Monthly Blog

It's a Brand New Day for Home Buyers

Federal law to extend and expand the tax credit seen as boon for prospective buyers, real estate industry, overall state economy

(Edison, NJ) President Obama today signed legislation H.R. 3548, which includes a provision to extend and expand the $8,000 first-time home buyer tax credit. The New Jersey Association of REALTORS^® (NJAR^®) anticipates that the newly signed legislation will help maintain the recent momentum seen in the New Jersey real estate market and spur the state's economy as a whole.

"It's a brand new day for those first-time home buyers who were rushing through their transaction in anticipation of the original November 30th deadline because they now have more time to complete the process," said NJAR^® Executive Vice President Jarrod C. Grasso, RCE. "The extension to April 30th of next year is key because these new buyers now have the opportunity to analyze every aspect of their purchase carefully and still close in time to obtain the $8,000 credit."

The legislation will extend the $8,000 first-time home buyer tax credit past its original November 30 deadline, and it will now be available through April 30, 2010. Additionally, existing homeowners who have lived in their homes for at least five consecutive years out of the last eight will be eligible for a credit that can total $6,500 ($3,200 for those filing separately). In both cases, a written, binding contract to purchase must be in effect by April 30, 2010, and the purchaser needs to close by July 1, 2010.

"The credit has been shown to be a powerful incentive that significantly spurred the real estate market here in New Jersey," said Diane Dilzell, president of NJAR^®. "Expansion of the tax credit to current homeowners is bound to aid in continuing to elevate the housing market and the economy further as it offers a bonus to those buyers. In addition to experiencing low prices and low interest rates, current homeowners are now faced with a prime opportunity to trade up to the home of their dreams."

The new law raises the limits for first-time buyers. The new limits for obtaining the full credit are $125,000 for a single person and $225,000 for a married couple. Individuals earning up to $145,000 and married couples earning up to $245,000 are eligible for partial credit.

According to data from the NATIONAL ASSOCIATION OF REALTORS^® (NAR), in New Jersey, the home buyer tax credit has brought in an additional 6,500 buyers into the market in 2009 compared to 2008. NJAR^® is hopeful that the credit extension and expansion can lead to continued growth in 2010.

More than 1.4 million people nationally have claimed the original tax credit, based on figures provided by the Internal Revenue Service (IRS). About 350,000 of those would not have made their purchase without the tax credit, according to estimates from NAR.

The Senate has voted to extend and expand a popular tax credit for homebuyers that was scheduled to expire Nov. 30. The House is expected to schedule a quick vote on the bill, part of a package that also extends unemployment benefits for people out of work more than a year. How the homebuyer tax credit would work:

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Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers. First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000.

Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30.

Military deadline: The deadline is extended by a year for members of the military who have served outside the U.S. for at least 90 days from Jan. 1, 2009, to May 1, 2010.

Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to $225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.

Cost: $10.8 billion.

Nation’s sales up, prices down

Existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of REALTORS®.

Existing-home sales — including single-family, townhomes, condominiums and co-ops — increased 3.6 percent to a seasonally adjusted annual rate1 of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.90 million-unit level in June 2008.

Lawrence Yun, NAR chief economist, is hopeful about the gain. “The increase in existing-home sales occurred in all major regions of the country,” he says. “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions. Despite the rise in closed transactions, many REALTORS® are reporting lost sales as a result of new appraisal standards that went into effect May 1 of this year.”

A June survey of NAR members shows 37 percent experienced at least one lost sale as a result of the new Home Valuation Code of Conduct, with seven out of 10 reporting an increased use of out-of-area appraisers. Seventy percent of NAR appraiser members said consumers were paying higher fees, while 85 percent report a perceived reduction in appraisal quality.

“Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations, and access to local data, and who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales,” Yun says. “In many cases, normal homes are being compared with distressed homes sold at a discount, which often are in subpar condition – this is causing real harm to both buyers and sellers.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.42 percent in June from 4.86 percent in May; the rate was 6.32 percent in June 2008. Mortgage interest rates have trended lower in recent weeks.

Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, down from a 9.8-month supply in May. Raw inventory totals are 14.9 percent below a year ago. “This is another hopeful sign — if we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” Yun says. An NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.

The national median existing-home price for all housing types was $181,800 in June, which is 15.4 percent below June 2008. Distressed properties, which accounted for 31 percent of sales in June, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2 percent higher than the 4.31 million-unit pace a year ago. The median existing single-family home price was $181,600 in June, which is 15.0 percent below June 2008.

Existing condominium and co-op sales jumped 14.0 percent to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May, but are 3.1 percent below the 588,000-unit level in June 2008. The median existing condo price4 was $183,300 in June, down 18.9 percent from a year ago.

Regionally, existing-home sales in the Northeast rose 2.5 percent to an annual pace of 820,000 in June, but are 4.7 percent below a year ago. The median price in the Northeast was $249,400, down 5.9 percent from June 2008.

Existing-home sales in the Midwest increased 0.9 percent in June to a level of 1.10 million but are 1.8 percent lower than June 2008. The median price in the Midwest was $157,000, which is 9.1 percent below a year ago.

In the South, existing-home sales rose 4.0 percent to an annual pace of 1.81 million in June but are 3.7 percent below a year ago. The median price in the South was $163,200, down 11.9 percent from June 2008.

Existing-home sales in the West improved by 6.4 percent to an annual rate of 1.16 million in June, and are 11.5 percent higher than June 2008. The median price in the West was $214,800, which is 24.9 percent below a year ago.

• How large was the unpaid debt?
• Was the property an investment or a personal residence?
• How much money does the borrower make and what other assets does he have?
• What is the policy of the mortgage insurer or the holder of the second lien?

News Source: National Association of Home Builders)

With Affordability Up, Buyers Are Starting To Return To The Market..

(WASHINGTON, D.C.) -- Thanks to record low mortgage rates and declining home prices, 55 million families - or half of all U.S. households -- can afford today's $200,000 median-priced new home, according to figures released by the National Association of Home Builders (NAHB).

"That's an increase of 17 million households from conditions just two years ago and the best housing affordability number we have seen in years," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "We are now seeing the first signs that buyers are returning to the marketplace."

Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance. The number of households that can afford to purchase a home today is 55.4 million, compared with 38.4 million two years ago, according to figures compiled by NAHB.

"With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing with each passing day. These are encouraging signs that the housing market may be finally reaching a bottom," said Robson.

Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market.

Single-family permits were up 11 percent in February, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down. In a survey for Century 21 Real Estate last month among prospective first-time home buyers who indicated they were likely to purchase a home in the next two years, a majority - 78 percent - said that now is a good time to buy a home. Of those responding to the online poll, 68 percent said that now is a better time to buy than six months ago.

Another sign that consumers are considering jumping back into the housing market is the growing interest in the $8,000 first-time home buyer tax credit included in the recently enacted economic stimulus package. During February and March, 1.5 million visitors logged on to NAHB's consumer Web site, www.federalhousingtaxcredit.com, to learn more about the tax credit. Further, a new survey commissioned by Move, Inc. found that nearly 20 percent of those who plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November.

"With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5 percent, and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market," said Robson.

Housing is a critical component of the U.S. economy, accounting for about 15 cents of every dollar spent in this country, so any upturn in the housing market should be viewed as good news for the overall economy, said Robson.

Construction of an additional 500,000 single-family homes - the difference between today's anemic construction rate and one that would move closer to meeting the underlying demand for housing - would generate 734,000 jobs and $35 billion in wages in the construction industry  and another 790,000 jobs and $37.7 billion wages in manufacturing, trade, and service sector jobs, he noted.

Additionally, another half-million housing starts would bolster the tax base for government, generating $45 billion in federal, state and local tax revenues. And the benefits go well beyond the completion of each home. Within the first year after buying a home, those half million households will spend about $2.5 billion more on appliances, furnishings and property alterations.

"Clearly, housing will be central to any economic recovery we experience in the months ahead," said Robson.

Increased affordability continues to spur sales

(February 11, 2009 – Orlando, FL) The median price of Orlando homes sold in January ($148,274) decreased by 33.06 percent compared to January 2008 while the area’s average interest rate dropped to its lowest point since May of 2005, creating market conditions that further tilt in favor of buyers.

Home sales are up, with members of the Orlando Regional Realtor® Association involved in the sale of 17.71 percent more homes in January of this year than January of last year: 957 to 813. Geographically, Osceola County recorded the greatest increase of sales activity amongst the four counties in the Orlando MSA: 120.51 percent. Lake and Orange counties posted sales increases as well (25.63 percent and 42.83 percent, respectively); Seminole County sales declined 16.24 percent.

“Buyers are responding to lower prices and mortgage rates,” says ORRA President Les Simmonds, L.G. Simmonds Real Estate Corp., “but uncertainty about the economy is creating hesitancy and pent-up demand. Additional actions, such as the proposed homebuyer tax credit and an increased availability of mortgages, are needed to stimulate the sales that will decrease inventory and stabilize prices.”

The number of pending sales, considered by housing economists to be a reliable predicator of future sales activity, continued its upward trend to 3,830. There are 121.25 percent more homes under contract in January 2009 than compared to January 2008 (1,713).

The decrease in median price drove the area’s affordability index to another record high of 165.27 percent. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $52,136 can qualify to purchase one of 12,122 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $245,046 or less.

The first-time homebuyer affordability has increased to 117.52 percent.

The area’s average interest rate was 5.28 percent in January 2009, the lowest level since May 2005.

Homes of all types spent an average of 104 days on the market before being sold in January 2009, and the average home sold for 92.63 percent of its listing price (a decrease from December 2008’s 92.83 percent). In January 2008 those numbers were 117 and 94.16 percent, respectively.

The majority of single-family homes (111) that changed hands in January 2009 were sold in the $200,000 - $250,000 price range; 75 homes sold in the $140,000 - $160,000 category and 71 homes sold in the $160,000 - $180,000 category. Four hundred seventy-four homes sold for less than $200,000 in November, and 198 sold for more than $300,000. On the far ends of the scale, 13 homes were sold for $1 million or more while 52 homes sold for less than $50,000.

Inventory

There are currently 22,613 homes available for purchase through the MLS. Inventory increased by 89 homes from December 2008, which means that 89 more homes came onto the market than left the market. Compared to last year, the January 2009 inventory level is 12.09 percent lower than it was in January 2008 (25,724).

The inventory level reflects a 23.63-month supply at the current pace of sales, which is up from the 15.59-month supply recorded in December 2008 and down from the 31.64-month supply recorded in January 2008.

There are 16,403 single-family homes currently listed in the MLS, a number that is 2,951 (15.25 percent) less than this time last year. As usual, most (2,305) are listed in the $200,000 - $250,000 price range. Condos currently make up 4,191 offerings in the MLS, while duplexes/town homes/villas make up the remaining 2,019. Most condos (410) are priced below $50,000, with another 393 priced between $100,000 and $120,000. The majority of duplexes/town homes/villas (322) are listed in the $120,000 - $140,000 price category.

Condos and Town Homes/Duplexes/Villas

The sales of condos in the Orlando area has increased by 44.57 percent. A total of 133 condos changed hands in January of this year compared to 92 in January 2008. The most (50) condos in a single price category that changed hands were in the $1 - $50,000 price range, more than double the number (22) that were sold in the next most populated category ($60,000 - $70,000). No condos whatsoever sold for more than $250,000 in January.

Orlando homebuyers purchased 84 duplexes, town homes, and villas in January 2009, which is a 55.56 percent increase from January 2008 when 54 of these alternative housing types were purchased. The majority (17) of duplexes, town homes, and villas sold in January 2009 fell into the $140,000 - $160,000 price category.

MSA Numbers

Sales of existing homes within the Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in January were up by 37.15 percent when compared to January of last year. Throughout the entire MSA, 1,281 homes were sold in January 2009 compared with 934 in January 2008.

Each county’s January 2009 to January 2009 sales comparisons are as follows:

Lake: 25.63 percent above 2008 (201 homes sold to date in 2009 compared to 160 in 2008);
Orange: 42.83 percent above 2008 (657 homes sold to date in 2009 compared to 460 in 2008);
Osceola: 120.51 percent above 2008 (258 homes sold to date in 2009 compared to 117 in 2008); and
Seminole: 16.24 percent below 2008 (165 sold to date in 2009 compared to 197 in 2008).

For detailed statistical reports, please visit www.orlrealtor.com and click on Housing Statistics on the top menu bar. This representation is based in whole or in part on data supplied by the Orlando Regional REALTOR® Association or its Multiple Listing Service (MLS). Neither the Association nor its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the market. Due to late closings, an adjustment is necessary to record those closings posted after our reporting date.

ORRA Realtor® sales, referred to as the core market, represent all sales by members of the Orlando Regional REALTOR® Association, not necessarily those sales strictly in Orange and Seminole counties. Note that statistics released each month may be revised in the future as new data is received.

Orlando MSA numbers reflect sales of homes located in Orange, Seminole, Osceola, and Lake counties by members of any REALTOR® association, not just members of ORRA.

Statistics on the sales of area homes that are sold without the assistance of a REALTOR® are available in the Real Estate Index, a report produced jointly by ORRA and the Real Estate Attorney’s Fund.

Market Statistics

Homes sales rise as affordability improves

(January 12, 2009 – Orlando, FL) Orlando’s housing marketing for the fourth month experienced a month-over-month increase in the number of home sales as buyers responded to improved affordability, according to statistics released by the Orlando Regional Realtor® Association.

"Lower interest rates and more affordable prices are attracting buyers who have been sitting on the fence about the decision to buy," said ORRA President Les Simmonds, broker of L.G. Simmonds Real Estate Corp.

Members of ORRA were involved in the sale of 21.28 percent more homes in December of this year than last: 1,305 to 1,076. The current number of pending sales (homes that are under contract to purchase but are awaiting completion of the transaction process) dropped slightly from last month, from 3,326 to 3,265. For the past nine months, the number of homes under contract has increased month-over-month, with 109.42 percent more homes under contract in December 2008 than compared to December 2007 (1,559).

December 2008’s median sales price of $169,900 is a 2.35 percent increase over November’s median sale price of $166,000; however it is 24.49 percent below the December 2007 median sales price of $225,000. “With approximately 40 percent of the transactions involving foreclosures or short sales, the median price is being pulled down by homes sold at discounted prices,” explained Simmonds.

First-time homebuyers still have the best conditions since March 2004 to purchase a home in the Orlando area, as the first-time homebuyers affordability index in December pushed up to 101.09 percent. In addition, inventory of houses on the market is stocked with more than 6,961 homes in the average first time buyer’s price range of $145,987 or less.

Even with the increase in median price, the area’s affordability index in December continued its upward march to a record 142.16 percent. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $51,962 can qualify to purchase one of 11,806 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $241,523 or less.

The area’s average interest rate was 5.40 percent in December 2008, down from 6.00 in November and the lowest for the entire year.

Homes of all types spent an average of 109 days on the market before being sold in December 2008, and the average home sold for 92.69 percent of its listing price (a decrease from November 2008’s 92.74 percent). In December 2007 those numbers were 113 and 92.75 percent, respectively.

The majority of single-family homes (182) that changed hands in December 2008 were sold in the $200,000 - $250,000 price range. On the far ends of the scale, 15 homes were sold for $1 million or more in December while 43 homes sold for less than $50,000 (a price category that saw an increased number of sales nearly every month in 2008).

Inventory

There are currently 22,524 homes available for purchase through the MLS. Inventory decreased by 1,884 homes from November, which means that 1,884 more homes left the market (either through sales or expired listings) than entered the market. Compared to last year, the December 2008 inventory level is 7.30 percent lower than it was in December 2007 (24,298).

The December 2008 inventory level reflects a 17.26-month supply at the current pace of sales, a nice drop from the 21.99-month supply recorded in November. By year’s end, inventory months-of-supply had declined 23.60 percent since December 2007.

There are 16,420 single-family homes currently listed in the MLS, a number that is 1,908 (10.41 percent) less than this time last year. As usual, most (2,445) are listed in the $200,000 - $250,000 price range. Condos currently make up 4,136 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,968. Most condos (413) are priced at $100,000 - $120,000. The majority of duplexes/town homes/villas (293) are listed in the $120,000 - $140,000 price category.

Condos and Town Homes/Duplexes/Villas

The sales of condos in the Orlando area increased by 42.71 percent: A total of 137 condos changed hands in December of 2008 compared to 96 in December 2007.

In December, the most (31) condos in a single price category that changed hands were in the $1 - $50,000 price category, yet again the greatest number of sales in the lowest price category for the year. Another 21 condos sold for $50,000 - $60,000; altogether, 93 of the 137 condos that sold in December did so for less than $100,000.

Orlando homebuyers purchased 117 duplexes, town homes, and villas in December 2008, which is a 6.40 percent decrease from December 2007 when 125 of these alternative housing types were purchased. The majority (26) of duplexes, town homes, and villas sold in December 2008 fell into the $160,000 - $180,000 price category.

MSA Numbers

Sales of existing homes within the Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in December were up by 27.56 percent when compared to December of last year. Throughout the entire MSA, 1,643 homes were sold in December 2008 compared with 1,288 in December 2007.

Seminole County’s December 2008 sales decreased 9.06 percent over that of December 2007 (271 to 298), while Orange County’s sales increased 42.34 percent (827 to 581). Lake County saw a 8.73 percent improvement in the number of sales in December 2008 compared to December 2007 (249 to 229), and Osceola County experienced its second-highest percentage increase of the year: 64.44 percent (296 to 180).

2008 Recap

Sales in 2008 were down by 11.97 percent over 2007. A total of 14,740 homes were sold in 2008 compared to 16,744 the previous year.

From a year-long perspective, the 2008 cumulative median price fell 18.27 percent to $200,000 over 2007’s $245,000. Throughout 2008, the majority of single-family homes that changed hands each month were sold in the $200,000 - $250,000 price range. In total, 20.79 percent (2,504) of all single-family home sales fell into that price range.

Condo sales fell 32.04 percent, with 1,436 condos sold in all of 2008 compared to 2,113 sold in all of 2007. The majority (200 or 13.93 percent) of sold condos fell into the $100,000 - $120,000 category. For the entire year, duplex, town home, and villa sales were down 10.00 percent.

By year’s end in 2008, 17,972 homes were sold in the Orlando MSA while 20,051 homes were sold by year’s end in 2007 (a 10.37 percent decline). For comparison, the MSA’s 2007 year-to-date sales were 39.7 percent below the 2006 year-to-date tally.

Each county’s year-end sales comparisons are as follows:

Lake: 5.43 percent below 2007 (2,976 homes sold to date in 2008 compared to 3,147 in 2007);
Orange: 10.60 percent below 2007 (8,839 homes sold to date in 2008 compared to 9,887 in 2007);
Osceola: 3.58 percent above 2007 (2,809 homes sold to date in 2008 compared to 2,712 in 2007); and
Seminole: 22.23 percent below 2007 (3,348 sold to date in 2008 compared to 4,305 in 2007).

For detailed statistical reports, please visit www.orlrealtor.com and click on Housing Statistics on the top menu bar. This representation is based in whole or in part on data supplied by the Orlando Regional REALTOR® Association or its Multiple Listing Service (MLS). Neither the Association nor its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the market. Due to late closings, an adjustment is necessary to record those closings posted after our reporting date.

ORRA Realtor® sales, referred to as the core market, represent all sales by members of the Orlando Regional REALTOR® Association, not necessarily those sales strictly in Orange and Seminole counties. Note that statistics released each month may be revised in the future as new data is received.

Orlando MSA numbers reflect sales of homes located in Orange, Seminole, Osceola, and Lake counties by members of any REALTOR® association, not just members of ORRA.

Statistics on the sales of area homes that are sold without the assistance of a REALTOR® are available in the Real Estate Index, a report produced jointly by ORRA and the Real Estate Attorney’s Fund.