Doug Reynolds

First Time Home Buyer Tax Credit Update

As of today, the tax credit currently will be expiring on December 1. That means you must close escrow on or before November 30^th to be eligible for the tax credit. There has been a lot of talk about extending and expanding the credit. There are currently a handful of bills out there with multiple variations of some form or extension and expansion to the tax credit being supported by politicians. The hope is that something will be announced by the middle of November on whether or not it will get extended. Most people in the real estate industry think that an extension will happen but nothing is certain yet. I will continue to keep you updated on the tax credit but for right now it's set to expire Dec. 1. Check my blog for the most recent updates on the status of the tax credit.

clear skies,

doug

www.BuyWithDoug.com

data and information from the Sacramento Association of Realtors:

After a 5.6% increase in August, the median sales price decreased for the month of September. Sales volume followed a similar trend, decreasing slightly month to month.

Single family home sales dropped to 1,631 total units in September. This is a 3.1% decrease from the 1,683 units sold the previous month. Year-to-year, the current figure is 19.3% below the 2,020 sales of September 2008. Of the 1,631 sales this month, REO sales made up 45.4% of the total sales while short sales and conventional sales made up the remainder of sales at 19.3% and 35.3%, respectively. When compared with August, REO sales decreased slightly while short sales and conventional sales showed slight increases.

After some positive movement, the median sales price decreased 3.7% in September from $190,000 to $183,000. Compared to the previous year, the current figure is 6.1% below the $194,950 of September 2008. The Total Listing Inventory increased from 4,987 to 5,273, a 5.7% change. The current Total Listing Inventory is 26% below the 7,124 listings reported in September last year. The Housing Market Supply figure again increased slightly, from 3 months in August to 3.2 months. Compared with last year, this figure is down 8.6% from the 3.5 months of inventory of September 2008. This figure represents the amount of time - in months - it would take to deplete the total listing inventory given the current rate of sales. According to MetroList® MLS data, the average home spent 48 days on market (from the time it was listed to the time escrow was opened) and was 1,714 square feet. Of the 1,683 sales this month, 158 (9.4%) had 2 bedrooms or fewer, 880 (52.3%) had 3 bedrooms, 506 (30.1%) were 4 bedroom properties and 136 (8.3%) boasted 5+ bedrooms.

At the 2009 C.A.R. REALTOR® Expo, California's largest real estate trade show, REALTORS®, Affiliate Members and Association Staff were treated to a number of meetings, including a housing market forecast. "We expect the median price to decrease slightly through the remainder of 2009 and into next year, then rise before leveling off next summer," said C.A.R. Chief Economist Leslie Appleton-Young. "For the year as a whole, home prices are forecast to reach $280,000." C.A.R. President James Liptak also commented: "California's housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market. This follows two years of double-digit sales declines in 2006 and 2007. Looking ahead, we expect sales to moderate to a more sustainable pace."

Condominium Resale Market

Sacramento condominium sales decreased 2.5% from 118 last month to 115. Compared to last year, sales are up 5.5% from the 109 units sold in September 2008. REO properties made up 54.8% (63) of all sales while short sales accounted for 12.2% (14) of the sales. Conventional sales rounded out the remainder of the total, accounting for 33% or 38 sales. The condominium median sales price decreased 3.5% month-to-month from $93,000 to $90,000. This current price is down 19.5% from the $112,000 median sales price of September 2008. The total listing inventory increased 5.6% month to month from 504 listings to 532 listings. Compared with the total closed escrows, the total listing inventory represents 4.6 months of inventory in the local condominium market.

Doug's Take: Well, it's pretty much more of the same for Sacramento as the MLS statistics were released today. The median price had a very slight dip from $190k to $183k. I actually think that very small dip can be looked at as positive news. Ever since February when our median price bottomed out our values were experiencing very high increases. We were at a risk of getting back into over inflated prices. I think it will be best for our market if the median bounces around a very small range for a long consecutive amount of months. That will allow our market to truly stabilize and then we can get back to small, steady incremental appreciation. Also, the inventory went up from 3 months to 3.2 months. Although small, this is good news. There are just too many buyers and not enough homes right now. If we could get to around 5 months of inventory we could see much more of an equilibrium. Other than that, our high sales volume was almost identical to the previous month. All in all i'd say good news for the Sacramento market. let me know if you have any questions.

clear skies,

doug

www.BuyWithDoug.com

from the LA Times:

Reporting from Washington - Will Congress extend the wildly popular $8,000 home buyer tax credit beyond its Dec. 1 expiration date?

That's a question generating huge pressure on Capitol Hill from would-be buyers who haven't found the right house as well as from realty agents, builders, lenders and squads of lobbyists working on their behalf.

But here's the first hint of an answer: On Sept. 17, the leadership of Congress' primary tax legislative committee introduced a tax credit bill that's likely to zip through the House and move to the Senate rapidly. Charles B. Rangel (D-N.Y.), chairman of the House Ways and Means Committee, sponsored the bipartisan Service Members Home Ownership Tax Act (H.R. 3590), which would extend the credit for another 12 months for thousands of military, Foreign Service and intelligence agency personnel who've been posted abroad during 2009.

Rangel's bill, with 29 cosponsors, would keep the credit alive through Nov. 30, 2010, for service members who had at least 90 days of overseas duty assignments during 2009 and who otherwise meet the eligibility requirements.

The bill would also prohibit the IRS from "recapturing" the $8,000 credit when service members are forced to sell or rent out their houses because they are ordered to deploy to a different duty station, overseas or inside the country.

Under the regular rules of the program, buyers who obtain the credit must use their houses as a principal residence for 36 months or repay the credit to the IRS.

As a result of the 36-month rule, many military and diplomatic employees have been hesitant to buy a house and claim the credit or are worried that their absence from the country could force them to repay the money.

For example, the spouse of a Foreign Service officer posted to the Philippines this summer for a two-year assignment wrote to Rep. Earl Blumenauer (D-Ore.) to alert him to a flaw in the tax credit program. The Oregon couple bought their first home earlier this year, encouraged by affordable prices and the $8,000 credit. But having now been posted abroad, they cannot claim to occupy the house as their principal residence. Under current rules, they face recapture of the full credit.

Blumenauer, who is a member of the Ways and Means Committee, said "it is absurd that thousands of Americans serving our country, away from friends and family, must choose between their service work and homeownership." He wrote corrective legislative language that was incorporated into Rangel's tax bill.

Though nothing is guaranteed on Capitol Hill, legislation eliminating tax penalties on the military during wartime looks like a good bet for early passage in both houses. Equally significant: It now appears likely that there will be an $8,000 tax credit available a year from now -- at least for some purchasers. Which raises the question: Why not leave it in place for all first-time buyers?

There's growing support for that on both sides of the Capitol, but there are also some complicating issues.

In the Senate, the most outspoken advocate for months has been a Republican, Sen. Johnny Isakson of Georgia, a former real estate broker. He wants not only to extend the credit to Dec. 1, 2010, but also to raise the maximum to $15,000 and make it available to all home buyers next year.

But recently, key Senate Democrats produced their own version of an extension, limited to six months, keeping the ceiling at $8,000 and targeting only first-time purchasers. The bill's primary sponsor is Sen. Benjamin Cardin (D-Md.). Democratic cosponsors include Majority Leader Harry Reid of Nevada and Debbie Stabenow of Michigan. Republicans John Ensign of Nevada and Isakson have signed on as well.

Cardin raised what may prove to be the crucial issue affecting the scope and duration of any credit extension: cost. "A six-month extension is a fiscally responsible way to provide adequate time to nudge even more prospective home buyers off the sidelines," he said in a statement.

Estimates of the revenue costs of the current credit vary widely, from $3 billion to more than $8 billion.

How do you pay for any extension without worsening the budget deficit? The new Rangel bill includes an answer: You raise taxes somewhere else -- you "pay as you go." The Rangel bill would pay for most of the servicemen's credit extension by increasing IRS penalties on taxpayers who fail to file partnership or S corporation returns.

This would raise an estimated $327 million over the next 10 years. Where and how to raise taxes to cover the far larger cost of a six-month or 12-month extension of the current tax credit could prove much more controversial.

Doug's Take: this is the first time i've heard of extending the credit for service members. I think if it's going to get extended it should atleast continue to be for all first time buyers, if not for all primary residence purchases. However, i do see the major flaw that this article points out about our military be punished when they are forced to move and now have to repay the credit. I agree with changing that. However as we get closer to the end of the credit, this is my take. If i were a betting man, i think there is atleast going to be some form of extension. i don't know if that means just for service members, or keep it how it is or to add move up buyers but i think some form of the credit will get extended. I could be wrong but i'm seeing first hand how much it is helping the economy and market on a daily basis. As always, i'll continue to keep you updated.

clear skies,

doug

www.BuyWithDoug.com

One of the areas i specialize in, is the 95826 zip code (Rosemont, College Greens and Glenbrook).

Here is sales data information for that area for closed sales in Sept. 2009:

All of the 95826:

31 Sold Single Family Homes.

Median Square footage: 1,563

Median Listing Price: $180,000

Median Sales Price: $182,000

Average Days on Market: 19 days

Rosemont:

21 Sold SFR's

Median Sq. feet:1,465

Median List: $175,000

Median SOLD: $178,100

Avg. DOM: 16

College Greens/Glenbrook:

7 Sold SFR's

Median Sq. feet:1,563

Median List: $244,900

Median SOLD: $227,000

Avg. DOM: 21

Doug's take: As you can see Rosemont is selling for little bit less. The houses in the lower price range are selling a bit faster and are also selling for over list price in most cases. Both neighborhoods are showing high volume of sales with properties selling with multiple offers in a few days. Let me know if you have any questions about the area or any properties on the market in this location. I've personally been inside a large majority of the homes on the market in the 95826. I'm here to help.

Clear skies,

Doug

www.BuyWithDoug.com