Aides: Home Buyer Tax Credit Extension Likely

Daily Real Estate News | October 8, 2009 |

Aides: Home Buyer Tax Credit Extension Likely
Extending the First-Time Home Buyer Tax Credit, due to expire at the end of November, is high on the Democratic Congressional to-do list, legislative aides said.

After Wednesday’s meeting with President Obama and House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) released a statement that the government should “continue efforts to strengthen the housing market by extending the home buyer tax credit.”

Mark Zandi, chief economist at Moody’s Economy.com, who is a consultant to Democrats in the administration and Congress, is advocating extending the credit through August and making it available to all home buyers. He said failure to extend the credit just as more foreclosures enter the market will push housing prices down.

Also, on Thursday, the House is expected pass legislation to extend the credit through 2010 for people who have been out of the country in the military, intelligence, or foreign services.

Source: The New York Times, Jackie Calmes (10/07/2009)

Making Your Home Age Appropriate Creates Appeal

Making Your Home Age Appropriate Creates Appeal

by Phoebe Chongchua

All of us have something in common with our homes. Sure, style, design, and location are at the top of the list, but how about age? As we age, buyers, especially the baby boomer generation, are looking to transform their homes into a place that they can stay in for as long as possible or they're hoping to find one that's already equipped for them to age-in-place. So how old your home and you are, are reason to give some thought to if your home needs age-appropriate adaptation in order for you to be most comfortable. And, in doing so, you may actually make your home more valuable to a wider audience of buyers, should you ever sell it.

According to the National Homebuilders Association, making a home suitable for the golden years is economical sound. The baby boomer generation (77 million people) makes up 28 percent of the U.S. population. Assisted living for this generation can cost more than $60-thousand per year, not counting moving expenses.

That's pretty pricey. So, if you've taken some steps to make your home an age-in-place sanctuary, then make sure you highlight those renovations if you ever list your home on the market. If you haven't made any revisions, perhaps, some minor adaptations can make your home stand out and more comfortable for any age.

"People who are middle-aged and younger are also opting to use products that are safer because they see the benefits. They are choosing to use tiles that have textures that prevent slippage. They're looking for ways to make the home look aesthetically pleasing and assist them with moving comfortably into their later years," says Steve Walton, Senior Design Consultant for Marrokal Design & Remodeling.

The most common renovations involve widening hallways, making bathrooms more expansive, opening up showers, adding railings in bathrooms and around the house so that wheelchairs and walkers can easily fit. "Hallways are generally three feet which is wide enough to get a wheelchair through, but the door openings in a standard home are about two-foot-six or 30 inches wide. So those need to be widened to a minimum of two-foot-ten or three foot which is a standard width," says Walton.

READ MORE HERE

Foreclosure sales drop

Some see it as sign of housing market stabilizing; others uncertain

Gene Davis, DDN Staff Writer

Friday, October 9, 2009

Foreclosure sales at auction in Denver last month dropped 29.3 percent compared to the same time period last year, a statistic that some experts believe is one of several indicators that the local housing market is beginning to stabilize.

However, a Realtor who specializes in selling foreclosed property says many leading banks are delaying going into the foreclosure process and that the numbers aren’t what they seem.

There were 294 foreclosure sales in Denver last month, which was 122 fewer than September 2008, according to a report released yesterday by the Department of Local Affairs Division of Housing.

“We certainly feel that in the housing market, we are seeing many different indicators to suggest that the housing market has reached bottom or, if not, is awfully close,” said Patty Silverstein, chief economist for the Metro Denver Economic Development Corp.

But personal experience has led Bob Costello of Denver Foreclosure Brokers to believe otherwise. He thinks that banks aren’t foreclosing as quickly as they should, which is altering the number of foreclosures.

“At some point banks will have a whole boatload of these things, the question is just when they will unload them,” he said.

Costello said that banks are deferring the losses that come when they go through the foreclosure process until a later quarter or next year. He believes that the banks want to show a level of profitability this year and will take the financial hit next year.

Another theory Costello has for the lack of foreclosed properties is that the banks are simply overwhelmed by the number of people who are behind payment on their mortgages. But as he pointed out, people have been predicting a flood of foreclosures for a while and it has yet to hit.

“It’s all a little bit goofy right now,” he said.

The Department of Local Affairs Division of Housing acknowledged in yesterday’s report that new foreclosure filings statewide actually increased 72 percent last month compared to the same time period last year. The division’s report downplays the increase in filings as being partially driven by a statutory change that lessened the number of new filings during August and September of last year. According to the report, “the large difference in foreclosure filing totals between September 2008 and September 2009 is driven partially by statutory changes and only partially by actual conditions in the real estate markets.”

Silverstein agrees that the Denver housing market isn’t out of the woods. She’s concerned that the metro area could see more foreclosures since “the lack of job opportunity has stretched (people) a little thin as well.”

Karen Harkin, Director of Home Finance at the Colorado Housing and Finance Authority, echoed Silverstein’s comment.

“As unemployment levels rise, more people continue to face the threat of foreclosure,” she said in a statement. “We urge people who are at risk of foreclosure to contact the Colorado Foreclosure Hotline at 877-601-HOPE.”

Silverstein still believes, though, that the stabilization of home prices and sales are making it look like the Denver house market is past rock bottom and in better shape than most other cities.

According to Silverstein, one reason Denver’s house market is in better position than most other areas is because the city didn’t see the huge run up in housing prices that many other parts of the country saw. The increase in prices — which particularly hit markets like Las Vegas, Phoenix, California and Florida — was largely due to investor-based activity and left the markets vulnerable to a housing crash, she said.

Another reason Denver is in better shape is because residential developers pulled back on activity very early in the national recession. The Denver housing market isn’t oversaturated as a result, she said.

Completed foreclosures in Colorado on a whole fell 5 percent last month compared to the same time last year. Denver county reported the largest fall in the total number of completed foreclosures, while Mesa county reported the largest spike with a 217-percent increase.

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Fall Real Estate Guide: Bargains, Bubbles And Stable Markets

Fall Real Estate Guide: Bargains, Bubbles And Stable Markets

Published: Thursday, 8 Oct 2009 | 9:31 AM Est

By: Chris Taylor

Take a quick look at America’s hardest-hit housing markets, and you might think you’re looking at some once-in-a-lifetime bargains. Miami down by almost half from its peak? Las Vegas off 55 percent and Phoenix selling at a similar discount? Get your checkbook, you’ve got a McMansion to buy.

But hold off a minute, says Ingo Winzer of real-estate consulting firm Local Market Monitor, which tracks and forecasts 330 metro areas around the country.

Just because a local housing market has sunk like a stone, doesn’t mean it can’t drop some more. And that’s exactly what many cities around the country are facing right now.

“Real estate cycles last for many years,” says Winzer. “Even though prices have been dropping for a couple of years in some markets, they could keep dropping for several years more.”

The culprit: A horrendous employment situation, which has already seen almost seven million jobs lost since the end of 2007. Even if the recession has technically bottomed out, people are still being laid off, and that will continue to be a drag on the housing market. Couple that with skittish lenders and the sheer number of distressed mortgages, and you have a toxic mix that still hasn’t been resolved.

“We’re definitely close to the bottom,” says Celia Chen, senior director of housing economics at Moody’s Economy.com, who points out that the Case-Shiller 20-city house-price index has finally been ticking up. “But we expect prices to start descending again by the end of this year. With so many foreclosures still in the pipeline, we don’t expect a bottom until the middle of next year.”

But not all is lost. All real estate is local, after all, and your hometown has its own unique prognosis. To make his forecasts at Local Market Monitor, Winzer compares income levels to housing prices, to determine which markets around the country are overvalued or undervalued. He then pairs that with local jobs outlook, to predict what’s in store for each community. His take on the best (and worst) housing bets for the next year:

Best Expected Performance:

In this group are many locales that never experienced the housing boom in the first place. Since they never climbed to unsustainable heights, they didn’t have a price cliff to fall off. Among this group are southern spots like Baton Rouge, La.; Columbia, S.C.; and Little Rock, Ark.

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Yes, the Housing Market Has Rarely Looked Better

By JAMES B. STEWART

Passing through the Fort Myers, Fla., airport a few weeks ago, I noticed people eagerly signing up for a free bus tour of foreclosed real estate—with all properties offering water views. During the ride to my hotel, the young driver volunteered that he had just bought his first house, paying $65,000 for a foreclosed property in nearby Cape Coral that last sold for over $250,000. He said he had never expected to be able to buy anything on a driver's salary, let alone something that nice.

Last week, Standard & Poor's reported that its S&P/Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the three months ended June 30 over the three months ended May 31, with only hard-hit Detroit and Las Vegas experiencing declines. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.

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In short, the data suggest that real-estate prices hit a bottom some time during the second quarter, and have now begun to rise. There's no way to be certain that this marks the end of the long, painful correction that followed the real-estate bubble, but clearly prices are no longer in free-fall. That means if you've been sitting on the fence, it's time to act.

Ordinarily I'd never try to time the real-estate market, but I can understand why buyers have been cautious. Few want to buy in down markets, just as stock buyers avoid bear markets. And for most people, of course, buying a house is a much bigger decision than buying a stock. But with real-estate prices nationally now down about 30% from their 2006 peak and showing signs of turning up, the prices aren't likely to go much lower. Every real-estate market is local, and so there may be a few exceptions. Overall, though, I can't imagine a better time to buy than now.

In addition to bargain prices, buyers also should find plenty of homes to choose from. The inventory of unsold homes was 4.09 million units in July, up 7.3% from June, according to the National Association of Realtors. And mortgage rates this week were at a two-month low of close to 5%, according to Zillow. Even the stricter appraisal process is working to the advantage of buyers. Appraisals are coming in far lower than most sellers have been expecting, forcing them to face the new reality of sharply lower prices. And with stricter standards, lenders aren't going to let buyers borrow more than they can afford, which protects buyers and helps to keep prices down.

Unless you're really prepared to accept the demands (and headaches) of being a landlord, I don't recommend direct ownership of real estate as an investment. The days of buyers lining up to flip Miami Beach and Las Vegas condos are mercifully gone.

There are much easier ways to make money in real estate, such as real-estate investment trusts or buying shares in home builders and other housing-related businesses (such as Home Depot). Historically, the mean rate of return on real estate has been around 3%, according to research from Yale economist Robert Shiller, who co-developed the Case-Shiller index. Shares in REITs and other stocks have often done much better.

But there's a good reason homeownership has been such a central part of the American dream. It delivers security, pride of ownership, a sense of community and decent investment returns as a bonus. I felt glad for my driver in Florida. He represents the other side of the foreclosure crisis. For every hardship story, and no doubt there are many, others are realizing their dreams of home ownership and getting what may well turn out to be the deals of their lives.

James B. Stewart, a columnist for SmartMoney magazine and SmartMoney.com, writes weekly about his personal investing strategy. Unlike Dow Jones reporters, he may have positions in the stocks he writes about. For his past columns, see: www.smartmoney.com/commonsense.

Survey Undermines Importance Of First-Time Homebuyers Credit

Published

Tuesday, October 06, 2009

Property Wire

With the fate of the stimulus bill in the hands of Congress, a vast majority of people in the real estate industry are touting the benefits of the first-time homebuyer program, and even urging its extension to current homeowners. Yet a Zillow poll disputes the extent of the credit's impact, indicating that for a significant number of buyers continuation of the incentive would not be a factor in their purchasing decision. For more on this, see the following article from Property Wire.

As US politicians prepare to debate the future of incentives to boost the real estate industry the latest surveys show that estate agents want them to continue but buyers say they make little difference to them.

Many experts have said that the $8,000 first time buyer tax credit, which is due to finish at the end of November, has had a major impact on the property market.

A bill to extend the programme is currently before the US Senate.

Realtors are backing an extension. In a poll by real estate company Weichert 71% said that the homebuyer tax credit was the single largest factor motivating buyers in 2009.

As well as continuing with the stimulus, they also want more potential buyers to be able to benefit.

The majority, some 92%, said the market will decline if the tax credit expires at the end of November while 97% want it to continue to the end of 2010.

The survey also showed that 20% felt affordable home prices were the biggest motivating factor and 8% indicated low interest rates played a major role.

‘The tax credit is working to restore confidence and stimulating the overall economy but we still have a long way to go before we return to a normal market.

As this survey shows, many in our industry are concerned that we will lose much of the ground that has been made toward a recovery if the tax credit is not extended,’ said president James Weichert.

Agents that responded to the survey also indicated expanding the credit to existing homebuyers and not just first-time buyers would further stimulate the housing market and higher-priced properties in particular.

But it would appear that property buyers don’t agree.

A survey from zillow.com found that a third of prospective first-time homebuyers said an extension of the tax credit would have no influence on their decision to buy in 2010.

In the survey of adults who qualify for the credit, 18% said extending the credit until the end of 2010 would be the main influence in their decision to purchase a home.

An additional 25% said it would be a significant influence, 27% said it would have some influence, and 31% said it would have no influence.

If the credit were extended, Zillow predicts that 1.86 million homebuyers would take advantage of the program and that would cost around $14.86 billion.

The National Association of Realtors is in favor of an extension.

‘The credit needs to be available for an additional period of time in order to sustain the progress that’s been made so we can continue to see our markets fully recover.

Uncertainty about the future of the credit will dampen consumer demand.

The only way we can assure that the progress we’ve made can continue is to extend the credit and to do that now,’ said NAR president Charles McMillan.

This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.