Here we are, two weeks before Christmas, and many people are asking if the Home Buyer Tax Credit, now extended and expanded, has helped to revive the real estate market.

The Home Buyer Tax Credit was due to expire at the end of November so September and October saw what seems was a "rush" to get in on the action. Even since the Tax Credit inception, sales have posted increasing numbers for the last 9 months.  October 2009 numbers show an increase of 10% over September 2009.  October 2009 was over 24% higher than October of 2008.  That is substantial!

On November 6, 2009, the Tax Credit was extended to April 30, 2010 or at least have a valid contract in place by that date and close by June 30, 2010.  The Tax Credit was also expanded to include qualifying repeat buyers.  These buyers could also realize a tax credit up to $6500.  Since the primary numbers of growth we have seen thus far were from First Time Homebuyers, this "Repeat Home Buyer Tax credit" will hopefully encourage the next higher tier of homes to move in stronger numbers. 

Since the pressure is off the deadline, the seasonal slow down is expected to resume for now and into January. Then we expect a good bit of home purchasing action into the end of the first quarter and second quarter of 2010. 

One last consideration-mortgage rates.  Now at levels below 5%, this will not last forever.  Interest rates are expected to jump in February and March and that will reduce the affordability of homes.

I recommend not waiting until the last minute to take advantage of this unique opportunity.  Too many things can go wrong in a transation.  If a deal falls apart at the last minute, it may be too late to find another home and close in time.  Rates can go up, opportunities go away.  Start getting financing in order and begin shopping now so you can be ahead of the game and not lose out!

I wanted to share some basics on the two tax credits being offered for a limited time:

• First Time Home Buyer Tax Credit:  this is basically the same as it was but the income limits have been expanded to $125,000 for individuals and $225,000 for married couples filing jointly. This expires April 30, 2010.

• Existing Home Owner Tax Credit:  

To be able to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.  The credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.

This tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500 and applies only to homes priced at $800,000 or less.

The dateline for the this credit is it's available for homes purchased after November 6, 2009 and on or before April 30, 2010. But, in cases where a legal sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.

Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Visit www.FederalHousingTaxCredit.com for more details and for the information source for this article.

The Worker, Homeownership, and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, includes tax credit benefits for many homebuyers. Here are some of the details worth noting:

• First-time homebuyers: These are considered as buyers who have not owned a home in the past 3 years, may qualify for a tax credit of up to $8,000.

• Existing homeowners:  If you have owned and occupied the same principal residence for a period of five consecutive years during the last eight years, may qualify for a tax credit of up to $6,500, after buying a new principal residence.

• Homebuyers must enter into a written legitimate purchase contract by April 30th, 2010, and close on the purchase no later than June 30th, 2010.

• Maximum annual income limits: are $125,000 for individuals and $225,000 for joint filers.

• $800,000: Maximum Home Purchase Price

Although some details are yet to be worked out, key senators reached an agreement to extend and expand the tax credit available to those purchasing a home for 7 months.  Not only does the plan extend the current credit to first time home buyers, it will also be available to those "move up" buyers that have owned thier current home for at least 5 years.  The amount of credit for existing homeowners will be up to $6500.00.

Income limitations will rise with both credits to $125,000 for individuals and $225,000 for couples. Contracts will have to be signed by April 30, 2010 and closed by June 30, 2010.

This extension is expected to help new and existing home sales as well as to soak up some of the foreclosures which have been diluting home values.

Final revisions should be completed by next week and it should see a fairly smooth completion and enactment could come as early as next week.

Questions and Answers on Home Inspections

We get a lot of questions about home inspections and are they really worth several hundred dollars?  I took the following from the NC Real Estate Commission's required forms and posted here for easy access to you all.  This is required reading for anyone purchasing a home.

"For most persons, purchasing a home is the largest investment they will ever make. It is no wonder then that many homebuyers employ professionals to inspect the structural and mechanical systems of the home and report to them on their condition. Sometimes sellers also employ Home Inspectors to alert them to problems with their homes which could arise later in the transaction. But normally Home Inspectors are employed by buyers. For this reason, this brochure is written from the viewpoint of the potential homebuyer.

This brochure is a joint publication of the North Carolina Home Inspector Licensure Board and the North Carolina Real Estate Commission designed to give consumers a better understanding of the home inspection process. What a home inspection is, who can perform an inspection and what to expect. If you have further questions regarding home inspections and Home Inspectors, you should contact the North Carolina Home Inspector Licensure Board, 322 Chapanoke Road, Suite 200, Raleigh, NC 27603, Phone 919/662-4480.

Questions

• What is a home inspection?
• Can anyone perform a home inspection?
• Why should I have the home inspected?
• In my home purchase I have chosen to sign the standard Offer to Purchase and Contract* form which many real estate and legal professionals use. It states that I have the right to have the home inspected and the right to request that the seller repair identified problems with the home. Will the home inspection identify all of these problems?
• How do I request a home inspection, and who will pay for it?
• Should I be present when the home inspection is performed?
• Are all inspection reports the same? What should I do if I feel something has been missed on the inspection?
• If, following the home inspection, the seller repairs an item found in the home inspection, may I have the Home Inspector perform a "re-inspection"?

Answers

What is a home inspection?

It is an evaluation of the visible and accessible systems and components of a home (plumbing system, roof, etc.) and is intended to give the client (usually a homebuyer) a better understanding of their condition. It is also important to know what a home inspection is not! It is not an appraisal of the property's value; nor should you expect it to address the cost of repairs. It does not guarantee that the home complies with local building codes (which are subject to periodic change) or protect you in the event an item inspected fails in the future. [Note: Warranties can be purchased to cover many items.] Nor should it be considered a "technically exhaustive" evaluation, but rather an evaluation of the property on the day it is inspected, taking into consideration normal wear and tear.

Can anyone perform a home inspection?

No. Only persons licensed by the North Carolina Home Inspector Licensure Board are permitted to perform home inspections for compensation. To qualify for licensure, they must satisfy certain education and experience requirements and pass a state licensing examination. Their inspections must be conducted in accordance with the Board's Standards of Practice and Code of Ethics.

Why should I have the home inspected?

Most homebuyers lack the knowledge, skill and emotional detachment needed to inspect homes themselves. By using the services of a licensed Home Inspector, they can gain a better understanding of the condition of the property, especially whether any items do not "function as intended"or "adversely affect the habitability of the dwelling"or "warrant further investigation" by a person who specializes in the item in question.

In my home purchase I have chosen to sign the standard Offer to Purchase and Contract* form which many real estate and legal professionals use. It states that I have the right to have the home inspected and the right to request that the seller repair identified problems with the home Will the home inspection identify all of these problems?

*Jointly approved and copyrighted by the North Carolina Association of REALTORS® and the North Carolina Bar Association.

Yes and No. Home Inspectors typically evaluate structural components (floors, walls, roofs, chimneys, foundations, etc.), mechanical systems (plumbing, electrical, heating/air conditioning), installed appliances and other major components of the property. The Home Inspector Licensure Board's Standards of Practice do not require Home Inspectors to report on: wood-destroying insects, environmental contamination, pools and spas, detached structures and certain other items listed in the Offer to Purchase and Contract form. Always ask the Home Inspector if he covers all the things which are important to you. If not, it is your responsibility to arrange for an inspection of these items by the appropriate professionals. For a description of the services to be provided by the Home Inspector (and their cost), you should read carefully the written contract which the Home Inspector must give you and which you must sign before the Home Inspection can be performed.

How do I request a home inspection, and who will pay for it?

You can arrange for the home inspection or ask your real estate agent to assist you. Unless you otherwise agree, you will be responsible for payment of the home inspection and any subsequent inspections. If the inspection is to be performed after you have signed the purchase contract, be sure to schedule the inspection as soon as possible to allow adequate time for any repairs to be performed.

Should I be present when the home inspection is performed?

Whenever possible, you should be present. The inspector can review with you the results of the inspection and point out any problems found. Usually the inspection of the home can be completed in two to three hours (the time can vary depending upon the size and age of the dwelling). The Home Inspector must give you a written report of the home inspection within three business days after the inspection is performed (unless otherwise stated in your contract with the Home Inspector). The home inspection report is your property. The Home Inspector may only give it to you and may not share it with other persons without your permission.

Are all inspection reports the same?

No. While the Home Inspector Licensure Board has established a minimum requirement for report-writing, reports can vary greatly. They can range from a "checklist" of the systems and components to a full narrative evaluation or any combination of the two. Home Inspectors are required to give you a written "Summary" of their inspection identifying any system or component that does not function as intended, or adversely affects the habitability of the dwelling, or appears to warrant further investigation by a specialist. The summary does not necessarily include all items that have been found to be defective or deficient. Therefore, do not read only the summary. Carefully read and understand the entire home inspection report.

What should I do if I feel something has been missed on the inspection?

Before any repairs are made (except emergency repairs), call the inspector or inspection company to discuss the problem. Many times a "trip charge" can be saved by explaining the problem to the inspector who can answer the question over the telephone. This also gives the inspector a chance to promptly handle any problems that may have been overlooked in the inspection.

If, following the home inspection, the seller repairs an item found in the home inspection, may I have the Home Inspector perform a "re-inspection"?

Yes. Some repairs may not be as straightforward as they might seem. The inspector may be able to help you evaluate the repair, but you should be aware that the re-inspection is not a warranty of the repairs that have been made. Some Home Inspectors charge a fee for re-inspections."

In our area, we have several very good licensed home inspectors available.  We have been recommending Sims Home Inspections to all of our clients.  His reports are very thorough with plenty of color pictures showing areas of concern.  Not only is Neil Sims a licensed Home Inspector, he is also a NC Licenced General Contractor.  He can inspect homes but he can also build them and I can tell you first hand, Neil Sims and his uncle, Geoff Sims build an excellent home.  You can contact Neil at 910-617-7467 or visit his website at http://www.simshomeinspections.com/

For more information on North Carolina Home Inspections, contact the board at the following address:

RESPA (Real Estate Settlement Procedures Act) has new rules going into effect on January 1, 2010.  RESPA is a HUD comsumer protection statute about closing costs and procedures. It requires consumers recieve disclosures at various times about fees involved in a closing and also prohibits those cost infating "kickbacks."

The new rules will standardize Good Faith Estimates of Closing Costs, promote transparency, and allow buyers to make better decisions when shopping for a lender.  Often, fees may change within a short time period and the differences in the original and final "fee quotes" from a lender will be readily apparent.  These new rules will apply to all residential contracts.

More details can be found at www.HUD.org.

We are now consistently seeing the signs that the housing market is making a comeback.  Have we really bottomed out?  It is too early to tell--you never know for sure until it is past. But, we do know that we have seen month over month increases in sales.  New home sales were up 11% in June in spite of the ongoing foreclosures out there.  Some purchase incentives are drying up as communities begin to sell.  Resales are up too--not just distressed properties.  These are all good indicators that pent up demand is moving to the market.

How many people are waiting to know for sure if we have hit bottom?  Quite a few I am willing to bet.  But--here is why you should not wait:

1) Prices are as low as they have been since before the real estate "boom"

2) Interest rates are great but will go up.  A 1% increase in interest rate will offset 10% in depreciation!

3) An approved and ready to purchase buyer be able to take advantage of an opportunity as soon as it comes up. 

4) You get equity and tax benefits immediatley and you are not wasting money on rentals.  The First Time Homebuyer Tax Credit is set to expire December 1, 2009--not the end of the year.

Great News for First-Time Home Buyers!

HUD recently announced that qualified First-Time Home Buyers who want to take advantage of the available tax credit of up to $8,000 now have another option available to them to help them become homeowners.

It's clear that first-time home buyers have been having a major impact on the housing market this year. The National Association of Realtors announced that first-time buyers, who typically account for less than 40% of home sales each year, have been especially busy…in March, homes that were purchased by first-timers accounted for 53% of all sales, and this percentage is expected to hold true for all of 2009.

With home affordability higher than ever, available tax credits and some of the lowest interest rates ever recorded for home loans, who can blame them? Particularly as a first-time buyer, there may never be a better time to buy a home than right now.

However, the availability of a tax credit, while a great incentive, does not put the money in the hands of a buyer right away. HUD's announcement now allows for prospective and qualified home buyers to borrow the money from approved agencies and lenders.

While details of participating lenders and HUD-approved agencies are not yet available, this should turn up the heat on prospective buyers to get busy searching for their next home. As further details become available, I will get them to you.

In the meantime, alert your database that one more barrier to homeownership is being removed and the time to start shopping is now!

Sincerely,

Chris Hutchens
Alpha Mortgage

910-256-8999

Pending Home Sales Rise, Housing Affordability Near Record

Washington, May 04, 2009

Pending home sales rose with many first-time buyers taking advantage of historically good housing affordability conditions, according to the National Association of Realtors^®.

The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82.0 in February, and is 1.1 percent higher than March 2008 when it was 83.7.

Lawrence Yun, NAR chief economist, said it should take a few months for the market to gain momentum. “This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a downpayment,” he said. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.” NAR’s Housing Affordability Index² remained near record highs. The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.

The Pending Home Sales Index in the South rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago. In the West the index increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008. The index in the Northeast fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago. In the Midwest the index slipped 1.0 percent to 82.3 but is 8.2 percent higher than March 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the increase in buying power is quite remarkable. “Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he said. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”

A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.

The National Association of Realtors^®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Link to original Story:

http://www.realtor.org/press_room/news_releases/2009/05/march_phsi