GREAT TIME TO BUY!!

Home Buyer Tax Credit Expires – Opportunity Doesn’t

Business Building by Margaret Kelly Print Article

RISMEDIA, July 27, 2010—The Home Buyer Tax Credit proved to be a valuable stimulus to the troubled U.S. housing industry. The only catch: those who qualified had to be under contract by April 30, 2010, and close by June 30 (editor’s note: at press time, the federal government had extended this closing deadline to September).

In the months leading up to the contract deadline, existing home sales increased steadily and, according to NAR data released in May, they jumped 7.6% from March to April, showing a 22.8% increase from April 2009 figures.

Now, with both tax credit deadlines past, real estate professionals can help maintain the recent momentum by keeping buyers motivated. Truth is, the tax credit was one of many incentives to enter the market in the past two years—and several of those advantages still exist for qualified buyers. Remind your customers that it’s still a great time to buy. Here are some key points to highlight for them:

Low Home Prices
Although there is widespread agreement in the industry that the housing market has reached the bottom, home prices aren’t expected to spike upward. Instead, they’re likely to skip along the bottom into 2011. They will continue to decline in some markets and creep up in others. As long as buyers remain diligent in the home search over the coming months, possible pricing fluctuations won’t have a dramatic effect on their property options.

Low Interest Rates
Interest rates on 30-year, fixed-rate mortgages hit a five-month low of 4.93% in May, and as of early June the rates were holding steady below 5%. Financial concerns over the growing debt crisis in Europe have stemmed discussions in the U.S. of raising rates. The historically low rates will save home buyers thousands and thousands of dollars over the life of a loan, which arguably is reason enough to enter the market.

Other Tax Benefits
The U.S. Home Buyer Tax Credit was temporary, but there are other tax benefits that buyers can continue to count on for the foreseeable future. Property taxes, mortgage interest payments and mortgage insurance premiums are qualified deductions that can help reduce many homeowners’ tax liability. For eco-conscious homeowners, purchasing energy-efficient appliances and making other green upgrades can mean a tax credit up to $1,500. For more information, be sure to visit www.irs.gov or consult a tax professional.

Encourage your buyer clients to focus on today’s favorable home buying conditions, instead of looking back with regret. It’s worth sitting down with them to recap the benefits of buying over renting. Tax credit or no tax credit, homeownership is part of the America dream—and it’s alive and well.

When everyone is selling. . . buy!

I was reading an article this morning by cnn money writer Les Christie, and it talked about now being the best time to buy a home in the past four years. For those of you who read my blog “2008, Last Chance for deals,” you know I feel the same way.

For years we saw double digit home equity increases in home values and so everyone kept buying. Now we’re suddenly seeing home prices stay stagnant, so everyone wants to sell or to keep on renting for awhile until prices stabilize. But that doesn’t follow market economics. Markets are one of our few chances to be contrarians. If everyone is doing something, you should probably do the opposite!

In this case, if you can afford to buy, now’s the time. Lending requirements have gotten stricter, so I would absolutely recommend talking with a lender first to find out what you qualify for, and more importantly, what you’re comfortable with.

The interest rates are low and the sellers are motivated. Check out the article. It names Louisiana as one of the top undervalued markets in 2008:

http://promo.realestate.yahoo.com/housing:-best-time-to-buy-in-four-years.html

Bywater and Marigny sales prices

I’ve been hearing a lot of projections about how well or poorly the housing market did in the Bywater and Marigny neighborhoods of New Orleans, so I decided to take a look at the numbers. I compared the last half of 2006 (July 1 – December 31) with the last half of 2007 in terms of single family home sales.

In Bywater *
second half of 2006
Homes Listed 37
Homes Sold 20
Days on market 84
Avg. $/sf $125
Avg. Home size 1300

Second half of 2007
Homes Listed 24
Homes Sold 16
Average days on Market 130
Avg. $/sf $130
Avgt. Home size 1500

In Marigny
Second half of 2006
Homes Listed 50
Homes Sold 15
Days on market 98
Avg. $/sf $163
Avg. Home size 1900

Second half of 2007
Homes Listed 36
Homes Sold 15
Days on Market142
Avg. $/sf $156
Avg. Home size 1992

As you can see, in Bywater less homes were listed in the second half of 2007 and less homes sold taking a much longer time to sell, almost twice as long, as in 2007. However, the average price per square foot did go up from the second half of 2006 to the second half of 2007.

That’s a positive sign that even though the market is moving much more slowly than anyone would like, it is still holding its price overall in Bywater. Each home needs to be looked at individually, however. For example, homes that need a little bit of repair must be priced very well to convince buyers to take on the headache of a renovation in this market.

In Marigny in the second half of 2007, less homes were listed, less were sold, they spent more
time on the market and had a lower average price per square foot. However, it’s not all bad news, the lower amount of homes put on the market means supply is starting to regulate itself to demand.

What about all those homes that were listed and not sold? For Marigny in the second half of 2006, for example, 50 single family homes were listed and only 15 sold. What happened to the other 45? In many cases, if sellers could not get the price they wanted in the time they wanted, they often stayed put, or they rented out their homes. There were a very large number of homes that were expired or withdrawn.

What does this mean for sellers? If you want to sell your home quickly and not in the average time of almost five months, you need to pay strict attention to price and make your home look its best. We’re no longer in the market where you can have strange pet smells, pealing paint or messy yards and expect to get top dollar. Helen and I can show you what you need to do to get your home ready.

For buyers? Be reasonable, but make offers! Helen and I can show you what a good offer would be for the home you’re interested in.

* For Bywater, I’m just looking at the prices on the riverside of St. Claude. The Bywater historic district encompases more homes than that, but the houses on the riverside are more similar lending themselves to better comparison. In a later blog I’ll try to pull the numbers for all the Bywater Historic District, which has very varied boundary lines!