$8,000 Tax Credit Ends Soon

Act fast! Homebuyer tax credit ends soon

There's barely three months left before the $8,000 tax credit for first-time buyers ends -- and it can take that long to close on your new home.

By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Use any metaphor you want: the ticking clock, sands running through the hourglass or pages falling away from the calendar. The fact is, time is running out to claim the $8,000 first-time homebuyers tax credit.

Passed earlier this year as part of the economic stimulus package, the credit is good for up to $8,000, or 10% of the purchase price, and applies to people who have not owned a home in the previous three years. (There are some income restrictions.) The best part: Unlike a similar program from 2008, the credit does not have to be repaid.

The bad part: It ends on Dec. 1.

Because it usually takes around 90 days to close on a house after a contract is signed, buyers have very little time left to act. As of Thurs., Aug. 27, there were only 96 days left before the credit ends.

"Buyers have to get a home under contract very, very soon," said Tom Kunz, CEO of Century 21. "They probably should get out looking."

Sense of urgency
What they will find may surprise them: Many of the prime properties have already been snapped up. Home sales have been on the upswing, and inventories are so depleted in hot markets that first-time buyers are struggling to find homes in their price range. (Check prices in your city.)

In Whittier, Calif., for example, there are few repossessed homes for sale. Those are easy to buy because there isn't a lot of red tape and the bank wants to get rid of them as quickly as possible. Instead, most of the properties are short sales, where the sellers have to convince their lender to let them sell the house for less than they owe.

"That's why there's such a sense of urgency now," said Irma Tapper, a Century 21 real estate agent in Whittier. "The banks have to approve short sales, and they're taking three to six months to do that."

That means a first timer putting a bid on a short-sale might not get an answer form the bank until well after the Dec. 1 deadline for the tax credit. So when an actual repossession listing hits the markets, it creates a feeding frenzy.

Chuck Whitehead, who runs the Coldwell Banker agency in Temecula, Calif., said one recent listing hit the market on a Friday and by Monday there were 57 bids.

The National Association of Realtors attributes much of this activity to the first-time buyer tax credit. It estimates that 1.8 million buyers will file for the credit, and 350,000 of them wouldn't have been able to buy without it.

"It makes a big difference because most of these clients are in a lower price range," said Michelle Edmunds, an agent with Coldwell Banker in Temecula, Calf., who has closed sales for six first-time buyers. "The houses they buy need work and normally they wouldn't want to move in because of the [less than perfect] conditions the homes are in."

That is true for Wesley Forsythe. This June, the 30-year-old computer consultant and his girlfriend bought a row house in the Fishtown section of Philadelphia. Since he paid just $80,000 for the three-bedroom, two-bath place, the credit acted like a 10% discount.

"It allowed us to expand our price range and plan additional renovations," he said. "My mortgage is several hundred dollars less than what my new rent would have been."

Forsythe applied for the credit immediately after closing, filing an amended 2008 tax return. The IRS cut him a check in less than seven weeks. He's spending it now on new hardwood floors, repainting most of the interior and renovating a bathroom. He's stretching the cash by doing much of the work himself.

Cash for Clunkers effect
Of course, analysts worry that this frenzy will dry up once the tax credit expires. They argue that without the incentive, much of the pressure on homebuyers to act quickly will vanish, and the nascent housing recovery could slump.

In many ways the tax credit is similar to the Cash for Clunkers program that ended this week. Already, auto dealers are anticipating that car sales will evaporate after accelerating during the program.

"It's just like Cash for Clunkers," said Robert Dye, a senior economist for PNC Financial Services Group. "It runs the risk of a let-down as the program runs its course."

Johnny Isakson, R-Ga., who is a former real estate broker, is pushing legislation to extend the tax credit through next year, increase it to $15,000, include non-first-time homebuyers, and remove income restrictions.

The effort has drawn strong industry support.

"We need to stimulate the move-up buyer," said Century 21's Kunz, "so it works its way up the pricing food chain. That's what we need to get inventory moving again."

http://money.cnn.com/2009/08/27/real_estate/homebuyer_tax_credit_ending/index.htm?postversion=2009082715

How is Zestimate Calculated?

A lot of us use the Zestimate on zillow.com to get the value of a house. How is it calculated? Watch the Zillow videos.

For real estate professionals:




For general site users:

Real Estate Seminar (Part II)

The second part of the seminar had 25-30 attendees from Cisco. The questions from the audience were very specific:

• is real estate in bay area hitting the bottom yet?
• when is a good time to buy?
• how is the rental market in bay area?
• shall we look outside of bay area if we want positive cash flow?
• what are the tax advantages of real estate investment?
• what about loan options for investment properties?
  

Dr. Ho addressed the questions based on his first-hand info on the market and 30+ years of experience of seeing the ups and downs in the real estate market in bay area. It was a greatly informative and educational seminar, for veteran investors as well as first-time home buyers.

Real Estate Seminar (Part I)

Last Friday, Dr. Ho hosted a real estate seminar in San Jose with 35-40 attendees from Cisco, including their family and friends. It was an open forum with the purpose to address questions on people's mind regarding real estate and investment in bay area.

Dr. Ho brings together his expertise in medical knowledge and 30+ years of experience in real estate, and started the session with an anatomy on decision making:

• Should I buy?
• Can I buy?
• Will I buy?

After all, buying your first home or an investment property is probably one of the most important decisions to make in life. Dr. Ho went on to open up the floor to the audience, addressing their specific questions as well as throwing in some fundamental guidelines for real estate investment. Some highlights:

• 4 Quadrants: wage earner, salary earner, business owner, investor. The goal is to become an investor and make the money work for you.
• Dr. Ho's 2 Principles of Real Estate Investment, from his 30+ years of experience (sorry we can't divulge the "secret" here; you'll have to attend the seminar or contact Dr. Ho otherwise to find it out)
• Criteria to buy an investment property: cash flow analysis, ROI, rental market, supply and demand curve
• Your own home is not an investment, as contrary to some popular belief.
• Why does the housing market behave like a basketful of rice?

The session was nicely concluded with a delicious catered lunch and mingling among the attendees. It was a diverse audience with some people looking to buy their very first home, and some others looking to add more investment properties to their portfolio. People exchanged information and learned from each other.

Find out where mortgage rates, home sales, and the median price are headed

Find out where mortgage rates, home sales, and the median price are headed. The Association recently released a mid-year update of our 2009 Housing Market Forecast. Click here to view.

Bay Area Cities Ranked in Top 25 Places for Rich Singles

#5 Santa Clara: high tech as well as sports loving.

#20 Campbell: bar hopping in Campbell?

#21 Sunnyvale: how about Segway polo?

Complete list: http://money.cnn.com/galleries/2009/moneymag/0906/gallery.bplive_richsingles.moneymag/index.html

Bay Area Home Sales and Median Price Rise

Home sales in the Bay Area jumped to their highest level in almost three years, the result of improved mortgage availability and a perception among potential buyers that prices have bottomed out. The median price paid for a home increased month-to-month for the third month in a row, a real estate information service reported.

A total of 8,644 new and resale houses and condos sold across the nine-county Bay Area in June. That was up 16.1 percent from 7,447 in May and up 20.4 percent from 7,178 in June 2008, according to San Diego-based MDA DataQuick.

Home sales have increased on a year-over-year basis the last ten months. June sales have varied from a low of 7,118 in 1993 to 15,735 in 2004 in DataQuick’s statistics, which go back to 1988. Last month was 16.1 percent below the 10,306 for an average June.

“Getting mortgage financing this last year has really been an egregious process, especially for borrowers in the upper half of the market. We’re just now seeing the beginnings of more normal mortgage lending patterns. There’s still a long way to go, but it looks like the worst of the grind is over,” said John Walsh, MDA DataQuick president.

The median price paid for all new and resale houses and condos sold in the nine-county Bay Area was $352,000 last month, up 3.1 percent from $341,500 in May and down 27.4 percent from $485,000 in June 2008. It was the highest since $375,000 last October.

The current median is 47.1 percent below the $665,000 peak reached in June 2007. It hit a low of $290,000 in March this year. About half the downturn appears to be price declines, the other half is the absence of of high-end home sales in the statistics, which pulls the median down.

Financing with home loans above the old “jumbo” limit of $417,000 edged up to the highest level in almost a year. Last month 28.8 percent of all Bay Area mortgages were jumbos, the highest since 31.9 percent in August last year and well above the bottom of 17.1 percent last January. Two years ago jumbos accounted for more than 60 percent of all home purchase loans.

Bank of America and Wells Fargo are the two most active lenders in the Bay Area with 30 percent of the market between them.

Use of government-insured FHA loans – a common choice among first-time buyers – represented 24.1 percent of all Bay Area purchase loans in June, down from a record 26 percent in April but up from 10.7 percent a year ago.

MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales counts were estimated in Alameda County.

Last month 37.3 percent of all homes resold in the Bay Area had been foreclosed on in the prior 12 months, down from 40.5 percent in May and the lowest since 36.0 percent in August 2008. The peak was 52.0 percent in February this year. By county, foreclosure resales ranged last month from 6.3 percent of all resales in Marin to 62.7 percent in Solano.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,585 last month, up from $1,443 the previous month, and down from $2,407 a year ago. Adjusted for inflation, current payments are 39.7 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 55.4 percent below the current cycle's peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains near record levels, while financing with adjustable-rate mortgages is near the all-time low but has recently edged higher. Financing with multiple mortgages is low, down payment sizes and flipping rates are stable, and non-owner occupied buying is above-average in some markets, MDA DataQuick reported.

	Sales Volume			Median Price
All homes	Jun-08	Jun-09	%Chng	Jun-08	Jun-09	%Chng
Alameda	1,441	1,753	21.7%	$455,000	$335,000	-26.40%
Contra Costa	1,528	1,817	18.9%	$378,000	$250,000	-33.90%
Marin	258	271	5.0%	$846,000	$710,000	-16.10%
Napa	113	108	-4.4%	$440,000	$355,000	-19.30%
Santa Clara	1,626	2,090	28.5%	$612,000	$445,000	-27.30%
San Francisco	571	561	-1.8%	$726,750	$635,000	-12.60%
San Mateo	565	622	10.1%	$690,000	$565,500	-18.0%
Solano	511	851	66.5%	$300,000	$185,000	-38.30%
Sonoma	565	571	1.1%	$389,500	$300,000	-23.00%
Bay Area	7,178	8,644	20.4%	$485,000	$352,000	-27.40%

Source: MDA DataQuick Information Systems, www.DQNews.com