Real Estate News

Building wealth.  Buying low/ selling high.  Equity income.  Tax deductions.   Positive cash flow.  Interest deduction.  Let’s even throw appreciation in there because, well, we will see it again.  I have posted on here numerous times about the benefits of buying rental or investment property.  These deals are real, affordable, and available now.  The deals I speak of: buying a duplex and renting out one side.  Purchasing a townhome that cash flows with little maintenance.  Snatching up a single family home, that with a little TLC that turns into a nice income producer.  Buying property close to college for your children and others to rent while attending. These deals are real and happening and you don’t have to be Trump to get in on it.  I would decline to self promote if it weren’t true, easy and if I weren’t helping people do it.  Disclosure on the self promotion, I’m not creating the environment or the potential, it’s there.  It’s the buyers that are smiling and making agreat deal, I am just having fun counseling, coaching, and helping them achieve it.

A substantial majority of both home owners and current renters agree that owning a home is a smart decision over the long term. That’s according to the results of a National Association of Realtors® survey of 3,793 adults conducted online by Harris Interactive.

The American Attitudes About Homeownership survey found that in today’s challenging economy, 95 percent of owners and 72 percent of renters believe that over a period of several years, it makes more sense to own a home. In addition, an overwhelming majority of home owners are happy with their decision to own a home – 93 percent of owners surveyed would buy again.

“Home owners and renters agree that home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy,” said National Association of Realtors® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “The results of this survey illustrate just how important issues related to home ownership are to people in this country.”

The survey uncovered some differences between home owners and renters, as well. While more than half of owners are “very” or “extremely” satisfied with the overall quality of their family life, only one-third of renters report the same levels of satisfaction. Similarly, 43 percent of home owners are very/extremely satisfied with their community life, compared with 30 percent of renters.

A majority of renters – 63 percent – said that it was at least somewhat likely that they would purchase a home at some point in the future. Among this group, young adults (18-29 years old) have the strongest aspirations for home ownership; only 8 percent of young adults said that it was “not at all likely” that they would purchase a home at some point in the future.

In today’s market, many aspiring home owners are faced with worries about job security and creditworthiness. Among renters who are very or extremely likely to buy a home in the future, three out of five consider confidence in job security and creditworthiness to be an obstacle.

One point of agreement between renters and home owners was support of the mortgage interest deduction (MID). Seventy-four percent of owners and 62 percent of renters say it’s “extremely” or “very” important that the MID remain in place.

“At a time when the middle class is under increasing economic pressures, both home owners and renters agree that the mortgage interest deduction should not be targeted for change,” said Phipps. “Given strong public support of and aspirations toward owning a home, we need to keep policies in place that support and encourage responsible, sustainable home ownership for our future.”

http://www.realtor.org/press_room/news_releases/2011/01/owning_home

REALTOR® Magazine-Daily News-Voters Say: Don’t Mess With the MID.

Outside the voting area at Hosanna Church in Lakeville, MN I was having a conversation with someone about 1^st time buyers, investors and the interest rates.  Most indicators and industry professionals point to the rates not being this low for too much longer and predict them to go higher in 2011. This person is looking at purchasing to rent out the home versus living in it, but in either case, investing or buying as a principle residence, short sales or foreclosures, home prices and interest rates make this a great window of time to buy.

As the mercury inches downward outside, grab your favorite hot beverage and let’s review the buyers and sellers weekly dance card. Bear in mind that current activity may look especially slow compared to last year’s tax-credit-induced performance.

For the week ending October 9, sellers continued to pick up their tempo by introducing 1,479 new listings to the marketplace. That’s only 4.1 percent fewer new homes than last year at this time, as the year-over-year comparison gap continues to narrow. Buyers danced to a slower beat. The 523 pending sales for the week were 44.8 percent fewer than last year. That’s the largest decline in 13 weeks.

With seller activity slowly returning and buyer activity remaining sluggish, inventory levels are still high. There were 26,866 active listings as of October 18. Keep a close watch on this metric, as it emphasizes the dynamic balance between supply and demand—the most critical forces affecting the market.

There is some good news in the mix. At 220, housing affordability is at an all-time high. The availability of low cost homes combined with low interest rates have created an extraordinary buying opportunity

As long as you know the rules of the game when buying or selling shorts sales, you’ve fought half the battle. I was talking with a client looking for short sales in Lakeville, MN around the area by Hosanna Church in Lakeville, MN. While still at times a great price bargain, I explained there are other important things to consider when purchasing a home listed as a short sale, such as offer time, disclosures, personal property, counteroffers, and bank negotiations. A lot of the process is still negotiable despite requiring lender approval.

Most buyers purchasing with FHA loans are doing so needing seller concessions to avoid depleting all of their savings. FHA currently allows seller concessions up to 6 percent. They are proposing a rule which would reduce the seller concessions to a maximum of 3 percent. In some states, (read OURS) closing costs are often hight than 3 percent. NAR (National Assoc. of Realtors) President Vicki Cox Golder said a reduction in permitted seller concessions will have a detrimental effect on the recovery of the real estate industry and make it more difficult for buyers to purchase a home. In a letter dated 8/16/2010, sent to FHA Commissioner David H. Stevens, NAR comments on the “Federal Housing Administration Risk Management Initiatives: Reduction of Seller Concessions and New Loan-to-Value and Credit Score Requirements” Federal Register Notice.

NAR also calls on FHA to lower the proposed the credit floor exemption for all FHA-insured borrowers seeking to refinance and to ensure that borrowers with nontraditional credit scores are not unduly burdened manual underwriting. FHA proposes a temporary exemption for refinances that involve a reduction of existing mortgage indebtedness but this excludes borrowers with a credit score below 500. Many borrowers have had credit scores above 500 when they purchased their homes but now have lower credit scores and they may still be good candidates for a refinance. Lastly, FHA proposes manual underwriting requirements for borrowers with nontraditional credit histories. NAR believes that the Technology Open to Approved Lenders (TOTAL) scorecard was created to consider unique factors presented by borrowers with nontraditional credit histories

Extended Home Buyer Tax Credit Expires

Although the Extended Home Buyer Tax Credit expired on April 30, 2010, home buyers who signed a written, binding contract by that date and close before July 1, 2010 may still be able to claim the credit. Below you will find general information about who can claim the credit and how. 

If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.

Latest News

(June 30, 2010) Congress has passed an extension of the Homebuyer Tax Credit closing deadline, the Homebuyer Assistance and Improvement Act (H.R. 5623). The extension applies only to transactions that have ratified contracts in place as of April 30, 2010 that have not yet closed. The legislation is designed to create a seamless extension. The new closing deadline for eligible transactions is September 30, 2010. There will be no gap between June 30 and the date the President signs the bill into law. NAR worked closely with Congressional leaders on both sides of the aisle to enact this important legislation. Extending the Tax Credit Closing deadline will help provide additional stability to real estate markets across the nation.

(June 30, 2010) — As of 5 p.m. Eastern time, the Senate has not passed the unemployment bill that includes an extension of the home buyer tax credit. The Senate may take up the tax credit extension separately or as part of a few other bills. NAR continues to stress the importance of extending the deadline for households who met the April 30 contract submission deadline. If you have buyers with deals pending, NAR urges you to encourage them to retain their paperwork in the event lawmakers pass the tax credit extension retroactively.

(June 29, 2010)—The United States House of Representatives has just passed HR 5623, the Homebuyer Assistance and Improvement Act of 2010, by a vote of 409-5. This bill extends the deadline for closing tax credit eligible transactions from June 30 to September 30, 2010. The bill moves to the Senate where the outcome is much less certain. NAR will continue to update you as the events move forward.

(June 28, 2010)—NAR is working very closely with key Members of Congress on a possible extension of the June 30, 2010 deadline for closing contracts eligible for the Homeowner Tax Credit. NAR is pursuing all possible options to determine what other legislation may be available for passing a June 30 extension. Each of the possible options face difficult obstacles, but NAR’s efforts to clear the way are on going. The Senate will be considering a small business bill that includes tax provisions during the week of June 28. In the meantime, those impacted should proceed as if the June 30, 2010 date is binding.
Read more >

Lack of Credit Extension Would Dash Hopes of Home Buyers in All 50 States (June 28)
President’s Podcast: NAR Pushing Hard on Three REALTOR® Issues (June 15)
NAR Commends Senators for Offering Home Buyer Tax Credit Extension, Urges Senate and House to Quickly Pass Legislation (June 11)

About the Extended Home Buyer Tax Credit

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, in November 2009, Congress passed legislation that:

• Extended the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
• Expanded the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Special Note for Overseas Military Personnel and Federal Employees 

Military personnel and some federal employees serving overseas may still be able to claim the credit on home purchases made before April 30, 2011. Consult the IRS web site for more information on the Extended Home Buyer Tax Credit provisions for qualified military personnel and federal employees. 

Frequently Asked Questions

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

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.

If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.

Which Properties Are Eligible?

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

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

1. The price of the home.
2. The buyer’s income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer 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 $125,000 and $145,000 for single buyers and between $225,000 and $245,000 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 $145,000 for singles and over $245,000 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 this three-year period, the full amount credit will be recouped on the sale.

Struggling in a recession and seeing some increases in markets and signs of positive growth.  It’s interesting this type of reform is being brought about at this time.  A lot of 1st time buyers as wells as those who could not obtain conventional financing have been utilizing FHA mortgages for purchases.  The House has passed its version of the FHA reform, and now it is on the Senate to vote on their version of the bill.  Up front mortgage insurance has already seen an increase and now the monthly mortgage insurance may TRIPLE!  Many within the FHA claim that this additional premium will help to strengthen the Administration’s balance sheet while building additional reserves to guarantee more loans and reduce long-term costs for borrowers.  Others would argue that present borrowers’ monthly expenses will rise and make it harder for others to qualify.

The bill also mandates additional oversight as the FHA will now be able to further tighten underwriting standards and enforce additional accountability on providers of FHA guaranteed financing. Lenders will now have to sign indemnification agreements in order to provide these loans, so that in the case where a lender is judged to have originated a loan via fraudulent means, that lender will be forced to repay the FHA for any claims related losses.

This  new bill might very well purge our market of the bad apples, leaving behind only the good guys to service the buyers. The reverse could also very well happen as well. For example, to ensure that what happened never happens again, our regulatory system fails us and a vital path to homeownership dries up, whereby no lender wants to use the programs out of fear, which is now a legitimate concern. 

On the surface, making the same product more expensive in our current market doesnt appear too attractive.  However, removing some of the “bad apples” from the lending marketplace does.  (FEEL FREE TO DO THIS WITHOUT CHARGING BUYERS MORE…..)

Like with a lot of changes, we will have to judge in hindsight whether good or bad.

Washington, June 02, 2010

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the National Association of Realtors®.

The Pending Home Sales Index,^* a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.” NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.

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