Friday, April 30, 2010

The Headlines Were Overly Rosy On February's Case-Shiller Index

Case-Shiller Change In Home Values Jan-Feb 2010

Earlier this week, Standard & Poors released its February Case-Shiller Index, a home price tracker for select metropolitan areas. 

Overwhelmingly, home values fell in the 20 markets tracked by the Case-Shiller. Only San Diego showed a modest increase.  The other 19 markets averaged a 1.23 percent decline between January and February.

However, that's not the story you read in the most papers. Instead, headlines read that home values were up in the United States, citing annualized data.

Unfortunately for active home buyers and sellers, year-over-year data isn't all that helpful when making a real estate decisions. It's the month-to-month data that matters. Month-to-month changes in home prices are what defines a housing market. Month-to-month is what sets the tone for contracts and negotiations on a purchase.

The rosier, annualized data published this past week just doesn't capture the reality of what was the February 2010 market.  And even then, the data is somewhat useless because it's from February and May will be upon us next week.

Case-Shiller is on a 2-month lag -- hardly reflective of the "right now" of real estate.

When you're looking for real estate data that actionable, consider using sources that are more "real-time". A real estate agent may be the right place to start.  Because for all the data that Case-Shiller and the other housing indices collect, it can never be as relevant to your individual needs as a well-executed, timely market analysis.

Housing Starts Data Hints That Housing Will Expand Even After The Tax Credit Expires

Housing Starts Apr 2008-Mar 2010After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.

It's yet another signal that the housing market nationwide is stabilized.

A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.

This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago.  Revisions to prior data have all been higher, too.

Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.

Housing permits are an important data point in housing because permits are precursors to actual housing starts.  According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

Therefore, because March's housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.

This, too, reflects well on housing because the federal home buyer tax credit won't be in existence this summer. The simple fact the homes are being built now shows that housing is likely to expand even after the tax credit expires.

Non-military members must be under contract by April 30, 2010 and closed by June 30, 2010 in order to claim up to $8,000 in federal tax credits.

Thursday, April 29, 2010

Home Cooking - Granola

This granola recipe is not only low in both fat and sugar, but it is extremely cost effective. In terms of taste, I find this granola to be spectacular. Make it on the weekend when you have time, and eat it for breakfast or as a snack throughout the week.

Orange, Cranberry and Almond Granola (makes 5 1/2 cups granola)

3 C old-fashioned rolled oats

1/4 C wheat germ

1/4 C flax seeds

1/4 C unsalted and shelled sunflower seeds

1/2 C almond slivers

1/2 C pecan pieces

3/4 C dried cranberries

1/3 C fresh squeezed orange juice

3/4 C honey

1 Tsp orange zest

1 1/2 Tsp vanilla extract

1 Tsp almond extract

1/3 C canola oil

Preheat oven to 325 degrees.

In a small saucepot, combine orange juice, honey, orange zest, vanilla, almond extract and canola oil. Heat over a low flame just until the honey melts and all the ingredients are incorporated.

In a large mixing bowl, combine oats, wheat germ, flax seeds, sunflower seeds, almonds and pecans.

Pour the orange juice mixture over the oat mixture and mix until everything is well combined.

Spread the oats in a thin layer on a greased cookie sheet and bake for 15 minutes. Remove from the oven and gently stir the granola. Bake for another 15 minutes. Add the cranberries to the granola, gently mix and bake for an additional 10 minutes.

Remove the granola from the oven and allow it to cool completely. Transfer it to an airtight container or re-sealable bag and enjoy!

How Iceland's Volcanoes Are Helping Mortgage Rates Fall

Mortgage rates react to natural disastersMortgage rates and home affordability have improved lately, thanks to an unlikely ally -- Mother Nature.

In the 7 days since Iceland's Eyjafjallajökull erupted, ash clouds have grounded planes, disrupted businesses, and stranded exports in warehouses worldwide.

It's a drag on commerce that's spilled over onto Wall Street. As experts debate the potential for future seismic activity, traders are taking some of their investment risk off the table. 

In trading circles, it's called "safe haven buying". When the market gets cloudy, investors often move their cash into relatively safe assets.  This includes government-backed securities -- mortgage-bonds among them.

Demand for bonds rise, pushing up prices and driving down rates.

Conforming and FHA mortgage rates touched a 3-week low earlier this week.

Volcanic eruptions and like natural disasters remind us: mortgage rates change for all sorts of reasons. Some we can predict, most we cannot. There's literally thousands of influences on the U.S. mortgage market.

If you've been shopping for a home or floating a mortgage rate, luck's been on your side. Mortgage rates have fallen post-Eyjafjallajökull. However, as ash clouds dissipate and business resumes worldwide, investors will regain their collective appetite for risk and safe haven buying will reach its natural end.

When that happens, mortgage rates will rise.

Therefore, use the seismic uncertainty to your advantage.  Consider locking your mortgage rate sooner rather than later -- while rates are still low.

Wednesday, April 28, 2010

A Simple Explanation Of The Federal Reserve Statement (April 28, 2010 Edition)

Putting the FOMC statement in plain EnglishToday, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.

In its press release, the FOMC noted that, since March, the U.S. economy "has continued to strengthen" and that the jobs markets "is beginning to improve".  This is a step up from the last meeting after which the Fed said jobs were "stabilizing". 

It also reiterated that business spending "has risen significantly".

Today's statement marks the 7th straight press release in which the Fed shows optimism for the U.S. economy. Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year's financial crisis.

Threats remain to growth, however. The Fed fingered a few:

  1. Employers are reluctant to hire new workers
  2. High unemployment threatens consumer spending
  3. Consumer credit (still) remains tight

Also in its statement, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent "for an extended period".  This was expected.

Overall, the statement's tone was positive and the Fed noted that inflation is within tolerance. 

Mortgage market reaction has been muted thus far. Mortgage rates are unchanged post-FOMC.

The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010.  The 55-day span between meetings will be the FOMC's longest of 2010.

The Fed Adjourns From A 2-Day Meeting Today And What It Means For Mortgage Rates

Comparing 30-year fixed mortgage rate to Fed Funds Rate since 1990The Federal Reserve adjourns from a scheduled, 2-day meeting today.  It's one of 8 scheduled Fed meetings for 2010.

Upon adjournment, Fed Chairman Ben Bernanke & Co. will release a formal statement to the market. In it, the Fed is expected to announce "no change" in the Fed Funds Rate.

The Fed Funds Rate is currently in a target range of 0.000-0.250 percent.

The Fed Funds Rate is an inter-bank lending rate. It's also the basis for Prime Rate, a consumer interest rate on which credit card payments are based, among other consumer loans.  Prime Rate is equal to the Fed Funds Rate + 3 percent.  Credit card rates, therefore, will likely stay flat today, too.

Mortgage rates, however, should change.  Possibly by a lot.  The 30-year fixed mortgage does not correlate with the Fed Funds Rate (as shown in the chart at right).

The reason mortgage rates will change today is because, in its statement, the Federal Reserve will highlight vrious parts of the economy, identifying strengths, weaknesses and probable threats to growth. 

These observations influence investors with a stake in bond markets and future returns and, with Wall Street on edge right now -- unsure of whether recent economic growth is a longer-term trend or a short-lived blip --  mortgage rates could shoot higher or they could drop, depending on how traders interpret the Fed.

It's a difficult time to be shopping mortgages.

Further complicating matters is Greece's recent debt downgrade to junk status. A small contagion fear is budding worldwide and, as a result, the flight-to-quality has picked up steam. Mortgage rates are down because of it but could reverse higher at any moment.

Therefore, if you're actively shopping for a mortgage today, it may be prudent to lock your rate ahead of the Fed's announcement and any major market reversal. Mortgage rates may fall today, but there's very little room for them to fall.  This is, however, a lot of room for them to rise.

The Fed adjourns at 2:15 PM ET.  Call your loan officer to lock your rate.

Fight Your Real Estate Property Tax Bill Without A Lawyer

More than 60 percent of U.S. homes are "over-assessed", says an industry trade group. Homeowners pay more in property taxes than they otherwise should have to.  You might be one of them.

Have you considered fighting your real estate tax bill?

In this 4-minute piece from The Today Show, you'll learn:

  • When to file your tax bill dispute for the best chances of winning
  • How to pull your "property card" and check for tax bill-raising errors
  • What to do if the taxing authority turns down your request

Most importantly, you'll learn that don't need to hire an attorney to fight your tax bill.  You just need to be prepared.  Do your research and make your case. It's estimated that nearly half of all contesting homeowners are successful.

Tuesday, April 27, 2010

New Viral Song

It had to happen; in the world of viral videos we’ve had Charlie Bit My Finger, then Susan Boyle and recently the Evian Babies but what about social media? Introducing the “Everybody Tweet Tweet” song. Expect to see this on every news channel and breakfast show in the next few months. Enjoy (?)

New Homes Sales Were Strong in March, But Not As Strong As The News Would Have You Believe

New Home Sales Mar 2009-Mar 2010The sales of newly-built homes soared in March. Even more than what was expected. But the news may not be as glowing as what the media is telling us.

Take a look at the headlines from last Friday:

  • Sales of new homes rocketed up 27 percent in March (WaPo)
  • New-home sales rise fastest in 47 years (CNNMoney)
  • Sales of New Homes Climb by Most Since 1963 (Business Week)

None of these statements is false, per se, but each is somewhat misleading.  The biggest reason why March's New Home Sales was even able to rise 27 percent is because data from the month before it -- February -- was the worst in New Home Sales history.

In February, new homes sold posted its lowest level in recorded history. 

A better comparison would be against March a year earlier; or October 2009, the month before the home buyer tax credit's initial expiration date. 

Against both of those time periods, March 2010 fared well.

Home buyers - first-timers and repeats alike -- went under contract last month, taking advantage of the soon-to-expire federal home buyer tax credit program.  The credit gives up to $8,000 for first-time buyers and up to $6,500 for repeat ones.

Buyers must be in mutual contract on or before April 30, 2010 to be eligible for the credit, and must closed on or before June 30, 2010.

The New Home Sales data included other strong housing data, too. The current supply of new homes nationwide is at a multi-year low.  Along with stronger home demand, this should push home prices higher throughout the coming months.

It's no wonder builders are bullish on the economy.

Home Resales Boom Into The End Of The Tax Credit; Home Values Seen Rising.

Existing Home Sales Mar 2008-Mar 2010Existing Home Sales rose in March, as expected. U.S. home buyers closed on 7 percent more homes as compared to February.

Furthermore, versus March 2009 -- a month many people equate to the low point of the U.S. economy -- sales volume was up 16 percent.

"Existing home sale" is the technical term for a home resale; a home previously inhabited by a person.  It's the opposite of a "new home sale" which is a sale of a newly-constructed home.

Existing Homes Data is tracked by the National Association of Realtors® and a closer look at the March data reveals some other interesting notes:

  1. Year-over-year sales are higher for the 9th straight month
  2. Real estate investors represented 19 percent of all homes purchased
  3. First-time home buyers account for 44 percent of all buyers

Also worth noting is that the supply of available homes is down on a broader basis.  At the current rate of sales, the existing home inventory will be exhausted in 8 months.

Despite banks releasing foreclosures and REO into the market, that's still one half-month less from February.

When supplies drops, home prices tend to rise. It suggests an underlying strength in housing that should support home prices through the next few months -- especially as the home buyer tax credit finishes working its way through the system.

That said, real estate markets are local. You shouldn't assume that what's happening on the national level is also happening here at home.  Be sure to check with your real estate agent about local market conditions before making a decision to buy or sell.

Monday, April 26, 2010

New State Tax Credit

A new state tax credit goes into effect on May 1, 2010 for first-time home buyers and buyers of new, never-occupied homes. The state has allocated a total of $200,000,000 to be split evenly between both groups.

The tax credit applies to escrows that close on or after May 1, 2010. and before January 1, 2011. Additionally, if escrow is entered prior to December 31, 2010, you have until August 1, 2011 to close escrow.

These tax credits are limited to the lesser of 5% of the purchase price or $10,000. The tax credit must be applied over three years in equal amounts beginning in the year the home was purchased.

The tax credit is not refundable, meaning if your total tax is less than $10,000, you will not be getting a check for the difference.

In any event, please do not construe this as legal or financial advice. Please contact your lawyer or financial adviser if you intend to use the credit.

For full information, go to:

P.S. If you open escrow before April 30th, you can take advantage of the state and the federal tax credits.

Remember, the real estate market is a matter of neighborhoods and houses. No two are the same. For complete information on a particular neighborhood or property, call me.

Median Price Jumps in March

Median Price Jumps in March

The median price for single-family, re-sale homes rose 19.1% year-over-year in March. It is now at its highest point since June 2008. This is the seventh month in a row the median price has been higher than the year before.

Meanwhile, inventory also rose sharply last month: up 21.2% year-over-year. Inventory is at its highest level since February 2009. This is also the first time since last February that inventory has been higher than the year before.

Home sales also improved in March, rising 0.9% over last March.

Pending sales remained anemic, down 51.7% from last year. This is the fourth month in a row pending sales have been weaker than the year before. Note that we are reporting pending sales without contingencies. Contingent sales are now 4,571, with most of those being short sales subject to lender approval.

Nevertheless, with the new state tax credit, and the federal tax credit still in effect until the end of April, we expect sales for the Spring selling season to be strong.

Thursday, April 22, 2010

How To Buy Bank-Owned Homes In A Period Of Rising Inventory

Foreclosures concentrate on 4 statesForeclosure filings rose close to 20 percent nationwide last month versus February, according to foreclosure-tracking firm, and for the 13th straight month, total filings topped 300,000.

In addition, bank repossessions reached an all-time, quarterly record. Through the first three months of 2010, banks reclaimed more than 257,000 homes.

Nonetheless, 4 states dominated foreclosure activity nationwide.

California, Florida, Arizona and Georgia accounted for more than half of all bank repossessions. It's a disproportionate distribution of foreclosures. Together, the 4 states represent just 23 percent of the overall U.S. population.

The RealtyTrac report revealed some other interesting statistics, too.

  • Foreclosure activity was up in 40 out of 50 states last month
  • Bank repossessions rose 9 percent versus the same quarter last year
  • For the 13th straight quarter, Nevada topped the state foreclosure rate

Regardless of where you're buying, foreclosures and REO are making a profound impact on pricing and product. Distressed homes are 35 percent of the overall resale market.

There's excellent value in foreclosures out there if you know where to look, but keep these points in mind:

  1. Buying bank-owned homes can take 120 days to close or more. Be flexible.
  2. Foreclosures aren’t always listed for sale publicly. Some inventory is privately-held.
  3. Bank-owned homes are often sold "as is". There may be defects that render the homes mortgage-ineligible.

The REO market can be different from the traditional "existing home" market.  Therefore, if you have an interest in buying REO, be sure to talk with an experienced real estate agent first.

Wednesday, April 21, 2010

Home Renovations That Increase Your Resale Value (2010 Edition)

Not all home improvement projects are created equalNot all home improvements are created equal. Especially if you're looking for "resale value" back from your work.

An article from the Wall Street Journal lays it out cleanly. Function beats flash these days so be wary of where you spend.

Environmental upgrades such as home insulation and energy-efficient steel entry doors are recovering a much greater percentage of their cost these days than major remodels including kitchens or bathrooms.  This is especially true for homes that are already "over-improved" relative to the neighborhood.

Upgrading the biggest and best homes on the block can be a losing proposition.

The article's findings include data from groups such as the National Association of Home Builders, Remodeling Magazine, and Consumer Reports.  It lists the following home improvements among its top "paybacks":

  • Steel entry door replacement : 129% cost recovery
  • Wood deck addition : 81% cost recovery
  • Vinyl-replacement window : 77% cost recovery

Energy-efficiency projects also recoup costs monthly in the form of lower heating and cooling bills.

Remodeling Magazine says a larger number of homeowners will remodel their homes in 2010 with less emphasis on upgrading kitchens and bathrooms, and more emphasis on adding new rooms.  From an appraisal perspective, this is a terrific way to increase your home's value -- especially if your home's bed/bath count lags your neighbors.

Before starting a home improvement project, regardless of whether your goal is increase resale value, talk with a real estate agent about other homes in the area and how they're built. At worst, you'll gather some ideas you can work into your plan. At best, you'll keep yourself from over-improving.

Tuesday, April 20, 2010

Why You Shouldn't Schedule Your Closing For May 28, 2010

3-day weekends can make closings toughThe federal home buyer tax credit expires April 30 and the deadline is sparking a home sale surge. It figures to burden real estate, mortgage and title offices nationwide over the next 60 days so plan your closing date accordingly.

Especially because the last Friday in May is the Friday before Memorial Day.

Now, if the connection between the tax credit and Memorial Day is not immediately clear, think of your own office on a 3-day weekend's Friday. Some of your colleagues take a half-day at work, others take the entire day off.

Office-wide, productivity drops.

The same is true in the real estate space. Offices are short-handed ahead of a holiday so, if you're under contract for a home and plan to close in May, consider a closing date other than Friday May 28, 2010. 

And meanwhile, with 6 weeks until Memorial Day, here's some steps you can take today prepare for other people's time off later. 



  1. Notify your lender of your planned vacation time between now and your scheduled closing
  2. Purchase a homeowners insurance policy and prepay the first year. Send proof of payment to your lender.
  3. Have Power of Attorney forms lender-approved and signed by all parties in advance, if applicable
  4. Deposit gift monies and/or retirement fund withdrawals into an acceptable bank account, if applicable
  5. Schedule your final walk-through as far in advance as is realistic so there's time to make "fixes", if needed
  6. Have your closing funds ready at least 1 day in advance

The tax credit's expiration is around the corner and as it gets closer, real estate-related businesses are taking on more work. Basic title and mortgage tasks are taking longer to complete and that should persist for a while.

Get ahead of the curve and beat your contract dates handily. Use the checklist above and be responsive to your lender's requests.


And, if at all possible, avoid closing on the Friday before Memorial Day and even the Tuesday after -- it's when office staffs are at their smallest.

Monday, April 19, 2010

How To Keep Your Kitchen Knives Sharp

If you own kitchen knives, you better keep them honed. That's because a dull knife blade not only slows you down in the kitchen, but it can be more dangerous than its ready-to-cut counterpart, too.

In this brief, 2-minute video, you'll learn how to use a knife steel to keep your kitchen cutlery in top form.

Among the tips:

  1. Hold your knife at a 20-degree angle to the steel for maximum effect
  2. 10 swipes per side is sufficient to keep the blade straight
  3. Mid-range knife steels are the best choice for most kitchens

Most knife steels don't actually sharpen knives. Instead, they straighten the microscopic teeth that make the knives work. And that's okay. Just remember use the steel every time you use your knife.

Sunday, April 18, 2010

It's Time To Re-Approve Your Pre-Approval

Get re-approved for your mortgageAs the federal home buyer tax credit nears its April 30 end-date, there's a lot of would-be home buyers still working to get under contract.

A piece of advice for all of them : If your pre-qualification and/or pre-approval letter is more than 8 weeks old, it would be prudent to have your lender "re-pre-approve" you.  Mortgage guidelines have been in flux and your original lender letter may now be invalid.

For example, over the past half-dozen months, the majority of mortgage lenders have reduced their risk tolerance with respect to:

  • Maximum debt-to-income ratios
  • Minimum allowable credit scores
  • Calculation of "assets in reserve"

For buyers of condominiums and co-ops, even the subject property itself is coming under tougher scrutiny.

Today's mortgage applicants need to be a complete package. It takes more than just good income and credit to get approved anymore and today's buyers should revisit their qualifications. What passed underwriting in January may not pass in May.

Being pro-active brings other advantages, too. If a mortgage re-pre-approval does unearth an issue, it'll be easier for every party to the transaction to address and correct it up-front versus trying to clean up a mess once a home's already under contract.

Talk to your agent and your loan officer about your pre-qualification/pre-approval letter before you bid on a home.

Saturday, April 17, 2010

A Traveler's Guide to the Airport

Be Organized
From the moment you start planning your trip, you need to create a system of organizing tickets, receipts, itineraries, passports and the like. While it sounds like we're stating the obvious, you would be surprised at the amount of people who don't do this, as well as the time it wastes rummaging for these items once you're at the airport. If, by chance, things do not go as planned on your day of travel (i.e. flight delays or cancellations), organizing your documents will provide you quick access to necessary information.

Early Check In
Many airlines now allow you the ability to check-in early, even pick your seat, as much as 24 hours in advance of your plane flight. This process can be done via the airline's website, and in some cases by way of free applications that can be downloaded to your smart phone. If possible, take advantage of these options. Doing so buys you peace of mind, and possibly a lot of time.

Be sure to check your airline's restrictions for both carry-on and stowed baggage. For carry-on baggage most restrictions have to do with size. Simply put, you cannot bring anything into the airplane's cabin that is too large to fit in the overhead compartments.
Dress Code
The clothes you wear to the airport can save you a lot of time while moving through lines.

Dress comfortably and weather appropriately, but forgo wearing any unnecessary accessories. Items such as belts, watches, wallets and jewelry will have to be removed when passing through airport screening.

The shoes you wear are important, as you will be asked to remove them as well. We suggest wearing loafers or any type of shoe that can be easily slipped off and on.

Checking Bags
You have several options when it comes to checking bags. The first is utilizing the skycaps. Normally located just outside your airline's departure terminal, skycaps can check in your bags, and check you in as well. Skycap lines can vary in size, but many times they are much shorter than those inside the terminal. It's important to know that while most airlines offer free skycap check-in, a few do charge, usually a couple of dollars per bag. No matter if your airline charges for this service, it is customary to tip your skycap two dollars (or more) for every bag you check.

Sorry for the delay!

Yes, I know it has been a week since I have posted.  It has been a crazy week with no time to write.  I think this is a good thing altogether.  I had 3 short sales approved this week!  Yes, I think we are about to see some improvement in the time it takes to complete a short sale.  My longest time is 17 months, and my shortest is 3 months.  Let's hope this week is a sign things are improving.

Wednesday, April 7, 2010

The Baker's Edge Nonstick Brownie Edge Pan Makes Perfect, Double-Edged Brownies

One of my favorite things!  Baker's Edge all edges brownie panFor fans of "edge" pieces, this brownie pan from Baker's Edge is a cookware best-seller and for good reason. It's built strong and bakes double-edged, extra chewy brownies to perfection inside and out.
Made from heavy-gauge cast aluminum, the Brownie Edge Pan is a continuous baking chamber that channels heat to all pan parts equally.  The result is a more evenly-cooked, better tasting batch of brownies. And with a 9 by 12 by 2 inches capacity, the pan is large enough to handle most homemade and box mixes.
Like cookware, you often get what you pay for with respect to baking products and, at $35 from, the Baker's Edge Nonstick Brownie Edge Pan may be worth every penny.  Or you can do what I did and order from the Solutions catalog for $39.00!  Ouch!
Buy one for yourself, or as a housewarming gift for a friend. It's perfect brownies every time.

Tuesday, April 6, 2010

Case-Shiller Shows Home Price Improvement In A Majority Of Cities Nationwide

Case-Shiller Monthly Change Dec 2009 - Jan 2010

Standard & Poors released its Case-Shiller Index Wednesday. The report shows that, on a seasonally-adjusted basis, between December and January, home prices rose in more than half of the index's tracked markets.

The strength of this month's Case-Shiller report, however, should be put in context.

For one, the report is on a 2-month delay; it's showing data from January, before the start of the Spring Buying Season and before the rush to beat the tax credit. Anecdotally, buyer interest has been strong since, leading to the types of multiple offer situations that drive home prices northward.

In other words, home values may be even higher than what's reflected in the January Case-Shiller data above.

Furthermore, the Case-Shiller Index measures home values in just 20 cities nationwide and they're not even the 20 biggest cities. Houston, Philadelphia, San Antonio and San Jose are specifically excluded from the report and each ranks among the country's 10 most populous areas.

Despite its flaws, though, the Case-Shiller Index remains important. Much like the government's Home Price Index, the private-sector report helps to finger broad housing trends and housing is still considered a keystone in the U.S. economic recovery.

Even if it's two months slow.

Monday, April 5, 2010

The Federal Home Buyer Tax Credit Enters Its Home Stretch -- 30 Days Left

Federal home buyer tax creditThere's just 30 days remaining to use the federal home buyer tax credit.

The credit ranges up to $8,000 for first-time homebuyers, and up to $6,500 for existing homeworkers who have lived in their main home for 5 of the last 8 years.

Claiming the federal tax credit is a two-step process. First, you must be under contract for a new home on or before April 30, 2010.  Then, you must close on said home on or before June 30, 2010. 

There are no exceptions on the dates (except for certain members of the military).

Timeline aside, homebuyers and the subject property must also meet minimum requirements in order to be tax credit-eligible:

  • You can't purchase the home from a parent, spouse, or child
  • You can't purchase the home from an entity in which the seller is a majority owner
  • You can't acquire the home by gift or inheritance
  • Each buyer in the purchase must meet eligibility requirements
  • The home sale price may not exceed $800,000
  • Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers

The complete eligibility checklist is published on the IRS website.  Or, if you find IRS-speak too difficult, make a phone call to your accountant.  Asking a tax professional's advice on a tax-related matter is never a time-waster.

And lastly, don't forget that if you're claiming to federal tax credit for home buyers, it's a tax credit and not a deduction.  This means that a tax filer who qualifies for the full $8,000 and for whom the "normal" federal tax liability is $8,000, will owe no federal taxes in 2010 to the IRS.

If you're an active buyer , mark your calendar for April 30, 2010. It's 30 days from now and, as the date gets closer, buyer traffic will increase. The likely result is higher home prices and more difficult negotiations.  The best time to act may be today.