Are we borrowing home sales from later in the year?

Unless you have been stuck in a closet or under a rock for the past several months, you  know that the deadline is quickly approaching for both the first time home buyer $8,000 tax credit and the $6,500 tax credit for repeat home buyers.

Anyone wanting to get either of those credits must be in contract by April 30, 2010. These incentives have certainly provided a boost to home sales across the country and in Lincoln. We are likely to see a rush from buyers to find a home and make an offer before the deadline hits. So, what happens after April 30th?

It’s possible some of these home buyers are making the move now instead of waiting until later this year. Perhaps they are getting married in the fall, or expecting a baby later this year, and they know they want to buy a house in 2010 so they have decidded to buy now and get the incentive. Does that mean realtors and home sellers will be sitting idle later this year? Perhaps.

However, I have encountered some buyers who are not going to let the promise of $8,000 force them into making a decision on a house before the right one comes along. Other buyers are betting that home prices are somewhat artificially inflated now because of the incentives and they are expecting home sellers will be more willing to negotiate later this year.

Your thoughts? Let me know.

Local home sale numbers still heading up

Check out this Lincoln Journal Star article, featuring Woods Bros Realty clients Becky & Dan Virgillito, who worked with agent Larry Corbett:

BY MATT Olberding/Lincoln Journal Star

Tanner Andrews had already put his house on the market before the $6,500 federal tax credit for repeat homebuyers became available in November.

So the tax credit didn’t really have anything to do with his interest in buying a new home.

But it did influence his choice.

Andrews and his wife, Faith, wanted a bigger home with more bathrooms for them and their two children. But they also wanted a house with a privacy fence.

The house they liked the best didn’t have a fence, though, and Andrews said they definitely would have kept looking and may not have bought the house they did without that $6,500 credit as an incentive.

“Putting up a privacy fence is $4,000, and having that tax credit helps tremendously,” said Andrews, who owns Andy’s Appliance repair.

Not only did the Andrewses benefit from the $6,500 tax credit for themselves, but the buyers of their home are taking advantage of the $8,000 federal tax credit for first-time homebuyers. Both sales are scheduled to close later this month.

To a large degree, the tax credits have helped a rebirth of Lincoln’s sagging home market.

There were 4,041 home sales in 2009 through the local Multiple Listing System, which covers Lancaster and parts of other surrounding counties. That was up 11.4 percent from 2008.

And despite the horrible weather in January, sales for the month were still up more than 3 percent compared with January 2009.

That has local real estate officials looking toward spring with optimism.

“I think you’re going to see quite an uptick in sales this spring,” said Kent Thompson, president of the Realtors Association of Lincoln.

Thompson predicted sales in the first half of the year could be up 10 to 15 percent over last year, as buyers unleash demand stifled by the harsh winter and rush to take advantage of the homebuying tax credits, which are set to expire at the end of April.

Thompson said he thinks things will level off in the second half of the year, after the tax credits go away, but he still expects sales to be up around 10 percent for the year.

“People are feeling a little more stable about where this economy’s at,” Thompson said.

The local economy has fared better than most other places in the country, with unemployment rates that are among the lowest in the nation. That, combined with low interest rates and the tax credits has helped jumpstart home sales.

“We’re hoping that as you look back at it, that ‘08 becomes the bottom and you go up from there,” said Doug Rotthaus, executive vice president of the local Realtors Association.

Sales to first-time homebuyers in 2009 drove exisiting home sales to their second-highest level in history, but even the new-home market – which has been at its lowest level in more than a decade – saw a slight improvement, with its first year-over-year gain in six years.

“Two thousand eight was the worst year we’ve had in a long time,” said Steve Champoux, owner of Prairie Homebuilders. “Two thousand nine was a lot better.”

Champoux said the tax credit really made a difference last year, helping demand for new homes.

Many of those sales were to first-time buyers, a fact that was reflected in prices.

Median prices of new homes dropped 6 percent last year, to their lowest level since 2005.

The median price of existing homes stayed steady at $125,000, which is also the lowest since 2005.

The overall median price dropped more than 2 percent last year, to its lowest level since 2003.

Rotthaus acknowledged that much of the homebuying in 2009 was in the lower price ranges, but he said he’s starting to see an uptick in “move-up” buyers – people selling a home to move to a larger, more expensive one.

“There does seem to at least be a little better activity in the $250,000 range,” he said.

That may be due in large part to the $6,500 tax credit available to people buying a new home who have lived in their current home for at least five years.

Like the Andrewses, Becky Virgillito and her husband, Dan, were looking for a bigger house for themselves and their child.

Virgillito said the availability of the tax credit made a “huge impact” on their decision to go ahead and look for a new house.

“We knew we wanted something bigger, but that (tax credit) was probably the deciding factor,” she said.

The Virgillitos’ house sold in less than a week – to a first-time buyer using the $8,000 credit – and they were able to find a house they liked right away.

They closed last month and have moved into their “dream home,” as Virgillito puts it.

“I encourage anyone who’s even considering it (using the tax credit) to look into it, because it’s well worth it,” she said.

Reach Matt Olberding at 473-2647 or molberding@journalstar.com.

Open House at North Creek Villas to start Sunday

North_Creek_Villas_FCH_logoWoods Bros Realty and First Choice Homes are pleased to present an “Open House at North Creek Villas” March 7-14 at the townhome subdivision at North 20th Street and Fletcher in Lincoln, Neb.

Nine brand-new townhomes are for sale in North Creek Villas, and they include two-bedroom ranch plans and two-bedroom two-story plans. All feature two-stall garages and are priced from $118,400 to $144,400. The convenient location offers easy access to I-80 and North 27th Street.

For the event, the homes will be open Sundays from 1-5 p.m. and Monday through Thursday from 4-7 p.m., with no opens scheduled for Friday and Saturday.

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First Choice Homes, is offering various incentives through the promotion. In addition, there is still an $8,000 first-time and $6,500 repeat home buyer tax credit available, not to mention already low interest rates.

First-Choice-HomesThe builder, First Choice Homes has built hundreds of homes in the Lincoln area for over 10 years. The company has been awarded an Honorable Mention award from the Better Business Bureau of Nebraska. First Choice Homes has teamed up with Gotcha Covered to select everything you need for your new home from carpet to kitchen cabinets, tile, light fixtures and all your home decorating needs. Their designers work with you for no extra charge.

The townhomes are listed by Beth Scholz and Rob & Teresa Predmore of Woods Bros Realty’s Lincolnshire Square office. For more information about the promotion, visit www.WoodsBros.com/NorthCreek.

Home buyer tax credits spurring Grand Island housing market

By Robert Pore
Grand Island Independent

It may be the right time to buy a house.

The government is providing a number of tax incentives that could help not only first-time home buyers but also those existing homeowners who would like to upgrade their residence.

Under the guidelines of the 2009-10 Home Buyer Federal Tax Credit program, first-time home buyers who have not owned a principal residence during the three years prior to the purchase may be eligible for a tax credit of 10 percent of the home’s purchase price, up to a maximum of $8,000.

Existing homeowners — who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence — or a repeat buyer may be eligible for a tax credit of 10 percent of the home’s purchase price, up to $6,500.

The eligibility period is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30 will qualify for the tax credit provided that closing occurs prior to July 1.

For more information about the Home Buyer Federal Tax Credit, visit www.federalhousingtaxcredit.com.

Pat Schmit of Woods Bros Realty, president of the Grand Island Board of Realtors, said the federal Home Buyers Tax Credit program has generated a lot of interest from potential home buyers.

“Many, many buyers have benefitted from this credit,” Schmit said, “mostly young people who are first-time home buyers.”

But interest has also been strong for the tax credit available for existing homeowners looking to upgrade, Schmit said.

Homes that qualify are all less than $800,000, including newly constructed homes or resale, and single-family detached, town homes or condominiums, provided that the home will be used as the buyer’s principal residence. Vacation home and rental property purchases do no qualify.

There are income limits to the program.

For example, home buyers who file as single or head of household can claim the full credit if their modified adjusted gross income is less than $125,000. For married couples filing a joint return, the combined income is $225,000. Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000, are eligible to receive a partial credit.

The credit is not available for single taxpayers whose modified adjusted grossed income is greater than $145,000 or married couples whose modified adjusted grossed income exceeds $245,000.

The tax credit is refundable, which means that, if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference. Under the program, the tax credit does not have to be repaid unless the homeowner sells or stops using the home as his or her principal residence within three years after the purchase.

The Home Buyer Federal Tax Credit was started to stimulate the housing market following the recent economic recession that slowed home buying and home construction.

While the housing market suffered throughout the country as a result of the economic downturn, the effects were not as great in Central Nebraska, Schmit said.

“Our housing market fell to some extent, but this (tax credit) has definitely improved it and has sparked an interest in buying again,” she said. “We have had a very strong housing market, and we saw a small decline, nothing like other communities.”

Schmit described Grand Island’s housing market as “stable,” but the number of listings are down, “and that is hurting us.”

“Normally, this time of year, we have about 350 listings, and now we are down to about 280,” she said. “There are just not as many houses to choose from, and it’s taking buyers longer to find a house.”

The number of listings may be down because people are not ready to sell their homes because of the economic climate nationwide, Schmit said.

“They feel that maybe it is just not the right time to move up,” she said.

Also, with lower housing prices, people who purchased homes several years ago may be reluctant to place them on the market for less than what they paid.

Once those home prices become more competitive as the number of buyers increases, owners may be more willing to put those homes on the market.

Schmit said there is a wide range of homes on the market — from older homes to new construction. She said the current price range averages between $100,000 to $150,000.

“It’s a very dynamic market, and we have people of all ages looking,” she said. “We have had calls from people moving back from Oregon and California.”

Another incentive is that interest rates are low. Schmit said there’s also strong demand for rental properties in Grand Island, which may contribute to tighter lending practices for those wanting to buy a new home.

For the rest of the article, visit the Grand Island Independent web site.

Woods Bros Realty gives away a year of mortgage payments

HomeServices of Nebraska CEO Gene Brake presents winners Tim and Kerri McDonald with a year of mortgage payments, joined by their Realtor Harry Malone of Woods Bros Realty.
HomeServices of Nebraska CEO Gene Brake presents winners Tim and Kerri McDonald with a year of mortgage payments, joined by their Realtor Harry Malone of Woods Bros Realty.

Kerri McDonald of Lincoln has one less thing to worry about for 2010. Woods Bros Realty, along with HOME Real Estate, is paying her mortgage payments for the year, as she is the winner of their 2009 Cover Your Bases promotion.

McDonald and her husband, Tim, purchased their first home, a Cover Your Bases listing, in September. By participating in the Cover Your Bases program, the seller agreed to provide an upgraded American Home Shield home warranty to provide more buyer confidence in the home.

Kerri said they plan to use the money to give themselves a nest egg or to pay down extra on their mortgage.

“I’ve never won anything before,” Kerri said. “I don’t know what to make out of it. It just hasn’t hit me yet.”

The home warranty has already come in handy for the couple, and they were able to take advantage of the first-time home buyer federal tax credit. They also took part in the NeighborWorks® program, a non-profit organization that offers home buyer education and assistance, in addition to neighborhood revitalization.

“This is really going to help us out with our future,” Tim said. “With the $8,000, too, what else could we ask for? It’s just a blessing, really.”

Sales associate Harry Malone of the Woods Bros Realty Lincolnshire Square office worked with the buyers to find a home, make an offer, and keep the sale moving when problems arose.

“They were very, very appreciative throughout the cycle of the sale, “Malone said. “These folks were just so nice all the way. It’s people like them who make my job enjoyable.”

Lou Villalobos of the Woods Bros Realty Country Club Plaza office was the listing agent of the home that had been on the market for a while and had recently had a price reduction, bringing into the McDonalds’ price range.

“When the Cover Your Bases promotion started, we added this home to it immediately,” Villalobos said.

The Cover Your Bases promotion was created to promote secure home buying and selling in an uncertain economy. Homes in the promotion included an upgraded home warranty to protect buyers from unforeseen repairs and expenses in the first year of owning their home. Entrants needed to purchase one of the promoted homes using a Woods Bros Realty or HOME Real Estate professional REALTOR®, and they were encouraged to have the homes inspected.

“We couldn’t be more pleased with the results of this promotion and are thrilled for the winners,” said Gene Brake, CEO of HomeServices of Nebraska. “We appreciate all the buyers and sellers who have participated in the program.”

135 buyers were enrolled for a drawing of free mortgage payments for a year, up to $12,000 of principal and interest. Kerri’s name was drawn Jan. 5, and Tim waited until he picked her up from work to give her the news.

“It’s still just a shock to me,” she said.

For more information about the Cover Your Bases promotion, visit www.CoverYourBases.net.

Local home sales, new and used, boom during October, November

BY MATT OLBERDING / Lincoln Journal Star

November was a month to remember for local home sales.

Existing home sales were up 76 percent over the same month last year. Sales of new homes were up more than 60 percent.

Doug Rotthaus, executive vice president of the Realtors Association of Lincoln, attributed the numbers largely to the $8,000 tax credit for new homebuyers, which was extended last month, and the new $6,500 tax credit for buyers who already own a home.

“Tax credits are playing a big part in this, along with low interest rates,” Rotthaus said.

Kent Obrist, a Realtor with Woods Bros. in Lincoln, said about one-third of his buyers this year have been first-time homebuyers.

He said that helped lead to a “really good” October and November.

Nationally, half of home sales in October and November were to first-time buyers, according to the National Association of Realtors.

Sales of existing homes were up 44 percent nationally and 53.5 percent in the Midwest compared with November 2008, although those numbers are measured differently from the local ones. The national sales figures are reported as an annual rate, rather than as raw numbers of sales.

“This clearly is a rush of first-time buyers not wanting to miss out on the tax credit,” said Lawrence Yun, the national Realtor group’s chief economist.

National figures for new home sales were not available from the Realtors.

Even with the strong showing in November, sales of new homes locally for the year to date are slightly below where they were last year, but Rotthaus said existing home sales are approaching record numbers.

The local record for existing home sales was set in 2005, and “we’re real close to beating ‘05 year-to-date,” he said.

Rotthaus said he’s looking forward to this year’s success continuing at least into the first half of 2010.

” I think the expanded tax credit will have a good impact on our market,” he said.

IRS sets guidelines for tax credit and co-borrowers

The IRS has spelled out guidelines for eligibility for the home buyer credit when co-borrowers purchase a property.

When a home-owning parent of an adult child co-signs for a mortgage and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount.

The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit.

When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer.

From REALTOR Magazine

Government extension of existing tax credits and creation of new benefits a positive step for residential real estate market

New tax credits will help continue to further activity within Lincoln’s residential real estate market

The extension and expansion of the existing homebuyer tax credit programs are positive steps for the nation’s residential real estate market, says Ron Peltier, Chairman and CEO of HomeServices of America, Inc., a Berkshire Hathaway affiliate, and the nation’s second-largest independent residential real estate brokerage (www.homeservices.com).

The existing homebuyer tax credit program, which has been in effect since January 2009, provides up to $8,000 in tax credits for individuals purchasing their first home, as well as for those who have not owned a home for three years has been extended into 2010. Under the new extended legislation, the current Nov. 30, 2009 deadline to close on a home has been expanded to June 30, 2010.

The newly-enacted tax credit provides eligible home buyers who have lived in their current home consecutively for five of the previous eight years with up to $6,500 in tax credits.

Qualified, prospective homebuyers looking to capitalize on either tax incentive will need to have a signed purchase agreement by April 30, 2010, and will need to close on their home by June 30, 2010.

“It is an unprecented time to buy a home,” said Gene Ward, managing broker and team leader of Woods Bros Realty. “The low interest rates and these tax incentives make it the perfect storm to make a move. Our local market will especially benefit because of our low home prices and cost of living.”

“We view this as an extremely positive step for our industry,” adds Peltier. “The extension of the homebuyer tax credit and, in particular, expanding the tax credit to include current homeowners, creates motivation for those buyers that have been contemplating a home purchase. This creates a tremendous incentive and makes this the perfect opportunity to act now.”

The tax credit is available for the purchase of principal residences only, and the home must cost no more than $800,000. Vacation and second homes are not eligible.

Individual buyers must have an annual income of no more than $125,000, or $225,000 for those who file jointly. Buyers who have served in the military outside of the U.S. for at least 90 days will receive a 12-month extension on the tax credit.

“Our industry is one of the nation’s key economic drivers,” concludes Peltier. “We are confident in its long-term viability and in its chief mission of helping facilitate the American dream of owning a home.”

Woods Bros Realty, an affiliate of HomeServices of America, is a full-service company offering 120 years of expertise in real estate as well as experience in mortgage, title, closing, and insurance services. Providing an easier way to buy and sell, nearly 300 sales associates work with clients in Lincoln, Seward, Beatrice, York, Grand Island, and southeast and northeast Nebraska. For more information about Woods Bros Realty, visit www.WoodsBros.com.

About HomeServices of America
HomeServices of America, Inc., based in Minneapolis, Minn., is the second-largest homeownership service provider in the United States. Owned by MidAmerican Energy Holdings Company, an affiliate of Berkshire Hathaway Inc., HomeServices’ operating companies offer integrated real estate services, including brokerage services, mortgage originations, title and closing services, property and casualty insurance, home warranties and other homeownership services. HomeServices Relocation, LLC is the full-service relocation arm of HomeServices of America which provides every aspect of domestic and international relocation to corporations around the world. HomeServices operates in 20 states under the following residential real estate brand names: Carol Jones REALTORS; CBSHOME Real Estate; Champion Realty Inc.; Edina Realty; EWM REALTORS; Harry Norman, REALTORS; HOME Real Estate; Huff Realty; Iowa Realty; Koenig & Strey GMAC Real Estate; Long Companies; Prudential California Realty; Prudential Carolinas Realty; Prudential First Realty; Prudential York Simpson Underwood; RealtySouth; Rector-Hayden REALTORS; Reece & Nichols; Roberts Brothers Inc.; Semonin REALTORS and Woods Bros Realty. Information about HomeServices and the locations of its subsidiary companies is available at www.homeservices.com.

BREAKING NEWS: Obama Signs Homebuyer Tax Credit Extension

RISMEDIA, November 6, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion:

Who is Eligible

  • First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
  • Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
  • All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits

Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.

  • For married couples filing a joint return, the combined income limit is $225,000.
  • Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
  • The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates

The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify

All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable

A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

For example:

  • A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
  • A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
  • All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions

The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

The www.federalhousingtaxcredit.com  site is being updated and should have more detailed information on the new tax credit next week.

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