The Basics: Extended Home Buyer Tax Credit 2009/2010

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

• Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
• Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.

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Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
  
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

1. The price of the home.
2. The buyer's income.

Price
 

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

realtor.com

Retail Investors to Enter Market in 2010

Retail Investors to Enter Market in 2010

Jones Lang LaSalle's 2010 Retail Outlook projects retail transactions and sales volumes to increase as customer demand starts to gradually recover.

In the new year, investors looking to take advantage of low acquisition prices are likely to find some of the biggest value in Class A trophy shopping malls.

Kris Cooper, managing director in the retail investment sales practice, remarks, "The continued lack of liquidity in the debt markets has contributed to pent-up demand, and we expect opportunistic investors to cautiously re-enter the market in early 2010. We're just now seeing lenders' willingness to lend to strong sponsors open up, but those lending offers are at far more conservative levels than we've seen in the past.

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Because of pending debt maturities and the need for capital, highly leveraged institutional investors are expected to hold on to properties unless forced to dispose of them. Cooper concludes, "Buyers will probably stick around for the next six to nine months before seeking better opportunities. We are also seeing significant interest from international buyers who feel now is the time to re-enter the U.S. market."

Source: GlobeSt.com, Katie Hinderer (12/13/09)

© Copyright 2009 Information Inc.

Tips for Winter Driving

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Winter Driving

Winter is the most difficult driving season. Not only do you have snow and ice to deal with, but there are fewer hours of daylight as well. Before winter weather arrives, make sure your vehicle is in good condition, especially the tires, battery, and exhaust system. Never combine radial and non-radial tires on the same vehicle. On front-wheel drive cars, it is best to put snow tires or "all-season" tires on all four wheels, not just the front. Be sure the windshield washer container is filled with a freeze-resistant cleaning solution. Always carry emergency supplies in case you become stranded. (See below for a suggested list.) A Citizens Band (CB) radio and/or cellular phone can be very useful to you or another stranded motorist in case of an emergency. Remember to pull of the road to talk on a cellular phone.

Driving Tips:
Know your vehicle. Not all cars respond the same to icy, slippery roads. For that reason, knowing how to handle your vehicle and how it responds in various weather conditions is important. Your owner's manual will provide vital information about your vehicle's braking system, tire traction, and safety tips. Drivers should maintain winter driving techniques and caution even when roads appear clear. For those driving SUVs or 4-wheel drive vehicles, please remember that these vehicles react to ice just like any other vehicle. Overconfidence in your vehicle's abilities can lead to serious problems.

• Utah law requires the use of seat belts and child safety seats in all vehicles. Driving while under the influence of alcohol and/or drugs is prohibited. Laws are strictly enforced.
• Clear all snow and ice from your hood, roof, trunk, turn signal lights, tail and headlights, windows, mirrors, and fenders.
• Plan your route and be familiar with the maps/directions to avoid confusion.
• Check the weather reports and adjust your starting time.
• Inform others of your route and expected time of arrival.
• Always fill the gasoline tank before entering open country, even for a short distance, and stop to fill-up long before the tank begins to run low. Keeping the gas tank as full as possible will minimize condensation.
• Drive with extra caution. Start slow and easy from a stop and steer smoothly. No abrupt turning, braking or accelerating.
• Increase your following distance. The distance needed to stop on ice is twice as long as that you would need to brake under normal driving circumstances.
• Drive slower than the posted speed limit; remember that it is calculated for ideal weather conditions.
• You have better visibility using your LOW BEAMS when driving in a snow storm or fog.
• Use extra caution when driving on bridges, overpasses, tunnels, or areas without direct sunlight. Those areas often have black ice - a thin clear layer of ice which allows the dark underlying road surface to show through. Black ice forms when the temperature is around (even slightly above) freezing and the road is damp/wet from high humidity, fog, daytime snow melt, rain, or snow. Signs of black ice include a shiny road surface or when you no longer see spray from the tires of other vehicles but the road still looks wet.
• KNOW YOUR BRAKES. Your owner's manual will provide information about your braking system. Find out which type of brakes your vehicle has and follow the safety steps below.
  
  
  
  1. Anti-lock braking systems (ABS) offer significant advantages on slick roads, if used correctly. To operate ABS effectively, apply steady pressure to the brake pedal during the entire stop. ABS will automatically pump the brakes, if necessary, to keep the wheels from locking. Never manually pump ABS brakes yourself. Apply only steady pressure continuously until you come to a complete stop.
  2. If you don't have ABS, you should gently apply pumping pressure to your brakes during slippery conditions. Do not apply steady pressure to your brakes. Standing on your brakes will only cause wheel lock, and may result in your car spinning out of control.
  
  
  
  

• HANDLING SKIDS
  
  
  
  1. FRONT WHEEL DRIVE: Once you feel your car begin to skid, slowly remove your foot from the accelerator, until you feel your wheels regain traction control. (Do not attempt to brake!) As your vehicle's tires grab the road, slowly turn the steering wheel in the direction you want your front wheels to go.
  2. REAR WHEEL DRIVE: When you begin to spin, remove your foot from the gas pedal. Slowly steer in the direction you want the car to go. If you are still skidding out of control, counter-steer until your vehicle is pointing in the right direction. Never apply steady pressure to the brakes.
  
  
  
  

If you become stranded:

(Items in bold should already be packed in the vehicle as part of your emergency supplies. See below for a complete emergency supply list.)

• If your vehicle breaks down, pull as far off the road as possible and turn on the warning/flashing lights. Your greatest personal danger at this point is that of being hit by passing cars.
• Don't panic. Use common sense.
• Do not leave your car unless you know exactly where you are, how far it is to help, and are certain you will improve your situation.
• To attract attention light two flares and place one at each end of the car a safe distance away or hang a brightly colored cloth from your antenna.
• If you are sure the car's exhaust pipe is not blocked, run the engine and heater for about 10 minutes every hour or so depending upon the amount of gas in the tank.
• To protect yourself from frostbite and hypothermia, use the woolen items, blanket, newspapers, and large bags to keep warm.
• Keep at least one window open slightly. Heavy snow and ice can seal a car shut.
• Bottled water may freeze. Eat a hard candy to keep your mouth moist.

Vehicle Emergency Supply List:

1. Battery jumper cables
2. First aid kit
3. Shovel
4. Basic tool kit (pliers, screwdriver, adjustable wrench) and pocket knife
5. Sleeping bags or blankets
6. Extra winter clothing (caps, socks, mittens, and boots)
7. Bottled water & non-perishable food - nuts, candy, nutrition bars, etc.
8. Windshield scraper
9. Flashlight and transistor radio with extra batteries for each
10. Candle and matches
11. Bag of sand
12. Bright colored cloth
13. Wireless phone, if available

Why many home-price measures may be misleading

By Lew Sichelman

WASHINGTON (MarketWatch) -- Question: I have noticed that some reports regarding housing prices reference "average" pricing while others refer to "median" pricing. Are both average and median considered roughly equally reliable measures of value? If indeed median pricing tends to get cited more frequently, why do you think that is? Just curious to get your take.

Answer: Median is the number that is the midpoint of the sample, or the central point of a set of data. To find the median, you would list all the data points and simply pick the entry in the middle of the list. Average, on the other hand, is the sum of all values in sample divided by the number of values. 

So, if 100 houses sold for a total of $1 million, the average price would be $10,000, or $1 million, the sum of all the selling prices, divided by the number of houses in the sample. To know the median, you'd have to know the selling price of each house in the sample and then plot out the midpoint at which the same number of houses sold for more and the same number sold for less.

Averages can be skewed by occurrences at the extremes, however. For example, if one house sold for $1 million and nine houses sold for $10,000, the average would be $109,000, even though most of the places in the sample sold for $99,000 less. It works the other way, too: If nine houses sold for $1 million and one sold for $1, the average would be $900,000.10, about a hundred grand less than what almost everybody in the sample paid.

Medians, on the other hand, are a true midpoint that can be impacted only by the size of the sample. Once the number of houses in the sample is determined, there is only one midpoint.

Each statistical measure has its merits, I suppose. I'm neither an economist nor a mathematician. But to me, averages work best when they are looked at over time, whereas medians are better when the sample is more robust.

Not to knock anyone's numbers, but when the widely quoted National Association of Realtors publishes its monthly sales statistics, it does not cover all sales for that month. NAR's sample does not capture new-home sales unless they went through the multiple listings service, and many of them don't. (Actually, it does not include any sales outside electronic multiple list services, and in this day and age, there are still some of those out there.) Based on my experience, I consider the new-home market to be the sales leader. Prices in that sector tend to rise or fall first, and existing houses tend to follow suit.

Numbers published by the also widely followed Federal Housing Finance Agency capture only those sales of houses that were financed by mortgages purchased by either Fannie Mae or Freddie Mac, not once but twice, first when the homes were purchased some years back and, second, when they were purchased this time.

But not all houses are financed by Fannie or Freddie-loans. In fact, most expensive houses are not. Another drawback -- at least I think it is a drawback -- is that the homes in the sample change over time. Consequently, a house in a market where prices are otherwise stagnant may sell for more than it did in the previous transaction simply because the seller put on a new roof, changed the carpeting or threw on a new coat of paint.

The figures I like to quote are published by the FHFA too. But they aren't followed by too many people. Indeed, before the mortgage market meltdown, they were published by the little known Federal Housing Finance Board, an independent agency which was moved into the FHFA when it was created to ride roughshod over Fannie, Freddie and the Federal Home Loan Banks.

One reason I like the FHFB/FHFA figures is that they are ones used to determine the so-called "conforming loan limit," which is the ceiling on loans which can be purchased by Fannie Mae or Freddie Mac, which then package them into securities that are sold to investors. I also use them because they include new-home sales.

But my favorite has its shortcomings too. For one thing, it does not include sales that were financed by government loans. That tends to skew the numbers higher because typically, FHA and VA loans are used to finance less-expensive houses. For another, the figures I quote are averages. Therefore, they are best looked at over the long-term; not months, and not necessarily year-over-year, but, say, this year versus three or five years ago.

Update 

"Shortly after I wrote you [regarding a dispute with our real estate agent over pricing] (Realty Q&A, Nov. 20, 2009), I was accidentally cc'd on a nasty email letter from the agent to her broker calling me and my husband crazy for wanting to increase our price. See previous Realty Q&A.

"The broker replied to all [I always love seeing people blunder with technology] advising the agent to only provide us with minimal service. She also added a few choice words. I took those emails to the president and various higher authorities within the franchise and explained my situation. They thought the agent's and broker's behavior so inappropriate and embarrassing that they were willing to provide me with a nonconditional release. We simply requested that they transfer the listing to a more competent office.

"Guess what? We not only got better service and more serious viewings, but we listed the house for $10,000 more, got an offer for $30,000 more than we would have with the other agent and actually are under contract right now -- just three weeks after the new listing! I'm sure what has happened here is not so typical but the power of my letter to the head of the realty company gave us an opportunity to be treated to a real professional (they gave us their top agent) rather then being held captive by two very incompetent folks."

Response 

Well, shiver my timbers. Guess I read you all wrong. I thought you were being unrealistic because all the offers came in far below your asking price, when all along it was the agent who was doing you a terrible disservice. I humbly apologize.

One of the lessons here is that if you believe you have been wronged, take your complaint to a higher authority. More often then not, someone at the next level or the next level above that will listen. And of course, it helps to be armed with a piece of rather damning email too.

When Is a Real Estate Agent a REALTOR®?

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When Is a Real Estate Agent a REALTOR®?

A real estate agent is a REALTOR® when he or she becomes a member of the NATIONAL ASSOCIATION OF REALTORS®, The Voice for Real Estate®, the world's largest professional association. The term "REALTOR®" is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and abides by its strict Code of Ethics.

Founded in 1908, NAR has grown from its original nucleus of 120 members to more than 1 million today. NAR is composed of REALTORS® who are involved in residential and commercial real estate as brokers, salespeople, property managers, appraisers, counselors, and others who are engaged in all aspects of the real estate industry.

Members belong to one or more of 1,700 local associations/boards and 54 state and territory associations of REALTORS® and can join one of our many institutes, societies, and councils. Additionally, NAR offers members the opportunity to be active in our appraisal and international real estate specialty sections. REALTORS® are pledged to a strict Code of Ethics and Standards of Practice.

Working for America's property owners, the NATIONAL ASSOCIATION OF REALTORS® provides a facility for professional development, research, and exchange of information among its members.

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Check out the Public Awareness Campaign television and radio spots that encourage consumers to rely on the expertise and integrity of REALTORS®.

The NAR advertising campaign runs February through November on network and cable television and network and satellite radio, helping consumers understand the real value of working with REALTORS®. From their voluntary adherence to a Code of Ethics to their incomparable knowledge of real estate processes, REALTORS® are the experts of residential and commercial property transactions.

RE/MAX.com adds foreclosure listings FREE

RE/MAX.com adds foreclosure listings FREE

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Homebuyers will now be able to search through more than 1 million foreclosed properties and access agents specializing in short sales and foreclosures, all in one location. RE/MAX International Inc. said it’s the first national real estate franchise to offer U.S. foreclosure listings on its Web site, www.remax.com.

Remax.com visitors can now access more than 1.3 million real estate owned (REO) properties in the U.S. through RealtyTrac.

“We strive to provide consumers with the most information, properties, videos, articles and resources to help them navigate today’s market,” said Kristi Graning, senior vice president, information technology and eBusiness for RE/MAX International. “Remax.com is now the perfect combination of resources on one Web site, where visitors can search for foreclosures and connect with a uniquely trained RE/MAX agent who specializes in short sales, REOs and foreclosures.”

Homebuyers across the country, including those looking to take advantage of the recently enhanced homebuyer tax credit, can search foreclosures by accessing the foreclosure tab in the featured property search box on remax.com.

Sourced by government agencies and national news media, RealtyTrac is the No. 1 foreclosure listing service. It collects extensive foreclosure data from more than 2,200 counties, covering more than 90 percent of U.S. households.

As part of the partnership, RE/MAX agents also have access to an advanced subscription of RealtyTrac’s service and foreclosure information which allows them to better serve clients. The comprehensive subscription offers agents more detailed information including properties in default and properties scheduled for public foreclosure auction, along with tax assessment information, comprehensive lien and loan history and neighborhood home sale trends.

“We are very pleased to be working with RE/MAX, one of the world’s leading real estate brands, and we’re excited to give consumers another way to access foreclosure data,” said Rick Sharga, senior vice president for RealtyTrac. “We believe we can have a positive impact on the national housing market by providing consumers with vital foreclosure information and giving homebuyers an opportunity to find the perfect home with the right agent.”

Many RE/MAX agents are qualified to manage foreclosures and distressed property. More RE/MAX associates have earned the Certified Distressed Property Expert (CDPE) designation than agents from any other national real estate network. The CDPE training, through the Distressed Property Institute, gives RE/MAX agents the expertise to assist buyers and sellers of REO and distressed properties.

For more information on RE/MAX International, or to search for property listings, visit http://www.remax.com. For more information on RealtyTrac, visit http://www.realtytrac.com.

Credit fix

Credit fix

Home-buyer tax credit will boost sales, housing market will stabilize: NAR 

By Amy Hoak, MarketWatch

SAN DIEGO (MarketWatch) -- Home sales are expected to rise about 15% next year, as buyers take advantage of a home-buyer tax credit and housing prices stabilize, the National Association of Realtors' chief economist predicted on Friday at the group's annual conference in San Diego.

The industry group is forecasting 5.69 million existing home sales in 2010, up from an anticipated 5.01 million this year. About 549,000 new-home sales are projected for next year, up from an estimated 397,000 this year, he said.

"The fear factor will no longer be at play in 2010," said Lawrence Yun, NAR chief economist. Many consumers feared that home prices would continue to fall and decided to postpone their purchases until the values were finished declining, he said. But next year, those who remained on the sidelines will believe prices have hit bottom.

And they'll take action -- if they have a job, he said.

Yun said unemployment could remain about 10% during 2010, but it "will not deter those people with jobs from making home-purchase decisions."

Realtors are celebrating the extended and expanded home buyer tax credit at their annual conference. The industry group, along with others, lobbied for passage of the measure. Read more on the expanded credit.

With the credit, first-time buyers can qualify for up to $8,000; those who own a home may qualify for a credit of up to $6,500 for the purchase of a new principal residence. Realtors are optimistic that the "free money" being offered to home buyers will help generate sales during some of the softest months of the year: November, December and January, Yun said.

"By putting cash in the hands of financially healthy home buyers, the credit will continue to help draw down inventory and stabilize home prices to encourage a strong and sustainable housing recovery," said NAR President Charles McMillan in a news release.

To qualify for the credit, buyers have to have a binding contract on a property in place by April 30, and need to close on the sale by June 30. Yun said there is a strong sentiment in Washington that the credit won't be extended again. He also thinks that it might not be needed.

"By that time, the housing market will be back on track... and I believe that will be the situation as the tax credit comes to an end in the middle of next year," Yun said. By that time, he expects home values to be showing consistent -- and sustainable -- increases.

Barring any major unforeseen events impacting the economy, home prices are expected to rise between 3% and 5% next year -- although appreciation will vary widely between local markets, he said. See why some economists think housing could be in for a double-dip recession in 2010.

Yun is also taking into account the high level of foreclosures that will continue to pile up into next year. Yun expects foreclosures to peak in the first or second quarter, but said there is demand in the market to absorb the inventory quickly. Read more on the avalanche of mortgage modifications that need to be dealt with.

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Focus on first-timers

First-time buyers made up a record 47% share of home sales over the past year, up from 41% in 2008, according to NAR's Profile of Home Buyers and Sellers, scheduled to be released during the conference. In 2006, as home prices were near their peaks in many markets, first-time buyers made up 36% of sales.

The rise in people buying a first home is being attributed largely to the tax credit; Yun estimates that there were 2.3 million to 2.4 million first-time buyers this year.

First-time buyers also took advantage of lower home prices this year, as well as low mortgage rates. NAR is forecasting that the 30-year fixed-rate mortgage will average 5.3% in the fourth quarter, and will rise gradually to 5.8% by the end of next year.

Yun said that the jumbo mortgage market is showing signs of improving, which will help sales of more expensive homes; jumbo loans are those that exceed the conforming loan limit and thus are too large to be bought by Freddie Mac or Fannie Mae.

Amy Hoak is a MarketWatch reporter based in Chicago