Chad & Sara Huebener

By Sara Huebener

The first-time home buyer tax credit is one of the most useful pieces of information we can share with buyers right now. Even people not looking to buy their first home should know about the credit because the ability and ease in which buyers can make a purchase impacts home sellers in move-up brackets. Here are some facts about the tax credit:

1. The tax credit is available for first time buyers only, and the maximum amount of credit is $7,500.

2. The credit is available for homes purchased on or after April 9, 2008 or before July 1, 2009.

3. Qualifying buyers include single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000.

4. The credit works like an interest-free loan and must be repaid over a 15-year period.

5. A first time buyer is defined as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the home ownership history of both the home buyer and his/her spouse. Ownership of a vacation home or rental property that is not used as the buyer's principal residence does not disqualify the buyer from eligibility.

6. For purposes of the tax credit, a principal residence that is constructed by the home buyer is treated as having been "purchased" on the date the owner first occupies the house. The date of occupancy must fall within the boundaries specified in number 2 above. If a newly constructed home is purchased from a builder, the settlement date determines eligibility for the tax credit.

More info can be found at www.FederalHousingTaxCredit.com

Buyer resources can also be found at http://www.federalhousingtaxcredit.com/resources.html

By Sara Huebener

I don't know if it was the warmer temps, or if people are really starting to see the positive aspects of purchasing a home in today's real estate market. But I DO know that buyers were out in droves this Sunday, going through open houses. The heavy traffic through my Super Bowl Open was refreshing!

Most of the people through the open house were toying with the idea of buying a larger family home to accommodate their needs. I found their comments to be very telling. Most of them commented that the deals and interest rates are so great that they are thinking about selling their existing homes to get what they really want and need for their families, and all seemed to understand that dollar-for-dollar, they would come out ahead in the long run with the purchase of a larger home.

With interest rates at 4-7/8 for a 30-year fixed mortgage, there is certainly reason to consider moving up. As long as people feel comfortable and stable in their jobs and prospects for the future, this is by all means a time to begin researching that avenue.

Spring market officially starts today. We will continue to post stats and updates on our www.WestSavageBlog.com as the market progresses. Keep watching our blog, and we'll watch the market for you.

By Sara Huebener

I've always been an advocate of owning real estate as part of one's financial portfolio, and, whenever possible, including investment properties among that list. I believe that if one can tolerate the nuisances that go hand-in-hand with investment property for a considerable period of time, ownership of investment properties can reap big rewards.

On Christmas Eve, we purchased another investment property. It was a bank-owned townhome in solid structural condition, but rough shape (if that makes sense). The home has some unique and attractive features such as beamed and vaulted ceilings, large rooms and a finished basement. And with a purchase price at 46% of its most recent sale price and 65% of active comparables, it appeared to be an attractive investment.

We are in the process of wrapping up Week 3 of the rehab on this home, including long, 3-day weekends of work. It has cost a handful of people hundreds of hours to work on plumbing, replace locks, fixtures and appliances, patch walls and doors, replace vanity tops and shower doors, paint, and CLEAN. The home is almost ready to go. I am wrapping up the final pieces later today with paint and the carpet. It is looking great and we are hoping to turn this into a clean and safe home for someone.

Such homes are seldom the "easy money" they are portrayed to be on HGTV, even after the repairs are completed. Owning rental property can an interesting experience. It is important to screen tenants well, and even then, nothing is guaranteed. We have had good renters in some of our units, and not so good ones at other times. Our best renters have always paid rent on time and kept the unit in good order. Even so, a Sunday night call about a broken washing machine is not uncommon. One tenant I had in a rental in Apple Valley riddled my months with headaches from non-payment of rent, trashed the unit and ultimately needed to be evicted. Fortunately there was a co-signor. On the other hand, my friend Pat had a renter for 20 years who was absolutely wonderful. He was very fortunate.

It will be interesting to see how this one goes. We have bought and sold rental properties over the past eight years. I expect it will continue to be an ongoing piece of our long-term financial plan. It's not easy, but neither is working while raising a family or saving for college. Preparing for the future is just "something we do". If you think you can tolerate the workload that goes into maintaining an investment property, I would encourage you to try to pick up a property soon. There are some amazing deals out there right now!

By Sara Huebener

The Price Range Supply Analysis is one of my favorite means for gauging our local real estate market. I would like to talk about our local housing market in particular, for December 2008.

The Southern Twin Cities Association of REALTORS® Housing Supply Outlook reports that the inventory of homes priced between $250,000 and $500,000 (which is the predominant price point of the West Savage market) is down an average of 21.95% from last year's numbers. Simply stated, fewer people in the $250,000 to $500,000 price point are attempting to sell their homes at this time.

However, the report states that the months supply of current inventory is down -.45% compared to 2007. This tells us that homes in the $250,000 - $500,000 range are starting to sell faster than they were last year. When the months supply of current inventory in our market is declining, that tells us that houses are selling faster because homes are sitting on the market for shorter periods of time.

Finally, a review of the first-time homebuyer market is always important to residents of West Savage, because when a first-time homebuyer makes a purchase, the sellers in those transactions (when not bank-owned) translate into potential buyers for homes on the market in the West Savage price point.

First-time homebuyers need to make rapid decisions, because homes in their bracket are moving quickly. While the inventory of homes on the market that are priced under $120,000 is up almost 80 percent from last year, the months supply of homes in that same price point is down by 43.1%, meaning these homes are flying off the market. Once the foreclosures and short sales work their way through the system, West Savage should expect to see a healthy boost in home sales.

This article was published in Savage's The Pointe Neighborhood Winter Newsletter, and was submitted on December 17, 2008.

By Sara Huebener

These days, more than ever before, the status of the real estate market seems to be a hot topic. In a day and age when people have unexpectedly seen home values and retirement accounts plummet, it's true that concern and uncertainty abound. Therefore, it comes as no surprise when people call us to inquire about the current market. Their primary questions regard possible decline in the value of their current home, whether we have reached the bottom of the market, and how long it will take to "get back to where we were".

The years 2000-2004 were incredible times for the Twin Cities housing market as far as most are concerned, especially in The Pointe. The market was accelerating rapidly, and at its peak, houses were selling fast and for top dollar. People were making a good return on investment. Many people used this real estate "bull market" to upgrade their homes and provide a higher standard of living for their families.

This brings us to the current market. Have we hit the bottom? It would appear so, of course, no one can say for sure. Home sales for October and November in the Twin Cities market are already ahead of the same months for 2007. This is a promising statistic.

So what does this mean for homeowners in The Pointe? That depends on particular situations. Those who need to downsize should consider holding onto their existing home for a period of time, to allow existing foreclosures to work through the system, since foreclosed homes put downward pricing pressure on current values. Conversely, those who are planning to upsize (and are in a positive equity position in their home) should do so now. Many higher-end homes are being offered at bargain prices. What might be a lesser sale price than could have been obtained three years ago can quickly be recouped in the savings from the larger purchase. Those who have no intention of selling (or refinancing) can rest easy, knowing that the value of their current home is, for all practical purposes, moot. After all, the value of a home, in a mindset that can be compared to viewing the value of stocks, is most important to those who need to sell.

Now that the tables have turned and we are seeing favorable conditions for buyers, first-time homebuyers have phenomenal opportunities before them. Downward pricing pressure from the rise in foreclosures, paired with a federal $7,500 tax credit offered through July 2009, provides first-time homebuyers with every incentive to get off the fence and make a home purchase now. This is good news for homeowners in The Pointe because when first-time home buyers can purchase a home, the sellers in those transactions (when not bank-owned) translate into more buyers for our neighborhood.

Now is also a terrific time to build personal wealth and expand portfolio diversification. The rise in foreclosures indicates that many people will not be able to purchase a home for several years. The rental market is therefore expected to be quite strong for the next 3-5 years. This high probability, paired with downward pricing pressure, creates a good opportunity to acquire investment properties at a price where profitability is likely.

In this time of uncertainty, two things are apparent: While it is only natural to be concerned about the value of one's home, those planning to upsize have tremendous opportunity to capitalize on this market. And if you have ever wanted to invest in real estate, there is no time like the present. The market is cyclical, and the key is to take advantage of the unique opportunities that each rise and fall present to us.

Chad and Sara Huebener are local Savage REALTORS® with Coldwell Banker Burnet. They have over 16 years of experience and specialize in the West Savage area. They can be reached at chad@cbburnet.com.