March, 2009

We’ll start in the West:  The West is the only part of the nation where pending home sales were up in January.  The index in the West is up slightly over December, but more than 13 percent higher compared to a year ago.  This means sales in the West are continuing to build.  Why?  There are bargains properties available. Prices are down in the West, and homebuyers and investors are flooding the markets, looking for deals; and, they’re finding them.

However, in other areas where prices have not dropped so dramatically, sales have been slower.  Moving over to the Midwest, the pending home sales index dropped since December.  In fact, they are down nearly 14% compared to a year ago.

The biggest drop nation-wide, though, is in the Northeast.  Pending home sales in this region fell compared to December, and compared to a year ago, the index was down by nearly 20%.

In the South, pending home sales were also down in January — both from December, and from one year ago – by about 9%.

Combined nation-wide, American pending home sales were down by 6%, on average, from last year.

While this is creating huge difficulties for the housing market, it’s also creating opportunity. Affordability is on the rise — the average American family has a much greater chance of being able to afford a home than it did a year ago.

A year ago, a family making just under $60,000, and putting 20% down could afford a house costing $263,300.  Today, thanks to price drops and interest rate drops, that number is up more than $20,000. That same family can now afford a home costing $283,400;  that’s assuming only 25% of the family’s income goes to the mortgage principal and interest.

Click for the latest facts and figures, provided by the National Association of Realtors®.

Since 2006, Americans have been rewarded with tax benefits for making energy-conscious home improvements.  In the 2009 stimulus bill, the Obama administration has beefed up those tax credits.

With the increased tax credits, you can now get up to $1,500 a year for approved appliances and home upgrades.  Additionally, the cost of advanced improvements can net you a tax credit of 30% of the value of these upgrades – with no limit!  Remember, unlike a deduction, a tax credit actually reduces the amount of taxes you owe, dollar-for-dollar — with these credits, you could receive what amounts to hundreds of dollars back!

• Tax credits are available at 30% of the cost, up to $1,500, in 2009 & 2010 (for existing homes only) for:
  • Windows and Doors
  • Insulation
  • Roofs (Metal and Asphalt)  
  • HVAC
  • Water Heaters (non-solar) 
  • Biomass Stove
• Tax credits are available at 30% of the cost, with no upper limit through 2016 (for existing homes & new construction) for:
  • Geothermal Heat Pumps
  • Solar Panels
  • Solar Water Heaters
  • Small Wind Energy Systems
  • Fuel Cells

Thanks to the stimulus, previous limits to these credits are gone.

Remember: you can only claim these credits on your main home, and the installations have to be completed by December 31, 2010.  You can claim the credit this year or next.  At tax time, use IRS Tax Form 5695 to claim the credit.

**With all of the above, check with the manufacturer to be sure the item is energy-efficient enough to qualify for the tax credit.

Do you need any more reason to install these green improvements besides low utility bills and high tax credits?  Think about how these upgrades will help you sell your home. These ‘green features’ are going to be huge selling points if consumer preference continues on the trend we’re seeing the past few years.  Even in today’s tough market, green homes are selling like no other.