The average interest on a 30-year mortgage fell to a 38-year low of 4.85 percent during the week ending March 27 from 4.98 percent the prior week, Freddie Mac reported.
The decrease came on the heels of the Federal Reserve's announcement that it plans to purchase another $750 billion in mortgage-backed securities and up to $300 million in Treasuries. President Obama says refinancing is now possible for 40 percent of mortgages and encourages home owners to reap the benefits of the record-low rates.
Click Here For Current Interest Rates!
Friday, March 27, 2009
Survey: Households Say Now Good Time to Buy
More than three-quarters (78 percent) of potential first-time home buyers say that now is a good time to buy a home, despite widespread concern about the economy.
Out of the 1,000 prospective U.S. first-time home buyers surveyed in early March for the CENTURY 21 First-Time Home Buyer Survey, 68 percent think now is a better time to buy than six months ago.
Prices are the driving motivation for potential first-time home buyers with more than eight of ten first-time home buyers (85 percent) saying they consider current home prices affordable and 73 percent citing that taking advantage of current prices is a major factor in their decision to buy.
Interestingly, potential first-time buyers are still split between “being willing to consider an offer now” (42 percent) and “waiting for prices to go down before they seriously consider making a purchase” (48 percent).
“Current pricing, rates and incentives, such as the First Time Homebuyer Tax Credit, provide tremendous opportunities for first-time home buyers to get into the market,” said Tom Kunz, Century 21 Real Estate president and CEO.
“Our research shows that while consumers still have concerns about the future of the economy, many are actively considering their options as we move into the spring selling season.”
Among the survey’s other key findings:
Bargains in the marketplace are providing additional options for buyers to consider.
56 percent of potential first-time home buyers are considering purchasing a foreclosed or short sale home, and 63 percent are open to purchasing either a “fixer-upper” or “as-is” home.
When asked to rate the features that they look for when choosing a home, price is the primary consideration with 87 percent saying this feature is “very important,” followed closely by neighborhood safety (80 percent) and the condition of the home (71 percent).
Having enough money for a down payment is a top concern of potential first-time home buyers as nearly half (46 percent) said they are “very worried” about the issue.
Most respondents (86 percent) are in the market for single family homes.
Stay Informed! Subscribe!
Free No-Obligation Consultations Available Anytime!
Call, Text or E-mail us at:
Tony Wilson (317)354-7410 tonywilson@callcarpenter.com
Valerie Wilson (317)441-3921 vwilson@callcarpenter.com
or visit www.WilsonRealtors.Net
Thinking about selling and not sure if the time is right?
Visit www.WilsonWorksForYou.com to see what we can do for you!
Out of the 1,000 prospective U.S. first-time home buyers surveyed in early March for the CENTURY 21 First-Time Home Buyer Survey, 68 percent think now is a better time to buy than six months ago.
Prices are the driving motivation for potential first-time home buyers with more than eight of ten first-time home buyers (85 percent) saying they consider current home prices affordable and 73 percent citing that taking advantage of current prices is a major factor in their decision to buy.
Interestingly, potential first-time buyers are still split between “being willing to consider an offer now” (42 percent) and “waiting for prices to go down before they seriously consider making a purchase” (48 percent).
“Current pricing, rates and incentives, such as the First Time Homebuyer Tax Credit, provide tremendous opportunities for first-time home buyers to get into the market,” said Tom Kunz, Century 21 Real Estate president and CEO.
“Our research shows that while consumers still have concerns about the future of the economy, many are actively considering their options as we move into the spring selling season.”
Among the survey’s other key findings:
Bargains in the marketplace are providing additional options for buyers to consider.
56 percent of potential first-time home buyers are considering purchasing a foreclosed or short sale home, and 63 percent are open to purchasing either a “fixer-upper” or “as-is” home.
When asked to rate the features that they look for when choosing a home, price is the primary consideration with 87 percent saying this feature is “very important,” followed closely by neighborhood safety (80 percent) and the condition of the home (71 percent).
Having enough money for a down payment is a top concern of potential first-time home buyers as nearly half (46 percent) said they are “very worried” about the issue.
Most respondents (86 percent) are in the market for single family homes.
Stay Informed! Subscribe!
Free No-Obligation Consultations Available Anytime!
Call, Text or E-mail us at:
Tony Wilson (317)354-7410 tonywilson@callcarpenter.com
Valerie Wilson (317)441-3921 vwilson@callcarpenter.com
or visit www.WilsonRealtors.Net
Thinking about selling and not sure if the time is right?
Visit www.WilsonWorksForYou.com to see what we can do for you!
Monday, March 9, 2009
Outside buyers drawn to Detroit's foreclosed homes
DETROIT – Welcome to Landlord Nation, where foreclosure notices are plentiful and for-sale signs offer at least 1,800 homes for under $10,000 that once were worth at least 10 times more.
In extreme cases, homes are on sale for $1 or less, which has enticed investors to Detroit from as far away as the United Kingdom and Australia.
"In the past few months, I've picked up 10 new clients from out of state that are buying in bulk," said Mike Shannon, a suburban Detroit real estate agent. His office specializes in foreclosures in a city that's among the national leaders.
"They're coming to us, saying `Look, I want to buy 50, 100, 1,000.' They want to own every decent and cheap house they can find."
Despite a stagnant retail housing market, real estate sales of foreclosed homes are booming. Shannon regularly fields calls from eager prospects, and recently sold 30 homes in one day to one buyer. A trio of U.K. investors has bought a half-dozen and plans many more.
"I thought it would be quite good fun to have a look," said Darren Veness, who lives near Brighton, England.
Outside buyers are the latest in a long line of landlords taking over the deteriorating housing stock of a city that because of its once mighty auto industry boasted one of the highest owner-occupied housing rates in the U.S. And unlike many large cities, Detroit's single-family homes dominate its landscape, not high-rise apartment buildings.
The outside investors aren't only interested in Detroit, but it's been targeted because of the sheer volume of homes and the fact that values have fallen so much more than elsewhere.
Detroit now has the lowest ownership rate for single-family detached homes of the 20 largest cities in the country, according to data analyzed by longtime Detroit demographer Kurt Metzger.
Even the sale of U.S. Housing and Urban Development homes has been impacted by the poor housing climate in Detroit. The average sales prices of such homes plunged from $46,702 in 2003 to $8,692 last year. Through the first month of 2009, average sales were $6,035.
Still, not all of Detroit's real estate market has bottomed out. Listings include a seven-bedroom, 11,580 square-foot Tudor in Detroit's historic Indian Village neighborhood for $849,900, and a $765,000 penthouse condo in the city's Albert Kahn Building.
What's the effect on a city whose population has plummeted to half its size since the 1950s with no sign of return? The winners might be the renters lucky enough to live in a home that's been fixed up by a legitimate landlord. The losers might be those who end up in less reputable hands.
The stakes could go either way for the landlords arriving in a market that may not have found its bottom. Same for the dwindling number of neighbors who still own their homes — they could benefit from having the vacant home fixed up and occupied but likely will find theirs will fetch a fraction of what they paid or owe.
Novella Willis, a longtime resident of Cruse Street, soon will have her mortgage paid off but she is among those caught in the changing market.
"None of these houses are selling. None of them," she said. "If you go down to the next block you'll see a lot of foreclosures all around here."
The once-stable neighborhood of well-tended brick homes on Detroit's northwest side has some with brick paver driveways and front walks, trimmed bushes and new windows. But foreclosures are creating what Shannon calls "an investors' dream." These are not the infamous $1 homes, but well-built structures falling on hard times that are available for under $10,000.
Willis, a 70-year-old retired court worker, says renters have hurt the neighborhood.
"A couple of houses across the street, they are in-and-out renters," she said. "They don't stay long, maybe three or four months. The renters rarely cut the grass, rarely do the snow. You don't see the owners until people leave the house."
But out-of-town investors have rescued two homes from abandonment.
Anthony Pierson and Henry Suell of Oakland and Wayne counties bought their home for $8,500. It's one of several they bought through HUD, and they expect to rent it within a month after they perform mainly cosmetic repairs.
Pierson, of West Bloomfield Township and Suell, of Harper Woods said the goal is to cover taxes and maintenance through the rent and maybe make some money if property values turn around.
"We just want to invest into it and bring the neighborhood back," Suell said.
Next door, the road to rehabilitation hasn't been as smooth. Days before a tenant was to move in, someone set fire to the home and caused significant interior damage.
"To be fair, with all the publicity and all the scare-mongering that goes with Detroit, we were expecting it to happen a lot sooner," said Veness, whose SVC LLC has so far rented three of the six homes they own.
Veness said he sent 10 e-mails to Detroit-area real estate agents after learning about the city's real estate bargains. He promptly heard back from Shannon, whose firm invited him to Detroit for a tour. Veness came for three days, and he and his colleagues bought their first two homes.
Veness said they have considered other U.S. cities, but so far Detroit is it. For them, it's simple: The homes are cheap and plentiful.
"Do the math, you can buy and rehab a home for $20,000, then rent for $900 a month," he said. "Three to four months of the year, rent is going to pay the taxes."
Rentals typically range from about $800 to $1,000, and many are subsidized by the government.
He rejects the label "absentee landlord," — or at least the image it conveys. He uses local construction and property management companies, and returned last month to take care of business and shop for new properties.
He also takes a long-term view on investing. Besides raising its stake in Detroit, his group plans to buy, fix and sell groups of homes to other U.K. investors.
"We just want to build our portfolio as big as we can," Veness said. "I know Detroit has been in a mess ... and I think now is the time. The next 10 years, it's going to change.
"If my investment still pays for itself, why am I going to leave it?"
City officials say they know numerous outside investors are buying homes because those who want to rent them must contact the Building Safety and Engineering Department. But exact numbers are hard to come by.
"For every call we get, I would guess there are five or six people we never know are out there," Detroit Planning Director Douglass Diggs said.
Diggs said city officials are trying to bring some stability to neighborhoods.
"We try to make sure that the people who are coming in and making an investment in the properties are going to keep them up. We don't want another crisis down the road where we have inferior housing stock."
Still, the tight credit market makes it difficult for many people to secure mortgages.
"We are pushing that individuals do rent-to-own and lease-to-own so people are moving toward home ownership roles," Diggs said.
One out-of-state investor is attempting to do just that. Newport Beach, Calif.-based Michael Alexander has bought more than 150 homes in Detroit and has hired a local property manager to work with renters to eventually purchase some of the homes.
The recent rush offers some experts hope for a housing market with no better options left. Property values drop when homes are rented, but in many cases the alternative is an empty house.
"At times, it's the only way to get the homes occupied," said John Mogk, a Wayne State law school professor.
Detroit began seeing more homes being rented in the mid-1960s as many white homeowners bought homes in the suburbs but kept their property in the city. It accelerated following the 1967 riot, when even more of the city's white residents moved out.
A HUD program affecting more than a quarter of the homes in Detroit allowed purchases with no down payment to borrowers with reduced credit standards.
"At that time Detroit was beginning to lose jobs and unemployment was building up," Mogk said. "Homes began to be abandoned, and then foreclosed on and taken over by HUD and sold en masse to investors.
Metzger said he's skeptical based on the city's history but hopes new efforts succeed where others have failed.
"If indeed these investors are going to ... strengthen the housing stock and really make sure the repairs the homes are stabilized, I think it's a great thing," he said. "We need housing stability, however that comes."
In extreme cases, homes are on sale for $1 or less, which has enticed investors to Detroit from as far away as the United Kingdom and Australia.
"In the past few months, I've picked up 10 new clients from out of state that are buying in bulk," said Mike Shannon, a suburban Detroit real estate agent. His office specializes in foreclosures in a city that's among the national leaders.
"They're coming to us, saying `Look, I want to buy 50, 100, 1,000.' They want to own every decent and cheap house they can find."
Despite a stagnant retail housing market, real estate sales of foreclosed homes are booming. Shannon regularly fields calls from eager prospects, and recently sold 30 homes in one day to one buyer. A trio of U.K. investors has bought a half-dozen and plans many more.
"I thought it would be quite good fun to have a look," said Darren Veness, who lives near Brighton, England.
Outside buyers are the latest in a long line of landlords taking over the deteriorating housing stock of a city that because of its once mighty auto industry boasted one of the highest owner-occupied housing rates in the U.S. And unlike many large cities, Detroit's single-family homes dominate its landscape, not high-rise apartment buildings.
The outside investors aren't only interested in Detroit, but it's been targeted because of the sheer volume of homes and the fact that values have fallen so much more than elsewhere.
Detroit now has the lowest ownership rate for single-family detached homes of the 20 largest cities in the country, according to data analyzed by longtime Detroit demographer Kurt Metzger.
Even the sale of U.S. Housing and Urban Development homes has been impacted by the poor housing climate in Detroit. The average sales prices of such homes plunged from $46,702 in 2003 to $8,692 last year. Through the first month of 2009, average sales were $6,035.
Still, not all of Detroit's real estate market has bottomed out. Listings include a seven-bedroom, 11,580 square-foot Tudor in Detroit's historic Indian Village neighborhood for $849,900, and a $765,000 penthouse condo in the city's Albert Kahn Building.
What's the effect on a city whose population has plummeted to half its size since the 1950s with no sign of return? The winners might be the renters lucky enough to live in a home that's been fixed up by a legitimate landlord. The losers might be those who end up in less reputable hands.
The stakes could go either way for the landlords arriving in a market that may not have found its bottom. Same for the dwindling number of neighbors who still own their homes — they could benefit from having the vacant home fixed up and occupied but likely will find theirs will fetch a fraction of what they paid or owe.
Novella Willis, a longtime resident of Cruse Street, soon will have her mortgage paid off but she is among those caught in the changing market.
"None of these houses are selling. None of them," she said. "If you go down to the next block you'll see a lot of foreclosures all around here."
The once-stable neighborhood of well-tended brick homes on Detroit's northwest side has some with brick paver driveways and front walks, trimmed bushes and new windows. But foreclosures are creating what Shannon calls "an investors' dream." These are not the infamous $1 homes, but well-built structures falling on hard times that are available for under $10,000.
Willis, a 70-year-old retired court worker, says renters have hurt the neighborhood.
"A couple of houses across the street, they are in-and-out renters," she said. "They don't stay long, maybe three or four months. The renters rarely cut the grass, rarely do the snow. You don't see the owners until people leave the house."
But out-of-town investors have rescued two homes from abandonment.
Anthony Pierson and Henry Suell of Oakland and Wayne counties bought their home for $8,500. It's one of several they bought through HUD, and they expect to rent it within a month after they perform mainly cosmetic repairs.
Pierson, of West Bloomfield Township and Suell, of Harper Woods said the goal is to cover taxes and maintenance through the rent and maybe make some money if property values turn around.
"We just want to invest into it and bring the neighborhood back," Suell said.
Next door, the road to rehabilitation hasn't been as smooth. Days before a tenant was to move in, someone set fire to the home and caused significant interior damage.
"To be fair, with all the publicity and all the scare-mongering that goes with Detroit, we were expecting it to happen a lot sooner," said Veness, whose SVC LLC has so far rented three of the six homes they own.
Veness said he sent 10 e-mails to Detroit-area real estate agents after learning about the city's real estate bargains. He promptly heard back from Shannon, whose firm invited him to Detroit for a tour. Veness came for three days, and he and his colleagues bought their first two homes.
Veness said they have considered other U.S. cities, but so far Detroit is it. For them, it's simple: The homes are cheap and plentiful.
"Do the math, you can buy and rehab a home for $20,000, then rent for $900 a month," he said. "Three to four months of the year, rent is going to pay the taxes."
Rentals typically range from about $800 to $1,000, and many are subsidized by the government.
He rejects the label "absentee landlord," — or at least the image it conveys. He uses local construction and property management companies, and returned last month to take care of business and shop for new properties.
He also takes a long-term view on investing. Besides raising its stake in Detroit, his group plans to buy, fix and sell groups of homes to other U.K. investors.
"We just want to build our portfolio as big as we can," Veness said. "I know Detroit has been in a mess ... and I think now is the time. The next 10 years, it's going to change.
"If my investment still pays for itself, why am I going to leave it?"
City officials say they know numerous outside investors are buying homes because those who want to rent them must contact the Building Safety and Engineering Department. But exact numbers are hard to come by.
"For every call we get, I would guess there are five or six people we never know are out there," Detroit Planning Director Douglass Diggs said.
Diggs said city officials are trying to bring some stability to neighborhoods.
"We try to make sure that the people who are coming in and making an investment in the properties are going to keep them up. We don't want another crisis down the road where we have inferior housing stock."
Still, the tight credit market makes it difficult for many people to secure mortgages.
"We are pushing that individuals do rent-to-own and lease-to-own so people are moving toward home ownership roles," Diggs said.
One out-of-state investor is attempting to do just that. Newport Beach, Calif.-based Michael Alexander has bought more than 150 homes in Detroit and has hired a local property manager to work with renters to eventually purchase some of the homes.
The recent rush offers some experts hope for a housing market with no better options left. Property values drop when homes are rented, but in many cases the alternative is an empty house.
"At times, it's the only way to get the homes occupied," said John Mogk, a Wayne State law school professor.
Detroit began seeing more homes being rented in the mid-1960s as many white homeowners bought homes in the suburbs but kept their property in the city. It accelerated following the 1967 riot, when even more of the city's white residents moved out.
A HUD program affecting more than a quarter of the homes in Detroit allowed purchases with no down payment to borrowers with reduced credit standards.
"At that time Detroit was beginning to lose jobs and unemployment was building up," Mogk said. "Homes began to be abandoned, and then foreclosed on and taken over by HUD and sold en masse to investors.
Metzger said he's skeptical based on the city's history but hopes new efforts succeed where others have failed.
"If indeed these investors are going to ... strengthen the housing stock and really make sure the repairs the homes are stabilized, I think it's a great thing," he said. "We need housing stability, however that comes."
Sunday, March 8, 2009
Reasons to Buy a Home This Year
People are afraid to buy a home in times like these, with the economy tanking and home prices continuing to fall. But if you're brave enough to stray from the herd, you might be in for the home-buying opportunity of a lifetime.
Ask for price reductions, improvements, closing costs—whatever—and the seller, desperately trying to get a contract, is very likely to work with you, said Jay Papasan, one of the authors of the book "Your First Home." When the market starts improving, your negotiating power starts to diminish, he added.
"People can get a lot of what they need and almost all of what they want today," Papasan said. "Once a few people get off the fence, there's safety in numbers and you lose your leverage."
If you're qualified to buy a home now, the purchase makes sense for your situation and you're prepared to live in that home for at least five years, there are reasons why you may be headed for a great deal:
1. Affordability is better than ever.
According to the NATIONAL ASSOCIATION OF REALTORS® (NAR) housing affordability index, homes were more affordable in December than at any other point since the group started the index in 1970. The affordability index is a measure of the relationship between home prices, mortgage interest rates and family income.
John and Julie Chilman, for example, recently have been able to stretch their dollars in the Las Vegas area. The listing price for the five-bedroom home they're buying was $265,000; they offered $250,000.
"Our real estate agent was like 'Yeah, pipe dream. Like they're going to take that,'" John Chilman said. "And all they did was counter $255,000 ... and they're paying all closing costs." The home had lingered on the market, and was listed for $310,000 just six months ago, he said.
In Las Vegas, prices have fallen 50.7 percent from their peak and are now where they were in the second quarter of 2002, according to data from Clear Capital, a real estate valuation and data provider for banks and investment firms.
A report from Moody's Economy.com, released this month, predicted that house prices will stabilize by the end of this year, even though the Case-Shiller house price index will fall another 11 percent from the fourth quarter of 2008. By the end of the real estate downturn, prices will have fallen by double digits, from peak to trough, in almost 62 percent of the nation's 381 metro areas, according to the report. In 10 percent of the areas, declines will be more than 30 percent.
Not all markets have experienced huge drops, however, so it's wise to take a look at how far prices have fallen in your area. The Office of Federal Housing Enterprise Oversight's Web site has a house price calculator that can help at www.ofheo.gov/HPI.aspx.
2. You have a large inventory to choose from.
In many places it is taking months to sell a home, creating loads of inventory—from new homes to existing homes to foreclosures. There was a 12.9-month supply of inventory in December given that month's sales pace, according to NAR.
A large selection gives buyers more choices and drives down prices. And home sellers have gotten the picture.
It's fair to say that home sellers have become "increasingly desperate," Papasan said. "People who have had for-sale signs in the yard for six months are starting to become in tune with the reality of the situation," he said. Buyers can take advantage.
But if you put off a purchase until inventory shrinks substantially, you might not get as good a price, said Eddie Fadel, author of the book "Don't Rent, Buy!" And be forewarned: It's nearly impossible to time the exact bottom of the housing market and even if you do there's no guarantee you'll make a killing.
"You buy for quality of life ... don't buy on speculation," said Duane Andrews, CEO of Clear Capital. "I wouldn't buy a home expecting the housing market to rebound quickly in the next 10 years," he said, adding that he expects moderate gains in values when the turnaround does happen.
Historically, real estate appreciates about 5 percent a year over the long term, said Nancy Flint-Budde, a Salem, N.Y.-based certified financial planner. But as the country crawls out of a recession, many markets probably won't see huge home-price gains any time soon.
3. Builders are offering big discounts.
Homebuilders are getting even more aggressive with their pricing.
In fact, Fadel recommends looking at completed new homes first because builders are offering such steep discounts. Plus, you'd have a warranty not only on the home itself, but also on the home's appliances, he said.
"(Builders) want to save their credit, save their brand, save their reputation and clear out inventory," he said. "They can go buy cheap land today with that cash."
His advice: Walk in with a preapproval for a mortgage, make an offer, then walk away without making a deal if you have to. Chances are, a builder will call back and reconsider that offer rather than let a potential buyer get away.
4. Mortgage rates are historically low.
It's not just the price of the home that will affect affordability; mortgage terms will also affect your monthly payments. These days, rates are very attractive for conforming loans, those that can be purchased by mortgage agencies Fannie Mae and Freddie Mac. (The current limit is $417,000, although that can rise as high as $625,500 in high-cost markets.)
Earlier this year, rates on the popular 30-year fixed-rate mortgage hit a level not seen in decades, and rates have stayed relatively near that low for weeks. For the week of Feb. 5, the 30-year fixed-rate mortgage averaged 5.25 percent, according to Freddie Mac's weekly mortgage survey.
But low rates don't mean lenders are handing out mortgages easily. You'll need good credit, a substantial down payment and a willingness to document your income in order to qualify for those great rates, if you can qualify at all.
5. You can get a federal tax credit.
There's currently a federal credit of up to $7,500 for home buyers who haven't owned a home in at least three years. That extra cash will come in handy: The average first-time home buyer spends about $6,000 in the first six months of owning a home, said Flint-Budde.
Ask for price reductions, improvements, closing costs—whatever—and the seller, desperately trying to get a contract, is very likely to work with you, said Jay Papasan, one of the authors of the book "Your First Home." When the market starts improving, your negotiating power starts to diminish, he added.
"People can get a lot of what they need and almost all of what they want today," Papasan said. "Once a few people get off the fence, there's safety in numbers and you lose your leverage."
If you're qualified to buy a home now, the purchase makes sense for your situation and you're prepared to live in that home for at least five years, there are reasons why you may be headed for a great deal:
1. Affordability is better than ever.
According to the NATIONAL ASSOCIATION OF REALTORS® (NAR) housing affordability index, homes were more affordable in December than at any other point since the group started the index in 1970. The affordability index is a measure of the relationship between home prices, mortgage interest rates and family income.
John and Julie Chilman, for example, recently have been able to stretch their dollars in the Las Vegas area. The listing price for the five-bedroom home they're buying was $265,000; they offered $250,000.
"Our real estate agent was like 'Yeah, pipe dream. Like they're going to take that,'" John Chilman said. "And all they did was counter $255,000 ... and they're paying all closing costs." The home had lingered on the market, and was listed for $310,000 just six months ago, he said.
In Las Vegas, prices have fallen 50.7 percent from their peak and are now where they were in the second quarter of 2002, according to data from Clear Capital, a real estate valuation and data provider for banks and investment firms.
A report from Moody's Economy.com, released this month, predicted that house prices will stabilize by the end of this year, even though the Case-Shiller house price index will fall another 11 percent from the fourth quarter of 2008. By the end of the real estate downturn, prices will have fallen by double digits, from peak to trough, in almost 62 percent of the nation's 381 metro areas, according to the report. In 10 percent of the areas, declines will be more than 30 percent.
Not all markets have experienced huge drops, however, so it's wise to take a look at how far prices have fallen in your area. The Office of Federal Housing Enterprise Oversight's Web site has a house price calculator that can help at www.ofheo.gov/HPI.aspx.
2. You have a large inventory to choose from.
In many places it is taking months to sell a home, creating loads of inventory—from new homes to existing homes to foreclosures. There was a 12.9-month supply of inventory in December given that month's sales pace, according to NAR.
A large selection gives buyers more choices and drives down prices. And home sellers have gotten the picture.
It's fair to say that home sellers have become "increasingly desperate," Papasan said. "People who have had for-sale signs in the yard for six months are starting to become in tune with the reality of the situation," he said. Buyers can take advantage.
But if you put off a purchase until inventory shrinks substantially, you might not get as good a price, said Eddie Fadel, author of the book "Don't Rent, Buy!" And be forewarned: It's nearly impossible to time the exact bottom of the housing market and even if you do there's no guarantee you'll make a killing.
"You buy for quality of life ... don't buy on speculation," said Duane Andrews, CEO of Clear Capital. "I wouldn't buy a home expecting the housing market to rebound quickly in the next 10 years," he said, adding that he expects moderate gains in values when the turnaround does happen.
Historically, real estate appreciates about 5 percent a year over the long term, said Nancy Flint-Budde, a Salem, N.Y.-based certified financial planner. But as the country crawls out of a recession, many markets probably won't see huge home-price gains any time soon.
3. Builders are offering big discounts.
Homebuilders are getting even more aggressive with their pricing.
In fact, Fadel recommends looking at completed new homes first because builders are offering such steep discounts. Plus, you'd have a warranty not only on the home itself, but also on the home's appliances, he said.
"(Builders) want to save their credit, save their brand, save their reputation and clear out inventory," he said. "They can go buy cheap land today with that cash."
His advice: Walk in with a preapproval for a mortgage, make an offer, then walk away without making a deal if you have to. Chances are, a builder will call back and reconsider that offer rather than let a potential buyer get away.
4. Mortgage rates are historically low.
It's not just the price of the home that will affect affordability; mortgage terms will also affect your monthly payments. These days, rates are very attractive for conforming loans, those that can be purchased by mortgage agencies Fannie Mae and Freddie Mac. (The current limit is $417,000, although that can rise as high as $625,500 in high-cost markets.)
Earlier this year, rates on the popular 30-year fixed-rate mortgage hit a level not seen in decades, and rates have stayed relatively near that low for weeks. For the week of Feb. 5, the 30-year fixed-rate mortgage averaged 5.25 percent, according to Freddie Mac's weekly mortgage survey.
But low rates don't mean lenders are handing out mortgages easily. You'll need good credit, a substantial down payment and a willingness to document your income in order to qualify for those great rates, if you can qualify at all.
5. You can get a federal tax credit.
There's currently a federal credit of up to $7,500 for home buyers who haven't owned a home in at least three years. That extra cash will come in handy: The average first-time home buyer spends about $6,000 in the first six months of owning a home, said Flint-Budde.
10 Easy Ways to Boost Property Value
Homeowners play an important part not only in how their home is perceived by prospective buyers, but also its actual appraised value. To help sellers better maximize their profit potential, Robert Jenson, CEO of The Jenson Group at RE/MAX CENTRAL, offers 10 tips for readily increasing a home’s worth:
1. Paint the exterior - A fresh coat of paint can give even a relatively new home a much needed facelift, and can often be done for as low as a few thousand dollars. Select a neutral tone that is consistent with other residences in the neighborhood. Also be sure to pay close attention to eaves, gutters and drains that may also need painting.
2. Complete all needed repairs - To maximize a home’s worth, it should be in good condition both inside and out. Don’t wait until there is an offer on the home. Hire an inspector now, and fix any and all problems, such as roof deficiencies, leaky plumbing and electrical concerns.
3. Purchase a home warranty - Establish peace of mind that comes with knowing a home and its contents are adequately covered in the event of a loss. A transferrable home warranty protection plan can provide added security to the home owner - and buyer - in this regard.
4. Furnish the home to sell - Appeal to the buyer’s emotion. Furnishing a home can go a long ways to getting your home sold, actually increasing the odds of it selling. Give buyers the option to procure the property with or without furnishings, and have a pre-established sale price set for either scenario.
5. Upgrade front yard landscaping - Curb appeal plays a big role more so than people realize. Potential buyers driving the neighborhood may never call on the For Sale sign, if your home doesn’t look appealing from the outside. As well, buyers waiting for their Realtor to show up will often spend a good amount of time critiquing the landscaping while waiting. In addition to purposeful foliage, add landscape lighting and a weather and soil moisture-based landscape irrigation scheduling device to boost value even more.
6. Create a quick kitchen makeover - Kitchens are one of the number one room in the home where you’ll get the most bang for your remodeling buck. Countertops and appliances are the quickest fix, as are faucets, fixtures, door knobs and other easily changed items that can have a large impact on the space.
7. Think spa, not bathroom - The master bath is an important a factor in a home’s worth. Think spa, or private sanctuary, where the master bath is concerned. A space meant to be relaxing, rejuvenating and more. Give buyers something to be excited about with upgraded faucets, fixtures, lighting, cabinetry, mirrors and the like. Then dress it up with plants, candles and other inexpensive, high impact décor.
8. Install soft and hard window treatments - There’s nothing more boring than a plain window. Take advantage of this easy opportunity to give the home’s interior design more impact, while also increasing the home’s actual worth. In addition to “hard” treatments such as blinds and shutters that offer privacy, also add soft treatments hung from decorative fixtures, which can alter the appeal of a room entirely. Look to a professional to ensure the best outcome.
9. Replace carpet rather than just cleaning - Rather than simply steam cleaning old, used carpet, replace it with fresh, neutral-toned carpet with an upgraded pad for an extra luxurious feel. Spending the extra money on new carpet will really make your home stand out from the crowd, in sight, feel and even smell.
10. Don’t overlook your closets - The better organized a closet, the larger it appears and the better it reflects on a home overall. Now is the time to box up those unwanted clothes and shoes and donate them to charity. Then, invest in a closet organization system - either by a professional or self-installed - which will positively impact an appraisal.
Tuesday, March 3, 2009
Stimulus Package Tax Credit
I wanted to give you some more info on the Tax Credit. The info is from the IRS 5405 form (attached below).
So now we have more info on what qualifies & what some differences are between the 2008 Credit Versus the 2009 Credit.
Here are some facts about the 09 Credit (references from IRS 5405 form):
1. First Time Homeowner is still 3 years. It also states if you are MARRIED THAT YOU & YOUR SPOUSE cannot own a home in the past 3 years!!!!!
2. Must live in it.
3. $75,000 individual/$150,000 married income limits for full $8000. Can get partial credit if income is sub $95,000 individual/$170,000 married.
4. Bond Loans are able to get credit now ($7500 did not allow it)
5. Nonresident Alien will not receive credit.
6. Acquired home by gift or inheritance does not qualify
7. Acquired home from a related person does not qualify.
Related person is defined as:
a. spouse, parents, grand parents, children, & grandchildren.
b. own 50% or more of outstanding stock w/ another person.
c. have a partnership business in which you directly or indirectly own 50% of capital interestor profit interests.
8. Credit is $8000 if closed post 1/1/09. Credit is $4000 if married but file separately. Credit max is 10% of purchase price up to $8000. See IRS rules on Modified Adjusted Gross Income.
9. No repayment if:
a. live in home 36 months
b. also please refer to specific info on page 2 of IRS form (Homes purchase in 2009 section) on other situations on no repayment
10. Exceptions to repayment rule (pre 36 mo's):
a. if you sale home to someone you are not related to, the penalty is will be the gain on the sale up to $8000.
b. if home is destroyed, condemned, etc. & you get another home w/in 2 years no repayment.
c. in a divorce, the spouse who receives the home will be responsible for the repayment.
d. if you die repayment is not required. if you have a spouse they will have to repay half of their credit.
11. Form requires date you acquired the home. So must have property prior to getting credit. 12. You can close in 2009 & modify 2008 taxes so you get $$ in 2008.
Again, please note we are NOT a Tax Advisor. Above we itemized some bullet points. So any questions on the Tax Credit Info above HAS to be referred to a licensed CPA or IRS. I am sure more questions/answers will arise from the IRS . As we hear them, we will forward that info as it's received.
Below I have also cut & pasted a article from the IRS on the 2009 Tax Credit.
Expanded Tax Break Available for 2009 First-Time Homeowners
IR-2009-14, Feb. 25, 2009
WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.
“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”
The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.
This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.
For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.
The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.
IR-2009-14, Feb. 25, 2009
WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.
“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”
The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.
This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.
For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.
The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.
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