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Archive for the 'First time homebuyers' Category

Real estate and Palm Harbor: Is this the best market for buyers ever?

If I were to ask you to describe your income, would you use words like “reliable,” “dependable,” or “steady?”  Do you think there’s a very good chance that your job (or your business) will be around in a year, or two, or five?

If you took out some sort of loan tomorrow, would you worry about your ability to pay it back because of future income issues? Or would you be confident that your job would remain in place over the long term?

Some people have jobs that pay really well, but which probably won’t be around for long periods.  I’ll give you an example: I have a relative who is working right now as an electrical contractor in Iraq. He’s making REALLY good money, but he doesn’t expect (or want) the job to last forever. After a year or so, he’s going to want to shake the sand out of his jeans, come back to the States, and resume a more normal life.

My relative’s big but short-term income puts him in a great position to pay off debt and accumulate cash. However, it does NOT make him a great candidate for a 30-year mortgage or a five-year car loan.

But YOU, on the other hand, might be sitting on a bigger asset than you realize, if you have a steady and dependable job or other source of income.

Why? Because this may be the best time in the past, oh, 75 years or so, to buy a house.

Which brings me to my second question:

Do you know what the S&P/Case-Shiller Home Price Indices is? Okay, I’ll tell you – it is a monthly report that measures the residential housing market. It tracks home values in 20 metro markets in the U.S.

And the Case-Shiller report for October, released just this week, shows a couple of things: 1. Home values in October were flat, and 2. in spite of that, home values during 2009 have generally been in slow but steady recovery mode.

Case-Shiller reports that home values have fallen a full 30% since their peak in 2005. That drop has been stunning – nothing like it has been seen since the Depression, and perhaps even earlier than that. For people who need or want a new home, it is an opportunity of stunning proportions.

And there is even more good news; interest rates have dropped, too, If you wanted a 30-year fixed rate mortgage three years ago, it would have likely cost you around 6.4 percent. Apply for that same mortgage today, and you’ll pay more like 5 percent.

What that means is that median home prices are now about where they were in the mid-1990s, a time when just about every agrees was a really great time to buy. What makes the current conditions even more attractive than then, however, is the difference in mortgage rates – something like 5 percent now, more like 9 percent back then.   

The Wall Street JOURNAL recently did some numbers-crunching, and came up with this conclusion: Buy an average home now, finance it with a 5 percent 30-year mortgage, and the cost comes out to be around 19 times today’s average weekly earnings. Conditions haven’t been that favorable for homebuyers since the 1970s, according to the JOURNAL.

Still not good enough for you? Okay, fine – then throw in the $8,000 first time home buyer tax credit, which is scheduled to run through the spring season.

Which brings us back to my original question: How would you characterize your income? Would you describe it as “reliable,” “dependable,” or “steady?”

If it is, and you can feel pretty good about relying on your income over the long term, this is probably the best time to buy a home that has come along during your entire lifetime, and probably your parents’ lifetime, and maybe even your grandparents’ lifetime as well.

The real question is the reliability of your income. These are uncertain economic times, and no one needs additional uncertainty in times like these. Unstable or unreliable income down the road could result in a foreclosure, no matter how attractive the selling price of the home is now.

But if income unreliability is not a major concern, unprecedented real estate opportunities await you.

Tags: pinellas, real estate and clearwater, real estate and palm harbor

Got your eye on a new Palm Harbor home? Don’t drag your feet.

I just sold a house to a couple who had been working with me since last November.  That’s right, it took them a full year to find the house they wanted to buy.

Were these people unusually picky, or were their requirements so specific that the right house simply wasn’t available for a really long time?  I would say “no” to both counts; I think they just wanted to be very careful in what they considered a very volatile market.  They wanted to make sure they didn’t pay too much in case the real estate market continued to free-fall, and they wanted to be sure they didn’t end up with a house that was going to cost a lot to upgrade.

This couple looked very actively during the past year, and they actually made offers on several houses. But if the negotiations on those houses began to bog down, or if the sellers didn’t act like they wanted to significantly drop their prices (and do so quickly), these people would back away.

I think their attitude was exactly the opposite of buyer attitudes two or three years ago, when buyers thought they had to act very swiftly in order to get the home they wanted. Now, caution rules the day for buyers, along with low-ball offers. I don’t think the low offers come so much from a desire to play hardball as from a fear of paying too much in a market where prices may have a way to go before hitting bottom.

The point of all this is the new first-time homebuyer tax credit, which the Congress just recently passed. This new tax credit offers an $8,000 tax credit to first-time homebuyers, and a credit of $6,500 to repeat buyers. That credit for repeat buyers MIGHT entice some move-up buyers to come back into the market, which has mostly been dominated by first-time buyers.

The original tax credit, which was launched last spring and which was to run only through the end of November, made home ownership possible for many first-time buyers. This new version continues to offer that, while also offering a tidy tax credit to people who are NOT first-timers.

But here’s the bad part (and the reason why I started out by talking about those buyers who took a full year to find a home they wanted to buy); this new tax credit is authorized only through April – buyers have to have a binding contract in place by April 30, 2010.

If you think your home search may take a number of months, you’d better get started now. April will be here before you know it.

Tags: first time home buyer, Palm Harbor, real estate, tax credit

New homeowner tax credit may mean tax windfall for builders

Last week, the Congress extended the first time homeowner tax credit. But what wasn’t so obvious about that legislation is that it provides some really big tax breaks for home building companies.

Big builders like Lennar and Pulte could end up with hundreds of millions of dollars in refunds from the U.S. Treasury on taxes they paid as far back as five years, according to the Wall Street Journal. Those refunds are designed to help the companies cope with the big losses they have experienced in the past two years or so.

The tax break will apply to large companies of all kinds. But it may be of particular benefit to the country’s biggest home builders, because they have experienced some really hefty losses as the economy has tanked over the past couple of years.

Some critics say they home builders don’t really need that much help because they have been selling off assets, such as land and unsold inventory, and bargain prices and then hoarding the proceeds. One source estimates that the 10 largest home building companies are sitting on average of $1.2 billion in cash each, quite a lot more than the $616 million cash average they had just a couple of years ago.

Pulte Homes says it may receive more than $450 million in tax refunds; Lennar Homes may get refunds of as much as $300 million.

One benefit to the tax refund news: stock prices for Lennar and other builders went up last week as the legislation was announced.

Tags: home builders, tax credit

Looking to buy in Pinellas County? The tax credit is nearing an end

     What’s going to happen to the first time homebuyer tax credit?
     The tax credit, which was introduced back in February as part of the Obama Administration’s stimulus package, gives an income tax credit of up to $8,000 to all first time home buyers. The trouble is, the tax credit runs out at the end of November.
     The Congress is thinking about extending the credit, and some members would like to see it expanded to apply to all home buyers, not just first-timers. But other members say that making the credit last longer – and apply to more people – would be a budget-buster. They say any new tax credit version should be offset by tax increases, or at least some spending cuts.
     Some observers say they think there’s a pretty good chance that the tax credit will be extended, but they are not so optimistic that it will be enlarged to include new categories of home buyers. 
     Under the current rules, the tax credit applies to individuals making more than $75,000 per year, or couples making no more than a combined $150,000 per year. Some members of Congress say they would like to double those limits so more homebuyers would qualify. That’s a nice idea and would stimulate more home purchases, but it would cost an estimated $16.7 billion. 
     Meanwhile, I can tell you that buyers are increasing their home shopping activities, trying to get sales done before the current programs ends. I know that because I have been busy showing property.

Finding — and financing — the perfect Pinellas County home

Stephanie Henningsen

I met Stephanie a while back, and she told me a story about how she was able to buy her own home, even though she was a single woman at the time living on one paycheck.  Not only was she able to buy the home, but she was also able to finance an extensive renovation that brought back a fine old home in St. Petersburg that deserved to be saved. I asked her if she would describe the process for my blog. Here is the first installment — there will be more coming.

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By STEPHANIE HENNINGSEN

I’ve always been attracted to older homes, the homes you find in historical neighborhoods immediately outside the downtown areas of municipalities around the country. It’s the details that draw me in – lots of windows, high ceilings, wood floors, crown molding.

Many of these remodeled homes come with a price tag that is way out of my range. However, I found a way to live in my dream home (complete with wood floors!) without going broke in the process.

A friend told me about the Neighborhood Assistance Corporation of America (NACA), an advocacy program designed to help:

• Homeowners refinance mortgages
• Low-income families find an affordable home
• Turn over neighborhoods by offering mortgages that allow homeowners who make above a certain income to buy a run-down home and remodel it.

NACA helps potential buyers through the following steps to prepare them for homeownership.

Once I had completed these steps, I was ready for the next adventure – finding my dream home.

Tags: first time homebuyer, pinellas county, real estate, St. Petersburg

Buy that Pinellas home with down payment dollars from the state

Florida's old state house

A few posts ago I discussed how some states were finding ways to provide that $8,000 federal home purchase tax credit BEFORE the sale of the home, so buyers could use the tax credit money as a down payment. I said that about 10 states had come up with programs to make that happen, most of them variations on bridge loans.

One state, Missouri, put several million dollars ina pot, and then advanced funds to homebuyers who qualified for the federal tax credit. The buyers could use the state’s money for the down payment, then pay it back when the tax credit check came in the mail. Other state programs were variations on that same theme.

At the end of the post, I asked if you thought the state of Florida should come up with a similar program and, if you did, that you might want to get in touch with your state legislator and say so.

Well, no sooner did I write that post but the Florida Legislature approved its own program.

The Legislature adjourned yesterday (Friday), but before it did it passed a bill providing $30.1 million that can be used for down payments by homeowners. The program goes into effect July 1, and the money will be distributed to qualifying homebuyers (that is, homebuyers who qualify for the federal $8,000 tax credit) by county housing housing administrators.

Details are still being worked out, and I’ll keep you up to speed as that process moves forward. But don’t let the lack of down payment money stand between you and the purchase of a Pinellas County home.

Tags: Add new tag, down payment, Florida, pinellas, tax credit

Pinellas County homebuyers: Don’t miss the $8,000 first time homeowner tax credit

    More than half of the people who plan to buy a home in the U.S. this year are first-time homebuyers. And ALL of them should look into the $8,000 tax credit that is being offered to first-time homebuyers this year by the federal government
 
      This is a pretty exciting to for first-time homebuyers to get into the market, what with very low prices and historically low interest rates. The $8,000 tax credit is just icing on the cake. It’s hard to imagine that such a “perfect storm” of home-buying advantages will come together again, at least in the lifetimes of most of us.

      Are people really aware of the first time homeowner tax credit? Apparently so – the IRS says that of all the 2008 tax returns filed by March 6, more than a half-million returns claimed the first-time home buyer credit.

      If the tax credit sounds good to you, don’t wait too long – it is only available until Dec. 1, 2009.

 Here are the nine most important things you need to know about the tax credit:

     1. The credit is available to all first-time buyers of any kind of home, new or re-sale.
 First time home buyers are defined as people who have not owned a residence during the three years prior to the purchase date.

     2. The tax credit is an amount of money equal to 10 percent of the home’s purchase price, up to a credit of $8,000.

     3. The income limit for a single taxpayer is $75,000; for married taxpayers filing jointly, income must not exceed $150,000.

     4. If you exceed the income limits, you may qualify for a partial tax credit.

     5. The tax credit does not have to be repaid. Previous tax credits were really interest-free loans.

     6. People who buy homes and claim the tax credit must use the home as a principal residence for at least three years. Those who fail to do that may have to pay the credit amount back to the government.

     7. Claim the tax credit on your federal income tax return by using IRS Form 5405. No other application or form is necessary.

     8. The credit may be claimed even if you have little or no federal income tax liability. An example: You had withholding in the amount of $4,000, but ended up owing taxes totaling $5,000. Normally, you would owe the government another $1,000 on top of what was withheld. However, if you purchased a home and claimed the tax credit, the IRS would send you a check for $7,000 – the $8,000 tax credit minus your $1,000 tax liability.

     9. The tax credit is a dollar-for-dollar reduction in your tax liability. In other words, if you owed the IRS $8,000 in income taxes for 2008 and you claimed the $8,000 tax credit, you would owe the IRS nothing.

Want to know more? Take a few minutes to listen to an expert – Robert Dietz, the tax economist for the National Association of Home Builders. Click on the YouTube icon above.

Tags: Add new tag, first time homebuyer, pinellas county, tax credit

First-time homebuyer programs in other countries

Scottish row houses

If you are a first-time homebuyer, you know how hard it can be to get that initial investment together, even in times like these, when home prices are dropping and interest rates are low.

 Yes, there are first-time-homebuyer programs of various types available through different agencies. But have you ever wondered what other countries do to help people who are buying their first homes?

 If you lived in Scotland, you could get some special assistance through a government program that is just now being expanded for people trying to buy their own homes.

 Here’s how it works:

First-time home buyers find the homes they want, but then only pay between 60 and 80 percent of the purchase price. The government picks up the rest, and holds on to its portion as an equity stake.

When the house gets sold sometime in the future, some of the sale proceeds go to the government to pay off that equity stake. If the homebuyers decide they want to pay off the government before they sell, they are free to do so. The whole arrangement is interest-free.

The Scottish government has been experimenting with the plan, called LIFT, and has made it available in limited areas, funding it with 24 million pounds. It has been so successful that the government is now expanding it to all of Scotland, and upping the fund to 60 million pounds.

Government officials hope the shared-equity idea will help not only first-time homebuyers, but home sellers as well. It is primarily aimed at low-to-moderate-income buyers.

To learn more click on http://www.cml.org.uk/cml/policy/issues/758

Tags: First time homebuyers, real estate

Five ways to find down payment money when you’re broke

What’s the biggest single obstacle to home ownership? A lot of people would answer, “The down payment — or lack of it.”

For several years now, we ‘ve had the benefit of some pretty easy no-down or little-down financing.  But with the way things are right now, we’re probably not going to see those days come back any time soon.

That means 10 percent or more down loans are much more the norm than they used to be.  But don’t worry — there are a number of easy ways (or sort of easy ways) to raise that down payment money.  Here are a few ideas:

1. SAVE THAT TAX REFUND CHECK

That annual tax refund check from Uncle Sam is always welcome, but how many of us actually earmark that money for a single purpose? Instead of using it to finance a shopping trip to the mall, or using the money for a down payment on a new car, stash it in a savings account, and then do the same thing all over again next year. In very little time you may have all the money you need to buy a new place for yourself.

2. UP YOUR WITHHOLDING

Are your tax refund checks too pitifully small to add up to very much? Or, even worse, are you getting a bill from the IRS instead of a check? There’s an answer for that — march yourself down to your Human Resources Department and ask them to withhold more money from your weekly paycheck.  If you can live with $100 less per week, that’s $5,200 dollars that will be coming your way next year. If that’s a little rich for your blood, $60 per week will give you $3,120 at the end of the year.

3. ASK YOUR RELATIVES FOR MONEY

Tell your parents that you want to buy a home, but that you don’t have enough money for the down payment.  They may surprise you — they may even applaud your maturity in wanting to own your own place. If they won’t give you the money, maybe they will LEND it to you. Be businesslike, and give them decent terms.

4. SELL SOME STUFF

Let’s face it, most of us have plenty of stuff we don’t need. If that describes you and your bulging garage, have a yard sale or a garage sale and turn those musty old items into cash. If you have some things that actually have some real value, you might try selling them on eBay.  You’d be amazed what people will pay for old car parts or 20-year-old Playboy magazines. If you have a sale and end up cleaning out your own garage, offer to sell some stuff for friends and family members, and offer to split the proceeds with them.  Who knows, you may discover a new career as a garage sale expert.

5. INVESTIGATE GOVERNMENT PROGRAMS

Did you spend time in the military? The Veterans Administration may have a no-money-down loan program for you.  Are you a first-time homebuyer?  There may be programs available for you, as well. There are still a surprising number of no-money-down programs out there; your realtor should be able to help you find them. Also, feel free to call me at 727-643-7100.

I know, I know, I said “Fives Ways…” But here’s a bonus idea for you:

SPECIAL BONUS STRATEGY

Get a second job. I know, this isn’t everybody’s idea of heaven. But do it with a short-term rather than a long-term time schedule in mind. I know someone who had a special financial need, and she financed it by signing up as a host of in-home jewelry parties. I know someone else who works every Christmas season at his local Post Office. There are all kinds of seasonal jobs out there. And if you have a special talent or ability, give some thought to who might like to pay for those skills on a part-time or occasional basis. When you get sick of working those additional hours, quit.

I’ll bet you have some make-money ideas of your own. If you do, hit the “comment” button at the top of those post and share them with us.

Tags: down payment, home financing

Tampa Bay real estate market: Sales up, but values down

The thing that continues to be pretty clear about the Tampa Bay real estate market is this: Home sales are continuing to make a nice comeback, but home values are still slipping and sliding.

You’d like to think that the trend of declining values is nearing the bottom. But just when we think that, another month comes along and values decline a bit more.

One good source of home value information is the S & P/Case-Shiller Home Price Index. Recent numbers from that index showed that home values in January in Tampa Bay were down 4.4 percent from the previous month. That’s a pretty steep drop for a single month, especially when you consider that the home value peak was in July of 2006, almost three full years ago.

Case-Shiller says that prices in this region (the region being Pinellas, Pasco, Hillsborough and Hernando counties) have dropped 37.3 percent in that nearly-three-year period.

So what is propping up sales when values are still going down? There’s several reasons:

GOOD PRICES: According to Case-Shiller, home prices in this area in January were just about the same as prices were in February 2004.  How often can you buy homes at five-year-old prices?

GOOD RATES: Mortgage interest rates are very, very low. How often have you seen the one-two punch of low home prices and low, low interest rates?

FIRST TIME HOMEBUYER ADVANTAGES: If you already own a home and you are either upside-down or have lost much of your equity, you’re not in much of a position to buy a move-up home. But if you are renting and don’t currently own a home, this is a GREAT time to buy. And first-timers are very much in the market right now.

TAX CREDIT: If you are a first time home-buyer (or haven’t bought a new home in the past three years), there is a big fat $8,000 tax credit out there just waiting for you.  When is the last time THAT happened?

SELLERS ARE WILLING TO NEGOTIATE: If we had already reached the bottom of the market and prices were going back up, sellers would be saying something like this: “Time is on my side. The more I wait, the higher my selling prices is apt to be. Why should I give anything away?” Instead they are saying things like this: “Prices are still going down. God knows where this is going. I NEED TO SELL! Bring me an offer, and don’t be afraid to ask for anyhing! Go ahead, try me!”

Of course buyers are in the market.

So we’ll be waiting a bit longer for that end to the home price slide. But in the meantime, homes are selling anyway.

Tags: pinellas county, real estate, sales, values