Currently browsing February 2009 monthly archives.

The Key Fact Missing From Today’s Existing Home Sales Headlines

On February 26, 2009, in Real Estate Information, by Tyler Ford | Comments

Existing home sales for January 2009In reading the headlines this morning, you’d think that last month’s Existing Home Sales figure signaled more trouble ahead for the housing market. 

Quite the contrary.

Beyond the attention-grabbing headlines is the real story;  the one that shows — once again — that housing market fundaments are coming back into balance.

As home values tick lower, it appears, value buyers are stepping in and snapping up supply.  It’s true that the number of homes sold fell to its lowest levels in 12 years, but we can’t ignore the fact that the number of homes available to buy fell, too.

  • Banks have put the brakes on foreclosures
  • Economic uncertainty is reducing job-related relocations
  • Builders have all but stopped building new homes

The national housing supply is as low as it’s been in more than a year.

Based on the current rate of sales activity, the national housing supply would be 100% sold in 9.6 months — a two-month improvement from the high point set in June 2008. 

Demand for homes is expected to rise, too:

  • The Federal Reserve is trying to hold mortgage rates low
  • Fannie Mae is opening its checkbook to real estate investors
  • The stimulus package is granting tax credits to first-timers
  • Tucson, Arizona is a desirable place to live and will recover quicker than other cities and states

So, it’s not that the headlines are wrong; it’s just that they’re incomplete. 

In looking at all of the data and not just one sliver of it, we can find hope. Falling supply plus rising demand leads home values higher and that’s the basis for a recovery.

(Image courtesy: Wall Street Journal Online)

The Relative Cost Of Owning Versus Renting Is Back At Historical Norms in Tucson, AZ

On February 25, 2009, in Real Estate Information, by Tyler Ford | Comments

The cost of owning a home versus renting one is returning to historical levelsOne popular housing theory is that –  before a bona fide housing recovery can begin – the cost of owning a home versus renting one must return to historical levels.

If that belief is a truth, a national return to rising home prices may be in store for 2009. 

Falling home prices coupled with falling mortgage rates, too, have dropped the relative, after-tax cost of owning a home to 125% of the cost of renting a home.

This is the exact 18-year historical average and not since 2001 has the gap been this small.

As reported by the Wall Street Journal, though, the study has some flaws.  For example, the data doesn’t account for ongoing home maintenance costs, nor does it consider real estate tax bills and insurance policies. 

But, combining a relatively low cost of ownership with the government’s $8,000 tax credit for first-time home buyers is likely to convert long-time renters into never-before homeowners.

This, too, is thought to be a key element of the housing recovery.

In many markets (but not all), home prices are expected to edge lower through 2009.  Provided mortgage rates stay low, the cost gap between owning and renting will shrink even more.

(Image courtesy: Wall Street Journal)

$8,000 Tax Credit For First Time Tucson Home Buyers

On February 24, 2009, in Mortgage Programs & News, by admin | Comments

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Let Tyler Ford and Todd Abelson of Sunstreet Mortgage show you how.

Click on the link below.

www.gethomegetcash.com

tyler-ford-and-todd-abelson-sunstreet-mortgage-575

Economic Stimulus Plan Benefits the Housing and Mortgage Industries

On February 24, 2009, in Mortgage Programs & News, by admin | Comments

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Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction

It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

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Rick Santelli and the “Rant of the Year”

On February 23, 2009, in Videos / YouTube, by admin | Comments

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Recent Comments

  • Tyler Ford: Great job Todd!
  • Tyler Ford: Seems as through the real estate market is picking up and home prices are stabilizing.
  • Gail Richards: Thanks Todd! More Great Information! Thanks for being on top of everything…your the best! Gail
  • admin: Hey Todd, Can’t wait to pick a winner!
  • steve kargel: Thank you Todd for sending us your updates and especially for insights like the Eller annual economic...

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