discusses a range of borrowing topics, including qualifying for a mortgage and mortgage types.
Home Mortgage Calculator: www.home-mortgage-calculator.net/how-much-should-i-borrow.asp Provides insights on how much to borrow for a mortgage.
MortgageInfoCenter: www.mortgageinfocenter.com/tips/default.asp Offers dozens of mortgage borrowing tips over five pages.
WASHINGTON 2009 How does a first-time homebuyer take advantage of the $8,000 tax credit? It comes with a few rules. According to the most recent analysis, the following rules will apply though things could change as tax professionals weigh the details:-
The deduction is worth 10 percent of a homes value up to $8,000, which means all homes worth more than $80,000 could qualify for the maximum amount.
There is an income limit to qualify. A married couples modified adjusted gross income (MAGI) should be under $150,000 and single filers MAGI should be less than $75,000.
Partial tax credits may be available for married couples with MAGI incomes over $150,000 but under $170,000, and single filers with incomes over $75,000 but under $95,000.
If married couples file separately, they can both claim 5 percent of the home purchase ($4,000 each for a home over $80,000) on their tax returns.
Its a tax credit, not a deduction. That means the entire amount goes back to the first-time homebuyer unlike deductions, such as mortgage interest, that are subtracted from gross income before tax is calculated. If qualified for $8,000, the buyer gets $8,000, even if they would not owe that much in taxes otherwise.
The tax credit applies to homes purchased from Jan. 1, 2009, through Nov. 30, 2009.
The tax credit does not have to be paid back, providing the homebuyer keeps the property for at least 36 months and resides in the home.
To qualify as a first-time homebuyer, the purchaser cannot have owned a home within the previous three-year period. However, ownership of a vacation home or rental home does not disqualify the buyer.
If purchasing a new home, the effective date to receive the credit is the first day the homeowner actually lives in the house. If construction began in 2008, that buyer could still qualify. And if construction begins in 2009 but the owner does not take possession until 2010, the buyer would not qualify.
The tax credit can be claimed on 2008 income tax forms even though the purchase took place in 2009. A buyer could close on a home the same day that it was signed into law, fill out their income tax forms the next day, and receive the tax credit fairly quickly.
The tax credit is not a downpayment, but it could be used toward a downpayment if first-time homebuyers plan ahead. U.S. taxpayers have money withheld from every paycheck for income taxes. If they owe more tax than the amount deducted, they pay the IRS; if they owe less, they get a tax refund. By anticipating at least an $8,000 refund in early 2010 when they file 2009 taxes, these buyers could cut down on their tax withholding this year and save the money toward a downpayment.
First-time homebuyers: How to get the $8,000 tax credit Tax Credit - Every homebuyer has unique circumstances and specific questions. The National Association of Home Builders (NAHB) has launched a consumer Web site with detailed information and an extensive list of frequently-asked questions. To find out more about the $8,000 tax credit, go here
http://www.federalhousingtaxcredit.com/
When will prices bottom out? - NEW YORK Feb. 10, 2009 Housing prices will hit bottom in the fourth quarter of 2009, predicts Moodys Economy.com in a new report.
Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view, the report says.
On average, home prices will decline 36 percent from the peak in the first quarter of 2006, the report says.
By the end of the housing downturn, nearly 62 percent of the nations 381 metropolitan areas will have experienced double-digit-percent declines in house prices, peak-to-trough, says the report.
The declines will exceed 20 percent in about 100 metro areas, according to the report, and the recovery will be lackluster.
A number of uncertainties in both the housing and economic outlooks remain, and the risks tilt to the downside, says Moodys Economy.com Chief Economist, Mark Zandi.
Source: The Wall Street Journal, James R. Hagerty (02/06/2009)
10 Real Estate Predictions for 2009 NEW YORK 2009 is likely to be a year of continuing adjustment to a changing real estate market.
Prepare yourself and your business with these predictions from HGTVs FrontDoor.com web-site.
Sellers will continue to face falling home values in the new year because theyll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.
The Obama administration will act on its plan to crack down on abusive lending practices.
Mortgage holders in danger of losing their homes will receive more assistance from a variety of programs since the Senates Joint Economic Committee has predicted two million foreclosures in 2009.
Banks restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.
Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.
The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages and credit, enabling better decision-making going forward.
Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.
Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.
Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.
The recession will end and buyers will regain confidence in the market.
Source: FrontDoor.com
