November, 2009

The NAR study, released last week, showed that first time buyers accounted for a record 47% of home sales over the past year, up from 41% in 2008 and much, much higher than the mere 36% in 2006.

And of course, buyers have been having enjoying record opportunities this past year…but looking ahead, the NAR sees some relief in sight for sellers too!
If there are no unforeseen shocks to the economy, the NAR reports said home prices should rise, between 3 and 5% in 2010, but with wide geographic differences.

Starting in the Northeast, total sales of single family, apartment condo and co-ops were up 6.9% compared last year. Though the median price of condos declined 8.7% to $236,800 from the 3rd quarter of 2008, that’s still less of a price decline than the single family home market saw and that price is actually up a little on last quarter when condos were, on average, $1200 cheaper.

Looking to the Midwest, home sales including condos and co-ops were up 13.2% in the third quarter, and are 5.2% above a year ago. The median existing condo price in this region was down to $158,000, which is down only $700 from last quarter, so we could be seeing some more signs of stabilization in the troubled Midwest, too.

In the South, sales rose 11.3% in the third quarter to an annual rate of 1.97 million and are 5.9% higher than the third quarter of 2008. The median condo price in this area was $133,800 in the 3rd quarter, up from last quarter’s $131,800, but still unsurprisingly down from last year’s highs by around 18%.

Home and condo sales in the West increased 5.6% in the third quarter, 4.6% above a year ago. The median condo price was $162,700 in the second quarter. Now it’s $165,500. And, in this region, you can see some of the biggest variances in the country — from the country’s cheapest prices of $67,600 in Las Vegas, Nevada all the way up to the US’s most expensive, $432,800, in San Francisco.

So, it looks like that while sales continue to be strong, we might be seeing some continued stabilization in prices across the country. Whether this trend continues, we’ll just have to wait and see.

Some folks think the best idea is to take the house off the market come November and bide their time through January when they know the buyers will be back. Even though it is true that sales typically slow between November and January, it is not a hopeless time at all to have a place on the market, particularly this year. One thing to keep in mind is that anyone who buying in the dead of winter probably has a good reason for doing so.

There are always a few very serious buyers who wait until their family is all gathered in town because they want the whole crew to help them search for a nice property and to try to keep clear-headed about how much to spend and how they are going to get the best return on their investment. Those are usually the people who have a real serious deadline to meet – perhaps they have to get out of their tiny one bedroom apartment before their first baby arrives, or they have to be settled in a new town before they start a new job there.

Because some people do take their homes off the market, the number of homes on the market declines. This can work to your benefit because serious buyers have fewer homes to pick from this time of year. Make sure you come up with something that makes your home stand out — price it well. One way to turn off buyers is to put a price tag on it that is higher than comparable homes in your area. Remember that you have to get people to come through the door before you can make a sale. Don’t give them a solid reason not to take a look.

When they do come over, make sure the place is irresistible. Sure, the grass might be covered in snow and the trees may have lost their leaves. But a few potted evergreens and some pretty outdoor lights or an eye-catching piece of art will make the walk to your door memorable.

The inside should be everything the outside is not. Think warm and bright and cheerfully decorated. Selling a home is easier when the buyers can imagine the plopping themselves down in it right then and there and feeling completely comfortable. Who wouldn’t feel happy to walk out of the cold and into a home with a roaring fire, twinkling lights and that smells of pine from the freshly cut tree in the living room? Go all out and put a batch of hot cider on the stove to entice buyers even further.

Even at Christmas, it is important to stick with the ‘less is more’ mantra of showing a house. Make sure the decorations are minimal and tasteful because, let’s face it, some people just go completely overboard when it comes to decking out their house for the holidays.

And don’t forget to hire a really good REALTOR®. When the market is hot, a lot of homes are going to sell themselves. But when things are down, it is key to have a REALTOR® who has a track record of making sales. It‘s even better if you can work with someone who has made sales over several winters and in down markets and can give you solid advice about moving properties when people aren‘t buying.

So think seriously about whether you really want to take your house off the market till next year. The biggest gift you get this year could be a signed sale contract.

Your modified adjusted gross income (MAGI) is your adjusted gross income, which is your income minus your above the line deductions, plus any foreign earned income. If you want help understanding and working out your MAGI, speak to a trusted tax professional, or the IRS directly as they are the ones who define it.

Don’t forget that there’s a “phase out range” of $20,000. So basically, the tax credit amount is reduced to zero once you earn more than $145,000 as a single or $245,000 as a married couple, and is reduced proportionally if you’re earning between those amounts. So, for example, if you were earning $135,000, you would get half the tax credit, or $3250.

Can you get a tax credit if you want to build a home without a mortgage?
It’s not the mortgage companies who dole out the credit, it’s the IRS, so if you’ve got enough cash to build a house outright, good for you — as long as you fulfill all the other criteria, you just fill out the forms and you get your deduction. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. So as long as you move in by midnight, April 30th, you’re good to go. But remember, for the $6500, the date of first occupancy must be after November 6, 2009 and on or before April 30, 2010, so If you’ve moved in already, you’re out of luck.

If it’s a newly-constructed home bought from a home builder, then the eligibility for the tax credit is determined by the settlement date, so if you’re in that situation, be sure to check with a tax advisor.