Extension is Likely for the First Time Home-Buyer Tax Credit

With the deadline on the First Time Home-Buyer Tax Credit program looming just one month away, the Obama administration is backing an extension from the original date of November 30, 2009 until April 30, 2010. The program, which has been helpful in stimulating the housing market, offers first time home buyers a straight $8000 credit on their taxes. (Previous credits were more of a loan that required the buyer to repay the government). More than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the homebuyer tax credits this year, according to the Treasury Department.

With so many buyers scrambling to close before November 30, many buyers face the possibility of losing out simply because underwriters are swamped and may not be able to deal with the demand in time. In addition, if a buyer has not yet begun the purchase process, it is unlikely they will make the deadline. The present discussion would extend the credit until April, but there are also new components up for review, like an addition credit of $6500 for home buyers who have lived in their prior homes for a minimum of 5 years and new increased income eligibility requirements, opening up the field of potential buyers considerably.

For more details about the current tax credit program, read our April 30, 2009 article (click here)

National Rebound in Existing Home Sales

Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.”

Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, which represents an 7.8-month supply2 at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0 percent below a year ago.

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19 percent in August; the rate was 6.04 percent in September 2008.

Excerpted from Realtor.org
Big Rebound in Existing-Home Sales Shows First-Time Buyer Momentum

Third Quarter Activity Report

The summer real estate market picked up markedly beginning in June and July, resulting in many third quarter sales. Many buyers, who had been waiting out the market for the past few years, came off the sidelines this summer and decided to buy. Low interest rates and the first time homebuyer credit have also helped to spur activity. The general feeling is that the market has leveled off and is not expected to drop significantly further. Despite the increased summer activity, the number of sales in Provincetown and Truro are still down about 50% off of last year’s figures while Wellfleet held fairly even with last year’s sales (which had already suffered a large decrease over the previous year).

Check out the "Real Estate Blog" on our Web site for charts compare year-to-date sales figures for Provincetown, Truro and Wellfleet with the same period last year and report on the average Days on Market of the property that sold.

Provincetown

The most active segment of the condominium market has been in the $300K - $600K range, which is accounts for 36 of the 55 sales and comprises 16 of the 30 pending sales. In the single family market, most of the activity is in the $750K and under market, with 9 sales thus far in this category and 6 more pending.

Truro

Most of the activity in Truro is in lower priced single family homes. 8 of the 15 sales were under 600K. 3 Sales were between 600K-800K and 4 were over 1M. There have been no sales this year between 800K – 1M.

Wellfleet

In Wellfleet, interest in single family homes comprises most of the activity in this market. The heaviest concentration of sales has been between 300K-600K, with all of the sales being under 900K.