Plymouth, MN

Buoyed by a generous tax credit, affordable homes, and low mortgage rates, the Pending Home Sales Index posted its seventh consecutive monthly gain in August.

It's the longest winning streak in the index's history and the highest reading in 2-1/2 years.

It's also another signal that the housing market is in recovery.

"Pending home sales" are a forward-looking indicator, measuring the number homes under contract to sell, but not yet closed.

Historically, 80% of homes under contract close within 60 days. Most others close within 120 days.

It's no wonder home values are rising in so many markets.

Home buyers -- take note. If you're plan to purchase a home between now and the New Year, expect that the recent run in pending sales will turn into run of closed sales which, in turn, should pump prices up and drop home inventory.

With mortgage rates hovering near 4-month lows, the best way to find a value in housing may be to act sooner rather than later.

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Mortgage markets rallied for most of last week, but ended Friday on a sour note.

After touching their lowest levels since Memorial Day, mortgage rates spiked to close out the week.

Despite pricing getting worse by 1/4 percent Friday afternoon, however, mortgage rates still managed to fall for the second consecutive week.

There were two main storylines last week on Wall Street. The first was data-driven.

After several months of better-than-expected results, the September Non-Farm Payrolls report fell well short of expectations.

According to the government, another quarter-million jobs were lost last month, raising the 12-month tally to 5.75 million. Additionally, consumer confidence figures dropped.

The stories are related and it brings us to the second storyline. Without job growth, some analysts are openly wondering how the economy will ever start to expand. Especially with the Holiday Shopping season getting underway.

The negative vibes were enough to shake off an overwhelmingly positive series of housing reports. Both Pending Home Sales and the Case-Shiller Index continue to gain.

This week, without much economic data set to release, look for market psychology to play an important role in the direction of mortgage rates. The last two times that mortgage rates fell to these levels, they quickly reversed.

All the pieces are in place for that to happen again.

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youtube channel: http://www.youtube.com/midwesthomeloans

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It's a sensational headline -- "The Sellers' Deadly Sins" -- but the message is clear. Home sellers make mistakes that not only cost themselves thousands, but sometimes cost the sale, too.

NBC's The Today Show lays it out cleanly in this 5-minute video:

1. How to respond to an "insulting offer".
2. How to handle the first purchase offer you receive.
3. What do when you can't leave your home for its Open House.
4. What room in the home should be kept the neatest.

But, be aware. At the video's end, there's a piece of advice that may sound extremely self-serving coming from a real estate professional. Don't let it turn you off. The video's overall message is spot-on and the advice is real-world tested.

Selling a home is a process. Make sure to do it properly.

website: http://www.homeloansmidwest.com/

youtube channel: http://www.youtube.com/midwesthomeloans

blog: http://www.homeloansmidwestblog.com/

The government's First-Time Home Buyer Tax Credit program expires November 30, 2009 -- a scant 60 days from today.

Considering it can take up to 60 days to close on a home, first-time buyers have 2 weeks at most to find a home.

Buyers not under contract by October 15 have little chance of meeting the November 30 deadline and, therefore, little chance of claiming the tax credit.

This is especially true for purchases involving short sales and foreclosures.

Congress passed the First-Time Homebuyer Tax Credit program as part of the 2009 economic stimulus plan.  IRS Form 5405 outlines the program criteria and includes the following stipulations:

• Buyer may not have owned a "main home" in the past 36 months.
• The home may not be purchased from a parent, spouse, or child.
• Adjusted gross income for the household must be below $95,000 for single tax filers and $170,000 for joint tax filers.

The credit is capped at $8,000 or 10% of the purchase price, whichever is less.  And don't forget -- the First-Time Home Buyer Tax Credit is a true tax credit.  It's not a deduction. 

This means that a tax filer who claims the full $8,000 and whose "normal" tax liability is $5,000 would receive $3,000 cash from the US Treasury when their tax return is processed by the IRS.

If you can't close by November 30, 2009, though, you can't claim the credit.

The clock is ticking. If you're planning to use the First-Time Home Buyer Tax Credit, the time to act is now.

website: http://www.homeloansmidwest.com/

youtube channel: http://www.youtube.com/midwesthomeloans

blog: http://www.homeloansmidwestblog.com/

For the second month in a row, 18 of the 20 Case-Shiller real estate markets posted higher home values. It's the 6th consecutive strong showing for the benchmark private-sector housing index.

Combined with falling home supplies and rising sales figures, this month's Case-Shiller Index suggests that housing may have bottomed sometime earlier this year.

It's cause for optimism.

Even Case-Shiller respresentatives seem excited. In its press release, the publishers singled out the index's winning streak, commenting on the recent "stabilization in national real estate values".

But, in that statement, we see the Case-Shiller Index's biggest flaw. The index ipurports itself to be a national real estate metric but, in reality, there is no such thing as a national real estate market.

All real estate is local.

The Case-Shiller Index reports home values for 20 U.S. cities. Each of those cities, however, is comprised of smaller neighborhoods, each with its own character, desirability, and price points. Case-Shiller attempts to lump it all together -- an impossibility.

As an example, New York City posted a nearly 1 percent increase in July but that figure is just a city summary. The actual market in three distinct neighborhoods -- Upper East Side, Chelsea, and Flatbush -- vary tremendously. Not to mention Long Island, too.

Flaws aside, though, Case-Shiller is still important. It helps to identify broader trends in housing and housing may hold the key to our economic future.

With July's Case-Shiller Index, we see that the housing market's recovery is being sustained.

website: http://www.homeloansmidwest.com/

youtube channel: http://www.youtube.com/midwesthomeloans

blog: http://www.homeloansmidwestblog.com/