Tax credit on the table for 2010
July 6, 2009
The stimulus package seems to be working. According to the National Association of Realtors, first time home buyers account for about 40% of the home sales lately. This figure showing a 5% increase over historical statistics.
Politicians who think the plan is working are calling for more tax incentives, over another year and to an expanded demographic…everyone who buys a home. Critics are saying it will decrease tax revenue for an already strained budget. We saw a very similar situation last year. The initial tax credit plan that was approved July08, was merely an interest free loan. When that failed to entice buyers in this unsettled market, the plan that is now in effect was approved.
I think we will see a similar situation in December when the stimulus package expires. No matter what happens next year, you can’t lose by taking the sure thing this year. You might be tempted to wait and see if there are more incentives next year but you are also risking that there will be no incentives.
Closing on a home, prior to December 1,2009 (for buyers who have not owned a home in the past three years) will get you $8000 tax credit. Can’t wait until 2010 to get your rebate or expecting to pay a higher tax rate for 09? You can file an amended 2008 return and take your tax credit now. My favorite part of the stimulus credit is that if you don’t owe $8K in tax, the government will send you a check. There are income limits, so if you don’t need the tax credit, you won’t get it. This may seem a little unfair but the point of the stimulus is to help those who couldn’t buy, be able to buy.
The town of Chapel Hill has been awarded the distinction of America’s most livable small city. One of the factors was the city’s commitment to public transportation. Chapel Hill has the second largest public transportation system in the state, second to Charlotte, a major metropolitan area. The town has increased ridership from 3million to 7million in less than a decade by offering free transportation to university employees, students as well as the public.
The city competed with 200 other small towns for the honor. Other criteria included mayoral leadership, creativity and innovation and the impact on residents. You can read the full story at this link: http://usmayors.org/pressreleases/uploads/CITYLIVABILITY2009Providence.pdf
This is the kind of news that we might want to keep a secret. One of the great things about Chapel Hill is that it is a small town but offers all the benefits of living in a major city while still holding on to the southern traditions and charm.
Raleigh/Cary ranked as best economic area in NC
June 21, 2009
The Triangle Business Journal highlighted a published study that puts the Raleigh/Cary area in a good light. The Brookings Institute studies and compares the economic condition of metropolitan areas using employment, unemployment rates, wages, gross metropolitan product, housing prices and foreclosure rates as the barometer. According to Brookings, Raleigh and Cary rank as the strongest economic area for the entire state of NC.
Texas was a hotbed of economic activity, taking four of the top four spots. Unfortunately, for Florida, their state took four of the bottom spots with Detroit the only area ranked lower. What is telling about this, to me, is that the real estate market was a big factor in this list. Texas has some of the most affordable housing in a major metropolitan area and Florida has just seen the burst of a huge housing bubble.
Raleigh home prices were up 2% over last year yet still affordable with the average home price below $300,000. Foreclosure rates in the triangle are very low compared to many other metropolitan areas.
US news has chosen Durham, NC as one of the 2009 top ten places to live…again! It is no surprise to me. I frequently say, “this is a fabulous place to live”. The article described our city as “a world class center of all things advanced”. Strengths highlighted included access to mountains and beach with plenty of outdoor activities nearby. Duke Medical center, a thriving technology hub and mild climate all add up to an excellent lifestyle.
I am going to add to the list, affordable housing. Although we are suffering with a slow market this year, Durham has been a bit of a hot spot; at least for me. Durham has many neighborhoods with revitalization in progress and there are plenty of choices throughout the area for first time buyers who are cashing in on the 8,000 tax credit.
A very ironic point of this article to me is that I have lived in two of the places that made the list. Well, I lived next to, Upper St. Clair, PA. I know that community very well and it has a lot of the stuff Durham was recognized for. One big thing lacking though is the climate.
For those who would like to see the list in its entirety, I am posting the link: http://news.yahoo.com/s/usnews/20090609/ts_usnews/bestplacestolive2009
Contingent offers may be a way to move your home
June 12, 2009
There is a reason that realtors don’t like contingency offers; it gives the buyer a chance to walk away. But I think that contingency offers may bring value in this market. I see a trend with many of my clients who have homes to sell. They have all these favorites and they want to make a move, but their own home is not sold.
I am suggesting a contingent offer on a purchase, will allow buyers to see what their deal is on the buying end. It provides a quantitative measure of what they will need at closing. Essentially, if you know what kind of deal you are getting on the purchase, you know what you need from your home sale. We live in a parallel universe, so in order to take advantage of the buyers market and “get the deal”, you will probably need to “give a deal”. But, at least by making the offer on the dream home contingent on the sale of your current home, you move forward to all negotiations knowing exactly what you are getting on both ends. It also will help sellers get comfortable with accepting the current market value of the home they are selling.
In this market, sellers are leaving homes with contingent offers on the market so there is no guarentee that this strategy will work. But, it may offer an opportunity for negotiation that otherwise would not exist.
Interest rates could signal time to get off the fence
June 11, 2009
The real estate market is a lot like the stock market. People tend to buy when prices are rising. In reality, they should be buying when prices are low. When stock and real estate prices are going up, buyers are lulled into a sense of confidence. I am not saying it is a false sense of confidence, I am not a a financial expert. I am just calling what I see. Looking back at the buying frenzie in 2003, I believe the buyers today are in a better position to see growth in their investment. Those investors who have the stomach for risk, are typically the ones who see the big profits, when their instincts are correct.
Interest rates are going up, for a second time this month. For buyers who want to take advantage of the bargain prices, it may be time to get off the fence. If interest rates continue to trend up, buying will become less affordable. I reiterate that I am not a financial expert, but I can say with confidence that interest rate is the number one factor in determining the affordability in your mortgage. Interest rate will affect your payment throughout the duration of the loan. So if you want to get a win/win of low price and low mortgage interest rate, now might be the time to make a move.
Ah, the Chapel Hill market. Our quaint southern college town is not known for its affordable real estate. People always come and go here and location rules with this highly educated population. The price/sft is directly proportional to the distance from campus. For the first time in a long time though, there are some bargains.
A friend of mine recently got a listing in Chapel Hill. It is a detached home, in a popular neighborhood, neutral, tasteful, nice curb appeal, clean, nice split bedroom floorplan, 3 bedrooms, 2 full baths, corner lot…….asking price $150,000. I thought “this home won’t last a day”, and a couple weeks later, …still there.
I gave a listing presentation three years ago to a seller who was contemplating a long term move and wanted advice on improvements. I gave him a price of 415,000. Last year that home went on the market and I was disappointed he chose another realtor. Well, today I quote the lyrics of Garth Brooks and say “sometimes I thank God for unanswered prayers”. After many price reductions and one year+ of staging marketing and advertising by mulitple realtors, that home is sitting. Now priced in the low 300,000s. This home has its negatives, but I am shocked to see where they have ended up.
I continue to see that homes either selling at or near asking price or lingering through the discounting stages. The bizarre thing is that when homes are a bargain, no one wants to buy. When the market was at its peak, everyone was fighting to buy at premium price and the mulitple offers were pouring in. I am just wondering, where are the bargain shoppers? If you can get a mortgage, you can get a bargain.
It was just a matter of time. I have seen buyers getting very creative with the $8000 stimulus tax credit. One buyer I am working with was smart enough to request an extension to file her tax waiting for the closing of her home to take advantage of the tax credit immediately. Other buyers are reducing their tax withholdings for the year so that by 2010 they will have gotten their 8K in the way of a bigger paycheck all of 2009. I believe the government will see an unprecedented number of amended 2008 returns coming in this year from buyers eager to benefit from their stimulus check.
Now the financial industry is all a buzz about whether buyers will be permitted to use the stimulus money as a down payment. I am always amazed at how innovative people become when money is involved. They are going to get the money anyways so why not let them use it as a down payment? If we want the stimulus package to work, we need as many qualified buyers as possible buying homes. I would caution those who are extremely tight on cash that having $8,000 to make improvements or to put in savings may be a better way to use the credit. Using the $8K as a down payment is just an idea being considered at this time but for buyers who are on the fringe it may represent the only way to get into a home.
This has been a season of first time buyers and my initial impression is that the stimulus money is working to spur on the real estate market. I am hopefull that the late season will bring more mid range buyers as they finally have found buyers for their starter home.
As many of my readers know, I have lived in Chatham County for the past five+ years. We purchased a spec home on a 2 acre parcel of dense woods with a creek. We were taken by the nature and especially the first summer, we were overrun (in a good way) with dragonflies, geckos, woodpeckers and humingbirds. My husband is fond of the birds and he has all types of feeders and feed that attract some very unusual birds. This week we are enjoying a new visitor to the garden, an indigo bunting. We feed all year and have amazing bird watching. I also have a perrenial garden and so we also see a lot of butterflies and tree frogs.
It is difficult to explain to people how beautiful Chatham County is. It is also easy to understand why so many people are trying to preserve the rural character and charm of the area. This brings the inspiration for this post; a poem that I read that I think expresses what we Chathamites all feel.
Previously published in the Chapel Hill Herald SunIn Praise of Chatham
May 19, 2009
Readers of this column
often find pointed critiques of matters that I think need attention
in Chatham County. Doubtless you will read such writings again, soon.
But Spring time has been so intoxicating that I must take this
diversion to also mention the solid core of wild goodness that is
Chatham County.
Regardless of calendar
time, for me, Spring begins when the Forsythia and Bradford Pear
burst their buds. Cardinals become my alarm clock, unless I get lucky
enough to have a Chuck Wills Widow perch in my backyard. I did strike
it lucky some weeks ago when that very bird chose our lot to light
and sing loud enough to raise the sun over the horizon.
The Dogwoods appear like
white butterflies in the forest. Being a small tree, the limbs are so
thin as to be nearly invisible at a distance. The flowers seem
suspended, floating almost, without any support the eye can detect.
This sleight of bloom lends an air of magic to the wooded hill barren
through winter’s cold.
Praise as well to the
Tulips, Irises and Lilies’; exotic shapes dandled on a breeze,
lightly sweet.
The Daffodils among the
early bulbs in varied sizes this year through the snow did push. Such
tenacity and strength.
The Pansy starts planted
by my neighbor withstood the frozen days and will now brave the day
long sun beating down on petals that appear so frail. No human could
take such extremes, yet we equate Pansies with the weak among us. Ha!
And again I’ll praise the
birds whose morning chorus swells each day with promise, contentment,
wooing, and the hope of chicks to feed. Bluebirds nest in the boxes I
bought from the credit union years ago. To and fro they go gathering
scraps for their nest. Before long both mom and dad are flying
sorties all day to feed the young who screech upon their every
arrival. Fiercely standing guard, alas, the bluebird is no match for
a black snake who senses an easy meal. One year Michele had to peel a
three footer off the tree and send it packing so the blue brood could
live to fledge.
The cry of the Red
Shouldered Hawk above the house is a frequent sound. Soaring, at
times harassed by crows or jays to be steered off their nests.
My favorites, the
Vultures, not comely I know, but nobler in sustained flight than
their local avian cousins. Surfing Spring breezes with not so much as
a flap of a wing, grace on the ethers searching out corruption to
devour. The ancient Egyptians held them in high esteem for that very
reason.
Each year a Meadowlark
makes its nest in the field on the community college campus.
Spring-of-the-year he calls thither a mate to pursue. Great
accompaniment to yoga practice in the sunny vernal morn.
Gentle showers and soft
breezes are also to be exalted. So ordinary, perhaps; yet so splendid
carrying coolness before Summer’s furnace. Not coolness only but the
scent of the Honeysuckle and her confederates Privet and Wisteria.
Through a cool Ante Meridian walk these wafting winds exhilarate the
brain with perfumed laced greetings.
I mustn’t forget the the
Peepers and toads, symphonic serenades soothing. They sing another
irrepressible vocal harmony in the ode to yearly renewal.
Not only the wild, but the
cultivated wonders of Chatham as well I must herald. The coming of
the farmer’s markets around. Tender lettuce, asparagus and
strawberries a bumper year we’ve had. Friends and neighbors greeting
and meeting at the focal point of local food grown by local people;
the common denominator of goodness, health and social cohesion.
Limited as I am by both
space and descriptive powers this praise of Chatham’s Spring must now
close. Until then allow me to encourage you to dawdle, tarry and
otherwise slow your days in what ever way you can to imitate the bee
and suckle the nectar from the Spring. Defy the tyrants who manage
your time, dirty your hands to plant a tomato, a bean, perhaps a fig
tree. Invest in life’s soil a harvest of bounty to take in the
Autumn.
Both Chapel Hill and Carrboro are considering proposals to lower the city tax rate that property owners are paying. Both towns are hoping to reduce the tax burden on the residents by approximately 14%. When the economy began to show signs of distress, the city managers of Chapel Hill reacted with budget cutting measures and halted some projects, resulting in a significant savings. Now, the towns are trying to reduce the burden on property owners, at least for the short term.
Orange County has adopted a tax neutral rate which will offset the increase in tax valuations that were sent out earlier this year. Tax valuations adjust the tax value of homes to reflect current prices. Because home values have increased in recent years, most homeowners saw a significant increase in the tax value of their home. The county is reducing the tax rate to offset the increase in value with the goal of a neutral tax adjustment for this year.
