November 2009

For all the home shoppers seeking clarity about the home buyer tax credits, we’ve posted the information below as concisely as possible.

FIRST-TIME HOME BUYERS:

The original cut-off date of November 30, 2009, for the $8,000 tax credit has been extended to include contracts executed on or before April 30, 2010. Important details to note:

• The government extension begins December 1, 2009.
• The tax credit may be as high as $8,000 ($4,000 for married couples filing separately).
• The buyer must not have owned a property within the last three years.
• The contract must be executed on or before April 30, 2010.
• The home must close on or before June 30, 2010.
• The purchase price limit is $800,000. -Income limits for the full tax credit: $125,000 (single) and $225,000 (married couples)

LONG-TIME HOMEOWNERS:

New legislation authorizes a tax credit for long-time homeowners buying a replacement principal residence.

• The buyer must have used the home sold or being sold as a principal residence consecutively for five of the previous eight years.
• The tax credit is up to $6,500 ($3,250 for married couples filing separately).
• The contract must be executed on or before April 30, 2010.
• The home must close on or before June 30, 2010.
• The purchase price limit is $800,000.
• Income limits for the full tax credit: $125,000 (single) and $225,000 (married couples).

For further information, contact Jonathan Doddridge at Ascent Financial Services, LLC, at 972-877-9787, or visit IRS.gov.

The Commerce Department reported Wednesday that new home sales rose 6.2% from September to October, reaching a seasonally adjusted rate of 430,000 sales per year. The numbers took several Wall Street analysts by surprise – a panel of expert forecasts had expected an annual rate of 404,000 new-home sales.

A decrease new-home inventory – down to a 6.7 month supply of 239,000 homes – was also positive news, indicating that housing supply and demand levels are continuing to stabilize.

Though the recent reduction of home construction has helped to bring the housing market closer to equilibrium, it has also negatively affected the economy at large. Residential construction contributes significantly to America’s gross domestic product, thus the industry’s return to health is imperative for the nation’s economic recovery.

Though the latest reports show improvements, new-home sales are still 70% lower than their peak in July 2005. The market has taken another step in the right direction, and it still has several steps to go.  

For a more detailed report, visit cnnmoney.com.

If only they sold a GPS system for the real estate market. (Can somebody get on that?) It sure would help in determining precisely where the housing market is, and where it is headed. Though the exact answers to those questions remain uncertain, the latest numbers indicate further improvement and stabilization.

What are the facts?

Nationally:

• The October housing inventory reached a 7 months’ supply, down from 8 months in September. (A 6 months’ supply is considered a balanced market)
• New-home starts dropped by a seasonally adjusted rate of 10.6%. New-home inventories are at the lowest levels since 1982, which is helping to liquidate the existing-home inventory and bring it back to normalcy.
• The median sale price of existing homes declined 7.1% from October 2008, which was a lower rate than the 8% year-over-year decline in September.
• Mortgage rates are incredibly low, with 30-year loans averaging around 4.8% and 15-year loans around 4.3%.
• As of the 3Q of 2009, average home prices across the U.S. are at similar levels to what they were in the fall of 2003. The latest numbers show improvement over Q1 and Q2 of 2009, and have risen well off their recent bottom. (See chart below.)

Locally:

• DFW’s existing-home prices stayed steady from September to October, according to the latest Standard & Poor’s / Case-Shiller Home Price Index.
• Foreclosure filings for the upcoming December foreclosure auctions are down 12% in Dallas County when compared to the same period last year, reports the Dallas Business Journal.
• Dallas saw an annual home price decline of only 1.2% from October 2008. (See chart below)
• Dallas tied Denver for the U.S. markets with the smallest annual price decline.

Due to variables such as the temporary tax credit and the fragile labor market, the future trajectory of the housing market is not entirely clear. Nonetheless, we have reason to be thankful today: the graphs are pointing in the right direction.

For more information, see dallasnews.com, businessweek.com, dallas.bizjournals.com, and realestatechannel.com.

October’s existing home sales surged 10.1%, exceeding expectations and reaching the highest level since February 2007. The National Association of Realtors indicated that the unprecedented rise was likely due to buyers trying to beat the tax credit’s original deadline. For more details, visit cnnmoney.com.

According to BusinessWeek.com, today’s existing home sales report has already had positive effects: the data encouraged stock market traders and lifted equities.

Real estate experts Diana Olick, Steve Liesman, and Rick Santelli discuss the specifics of today’s report, agreeing that October’s numbers include several “good signs.” Click below to listen to their insight.

Increasingly popular in suburban environments, town homes offer owners several lifestyle perks. But before diving into those benefits, let’s get clear — what exactly is a town home?

First and foremost, it’s not a condominium. According to Webster, condominium refers to individual ownership of a unit in a multiunit structure  such as an apartment building. Often condominium residents have joint ownership in the  common parts of the property, such as the grounds and building structure.

On the contrary, a town home is conjoined to another by a common wall and often includes an outdoor patio.  The first floor is ground-level, hence the French moniker pied-à-terre (literally “foot on earth”).

Boasting minimal upkeep but still including a small patch of land, town homes are especially attractive to those with canine companions. Empty nesters, executives on the go, and country-estate owners who literally need a “home in town” are also excellent candidates for this breezier lifestyle.

Close next-door neighbors provide home safety, but still ensure a large degree of privacy, as no one lives above or below. Furthermore, many town homes are located within complexes that include several amenities such as tennis courts, pools, and fitness centers.

If you’re intrigued by this lifestyle and would like to tour several options on the market, join Briggs Freeman for a town home tour this Sunday, November 22.

Steve Brown of the Dallas Morning News gave Dallas residents some good news this afternoon:

Housing and finance analyst First American CoreLogic has upped its outlook for the Dallas housing market. The Dallas area will see a 1.85 percent increase in home prices over the next year, First American says in its latest 12-month forecast based on September data. The Dallas price gain is better than the 1.1 percent national increase First American is predicting.

Click to read his full post at dallasnews.com.

Action Economics released a calendar of the top economic reports that will be published next week. If their predictions are accurate, we’ll be giving thanks on Thursday for some positive economic news. More to come…

On this morning’s Today Show Al Roker and Barbara Corcoran discuss affordable homes across the country. Watch the video below to see the charming Dallas cottage they featured.

Today CNNMoney.com released an article on housing affordability entitled “You don’t have to be a millionaire to buy a house.” Is it true?

According to the NAHB and Wells Fargo, 70.1% of all U.S. homes sold during the 3Q were affordable for the typical American family. (Typical, in this study, means a median income of $64,000.) This percentage was a significant rise from the 56.1% which qualified one year ago.

Many buyers have already taken advantage of these low housing prices, which are further discounted by the federal tax credit and low interest rates. Others, however, have procrastinated. To those folks CNN writes, “Now is a good time to buy.”

To read more, visit CNNMoney.com.

Freddie Mac announced today that rates on 30-year mortgages have fallen to 4.83 percent – much lower than the 6.04 percent rates seen one year ago. Freddie Mac’s chief economist Frank Nothaft reports that attractive 3Q rates have led to approximately $1.1 trillion in refinancing activity, saving borrowers about $10 billion in monthly payments over the first 12 months of their new loans.

Will these eye-catching rates last long? Probably not. Attempting to lower mortgage rates and loosen credit, the Federal Reserve has pumped $1.25 trillion into mortgage-backed securities. It is likely that this wide scale effort will end early next year, resulting in another round of raised rates.

For questions regarding mortgages and home financing, contact Ascent Financial Services. Also visit  msnbc.com to read more details about Freddie Mac’s report.