Great news came across the newswire today about the First-Time home buyers tax credit. It looks like Senators have agreed in principle to extend the credit although it still has to be inserted into a bill & voted on by the house. Headlines across the nation are slightly confusing on whether or not this will go through, but many feel that it will surely pass.
Here is what USA Today had to say about today’s announcements:
“Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.
The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.”
Based on today’s compromise it looks like the income limit would also be raised to $125,000 a year for individuals and $225,000 for married couples, up from the current income limits of $75,000 and $150,000, respectively. This means that more people will be in a position to capitalize on this incentive, which hopefully will fuel more home sales.
Many sophisticated real estate investors are excited about this potential extension because they are able to work with people facing foreclosure to create a win-win-win scenario where they can help purchase their home without them getting a foreclosure attached to their credit. Investors can then fix up the home and sell it at a discount to first time home buyers who can leverage this extended tax credit. Everybody wins and neighborhoods are being improved at the same time.
Question:
Are you glad that Senate leaders compromised to extend this tax-credit or do you think that it will hurt new and existing home sales? I would love to hear your feedback in the comments below!
Friday, October 30, 2009
Thursday, October 29, 2009
Homebuyer Tax Credit Could Be Extended
The first-time homebuyer tax credit has been such a popular program that lawmakers are considering extending it past the November 30 deadline.
Under the credit, new homebuyers can qualify for an $8,000 tax credit. As of now there are two options on the table: one, House proposal would extend the credit through the end of March, then lower and phase it out through the end of 2010; or two, a more generous option in the Senate would extend the credit through June 30, 2010 and open it to all buyers, rather than just first-timers.
The Senate is reportedly close to a deal and could vote on the extension as early as this week.
Under the credit, new homebuyers can qualify for an $8,000 tax credit. As of now there are two options on the table: one, House proposal would extend the credit through the end of March, then lower and phase it out through the end of 2010; or two, a more generous option in the Senate would extend the credit through June 30, 2010 and open it to all buyers, rather than just first-timers.
The Senate is reportedly close to a deal and could vote on the extension as early as this week.
Tuesday, October 27, 2009
Austin Real Estate - 3rd Quarter Report
The Austin real estate market tightened slightly during the 3rd quarter of 2009. Inventory for Austin as a whole is balanced – with a level of 5.7 months of supply. This is down from 6.3 months of supply at the end of the 2nd Quarter. However, throughout the Austin area, there are local variations in the market.
Sellers Markets: 1 – 3 months of supply
There are 9 local areas with less than 4 months of inventory. These are all located in the close-in suburban part of Austin. Median home prices range from $100,000 to $400,000. Homes in these neighborhoods are mostly limited to re-sales. Builders have generally moved further out to find lots for new construction. There is strong demand for these close-in areas. Mortgages are readily available. And, the first time homebuyer tax credit has drawn buyers into the market. Strong demand has kept inventory at low levels.
Balanced Markets: 4 – 6 months of supply
There are 17 local areas with balanced markets. The balanced markets are distributed throughout central core areas; close-in suburban areas; and some outer-suburban areas. Median prices in these neighborhoods range from $100,000 to $400,000, with a couple of areas up to $600,000. There is some new construction in these areas – which increases inventory. Readily available conforming mortgages; first time homebuyer tax credit; and low interest rates have improved the demand side, and kept these areas balanced.
Buyers Markets: 7 + months of supply
There are 20 local areas with over 7 months of inventory. Median home prices in these areas vary from $100,000 to over $1 million. Generally, these neighborhoods have more new home construction available – which increases supply. Upper end homes continue to have higher inventory than the lower and mid level part of the market.
Upper End Market:
Areas with many homes over $800,000 include Central and Northwest Austin, Westlake, Barton Creek, and Lake Travis. These neighborhoods have been popular locations for speculative building or remodeling.
Although most builders have slowed or stopped speculative building in the high end, this level of inventory has been slow to contract. This is because mortgage money is not as readily available for buyers of high end homes. Jumbo mortgages (over $417,000) require 20% down payment; excellent credit and income; and a higher interest rate. Many buyers in this market have been unable to sell their previous home in another state, and this has slowed the demand for high end homes here.
Foreclosures:
On average, foreclosures are 3.1% of listings on the market – not a significant part of our market. (1st Quarter was 3.7%; 2nd Quarter was 3.6%) However, some sections of Austin have more foreclosures than this. These include the Manor, Elgin, Bastrop and some Southeast areas. Here you may see foreclosures at 8% to 12% of listings. These areas were popular with first time homebuyers, and were also targeted by investors during the boom market. The good news is that these neighborhoods do not have very high inventory levels. This indicates that their foreclosures are being absorbed quickly and inventory is not building up.
Conclusion:
In Austin we are not faced with serious depreciation, as a result of prices that were pushed to unsustainable levels. We are not faced with a serious foreclosure problem, generating its own downward spiral. And, we are not faced with widespread job loss.
Joel Kotkin, whose research appears on Forbes, ranks Austin as the best big city for jobs. He writes, “Few places have received more accolades in recent years than Austin, the city that ranked first on our list of the best big cities for jobs.
Builder Magazine placed Austin second on their list of the “healthiest housing market for 2009.” Their study says: “While other markets lost employment, Austin added 17,400 jobs last year – a 2.3% growth rate. It helps that Austin is home to both a major university and the state capital. Existing homes cost a little bit more in Austin than other Texas markets, roughly $188,600, but that’s still below the national average. Also, Austin is one of the few metro areas in the country where median prices actually rose in 2008 — 2.7%. Amazingly, Austin now generates more home building activity than Chicago, which has six times more people.”
For buyers in all price ranges it is a great time to come into the market. Interest rates below 5% are the best in a lifetime, and they certainly will not remain this low. This is not the time to be waiting around for a better deal. It is the time to start shopping for a great place to live in Austin!
Sellers Markets: 1 – 3 months of supply
There are 9 local areas with less than 4 months of inventory. These are all located in the close-in suburban part of Austin. Median home prices range from $100,000 to $400,000. Homes in these neighborhoods are mostly limited to re-sales. Builders have generally moved further out to find lots for new construction. There is strong demand for these close-in areas. Mortgages are readily available. And, the first time homebuyer tax credit has drawn buyers into the market. Strong demand has kept inventory at low levels.
Balanced Markets: 4 – 6 months of supply
There are 17 local areas with balanced markets. The balanced markets are distributed throughout central core areas; close-in suburban areas; and some outer-suburban areas. Median prices in these neighborhoods range from $100,000 to $400,000, with a couple of areas up to $600,000. There is some new construction in these areas – which increases inventory. Readily available conforming mortgages; first time homebuyer tax credit; and low interest rates have improved the demand side, and kept these areas balanced.
Buyers Markets: 7 + months of supply
There are 20 local areas with over 7 months of inventory. Median home prices in these areas vary from $100,000 to over $1 million. Generally, these neighborhoods have more new home construction available – which increases supply. Upper end homes continue to have higher inventory than the lower and mid level part of the market.
Upper End Market:
Areas with many homes over $800,000 include Central and Northwest Austin, Westlake, Barton Creek, and Lake Travis. These neighborhoods have been popular locations for speculative building or remodeling.
Although most builders have slowed or stopped speculative building in the high end, this level of inventory has been slow to contract. This is because mortgage money is not as readily available for buyers of high end homes. Jumbo mortgages (over $417,000) require 20% down payment; excellent credit and income; and a higher interest rate. Many buyers in this market have been unable to sell their previous home in another state, and this has slowed the demand for high end homes here.
Foreclosures:
On average, foreclosures are 3.1% of listings on the market – not a significant part of our market. (1st Quarter was 3.7%; 2nd Quarter was 3.6%) However, some sections of Austin have more foreclosures than this. These include the Manor, Elgin, Bastrop and some Southeast areas. Here you may see foreclosures at 8% to 12% of listings. These areas were popular with first time homebuyers, and were also targeted by investors during the boom market. The good news is that these neighborhoods do not have very high inventory levels. This indicates that their foreclosures are being absorbed quickly and inventory is not building up.
Conclusion:
In Austin we are not faced with serious depreciation, as a result of prices that were pushed to unsustainable levels. We are not faced with a serious foreclosure problem, generating its own downward spiral. And, we are not faced with widespread job loss.
Joel Kotkin, whose research appears on Forbes, ranks Austin as the best big city for jobs. He writes, “Few places have received more accolades in recent years than Austin, the city that ranked first on our list of the best big cities for jobs.
Builder Magazine placed Austin second on their list of the “healthiest housing market for 2009.” Their study says: “While other markets lost employment, Austin added 17,400 jobs last year – a 2.3% growth rate. It helps that Austin is home to both a major university and the state capital. Existing homes cost a little bit more in Austin than other Texas markets, roughly $188,600, but that’s still below the national average. Also, Austin is one of the few metro areas in the country where median prices actually rose in 2008 — 2.7%. Amazingly, Austin now generates more home building activity than Chicago, which has six times more people.”
For buyers in all price ranges it is a great time to come into the market. Interest rates below 5% are the best in a lifetime, and they certainly will not remain this low. This is not the time to be waiting around for a better deal. It is the time to start shopping for a great place to live in Austin!
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