April, 2010

Some of these promotions include offers to cover up to 8-thousand dollars in closing costs, or to cut 8-thousand dollars off the sale price of a home, and they may indeed be very good deals. But we need to remind you they are NOT the same as government tax credits, and in fact, they could be viewed by the IRS as taxable income, so be sure to proceed with caution. And if you’re a home seller, keep in mind that while others are promoting these incentives, you’re more likely than not the one who will be paying for them.

Home Improvement Boom

Spring arrived with good news for the housing industry, as sales of both new and existing homes really boomed in March, and we’re seeing that trend continue in the home improvement business as well. The nation’s leading hardware retail chains won’t release their first quarter earnings until next month, but reports indicate they are enjoying booming business growth. So are companies that sell lawn mowers, heating and air conditioning systems and painting products.

Researchers say spending on home remodeling is pacing five percent ahead of last year, and if the trend continues, it will mark the first year of growth since 2006.

Just as we’ve seen with sales of existing homes, new home sales seem to have benefitted from a mild March that followed one of the worst winters in recent memory in most of the east. And the home buyers’ tax credit also deserves part of the glory, as buyers moved to make deals in advance of the April deadline. We should see the tax credit continue to play a role in sales through June, as buyers who beat the April signing deadline then need to follow up by the June 30th deadline to close their actual purchases.

So, let’s look at new home sales by region.

South

We saw the South lead the way with sales up by 44 percent.

Northeast

The Northeast enjoyed a 36 percent increase, year to year.

West

Sales rose 6 percent in the West.

Midwest

A 4 percent rise in the Midwest was recorded.
The median sales price for new homes in March was 214-thousand dollars, a 3 percent drop from February, but still, 4 percent higher than prices were a year earlier.

Those prices may continue to rise, because the supply of new homes is shrinking as the construction trade struggles to recover across much of the nation. 228-thousand new homes are available for sale in the US in March, down by 5-thousand compared to February. At the current sales pace, it would take just less than 7 months for all of those homes to be sold.

Of course, now that the homebuyers tax credit deadline has expired, we’ll have to see if the new home industry can stabilize and trade in those wild up-and-down months for a steady incremental growth as we’re starting to see develop for existing homeowners in much of the country. The credit was a wonderful sales tool, but if you’re in the market to sell your home, your REALTOR® is now more valuable than ever to help you in the post-credit sales market to close a deal with a potential buyer. Pick up the phone and make an appointment today!

Simply put, the less stuff you move with, the less money it will cost. Moving 20 boxes is less expensive than moving 30, whether you’re paying movers by the hour, or by the size of their truck.

And think about how much money you can make by selling off pieces of your old life. In the world of Craig’s List and e-Bay, you can pocket a lot of cash online without a lot of effort. And that’s before we even mention the ever-popular yard sale.

Now, you can make quite a bit of money by selling old books and furniture and knick-knacks, but remember, your top priority is to move without this stuff, so you must price it to sell. Pennies on the dollar are better than nothing, and much better than paying to move it.

You say that you can’t be bothered with selling your stuff? Then tap into your inner philanthropist and give your clutter away. There are many non-profit charities that will not only take your stuff, they’ll come and take it off your hands. They’ll do the work, you’ll get a tax deduction, and a charity will benefit from your kind donation.

So, now, how do you decide what to get rid of?

Go through your home closet by closet, touch everything in there and ask yourself some questions.

Do I need this? When was the last time I used it?

You may have a super 8 film projector that works just fine, but if it hasn’t seen any action since the Ford Administration, it’s time to say goodbye.

How many of these do I need?

Those extra coffee mugs at the back of the cabinet, the ones you never use, you probably won’t use them in your new home either.

Am I keeping this because my dear Aunt Gladys gave it to me?

Did it ever occur to you that Aunt Gladys had no use for it, either?

Remember this mantra – “When in doubt, throw it out!” With very few exceptions, there is nothing you own that can’t easily be replaced.

Hopefully, you’ll be enjoying your new home years to come. Give it the chance to earn its own clutter, and don’t stick it with the junk you’ve already collected. This is your chance to both shape up and ship out.

As you know, the tax credit deadline is upon us. People who have managed to get a binding contract by the deadline will qualify for the credits as long as they close by the end of June.
And we’re happy to report that millions of you will have taken advantage of this stimulus offer.

Of course, we won’t know for some time what the final grade will be for the tax credit. After a slow start to the year, we’ve really seen home sales rebound nicely in March, just as they did prior to the original deadline for the program last fall. We can expect to see sales for April to be up as well, as the final tax credit push was being made right up to the end. But what will happen next? Many economists predict sales for May and the summer to soften significantly on the notion that the tax credit was responsible for many home sales that otherwise would have taken place later in the year.

There’s no doubt that some home buyers did step up their purchases to take advantage of the credit, but we see plenty of reason to believe that home sales will continue to hold their own into the summer and beyond.

For one thing, the free market appears to be taking over where the government left off. Home builders and real estate companies did not really need to provide their own incentives to get buyers in the door when the government was offering up to 8-thousand dollars in tax credits. But now, we’re already seeing new breaks on closing costs and other promotions designed to keep the sales momentum going. And then there are places like California, which is offering its own homebuyer tax credit, designed to pick up where the federal program left off.

In some sectors, the housing market is already proving healthy enough to sustain itself without the government’s help. Sales of more expensive homes are starting to pick up again in areas where buyers may be neither eligible for, nor particularly motivated by, tax credits. Take the San Francisco Bay area, for example, where sales are red hot right now. Homes there are selling at, or above, list price, and moving on and off the market in a matter of weeks. The loss of the tax credit will hardly be noticed there, especially since many of those homes were priced too high to even qualify for the credit.

The fact remains that home ownership just plain works even without the tax credit. It provides attractive tax deductions, family comfort and helps build a sense of community. The federal tax credit helped reveal those perks to millions of new homeowners, and we’re willing to bet as the spring turns to summer and beyond, millions more will discover the benefits of owning a home, with or without the government’s help.