Seattle Home Prices Show Monthly Gain

as reported by the Seattle Times

Seattle home prices show monthly gain for first time in 2 1/2 years

Home prices in Seattle rose on a seasonally adjusted basis in October from September, the first increase in almost two and a half years, according to the closely watched S&P/Case-Shiller index.

By Seattle Times staff and news serivces

Home prices in Seattle rose on a seasonally adjusted basis in October from September, the first increase in almost 2 ½ years, according to the closely watched Standard & Poor's/Case-Shiller index.

The seasonally adjusted Case-Shiller figure for Seattle rose 0.44 percent in October. The index had fallen every month since peaking in May 2007; it's still down 22.5 percent since then and down 12.5 percent since October 2008.

Seattle was one of 11 cities in the 20-city index to post a seasonally adjusted increase in October.

On a non-adjusted basis, the local index has been essentially flat since March.

The local numbers compare with a seasonally adjusted October increase of 0.37 percent in the 20-city composite index, the fifth month of gains. Without adjusting for seasonal factors, the index was flat from September.

Home-price gains since the summer reflect the rush of buyers trying to close deals before the original expiration date of a federal tax credit. The Nov. 30 deadline was extended last month to April 30.

Besides a credit of up to $8,000 for first-time buyers, Congress expanded the program to include homeowners who have lived in their current properties for at least five years. They can now claim a tax credit of up to $6,500 if they relocate.

The 20-city home-price index was off 7.3 percent from October last year, nearly matching expectations of economists surveyed by Thomson Reuters. Many economists, however, are predicting a double dip in prices this winter as foreclosures increase and government support wanes.

"I'd be very surprised if we don't go below the lows we hit this year," Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning Washington, D.C.-based think tank. "We still have a very glutted housing market."

The 20-city index is up 3.4 percent from its bottom in May, but still almost 30 percent below its peak in April 2006.

There are also wide variations in price trends around the country. Prices have climbed for at least six months in a row in Denver, Washington, D.C., Minneapolis and San Francisco, for example.

But there's no sign of a bottom in Las Vegas, where prices have tumbled more than 56 percent from their peak in April 2006.

Other cities showing price gains included Charlotte, N.C., Detroit, Los Angeles, Phoenix, Portland and San Diego. Decliners included Atlanta, Boston, Chicago, Cleveland, Miami, New York and Tampa, Fla. Dallas showed no change.

Information from Seattle Times business reporter Drew DeSilver and The Associated Press is included in this report.

Posted 2009-12-30 in 2009

Interest rates will need to rise - but not anytime soon

Fed holds rates low as weak economy caps inflation

AP - Wed Dec 16th, 2009 6:10 PM EST

WASHINGTON - The economy is growing, but only weakly. Layoffs have slowed, yet jobs remain scarce. And interest rates will need to rise — but not anytime soon.

That was the mixed picture sketched Wednesday by the Federal Reserve , which pledged to hold rates at a record low to reduce unemployment and sustain the recovery. And the assessment was reinforced by government data on inflation, home building and U.S. trade.

Fed Chairman Ben Bernanke and his colleagues did sound a more optimistic note by pointing to the slowdown in job losses. But they made clear the recovery is far from strong: Consumer spending remains sluggish, the job market weak, wage growth slight and credit tight. Companies are still wary of hiring, they said.

In the meantime, the Fed isn't wavering from its commitment to keep its bank lending rate at zero to 0.25 percent, where it has stood since last December. It said again it will keep rates there for an "extended period."

In response, commercial banks ' prime lending rate , used to peg rates on home equity loans, certain credit cards and other consumer loans, will remain about 3.25 percent. That's its lowest point in decades.

Super-low interest rates are good for borrowers who can get a loan and are willing to take on more debt. But those same low rates hurt savers. The rock-bottom rates are especially hard on people on fixed incomes who earn scant returns on savings accounts and certificates of deposit .

Michael Darda, chief economist at MKM Partners, predicted that rates would stay where they are for most of next year.

"We believe the Fed is essentially out of the picture until late 2010 or early 2011," Darda said. The Fed's "optimism was constrained by a long list of caveats," he added.

Low inflation is one sign of the economy's weakness. Companies are finding it hard to raise prices because consumers fearful for their jobs remain wary of spending much.

That was clear from a Labor Department report Wednesday on consumer prices. Prices did move higher last month. But that was mainly because of volatile energy costs.

After stripping out volatile energy and food prices, inflation disappeared last month. That gives the Fed leeway to hold its key interest rate at a record low to aid the recovery.

At the same time, home construction rebounded in November after a setback in October. And applications for new building permits — a gauge of future activity — rose more than economist had predicted. A housing recovery is vital to the overall economy.

Also, the government said its broadest measure of foreign trade posted a sharp increase in the July-September quarter, signaling higher demand for foreign goods. That, too, is seen as a sign of a slowly strengthening economy.

The current account is the broadest measure of trade because it includes not only trade in goods and services but also investment flows among countries.

For last month, the Consumer Price Index , the most closely watched inflation barometer, rose 0.4 percent. That was up from a 0.3 percent increase in October.

The government said energy prices rose 4.1 percent, reflecting more expensive fuel oil and gasoline. Energy prices, though, are already in retreat. Oil prices are down about 10 percent this month.

"Aside from the surge in energy prices ... there were few signs of any inflationary pressures," said Paul Ashworth, economist at Capital Economics Ltd .

The uptick in inflation last month, however slight, ate into Americans' already-weak wages. Average weekly earnings, adjusted for inflation, dipped 0.7 percent from November 2008, according to a separate Labor Department report . It was the first such drop this year.

The Fed said it expects to wind down several emergency lending programs when they are set to expire next year. That seemed to strike a confident note that the Fed thinks it can gradually lift supports it provided at the height of the financial crisis.

The central bank made no major changes to a program, set to expire in March, to help further drive down mortgage rates.

The government is spending an unprecedented amount to prop up the housing market. The Fed expects to have bought $1.25 trillion in mortgage securities from Fannie Mae and Freddie Mac by the end of March. It's bought $845 billion so far.

It's also on pace to buy $175 billion in debt from those groups under the same deadline. So far, the Fed has bought nearly $156 billion.

Its efforts to lower mortgage rates are paying off. Rates on 30-year loans averaged 4.81 percent, Freddie Mac reported last week. That's down from 5.47 percent last year.

The government has propped up the housing market in other ways, too. It's spending roughly $15 billion for a tax credit for homebuyers. And that credit is being extended until spring at a cost of $8.5 billion. In addition, the cost of bailing out Fannie and Freddie could soar as high as $300 billion, according to Barclays Capital .

The Fed said it has leeway to hold rates at super-low levels because it expects that inflation will remain "subdued for some time."

Fed policymakers repeated their belief that slack in the economy — meaning plants operating below capacity and the job market staying weak — will keep inflation down.

Some worry that the Fed's cheap-money policies will stoke inflation.

But Bernanke, who's been named Time magazine's "Person of the Year" for 2009, has sought to assure skeptical lawmakers and investors that when the time is right, he's prepared to withdraw the extraordinary stimulus money the Fed has injected into the financial system. Doing so would reduce the likelihood of igniting inflation or new asset bubbles.

Some encouraging signs for the economy have emerged lately. The economy finally returned to growth in the third quarter, after four straight losing quarters. And all signs suggest it picked up speed in the current, final quarter of this year.

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AP business writers Martin Crutsinger and Alan Zibel contributed to this report.

Posted 2009-12-17 in 2009

Northwest MLS brokers expect momentum to continue in 2010

Move-up buyers, extended/expanded tax credits boost home sales;
Northwest MLS brokers expect momentum to continue in 2010

KIRKLAND, WA, December 3, 2009 – Home sales continued to outperform year-ago totals and prices continued to show signs of stabilizing, according to the latest report from Northwest Multiple Listing Service. Brokers credit move-up buyers as one factor for the positive activity.

"This winter will not be 'business as usual' for the housing market," proclaimed the CEO of one brokerage while expressing optimism for 2010.

Pending sales for November tapered off from October's surge during the rush to beat a looming tax credit deadline, but compared to November 2008, home sales jumped more than 31 percent. Members notched 4,888 pending sales (mutual acceptance of an offer) last month, which compares to 3,727 pendings for the same period a year ago.

Pat Grimm, a member of the NWMLS board of directors, said the strength of the first-time buyer market is no surprise. "What has been surprising is the strength in the move-up market," he remarked. First-time buyers led the market recovery, according to Grimm, the designated broker at Windermere RE/Capitol Hill, Inc. "Move-up buyers have definitely picked up the baton," he exclaimed.

Closed sales of single family homes and condominiums (combined) for November outgained year-ago totals by an impressive 76 percent, rising from 2,937 completed transactions to 5,168 closings across the NWMLS service area. Last month's total number of closings (5,168) exceeded the number of pending sales (4,888), a ratio that had not occurred since October 2008.

The median sales price area-wide was down about 7 percent from a year ago, the lowest percentage decline all year. Prices had been off every month this year by double digits until June (down 9.5 percent) and August (down about 8.8 percent), but for past three months the decline has been under 7.5 percent.

Grimm described the market within Seattle as "strong," noting stable prices during much of the year and a brisk pace of activity. "The shift was made away from a buyer's market early this year into a balanced market, and in some areas close to the city core, it's a seller's market," he commented.

Inventory for the MLS map areas encompassing Seattle is down more than 16 percent from a year ago, while pending sales jumped about 33 percent. For single family homes (excluding condos) within the Seattle map areas, inventory declined 20.6 percent from a year ago. The median selling price of $399,995 is 3.6 percent less than twelve months ago.

Inventory area-wide is at its lowest level in nearly two years. At the end of November, brokers reported 36,266 active listings (30,084 single family homes and 6,182 condominiums) across the NWMLS market area. That's down from 43,584 active listings in the system twelve months ago, a drop of nearly 17 percent. Not since January 2008, when brokers represented 34,950 home sellers, has inventory been that low.

"This winter will not be 'business as usual' for the housing market," said Lennox Scott, chairman and CEO of John L. Scott Real Estate. "Thanks to historically low interest rates, adjusted home prices, and the passage of the extended/expanded tax credit, we are getting a running start on the New Year," he added.

(Last month, Congress passed new legislation that extends the first-time home buyer tax credit of up to $8,000 to buyers who purchase by April 30, 2010. The legislation also authorized a tax credit of up to $6,500 for qualified repeat home buyers.)

Holidays can be favorable time to buy, sell
Although seasonal slowdowns are typical for housing activity, industry experts say now can be a good time for both sellers and buyers. Buyers tend to encounter less competition for the most desirable homes. Also, qualified buyers can expect above-normal attention from service providers who are experiencing a slowdown in their business, including lenders, home inspectors, appraisers and title companies. Lenders may even be willing to extend very favorable mortgage terms or forgo some fees as they vie for business.

Agents are able to devote more time to clients and the smaller selection of homes on the market. Sellers can also benefit from showcasing their homes with tasteful holiday decorations, although home stagers caution them to show restraint and not overdo the décor.

Other advantages may be faster closings by lenders who are motivated to add transactions to their 2009 books, and tax deductions.

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 20 counties in western and central Washington. Ferry County is now part of Northwest MLS, becoming the 20th county included in the monthly statistical reports.

Statistical Summary by Counties: Market Activity Summary - November 2009

November 2009 Single Family Homes + Condos	LISTINGS		PENDING SALES	CLOSED SALES
November 2009 Single Family Homes + Condos	New Listings	Total Active	#Pending Sales	# Closings	Average Price	Median Price
King	2571	11474	1984	2025	$415,581	$337,000
Snohomish	1128	5063	787	803	$294,649	$274,950
Pierce	1120	5471	840	802	$247,899	$222,000
Kitsap	328	1719	218	267	$273,771	$239,995
Mason	72	678	61	55	$187,179	$175,000
Skagit	146	1228	88	121	$236,525	$207,500
Grays Harbor	149	758	75	73	$159,859	$139,000
Lewis	84	742	43	36	$176,312	$162,400
Cowlitz	101	663	50	84	$173,687	$161,000
Grant	70	664	39	63	$174,257	$152,000
Thurston	328	1668	222	277	$251,349	$225,000
San Juan	24	441	10	15	$470,660	$377,000
Island	143	1036	83	89	$285,988	$240,000
Kittitas	65	511	32	37	$256,025	$230,000
Jefferson	33	532	13	27	$333,793	$271,000
Okanogan	21	352	23	15	$181,827	$150,000
Whatcom	228	1687	195	235	$290,344	$240,250
Clark	48	285	42	59	$259,011	$225,000
Pacific	34	362	19	19	$141,688	$139,000
Ferry	1	49	1	2	$185,825	$185,825
Others	107	883	63	64	$206,682	$187,450
MLS TOTAL	6,801	36,266	4,888	5,168	$320,379	$265,000

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498	5963	5551	5764	5825	5702	3829

__________
Copyright © 2009
ALL RIGHTS RESERVED
This material may not be published, broadcast, rewritten or redistributed without prior permission.

Posted 2009-12-15 in 2009

Tax Credit

Tax credit spurs big surge in Western Washington home sales

KIRKLAND, WA, November 5, 2009. Credit the tax credit and its impending expiration deadline for a surge in home sales last month. Members of Northwest Multiple Listing Service reported a 63 percent jump in pending sales during October compared to the same month a year ago, a gain many brokers attribute to a tax credit that is set to expire at midnight on Nov. 30.

Every county except Okanogan reported double-digit gains in pending sales (mutual acceptance of an offer). Collectively, NWMLS brokers notched 7,235 pending sales during October. A year ago, they reported 4,445 pending transactions.

"As anticipated, October saw a surge in home sales thanks to the federal tax credit. The hope of the real estate industry is that the credit will be extended until there is more equilibrium within the economy and the housing market can stand on its own two feet," said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

The new figures from Northwest MLS show continued signs of some stability in the market and improving consumer confidence. Inventory is at its lowest level since December 2008, and the year-over-year price decline, at 7.2 percent area-wide, is the smallest drop since June 2008.

Brokers added 9,344 new listings of single family homes and condominiums to inventory during October, the fewest number since December 2008 when the area was experiencing record snow accumulations. At month end, there were 38,159 active listings in the NWMLS database, a drop of 17.4 percent from the same month a year ago. At that time, the inventory included 46,189 residences.

For the four-county Puget Sound area (King, Snohomish, Pierce and Kitsap), inventory has shrunk 20 percent since twelve months ago. The selection of single family homes (excluding condominiums) in the four-county area is down 22 percent.

Despite a smaller selection than a year ago, there are plenty of choices across the price spectrum. The inventory includes two dozen listings priced under $30,000 and a dozen properties with asking prices of $10 million or more.

The median price on the 5,512 homes and condos that sold and closed during October throughout the NWMLS market area was $269,995, about 7.2 percent less than the year-ago figure of $291,000.

Prices vary widely across the MLS counties, both in dollar amounts and changes measured by percentages. The lowest median selling price, at $136,000 for single family homes and condos (combined) is found in Grays Harbor County. At the other end of the spectrum is San Juan County, where the median sales price for last month's completed sales was $454,250.

A comparison of price changes measured by percentages shows a range from a decline of nearly 17 percent in Jefferson County to a gain of 15 percent in San Juan County.

The median sales price in King County for last month's completed transactions was $349,950, down about 2.4 percent from twelve months ago when the median price was $358,500. For single family homes, the median price on last month's closed sales in King County was $377,500.

Northwest MLS directors who commented on October activity support extension of the tax credit that allows first-time home buyers who purchase a principal residence between Jan. 1, 2009 and Dec. 1, 2009 a credit of up to $8,000.

"I believe the $8,000 homebuyer credit set off a great chain reaction. The first-time homebuyer creates a move-up buyer," explained MLS director Meribeth Hutchings, the broker/owner of Windermere Real Estate/Lake Stevens. "The tax credit was the engine that started driving the market again," she remarked, adding, "It was a great October; hopefully the tax credit extension will be approved and the market will stay strong through the winter."

NWMLS director Kathy Estey, managing broker at John L. Scott's Bellevue office, cites a combination of factors for boosting activity, including the tax credit, stabilizing prices for entry level homes and diminished inventory. "Sales are not just fueled by the first-time buyer stimulus," she said, noting it prompted procrastinators to jump into the market and others to bail out of short sales that had not yet been accepted by lenders, opting instead to purchase homes that are not in the "distressed" categories.

"The fourth quarter is one of the best times for buyers, so we expect the positive activity to continue," Estey remarked, noting sales in her office were up again in October, "a month when we expect to see a slight decline."

Estey credits soft prices for contributing to the uptick in sales for homes priced at a million dollars or more. Her office participated in 10 sales priced at over a million dollars last month, calling that volume a "great improvement" from earlier in the year. In King County, 86 homes and condos fetched prices of $1 million or more, up from the year-ago total of 62 such transactions, according to NWMLS data.

"The compression of prices has created great values in that price range, the stock market has replaced much of what was previously lost, and there is reasonable financing for jumbo loans (20 percent or more down and good credit required)," Estey observed, while voicing hope for an extension of the tax credit. Noting the lending and escrow process takes at least 25-45 days, she said "The window has probably closed for buyers hoping to get in on the [current] tax credit."

Some builders are offering to pay the stimulus dollars to buyers who will miss the opportunity because the homes will not be completed by the expiration date of the existing tax credit, according to Estey.

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 19 counties in western and central Washington.

Statistical Summary by Counties: Market Activity Summary - October 2009

October 2009 Single Family Homes + Condos	LISTINGS		PENDING SALES	CLOSED SALES
October 2009 Single Family Homes + Condos	New Listings	Total Active	#Pending Sales	#Closings	Average Price	Median Price
King	3764	12321	2951	2234	$421,521	$349,950
Snohomish	1474	5171	1197	825	$304,444	$280,000
Pierce	1456	5591	1174	880	$237,553	$219,700
Kitsap	405	1795	380	266	$284,650	$248,500
Mason	123	735	70	65	$192,512	$167,500
Skagit	208	1282	140	102	$287,600	$235,495
Grays Harbor	120	833	85	73	$149,155	$136,000
Lewis	133	763	75	49	$148,859	$138,000
Cowlitz	123	675	83	57	$167,386	$168,000
Grant	120	696	63	63	$166,629	$147,000
Thurston	437	1729	295	290	$243,430	$225,172
San Juan	25	439	20	14	$479,500	$464,250
Island	162	1087	116	101	$318,332	$280,000
Kittitas	76	550	41	33	$237,065	$218,000
Jefferson	50	577	34	32	$322,574	$284,428
Okanogan	38	379	15	21	$171,214	$150,000
Whatcom	364	1821	315	225	$278,738	$250,900
Clark	69	310	65	63	$238,726	$225,000
Pacific	51	378	27	28	$183,689	$166,000
Others	146	1027	89	91	$230,487	$205,000
MLS TOTAL	9,344	38,159	7,235	5,512	$325,245	$269,995

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498	5963	5551	5764	5825	5702

“Information and statistics compiled and reported by the Northwest Multiple Listing Service.”

Posted 2009-12-03 in 2009

Tax Credit - Updated

from Suzie Sparks

Homebuyer Tax Credit Update!

On November 6, 2009, a bill was signed to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

TAX CREDIT OVERVIEW

Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible for the FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed. According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
They do not use the home as your principal residence.
They sell their home before the end of the year.
They are a nonresident alien.
They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In the Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

*Information courtesy of MMG.

Suzie Sparks

510-LO-34722

425-519-3274

suziesparks@landovermortgage.com

Posted 2009-12-03 in 2009

The Best Time To Buy A House

It's an often-asked question. When is the best time to buy a home? There are hundreds of possible answers to that question. On an annual basis, the best time is probably in the so-called off-season for real estate−fall and winter, when children are still in school and there are fewer people shopping for homes.

On an economic basis, it's very true that real estate moves through cycles, just as do the stock markets and bond markets−though real estate's cycles don't necessarily coincide with those of other markets. There is an economic season we call a seller's market, when there are more buyers than sellers of real estate. That reaches a peaking stage and moves inexorably into a season we call a buyer's market, when there are more sellers than buyers and prices are more flexible.

On a broader economic basis, there are seasons of overall economic growth and there are seasons of contraction or recession. A recession, if interest rates are favorable, is often a great time to buy a home, though many people who would otherwise consider selling may be waiting for a time when they feel more confident of their ability to buy another home and continue to afford the monthly payments.

The bottom line, though, is that the best time to buy a home is when you can, when you need to, when you want to−for the best possible life for yourself and those with whom you live. Prices do go down sometimes, but rarely. Waiting rarely pays off. If you can afford a home, consult your financial advisor and find a great real estate professional! Just call Beth at 425-450-5208.

Posted 2009-01-29 in 2009

That Silver Lining

Consider the couple whose house would have fetched $1 million if they had sold it last year. They had wanted to make a few quick repairs before putting it on the market, and they wanted to purchase a beautiful $1.5 million home when their existing home sold.

Now, a year later, their $1 million home has experienced a value correction of 10% and will fetch $900,000 if they sell it. They are heart-broken for a moment. Then they realize that the 10% correction also applies to the $1.5 million home they wanted to buy−so it is now selling for $1.35 million. They are, quite literally, $50,000 ahead at this point, having lost $100,000 in their existing home's value but having gained the benefit of a $150,000 price reduction for the home they want to buy.

There are other benefits, too. Insurance costs are slightly less. Property taxes will be slightly lower. And their total mortgage amount will be smaller. All of this because of what many in the financial media call a "bad" real estate market.

Look for the silver lining, indeed!

Posted 2009-01-07 in 2009