Move up Buyer Tax Credit Expected to Boost Real Estates Middle Market

On November 6th, the Worker, Homeownership and Business Assistance Act of 2009 was extended to include an addditional 6 months for the First Time Home Buyer Tax credit of $8000, and a new $6500 tax credit for those that already own a home and wish to upgrade between now and April 30, 2010.   This news is expected to positively impact the housing market, with a specific focus on the group who would traditionally by moving to their next larger home to meet the demands of a growing family.

In concert with these incentives, it continues to be a great time to buy.  Inventory is in great supply and their is competition among sellers that want to move their homes to negotiate and get into a transaction.   The move up buyer tax credit is expected to provide a much needed boost specifically to the luxury home industry.   With prices down, and sellers becoming more realistic on the times in front of us, coupled with the tax credit and historically low interest rates, there has never been a better time to purchase a home in the previous decade.

Here are some highlights of the Move Up Buyer Tax Credit comment to the Act for quick reference

  • Credit is calculated as a 10% credit up to a maximum of $6500
  • The income limit to qualify is $125,000 for an individual and $225,000 for a married couple filing taxes jointly, using the Modified Adjusted Gross Income calculation.  There is some consideration above this income cap but there is a phaseout of $20K on both brackets.
  • The maximum purchase price of the home can not exceed $800,000
  • The closing for a qualified transaction does not have to occur until June 30, 2010 provided that their is a bonafide contract to purchase in place by April 30, 2010.  This should make it possible for new construction products to benefit from the stimulus.
  • A taxpayer can claim the credit on a previous years tax return by filing an ammended return.

For more information, please visit the following link for answers to Frequently Asked Questions:

http://www.federalhousingtaxcredit.com/faq2.php

Housing Slump May Worsen Next Year, Not Get Better

Source:  CNBC, By: Albert Bozzo

If you already took advantage of the government’s tax credit for first-time homebuyers—or are planning to do it anytime soon—you’ll probably agree with this prediction: Sales of existing homes will peak in the final quarter of 2009, then begin a year-long slide, which is likely to be a sharp one, according to some estimates.

“Most of it [the tax credit] is simply shifting sales from one period to another,” says Global Insight economist Patrick Newport. “It doesn’t get rid of the fundamental problem; there’s still a glut of houses.”

Newport, for instance, expects single-family home sales to hit an annual rate of 5.88 million units in the fourth quarter (vs. 5.30 in the third quarter). Thereafter, sales will fall to 5.65 million in the first quarter and average just 4.75 million in the second half of the year.

“We expect a little stall in 2010,” says David Crowe, chief economist at the National Association of Home Builders. “I agree, you do advance demand, so you steal it for the future.”

 

The builders’ group has a similar forecast, with sales peaking at 5.60 million units in the first quarter and bottoming at 4.50 million in the third quarter, for a 2010 average of 5.15 million. That’s marginally above the 2008 rate of 4.91 million.

The accuracy of those forecast depends—like many things about the economy these days—on the job market, whose recovery is looking a bit delayed, based on historical patterns.

Some proponents of the tax credit, as well its recent expansion to repeat buyers and extension from the end of November through that of April, assumed it would prompt some people to purchase sooner than they originally intended, but those purchases would later be replaced by another group of buyers who were no longer concerned about job security.

“The economy and the job market didn’t pick up as people expected in ‘09 and as a consequence that is rolling it in 2010,” says Crowe.

There’s even some doubt that the $6500 credit for repeat buyers will make much of a difference. The original credit did not have the expected trickle-down effect on new homes.

“I don’t know if the expansion is really going to get anyone else into the market, if you think about what the transaction costs,” says Andrew Jakobovics,  associate director for housing and economics at the Center for American Progress. “The people who are going to take advantage of it were going to move anyway.”

And by most analysis, that’s unlikely to be enough.

Most economists see the jobless rate—now 10.3 percent—peaking around 11 percent sometime in early to mid 2010 and then creeping down to around 10 percent by the end of the year.

That’s too high to make much of a dent in the current glut. Inventory levels are now at an 8-9-month supply–Down from the 10-11-month levels of early 2009, but still above the 6-7-month goal.

“At the end of 2010, you’re still going to have that glut,” says Newport.

Another casualty of the job market is household creation, which has meant a steady stream of buyers in the past, helping keep inventories at a healthy level.

 In 2008, for the first time in years, household creation fell—and sharply, too. At the same time, the number of young adults living at home and average marriage ages increased. More recently, there has been a flattening.

 “A lot of the new households will be renters or stay renters,” says Jakabovics.

Given such headwinds, you might think it difficult to find optimists on housing, but they are loud and strong.

“I believe there is this pent up demand,” says the group’s chief economist Lawrence Yun. “It is just a question of bringing buyers into the market and absorbing the inventory.”

The NAR admits shifting demand has been a minor factor, but says fundamentals are improving, such that 2010 will bring the first increase in homes price in years.

“One thing that has been a drag will no longer be in place–that buyers expect prices to decline,” says Yun. “Inventory will be brought down to a level consistent with home values growing modestly.”NAR expects house prices to rise 4 percent in 2010 with sales hitting 5.7 million units, slightly above the 2007 rate. About 15 percent of sales will be the result of the tax credit, which requires a contract by the end of April and closing by the end of June. (By contrast Fannie Mae  [FNM  1.04    0.04  (+4%)   ] is predicting sales of around 5 million and a price decline of just under 2-percent.)

The NAR forecasts may be difficult to hit given that home foreclosures and mortgage delinquencies are at or near record highs Richard Smith, CEO of the national real estate company Realogy, is not as optimistic about price appreciation, but he does see something of “a perfect scenario” for the market.

Smith, whose company’s brands include Coldwell Banker and Century 21, says any change in employment, even sentiment, will help sales in general, while a snapback in new household creation will mean the traditional supply of new buyers.

Historically low interest rates—which may creep up a full percent over the next 14 months—will still be low enough to keep home affordability high.

“There have been times in the past three or four years you could be very cynical about housing,” says Smith. “This is not one of them.“

http://www.cnbc.com/id/34018204

Mortgages Decline to Lowest Rates in Five Weeks

Source:  Wall Street Journal – Amy Hoak

Home-mortgage rates fell this week, with long-term mortgage rates hitting their lowest levels in five weeks, Freddie Mac reported Thursday.

The 30-year fixed-rate mortgage has been below 5% for five of the last seven weeks, according to Freddie Mac’s weekly survey of conforming mortgage rates. The mortgage averaged 4.91% for the week ending Nov. 12, down from last week’s 4.98% average. It averaged 6.14% a year ago.

Fifteen-year fixed-rate mortgages averaged 4.36% this week, down from last week’s 4.40% average. The mortgage averaged 5.81% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.29% this week, down from 4.35% last week and 5.98% a year ago. And 1-year Treasury-indexed ARMs averaged 4.46%, down from 4.47% last week and 5.33% a year ago.

To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 0.7 point, while the 15-year fixed-rate mortgage, the 5-year ARM and the 1-year ARM required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

“Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance,” said Frank Nothaft, Freddie Mac chief economist, in a news release. “This comes at a time when house-price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up.”

Also on Thursday, the Mortgage Bankers Association reported that the volume of mortgage applications filed to purchase homes for the week ending Nov. 6 hit their lowest level in nearly nine years.

The volume of mortgage applications filed to purchase homes last week hit the lowest level in nearly nine years, the Mortgage Bankers Association reported Thursday.

Applications for loans to buy homes fell a seasonally adjusted 11.7% in the week ended Nov. 6 from with the previous week–bringing volumes to their lowest since December 2000. The Washington-based MBA’s weekly survey covers more than half of all applications filed for U.S. retail residential mortgages.

http://online.wsj.com/article/SB125808220215546649.html

First Regional Auction for Select Sotheby’s International Realty

Select Sotheby’s International Realty, in conjunction with Concierge Auctions, launches our first regional real estate auction for distinctive properties.   This service will be conducted throughout upstate NY going forward, and is expected to produce at least one, if not two buying opportunities per quarter for properties valued at $1 million or more.

On December 5th, the first auction will be held for 34 Pulver Road on beautiful Lake George.  This auction represents the most compelling buying opportunity in todays market for those looking for a lakefront home in the Southern Basin.  Expected bid range is between $1M – $1.7M.   This event will help shape the future of lake front sales transactions in the Adirondack Park.

Please visit www.lakegeorgeauction.com for more information about the property and the process.

First Time Home Buyer Tax Credit Extended

Today, the U.S. House of Representatives voted by an overwhelming 403-12 margin to approve the Unemployment Compensation Extension Act (H.R. 3548) that included, as an amendment, the extension and expansion of the Homebuyer Tax Credit. The bill already passed in the U.S. Senate yesterday, so now it will advance from Congress to the White House for President Obama’s signature. The Administration already has signaled its support of the Homebuyer Tax Credit amendment as well as the President’s intention to sign the bill into law.

– From Mike Good, CEO Sotheby’s International Realty Affiliates