California state first-time buyers tax credit deadline Aug. 15

State first-time buyers tax credit deadline Aug. 15
The Franchise Tax Board (FTB) recently announced it will accept applications for the California first-time home buyer tax credit through midnight on Sunday, Aug. 15, 2010.  The FTB believes it will have received more than enough applications to cover the $100 million allocated for eligible first-time home buyers.  It will continue to accept applications for the new-home portion of the state tax credit.

Due to the high volume of faxes, consumers may experience some delays and difficulties in connecting to the FTB fax number during normal business hours.  It can take several minutes or possibly up to an hour to connect and transmit the fax.  Buyers who receive a busy signal are advised to try again later. The fax number is open 24 hours a day, so consumers may fax applications during non-business hours when the line is not as busy.

More info.

Don't forget, for a limited time we're offering a 1% credit to any first-time homebuyers who use our services. Check our web site for details.

Bay Area Housing Affordability Index 2010 (HAI)

 
The California Association of Realtors tracks the "HAI" which is the Home Affordability Index. Their methodology can be found here, but in a nut shell they take into consideration the median home price for a particular area, the median income, the current interest rates and mash it into an index which essentially says what percentage of the population can qualify for the median price home assuming they put 20% down and have 30% (which is conservative) income to debt ratios. The higher the index the more home people can afford to buy a home. Since there are three variables which could affect this outcome, a dramatic shift in any one could influence the affordability trend. In the case of today's market two of the three variables are in favor of home affordability-low interest rates and lower median home prices. The third-income-has impacted these number to some degree and kept the index from being even higher as wages have remained stagnate and unemployment is high.

What this means to you is if you are considering whether to buy a home in the Bay Area, unless you are concerned over your job security this is one of the best times to purchase a home in the Bay Area in decades. 

HAI

 

THE ASSUMPTIONS AND METHODOLOGY USED TO CALCULATE C.A.R.'S TRADITIONAL HOUSING AFFORDABILITY INDEX (HAI)THE ASSUMPTIONS AND METHODOLOGY USED TO CALCULATE C.A.R.'S TRADITIONAL HOUSING AFFORDABILITY INDEX (HAI)

Step 1. MEDIAN PRICE: C.A.R.'s housing affordability index is based on the median price of existing single-family homes sold from C.A.R.'s monthly existing home sales survey. Starting in 1987, this survey is based on reports of closed escrow sales from 80 Boards or more of REALTORS® and multiple listing services around the state. Prior to 1987, the survey was based on reports from 45 Boards.

Step 2. DOWNPAYMENT: It is assumed that a household can make a 20 percent downpayment on the median-priced home. Therefore, the loan amount needed to purchase a home would be 80 percent of the median home sales price.

Step 3. INTEREST RATE: Using the national average effective mortgage interest rate on all fixed and adjustable rate mortgages. This is represented by the effective composite rate for previously occupied homes, which is reported monthly by the Federal Housing Finance Board.

Step 4.The monthly payment for PRINCIPAL, INTEREST, TAXES AND INSURANCE (PITI) is computed as the sum of three parts: -Monthly mortgage payment, based on the terms of the mortgage in Steps 2 & 3. -Monthly PROPERTY TAXES are assumed to be 1 percent of the median home sales price divided by 12. -Monthly INSURANCE PAYMENTS on the house are assumed to be 0.38 percent of the median home sales price divided by 12. The results of these three calculations are added together to find the PITI or total monthly payment for a household that buys the median priced home.

Step 5. It is then assumed that the monthly PITI can be no more than 30 percent of a household's income. Thus, the monthly housing payment is divided by .3 to come up with the MINIMUM INCOME NEEDED TO QUALIFY FOR A LOAN on the median-priced home.

Step 6. Starting in 1988, data for the distribution of households by various income ranges was obtained from Claritas. INCOME DISTRIBUTION figures were developed based on the projected percent change in the annual median household income. Prior to 1988, household income utilized in the housing affordability index was based on projections by C.A.R. using the 1980 census data as a base. (I wonder who "projects" incomes-my emphasis and what criteria is used for that)

Step 7. The minimum income amount calculated in Step 5 is multiplied by 12 to determine the minimum annual income needed to qualify. This amount is compared to the income distribution of households. The percent of the households with incomes greater than or equal to the minimum income becomes the HOUSING AFFORDABILITY INDEX (HAI). NOTE: The quarterly HAI series begins in 2006, prior to that the series was monthly. The quarterly HAI for a given geographic area in a particular quarter is based upon the quarterly median price for that area as well as the quarterly income distribution for that area.

What if I get lousy neighbors?

Finding a home with great neighbors can be the luck of the draw.

When we help Buyers find a home many are concerned about who their new neighbors might be, I’m reminded of my childhood experiences trying to lay claim to the perfect campsite.

When I was a young, like so many of our generation, our parents took us on summer camping trips as a frugal way to enjoy a vacation. As we entered the campground, finding the perfect campsite was always a moment of great anticipation. Competition was fierce for the great sites; as with most people who want to get away for the weekend they also want to get away from other people—being a social society, we want to be close, but not too close. We’d drive through the entire campground before selecting the perfect spot—one with seclusion, beauty and because we had a camper, it had to be level. Of course we’d check out who our nearest neighbors would be too. My parents wanted to avoid parking in a spot near a bunch of rowdy kids, which was where the interests of my parents and I parted.

Settled in on the perfect spot, we began to enjoy our week-long vacation. As would often happen, we’d wake up Monday morning and see that our weekend neighbors had vacated to return home. That left us with a new dilemma—who would be our new neighbors? We knew we had no control over who might choose to park next to us and wondered if they would evaluate us as we did our neighbors, (looking back I’m sure many seniors chose to drive on past our campsite after spotting three active kids playing around).

I was always interested in who would we get as our new band of travelers. Of course we had no control over who our camp fellows might be, and often provisionally contemplated moving to a new campground should our new nomadic neighbors prove too loud.

Finding a home with great neighbors is reminiscent of these camping expeditions. Like finding the perfect site, you quickly learn that the neighbors you have today may not be the ones you get tomorrow as like you, they too can move. Sometimes you’re lucky enough to get the quietest neighbors in the world and then they decide that Johnny needs a companion and the next thing you know you’re waking up during the night to Rex’s midnight pangs of loneliness.

While it’s prudent to pay attention to a neighborhood and who your new neighbors might be, keep in mind that you should not rely on today as a constant —good or bad. Your neighbors could easily be here today and gone tomorrow.

 

When Not to sell Your Home

PODCAST SERIES

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Real estate markets are cyclical and can last ten years as we’ve recently seen, but even within a cycle there are better times during each year in which to sell.

The short answer is the worst time is in the winter, with the best times being in the spring and fall but here’s why. Psychologically, it appears buyers are more motivated to get a home early on in the year. Writing a huge check to Uncle Sam in April could be one incentive, and fulfilling one’s New Year’s resolutions could be another—both are frequently mentioned. Whatever the reason more buyers come out in the spring and tend to pay more for a home (as a percent of asking) than any other time.

The year’s spring market started off rather unremarkable due to the uncertainty of real estate as a holding while many buyers took (and continue to take) a wait and see attitude.

This graph illustrates the favorable fall selling conditions with the seller receiving a high percentage of their asking price. Notice that in October the amount a seller receives typically bounces back up? We call this phenomenon the “fall bounce” as October sales are consummated in September/October.

That could make this fall a prime time to sell in this year’s cycle. Fall is typically another window of opportunity to sell and obtain the most money for your home and this one appears to be shaping up quite nicely. The market has been rebounding steadily since the beginning of the year, and appears it may crescendo this fall, at least for the year.

We wrote a series on our blog at BeautifulMountainBlog.org about when’s the best time to sell where we analyze the important market indicators to determine favorable selling conditions. Some of which are::

·         The month’s supply of homes for sale

·         The amount a seller received of asking

·         The days it takes to sell a home, or DOM

If you are considering moving this fall we’d be glad to answer any questions you may have about the process.

Download when_not_to_sell_a_home.mp3

Home Sales Decline As Tax Credits Expire – WSJ.com

"Some 60% of the 109 economists and other analysts surveyed by MacroMarkets LLC expect home prices to decline this year, up from 40% in May."

via online.wsj.com

I found this amusing. If their numbers are right, at 66% the economists are no better than the Supreme Court Justices at arriving at a consensus, and probably no more accurate than our local weather announcer when they do.

Why Are Interest Rates So Low and What Does it Mean to Me?

Unasked2 copy Whether you are thinking of buying or already own a home the current historically low interest rates may help you save thousands of dollars.

Rates in the last week have averaged the lowest point since records were first kept over 30 years ago. Refinancing today may help you save hundreds of dollars in monthly interest payments but even more important are the long term savings.

Rates are low right now because the financial crisis in Europe is driving the appetite for U.S. bonds which in turn raises the price and lowers the yield (interest) payment. And since mortgage rates roughly track the 10 Year Treasury Bond you can see where rates are headed and why. Rates are the lowest they’ve been–period.

If you think about the past 30 year trend of interest rates, which have averaged around 9%, it’s easy to guesstimate that the odds are good rates will be higher in the future rather than lower. What does that mean to you? If you are considering a purchase it means that there are two ways to look at it: if you buy a home at today’s rates either your monthly payment will be substantially lower or you can buy a considerably larger home for the same amount of money. In fact a payment on a $1,000,000 home ($800,000 loan) would be around $4,234 per month as opposed to $6,437 at the average historic 9% rate. But that doesn’t even begin to tell the whole story.

Not everyone stays in their home for Fhfb_contract_rate30 years but this offers up a substantial savings in interest payments. Most people aren’t aware of the long term costs of home ownership so you’ll be interested to note that at today’s rate your total interest payments over 30 years would total $725,000 and at the historical 9% rate it would be as high as $1,517,000–over double the interest payment for the same home. What could you do with an extra $793,000?

Perhaps rates will never be as high as they were back in the late 70’s and early 80’s but rates have still averaged 6.7% over the last 15 years during a time of historically low rates.

Case-shiller MSANow combine this with the recent decrease in home values and it’s hard to argue that waiting to buy a home will significantly benefit you.

Belmont – Home sales for June 2010 in 94002

Belmont June 2010 SALES

Home sales in Belmont held their own as 25 homes sold in the month of June. Last month as you may recall 34 homes sold, the most in as many months. In June of 2009 20 homes sold and last year there wasn't a looming deadline to close escrow for a tax credit.

(click on the graphic for a full size picture)

Speaking of tax credit, don’t forget we’ve effectively extended the $8,000 tax credit by offering any first time buyer 1% of the purchase price as a credit towards their closing costs for anyone who buys a home through us and closes escrow between now and September 30th 2010.

MEDIAN PRICE

The median price took another jump up from $848,500 last month to $975,000—a 15% increase. The size homes which sold during the same period were about 10% larger so there was still some upward pressure on prices not just the fact that larger homes were selling.

DOM

The time it took to sell a home in Belmont was up from 25 days last month to 46 days in June; a pattern that more-or-less holds true each year as folks have graduations and vacations on their minds in lieu of house hunting.

INVENTORY

The number of homes for sale has stayed relatively flat at 66 as compared to 60 in May and 62 one year ago. And the number of new listings appears flat too at around 30 each month. As long as sales continue at this pace inventory should remain in check.

With interest rates hitting the lowest point since records were kept it has helped spur refinances and it remains to be seen if it will spur more fist time homebuyer sales. If you are considering buying a home on the peninsula with rates and values at what appear to be the trough, you may want to consider getting that home you’ve always wanted but perhaps held off for until more favorable conditions—they’re here.

Don't forget we update the market statistics for San Mateo County, San Carlos, Redwood City and Redwood Shores each month on our web site at MorganHomes.com.

$8,000 Tax Credit Extended to September 30, 2010

Missed out on the $8,000 first-time homebuyer tax credit?

 You'll be glad to know you can still receive $8,000 when you buy your first home through us.

 How do we do it? Simple. If you buy a home through us between now and September 30th, 2010 we will credit you 1% of the purchase price up to $8,000 in escrow for your closing costs.

 What's the difference between our credit and the government tax credit?

Well for starters you won't have to wait until next year's tax filing to get the refund-we credit it to you at closing so you can really put it to work.*

 Call us for details.

 

 Drew & Christine Morgan

"Helping People Make Good Decisions"sm

 

Carlmont Associates

1940 Ralston Ave.

Belmont, CA 94002

01124318 & 01174047

Office: 650-508-1441

Fax:    650-591-4329

 

*Some restrictions apply.

 

 

 

 

 

 

 

 

 

$8,000 Tax Credit Extension to September 30, 2010

What’s the big brouhaha about yet another extension of the $8,000 tax credit for first time homebuyers?  
Bird house Senator Harry Reid wants home buyers to have until September 30, 2010 to close escrow and receive the $8,000 tax credit. But before you go out and celebrate, understand that the only buyers this extension will help are people who already were in contract to buy a home by the April 30th deadline. The proposed extension would allow only those buyers to have until September 30th to close escrow rather than the looming deadline of June 30th. Senators Johnny Isakson, R-GA, and Christopher Dodd, D-CT, are joining Senator Reid in support of the amendment. And why not? It’s a good political move and even Senators who said they would never vote for another extension will feel pressured in an election year to get behind this move.

Will it help? Sure, in a few cases where there are delays in the closing of escrow where banks may be overwhelmed or dragging their feet on short sales or where buyers are simply not able to close soon enough.

But don’t look to the government to shore up the housing industry anymore for awhile. The housing market is like a bird flying the nest…at some point you have to find your own wings.

Belmont ( 94002) Home Prices for May 2010


Belmont “hit one out of the park” last month as 34 homes closed escrow. One has to go back to May of 2002 to see activity like that. Baseball Of course unlike baseball all the “teams” did relatively well as the last minute rush to capitalize on the $8,000 government tax credit lured at lot of new buyers to the closing tables.

But there’s sort of this snowball effect because many of the homes sold in Belmont didn’t even qualify for the $8,000 tax credit. Only 12 of the 34 homes had sale prices below the $800,000 cap. Yet the attention the tax credit received in the media probably buoyed the confidence of fence sitting buyers.

Belmont May 2010 

(Click on the chart of a full sized window)

 MEDIAN PRICE

$848,800—Homeowners are you depressed? It was $967,500 just one month ago! Think back—last year in May the median home in Belmont sold for $840,000 and for that you got an 1845 square foot home. This May you got a 1710 square foot home and in April it was 2418 but lest we not forget it cost you $967,500. The change in square foot may be a better indicator of value—here’s why: The change in square feet between May ‘09 and May 2010 was 135 (7.3%) which is probably closer to where values dropped year over year. Forget about April’s $967,500 benchmark for the year—there were some big homes selling that month and it threw the numbers way off.

DOM

The Days on Market (or the time it took to sell a home) went from 45 last May, to 44 this April and only 26 this May. So homes sold faster. What does that mean? Sellers are getting more realistic about prices and more buyers entered the market. That’s about all those tea leaves are telling you.

% Received of asking

Sellers in Belmont received 99% of their asking price (after price reductions). This is kind of a worthless statistic since homes invariably will sell close to asking once they are lowered to the right asking price. How about if we were to look at last May (98%) and last month (99%) see—statistically no change. Now let’s look at what seller received before they lowered their price—what percent did they get of their original asking price? Turns out at 99.84% it tells us very little accept that not a lot of bargaining goes on in our market. What we do learn is that only 4 people had to lower their asking price to get a sale—the reason for the small differential. But if we look at sellers who accepted less than their asking price we see a different story. Fifteen of the 34 sales received on average $26,000 less for their home while three homes received their asking price, the other 16 sellers received on average $21,000 over their asking price.

Now that the tax credit is over will the flurry of home sale activity be akin to radio silence? Stay tuned for our June update.