The $8,000 first-time home buyer tax credit has generated a lot of discussion in the main stream media, as well as on various blogs and in YouTube videos.
Those opposed to the first-time home buyer tax credit argue that it is a federal government hand out that the nation cannot afford. In addition, opponents of extending the first-time tax credit believe the vast majority of people who purchased a home would have done so without the credit; however, some reports put the number of people who purchased a home because of the tax credit at between 300,000 and 400,000.
A recent report that thousands of tax credit are fraudulent (apparently a four-year-old filed a claim) has given opponents more evidence that the program is a waste of federal tax dollars.
With local, state and national Realtor and home builder associations voicing strong support to Congress and the Obama Administration, a tax credit extension seems likely. Various proposals to extend the tax credit are competing in the U.S. Senate. One proposal would simply extend the tax credit through June. Another proposal would increase the tax credit to $15,000.
U.S. Senate Majority Leader Harry Reid of Nevada recently suggested yet another proposal that would extend the current tax credit four months and then phase it out over the course of 2010. The value of the credit would decline $2,000 every quarter. U.S. Speaker Nancy Pelosi apparently wants to extend the credit to all home buyers, not just first-time home buyers.
Supporters of the tax credit argue that the tax credit has stabilized the U.S. housing market, an important piece of the nation's economy. Realtor groups claim that each home purchase adds $63,000 to the economy. In addition, housing inventory around the U.S. has declined, putting inventory closer to normal levels.
I think the tax credit should be extended and expanded. I would be happy with an extension until June 30, 2010. I also think all home buyers, not just first-time home buyers, should be eligible for the tax credit. In addition, the income limits should be double to $150,000 for an individual and $300,000 for joint filers. Finally, the tax credit should be for existing homes only, not new construction. Such a limitation would discourage building in states that still have a glut of new homes.
Virtually all of my clients that are eligible for the tax credit have told me they plan to use the tax credit to improve the property. There isn't any doubt in my mind that this tax credit is putting people back to work, and that is not a waste of taxpayer money.
The number of foreclosure deeds recorded in Massachusetts declined by double-digit percentages in May 2009 compared to May 2008 and April 2009, The Warren Group, a publisher of real estate data, reported June 18, 2009; however, the number of foreclosure proceedings started by banks and other types of lenders dramatically increased during the same period.
There were 582 foreclosure deeds recorded in May 2009, a 58.6 percent drop from 1,405 in May 2008 and 24.3 percent below the 769 in April 2009. Year-to-date foreclosure deeds fell 26.3 percent to 4,110 from 5,576.
“The number of foreclosure deeds recorded in May was the lowest since April 2007. It is encouraging that foreclosures have declined for two months straight. I think lenders have realized how costly foreclosures can be and are taking steps to avoid foreclosure whenever possible,” Timothy M. Warren Jr., CEO of The Warren Group, said.
“But I remain concerned because unemployment has crept up, and many people who’ve lost their jobs will have trouble keeping up with mortgage payments. In addition, it also looks like the pace of initiated foreclosures has remained fairly steady over the last four months. Lenders have started over 2,000 foreclosures a month since February,” Warren said.
A total of 2,329 foreclosure petitions were filed in May, almost six times the 390 foreclosure petitions filed in May 2008. Foreclosure petitions mark the start of the foreclosure process in Massachusetts. In addition, the number of foreclosure petitions climbed 15.7 percent from 2,013 in April 2009. There were 10,978 foreclosure petitions filed from January through May 2009, 13.7 percent lower than 12,726 last year.
“The sharp increase in May foreclosure petitions year-over-year is due to the so-called 90-day right-to-cure law that went into effect last May. The state law, which requires lenders intending to foreclose to give delinquent borrowers in Massachusetts 90 days to catch up on missed mortgage payments, artificially depressed foreclosure petitions in May 2008,” Warren said.
Auction announcements fell 30.7 percent to 1,377 in May 2009 from 1,987 in May 2008, but climbed 26.8 percent from 1,086 in April 2009. Year-to-date auction announcements dropped 34.7 percent to 5,825 from 8,916.
The median price of a single-family home in Massachusetts declined 11.8 percent in May 2009 compared to the same period last year, and single-family sales dropped 15.3 percent, The Massachusetts Association of REALTORS reported June 23, 2009.
I must admit, I expected the sales numbers to be much better, either flat or slightly higher on a year-over-year basis. The decline in median price does not surprise me.
Why? Everyone I speak with is busy, including other agents, home inspectors and mortgage professionals. Sure, the mortgage people were busy with refinances, but many told that home purchases were picking up quite a bit. The median home price decline is not surprising considering that so many of the bank-owned properties are in such horrible shape. Those properties are playing a major role in dragging prices down in some communities. Most of my first-time home buyers are simply not interested in bank-owned homes
The median condo price declined 6.2 percent in May compared to May 2009. Median home prices for single-family homes and condominiums have experienced month-to-month gains for the last three and four months respectively.
There were 2,972 detached single-family homes sold this May, a 15.3 percent decrease from the 3,510 homes sold the same time last year. On a month-to-month basis, home sales were up 21.4 percent from 2,448 homes sold in April 2009.
The median selling price for single-family homes in May was $284,000, a decrease of 11.8 percent compared to $322,000 in May 2008. Despite the decrease, this is the highest median price since October 2008. In addition, the May median price is up 12 percent from the 2009 low of $252,500 in February. On a month-to-month basis, the May median selling price was up 3.3 percent from $275,000 in April 2009. This is the third straight month of month-to-month increases. The May median selling price is now back to more affordable 2003 levels.
The condominium market experienced a significant decrease of 24.6 percent in the number of units sold this May compared to the same time last year (1,640 units sold in 2008 compared to 1,236 units sold in 2009); however, on a month-to-month basis, condominium sales were up 34.9 percent compared to the 916 units sold in April 2009. May was the fourth straight month of month-to-month increases.
Condominium median selling prices in May were down 6.2 percent from $282,500 in 2008 to $265,000 in 2009; however, May's median condo price is the highest median price since August 2008. The May median price is up 30 percent from the 2009 low of $204,000 January. On a month-to-month basis, the median selling price of a condominium was up 12.3 percent from an April 2009 median price of $236,000. The May median selling price for a condominium is now back to 2005 levels.
The number of single-family homes put under agreement in May was down 5 percent compared to the same time last year (5,059 homes in 2008 to 4,802 homes in 2009). On a month-to-month basis, single-family homes put under agreement were up 7.2 percent from 4,480 homes in April. The number of condos put under agreement in May was down 6 percent compared to May 2008 (2,147 units in 2008 to 2,025 units in 2009). On a month-to-month basis, condos put under agreement were up 7.2 percent from 1,878 units in April. Pending sales or “under agreements” are homes that have a signed purchase and sale agreement, but have yet to close and be recorded.
The inventory of residential properties on the market in Massachusetts as of May 31, 2009 decreased 17 percent compared to the same time last year (from 50,537 listings in 2008 to 41,770 listings in 2009). At the current sales pace, this represents approximately 12.4 months of supply, up from 9.8 months of supply in May 2008. On a month-to-month basis, the average months of supply is up slightly from 12.1 months in April. It is considered a balanced market when there are between 7.5 and 8.5 months of supply.
The inventory of single-family homes decreased 17 percent from May 2008 (35,012 listings in 2008 to 29,210 listings in 2009). to 11.9 months of supply in May 2009.
The condominium market saw May inventory decrease by 19 percent from last year (15,525 listings in 2008 to 12,560 listings in 2009), to 13.7 months of supply in May 2009.
Detached single-family homes stayed on the market an average of 148 days in May 2009 compared to an average of 143 days in May 2008, while condos stayed on the market an average of 149 days, up from an average of 135 days in May 2008.
I question the usefulness of the data for days on the market due to the length of time it takes to close short sales. Some listing agents place the short sales "under agreement" on the MLS when an offer is accepted. Some listing agents just flag the property as having an accepted offer, thus continuing to accumulate days on the market. Other agents just keep the property "active" on the MLS until the lender approves the short sale. That can take many months.
I wonder how other agents feel about the data for average days on the market.
A Springfield, MA Land Court judge's recent ruling has resulted in many sales of bank-owned properties being halted.
The judge ruled that due to improper paperwork two banks improperly foreclosed on two Springfield-area homes; therefore, the title to these properties is "clouded" or defective.
The decision effects the sale of many bank-owned properties in Massachusetts. It has effected one transaction of mine.
Read more about this at MassForeclosed.com.
Tewksbury, Massachusetts recorded a gain in the number of sales of single-family homes last quarter, as compared to Q1 2008 and Q1 2007. During the first quarter of 2009, 30 homes sold. This represents an increase of 7.14 percent from the 28 sales of Q1 2008, and is 15.38 percent more than the 26 sales during the first quarter of 2007.
The median price of single-family homes in Tewksbury dropped from the first quarter last year, down from $326,000 to $307,450 in Q1 2009, and a decline of 5.69 percent. Last quarter’s median price is 15.76 percent below Q1 2006.
On average, Tewksbury single-family homes spent less days on the market than they have in the previous three years. While averaging 112 days last quarter, single-family homes averaged 134 days, or 16.42 percent more time on the market during the first quarter of 2008.
Tewksbury, MA Real Estate Market Data
Median Price Number of Sales Days on the Market
Q1 2006: $364,950 36 122
Q1 2007: $371,750 26 153
Q1 2008: $326,000 28 134
Q1 2009: $307,450 30 112
I am an exclusive buyer agent, 100% loyal to home buyers in Massachusetts. I help consumers buy homes in Essex, Suffolk and Middlesex counties. For more information: http://www.buyersbrokersonly.com
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