Real Estate Information

Pending home sales rose rose 6.4 percent from July to August, to the highest level in more than two years, the National Association of Realtors said.

August marked the seventh straight month of increases in NAR's pending home sales index. But there has likely been some double counting in recent months because some buyers who were under contract but failed to close have signed new contracts to buy, said Lawrence Yun, NAR chief economist.

"The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales and issues regarding complex new appraisal rules," Yun said in a statement. "No doubt many first-time buyers are rushing to beat the deadline for the $8,000 (first-time homebuyers) tax credit, which expires at the end of next month."

NAR's Pending Home Sales Index rose 6.4 percent to 103.8, up from a reading of 97.6 in July. The index is up 12.4 percent from a year ago and at the highest level since a reading of 104.5 reading in March 2007.

A reading of 100 is equal to the average level of contract activity during 2001, the year the index was launched and the first of five consecutive record years for sales of previously owned homes.

At the regional level, pending home sales were up in all four areas of the country, in both monthly and annual comparisons.

The West saw the strongest growth, with pending home sales up 16 percent from July to August and 22.3 percent from a year ago, to an index reading of 130.5.

The index was up 8.2 percent in the Northeast, to 85.3, a 12 percent increase from a year ago.

In the Midwest, the index rose 3.1 percent to 90.8, up 7.6 percent from a year ago.

The South saw a 0.8 percent bump in pending home sales from July to August, to 104.6, up 8.2 percent from a year ago.

In a separate announcement, the U.S. Census Bureau said construction spending grew by 0.8 percent from July to August, to a seasonally adjusted annual rate of $941.9 billion -- an 11.6 percent decrease from a year ago.

Spending on private construction grew by 1.8 percent from July to August, to an annual rate of $622.1 billion, while public construction shrank by 1.1 percent to $319.8 billion. Looking back a year, however, spending on private construction was down 17.8 percent while public construction grew by 3.3 percent.

Residential construction was the main driver in the month-over-month increase in private construction, growing 4.7 percent from July to August to a seasonally adjusted annual rate of $249.5 billion, down 26.7 percent from a year ago

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

NEW YORK (CNNMoney.com) -- More than 1.4 million Americans have already claimed the new tax credit for first-time home buyers, according to a report from the Internal Revenue Service.

The credit, which applies to sales as of January 2009, is good for 10% of the price of a home, up to $8,000, and supporters assert it has helped stabilize the housing market. It's available to anyone who has not owned a home for three consecutive years prior to purchase, and to qualify for the full credit buyers must be purchasing a primary residence, and couples can earn no more than $150,000, while individuals must make less than $75,000.

The credit has been an important stimulus tool for two reasons. It's fully refundable, meaning that even if buyers owe no taxes whatsoever, they'll get an $8,000 check from the IRS. And this refund will put money in consumers' pockets for good, as opposed to the $7,500 first-time homebuyer tax credit that could be applied to sales made between April 2008 and July 1 2009. 

"Just like the Cash-for-Clunkers program, there could be a hangover effect," said Mike Larson, a real estate analyst for Weiss Research.

That's why housing industry participants are pushing Congress to keep the tax credit in place.

"We're calling for extending the credit until the end of next year and expanding it to all homebuyers," said NAR spokesman Walter Molony. "We do think that housing will recover without it but the market will come back faster and stronger with it."

Some 1.8 million people are expected to participate in the program by the time it lapses and the National Association of Realtors (NAR) estimates that it will result in an extra 350,000 sales. The NAHB more conservatively predicts 165,000 more home sales than would have occurred. The associations don't want that momentum to slow. The associations don't want that momentum to slow.

"If we don't extend and expand the program, the seeds of growth planted could [die]," said NAHB president Jerry Howard.

There are six bills before Congress that would extend the tax credit, two in the Senate and four in the House of Representatives.

On Wednesday night, Senator Ben Cardin, D-Md., along with Senators John Ensign R-Nev., Harry Reid, D-Nev., Johnny Isakson, R-Ga., and Debbie Stabenow, D-Mic., introduced a bill extending the tax credit program for six months.

Reid released a statement saying, "Yesterday we learned that new home sales have increased in Las Vegas, and that's good news. I hope this credit will build on that so more Nevadans can realize the American dream of home ownership."

Senator Isakson, a former real estate broker himself who has become a leading voice on housing market issues, had introduced his own bill several weeks ago. That would not only extend the credit for a year after it's renewed, it would allow all homebuyers, not just first-timers, to claim it, as long as the property is for a principle residence. The bill would also increase the tax refund to as much as $15,000.

The house bills all extend the deadline through at least the end of December 2009 and two of the bills, introduced by Howard Coble, R-NC and by Dan Burton, R-Ind., would have it run through 2010. They would also open it up to all homebuyers.

Sentiment backing efforts to extend the credit appears to be on the rise, according to Jaret Seiberg, an analyst with Concept Capital's Washington Research Group. He put the odds of an extension at 2 to 1. Isakson's version has already attracted 16 co-sponsors, according to his deputy chief of staff, Joan Kirchner.

But the NAHB's Howard, whose background includes extensive tax lobbying, said that he's seen "a couple of red flags lately," threatening to derail any of the bills.

For one thing, the White House has made it known that it is not supporting the extensions. That doesn't mean the administration is against it, it just means that it won't work towards passing any of the bills.

Another hurdle: The growing sentiment among fiscal conservatives that any extension must be paid for by finding savings in some other areas. There has already been $14 billion allocated to the program -- and any extension would surely cost billions more. Finding that money may be very difficult.

Howard contends that while extending the tax credit may be costly, generating home sales can fire up the entire economy.

When people buy homes, especially new homes, they put a lot of cash into circulation. They buy furniture and appliances, new rugs and drapes, do landscaping and painting.

"When I bought my first home, I begged borrowed and, since the statute of limitations is now over, I can admit I stole from my parents to furnish it," he said. "For our second home, my wife and I bought all new stuff." 

I’m often asked if this is a good time to buy a home.  Some clients are concerned that home prices may fall further than they have already.  They are assuming that the best course of action is to wait for the bottom in the market and then buy.  The problem with this approach is that you don’t know where the bottom is until you see it in the rear view mirror, meaning until you’ve missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability.  Even though interest rates have gone up in the last six months, they are still near historic lows.  Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life.  It’s important to live in a home that reflects your taste and values, yet is within your financial “comfort zone.”  To that end, it may be more important to lock in today’s relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today’s market.