South Dakota

Envision Companies is continuing to build homes in SW Sioux Falls. Recently completed was the second 8 unit townhome/condo building, and construction has started on the third unit. There is still time to customize each home to the buyers specifications. Some homes are ready for occupancy and some are waiting for the buyers custom specifications. The third building homes will be ready at the beginning of the new year and are elligible for the $8000 tax credit for buyers who qualify...and FHA financing is also approved for our homes.

Volumes: Land sales volumes appear to have stabilized, hovering around 50% off from the peak in 2006 - 2007, on average over the entire Midwest region. Anecdotal evidence in the land market indicates we are seeing stabilized volumes now, suggesting we may have formed a bottom in terms of land sales volumes. Second, the developer and the leveraged speculator are fully out of the land buyer marketplace given the supply/demand imbalance of development product and the difficulties with obtaining credit. Much of the decrease in sales volumes (25-30%) is directly attributed to the absence of the developer and leveraged speculator, again supporting the stability of current sales volumes. Third, due to the established and recent consistency of the strongest cash buyer types, "end users" and private equity funds, the difficulty with obtaining conventional financing already plays no significant role in today's buyer market and is unlikely to further decrease sales volumes.

Values: The value landscape is different area to area much more so than any small regional differences noted in sales volumes. In areas with booming expansion, we witnessed land values spiking 15-30% annually in 2005 and 2006, an unsustainable movement. In other area far from development pressure, land values continued their steady annual appreciation in the 3-8% range without any dramatic spike. You can guess which category is experiencing the significant pullbacks. In line with the slower land market, pricing has been adjusted downward in many cases and will continue to be adjusted downward where needed to find common ground with value on a case by case basis. Inclusive of both Buyer and Seller representation, Dakota Properties land sales in the past 12 months have shown 5-20% discounts from asking prices, reflecting the varying gaps between pricing and value from property to property.

Emerging Trends: The Midwestern land market is not overly leveraged, but as a result of leverage and recent losses in other investments, land owners are placing some spectacular "legacy" properties on the market this season. We believe this trend represents an important generational buying opportunity, as we normally only see this highest level of quality available every 15-20 years. As an additional trend, owner financing may become more common again as it aids both sides of the transaction, helping the Buyer hold on to more cash as a precaution and facilitating a sale sooner for a Seller while also spreading out any gains for potential tax benefits.

Summary: As the blur of the last decade starts to come into focus, people seem to be taking stock in what is important. Doing the next big deal and sprinting to keep ahead of the crowd seems to be less meaningful than getting away from the crowd and spending quality time with family and friends. Since there are few places as appealing as the Midwest, we are seeing a renewed interest in our marketplace. While this interest is not as frenzied as it was prior to the recession, it is decidedly a thoughtful and introspective interest driven by a true reflection on the part of buyers as to what type of property meets all or most of their criteria. Upon finding such a place, buyers today will "pull the trigger" as they see the inherent value in owning investment quality rural real estate. The smaller number of transactions that have occurred closed on average 5% - 20% down from the prices sellers were able to achieve in 2006 and 2007. Late summer and early fall has brought on a small flurry of activity with more buyers coming and touring property than we have seen in the previous nine months. The stock market has clearly been stronger and, whether this is a "dead cat bounce" or a real turn in the economy, there appears to be growing confidence in our marketplace and in the fact that things will get better. Statistically the number of sales is down significantly from 2007 and still below the pace of 2008. The jury is clearly still out for this year as we are in the midst of what is normally our busy season with results still to come in. The sentiment seems to be one of guarded optimism rather than the pessimism of just a few months ago. As we await the verdict on the second half of 2009, rest assured that the team at Dakota Properties will continue to provide the best service we can to our clients while embracing this remarkable place we are privileged to call home.

It just got better and also more complicated. On November 6 President Obama signed the Extended Homebuyer Tax Credit. The November 30 deadline is gone. The $8,000 cash incentive for first-time buyers has been extended to next year. Congress even added a $6,500 credit for current and former owners to buy again.

This new program is considerably more complicated because the number of eligibility criteria for both you and for the home you purchase, have increased. There are also many more policy guidances, to cover various scenarios for your income, purchase type (e.g., contract for deed), your relationship with the seller (brother?) or with a co-signer (parent?). It would be great to summarize it here, but it's just too extensive and complex now to synthesize to a few paragraphs. In fact, even the IRS hasn't even figured it out yet. As of this writing, the online IRS description of the extended homebuyer tax credit simply says "more to be added soon." So we'll just advise you to get professional assistance, starting with a realtor, mortgage lender or tax adviser.

Don't get too excited about the $6,500 repeat-homebuyer aspect just yet, though. You must have lived in your current principal residence at least five of the past eight years. That's right. A whole bunch of Americans haven't lived in one home for five years, ever, and never will. One wonders if this exclusion was a way for Congress to announce the new goodie-giveaway program without it actually costing so much. Or perhaps they intended this five year limit, aligned next to the first-time critiera, might be intended to result in equal numbers of takers for each of the two programs.

Still, here are some very helpful overviews:

• 
  "Home Buyer Tax Credits" on the web site http://www.federalhousingtaxcredit.com, provided by the National Association of Home Builders
  
• 
  "Homebuyer Tax Credit" Issue Brief, provided by the National Association of Realtors
  
  
  
• 
  "Homebuyer Tax Credit", provided by the IRS (but as of this posting date, the IRS site simply addresses the first-time home buyer tax credit, and says "more later" will come about the repeat-owner homebuyer tax credit.
  
  

But please be careful what you read online. We have seen one particular detailed description of the program, claiming IRS policies on the homebuyer tax credit, posted and re-posted on dozens if not hundreds of blogs all over the country by blog authors who somehow forgot to give credit from where they copied the entire blog post. That means you can't know who was some 7th grader who may have written the original post as a hoax. That is one reason we are not trying to explain it here. If the IRS doesn't yet know the IRS policies, how would we? Be sure you go right to the source (e.g., IRS) for the only real dependable source of information.


And we wait...

Posted by Lee Alley, www.BHhomes.INFO, Rapid City, Black Hills, SD at 5:44 PM

Labels: Financing

During the month of October, 2009 there were 17 new residential listings in and around the Black Hawk and Piedmont area compared to 20 last month. The total # of homes for sale is 85 compared to 84 last month. 15 homes have sold or are under contract compared to 18 last month. Avg. price of a single family home in the Black Hills is $210,803 down from $175,139 last month, with an average of 81 days on the market which is down from 76 days last month. Sellers have been receiving 95.12% of their asking price which is up from 96.79% last month.

ZIP Code: 57769

Location Characteristics: Piedmont is located in the beautiful Black Hills of South Dakota just 5 miles west of Rapid City on I-90. We are famous for the Mount Rushmore National Monument and for the millions of pine trees that make the Hills look Black. Crazy Horse Memorial is also being carved into a mountain in this area. Piedmont is nestled into the pine trees and is a very nice, small peaceful community which you will feel right at home in. Please visit, enjoy, and live here in the tranquil beauty of the Black Hills.

During the month of October, 2009 there were 4 new residential listings in and around the Hill City/Central Hills area. The total # of homes for sale is 51. And 2 homes have sold or were under contract. Avg. price of a home in the Black Hills since last month is $210,803 compared with $175,139 with an average of 81 days on the market compared to 76 last month. Sellers have been receiving 95.12% of their asking price as compared to 96.79% last month.

ZIP Code: 57745

Location Characteristics: Hill City is located in the heart of the beautiful Black Hills of South Dakota. We are famous for the Mount Rushmore National Monument and for the millions of pine trees that make the Hills look Black. Crazy Horse Memorial is also being carved into a mountain in this area. Hill City is the most desirable location sought by out of state home buyers. It is a very pleasant, artsy, small village surrounded by pine trees. Please visit, enjoy, and live here in the tranquil beauty of the Black Hills.