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Wednesday, October 21, 2009
Austin Real Estate Report
Friday, October 16, 2009
WHEN WILL RECESSION END?
COLLEGE STATION (Real Estate Center) – Three things have to happen before the current recession can be declared ended. One is underway, said Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University.
"I think the economy will begin to turn for the better once the health care and cap-and-trade issues are settled. Those two political debates are creating substantial uncertainty for business owners and investors," he said.
The personal savings rate is the second trend to watch, said Dotzour.
"Over 70 percent of the U.S. economy is consumer spending," he said. "When the savings rate finally levels out, consumer spending will start to increase again."
Increased corporate profits are the third trend that must occur to bring the recession to an end. There is some indication that has already begun. The last three data points were all up. Rising profits lessen the urge for companies to lay off workers.
Research Economist Dr. Jim Gaines added that the increased corporate profits have come from reduced costs, not the kind that leads to expansion.
"Keep your eye on these three issues," Dotzour said. "When they are resolved, the economy will begin to turn the corner."
Thursday, October 15, 2009
Monday, October 12, 2009
8,000 Reasons To Buy
If you've been dreaming and saving to buy your first home, the next few weeks present a unique opportunity.
For first-time home buyers whose income falls within certain limits, purchasing a house, condominium or townhome might make them eligible for a tax credit worth 10 percent of the purchase price of their home, or $8,000, whichever is less. This amount reduces the amount of taxes you owe, or increases your refund, dollar for dollar, according to the IRS. For example, if you normally would have a refund next spring of $100, with a qualifying home purchase your refund could be $8,100.
Because of the tax credit and other factors, "my perception is that it's a great time to buy," says Carol Dochen, who has been in real estate for 28 years. She is the owner of Carol Dochen Realtors.
"Interest rates are at a historic low," Dochen says. "Because the market has dipped, you will be buying at a lower price point instead of a higher one."
Amy McGowan, an agent with Keller Williams, says she's been urging her clients to understand the unique benefits of this tax offer.
"The biggest thing I try to tell them is, say they are looking at a $200,000 home, the tax credit is equal to a 4 percent appreciation in value," McGowan says. In fact, it's a financial bonus that requires little effort on the buyer's part. "It's money that comes to you in your mailbox."
Here is a guide to what you need to know to take advantage of the tax credit and get into your first home before the holidays:
Who is eligible for the credit?
People who filed individual income taxes for an income of $75,000 or less, or couples who filed jointly with an income of $150,000 or less. You must not have owned a home within 36 months of your date of purchase. You must occupy the property you buy as your primary residence (this program is not for people who want to buy something and rent it out, nor does it apply to vacation homes).
When do I need to have found a house?
Right now. Late October might be pushing it. "The program as we know it ends Nov. 30," says Diane Dopson, owner of Diane Dopson Properties. "This means that you must have closed on the house by that date. It is possible that the government will extend the deadline, but in case this does not happen, the latest time to have a house under contract would be mid-October," Dopson says. "Loan approval is taking four to six weeks." In other words, once you find a house and put it under contract, it could take another four to six weeks before you are able to close on it, and that needs to be done before Nov. 30.
"Try to be under contract no later than Oct. 25," Dochen says.
What should I do first?
If you have not already done so, you should get preapproved for a home loan and find a reliable real estate agent to help you shop for a home. You need to know what price range to search, as well as the part of town you'd like to live in.
"We sit down with our clients and have them talk to a lender, so we can show them the right-priced property, and we match neighborhoods to that price range," Dochen says.
Should I buy a house just because the tax credit is available?
"Be careful and make sure that for your personal situation, you are ready," says Nancy Taute, an agent with Carol Dochen Realtors. "You need to be ready to accept responsibility for homeownership." She cautioned that buyers need to be prepared to be able to sustain six months to a year of mortgage payments in case they lose their jobs.
For those who are financially ready, the time couldn't be better.
"If you are prepared, if you have done your budget and your job is secure, it's time to get serious," McGowan says. "The combination of low interest rates, the tax credit and affordability in the market" make it worth pursuing homeownership now, she says.
What types of properties does the credit apply to? Can I buy the property from anyone?
You can buy a single-family home, townhouse, condominium or mobile home (and the land under the mobile home), as long as it will be your primary residence, according to the IRS. You cannot buy the property from your parents or grandparents, or from your children, grandchildren or your spouse.
If I buy a house and receive the tax credit, but end up moving next year, do I have to pay the government back?
Yes. You must repay the credit if the house stops being your primary residence (your home) in the 36 months following the purchase date. As long as you live in the house for 36 months after you buy it, you don't have to pay the credit back, Dochen says.
How do I receive my tax credit?
You can file an amendment to your 2008 taxes, or wait and file it with your 2009 tax return. You will be filing Form 5405. Go to www.irs.gov for more information at http://www.irs.gov/newsroom/article/0,,id=205416,00.html.
What price range are most first-time home buyers looking in?
Most first-time home buyers are probably looking at properties between $100,000 and $350,000, Dopson says.
Angela Brutsch?, spokeswoman for the Austin Board of Realtors, says there has been a definite rise in the percentage of sales in houses in the $100,000-to-$150,000 range.
In August 2008, sales in this category made up only 3.7 percent of the houses sold that month, but this August, that category made up 7.9 percent, more than double the former amount.
In August, 55 percent of the houses sold were in the $100,000-to-$200,000 range, and another 19.2 percent were in the $200,000 to $300,000 range. Together these made up 74.2 percent of the homes sold.
The number of sales in "these price ranges are trending higher than last year," Brutsch? says, because they are popular with first-time buyers taking advantage of the tax credit.
What Central Texas neighborhoods are popular with first-time home buyers?
First-time home buyers looking in the $100,000-to-$200,000 range and seeking a three-bedroom, two-bath house are looking in Cedar Park, Leander and Round Rock, as well as in Rancho Alto in Southwest Austin and Olympic Heights in South Austin, McGowan says.
Other neighborhoods popular with first-time home buyers include Maple Run, Westcreek, Cherry Creek, University Hills, Windsor Park, Balcones Woods and Pioneer Crossing, Taute says. Pflugerville, Buda and Kyle are also in demand.
Any other last words of advice?
The real estate agent's mantra is "location, location, location," and that holds true in this situation as well, the agents say. "Make sure the location works for you, job-wise, community-wise, school-wise," Dochen says.
Arlene Maze, an agent with Carol Dochen Realtors, says, "Do the morning and afternoon commutes from the house. Go to your activities to and from there. It has to work with your lifestyle."
Where can I look if I have other questions?
Talk to your real estate agent. In addition, there is a lot of information about the program at the IRS Web site: http://www.irs.gov/news room/article/0,,id=206291,00.html.