Congress — both the U.S. House and Senate — passed the Homebuyer Assistance and Improvement Act of 2010 (HR 5623), which extends the Closing Deadline for Homebuyer-Tax-Credit eligible transactions to September 30, 2010 (instead of June 30).
This extension of the Closing Deadline applies only to transactions with ratified contracts in place as of April 30, 2010 but not yet closed.
Up to 180,000 homebuyers nationwide (including approx. 8,500 in Ohio) would have lost their tax credit had Congress not passed this extension.
What happened
The Senate approved the legislation – by unanimous consent – last night at 9:40 pm.
The House approved the legislation on Tuesday, June 29 by a vote of 409-5.
The legislation provides a seamless transition. There is no “gap” between June 30 and the time when the bill will be signed into law by President Obama (likely to occur today).
Government Affairs staff from the National Association of REALTORSâ worked vigorously with Congressional leaders on both sides of the political spectrum to get this legislation enacted.
The numbers released form the Cincinnati Area Board of Realtors show that the local real estate market has improved since last year and is trending towards stability and balance. Year over year 2010 spring season has been much more active than 2009. Below you can see the increase in number of homes SOLD, not under contract, but SOLD!
- March 2010 vs. March 2009 = +13.97%
- April 2010 vs. April 2009 = +32.69%
- May 2010 vs. May 2009 = +25.43%
The $8,000 tax credit did have an impact on the sales volumes, and according to the board the sub $200,000 price point was particularly active. What is important to remember is that the tax credit ended in April, but closings can be as late as June 31 so expect to see strong June numbers as well.
Better yet is that inventory of homes has gradually decreased, bringing the market closer to balance. With an inventory of 6.75 months we are leaving a ‘buyers market’ ( 7+ moths of inventory) but are a long way from a Sellers market (5- months of inventory). Overall look for prices to stabilize and being to increase. Cincinnati’s average home price is up 9.9% for the first 5 months of 2010 compared with the first five months of 2009.
If you are in the market for a condo, there are some critical pieces of information you should research with your real estate agent before making an offer.
1. Read Between the Lines
Take a look at the minutes of the condo association board meetings to see what the building-wide challenges are. Even if there aren’t any complaints, reading the minutes will reveal the sorts of projects that are under way at the complex — projects the seller may have neglected to mention.
2. Who is Paying Their Bills?
Make sure the association is collecting the dues from everyone on time! . If people aren’t paying their association dues on time. Carefully consider buildings that are underfunded.
3. Planning for Repairs
Associations take on a lot of building maintenance so make sure the repair fund for the new roof, driveway, and exterior are well thought out and funded.
4. Insurance, Insurance, Insurance!
Gt a copy of the certificate of insurance, which is a summary of the association’s policy. First see if the replacement costs covered by the policy are an accurate estimate of the cost of rebuilding. Then make sure that the policy has a building-ordinance clause, which means that the insurance will cover the cost of bringing the building up to code if there is any rebuilding to be done. Finally, make sure that you understand exactly what the association policy covers and what you are responsible for.
5. Legal Compliance
Buying a single-family home without a lawyer is no big deal for many people. But with a condo, there’s so much more involved. Contact a local real estate lawyer and have him or her go over the bylaws of the association. Also see if there are any pending cases by any residents against the association.
6. Can I rent My Unit?
Certain associations have a limit on the number of units that can be rentals at any one time. If you plan on renting your out down the road make sure you know the rules and plan in advance.
7. Professional Management
If the complex is professionally managed, check out the management company as thoroughly as you check out the association. Ask other owners. Ask people in nearby buildings. And be sure to interview the day-to-day manager directly.
8. Read The Books
Read the condo documents for anything out of the ordinary and think in advance. Are there restriction on commercial vehicles, pets, loud music, or even placement of ‘Real Estate Signs’. Remember when you go to sell your condo you want to know you attract the next buyer.
In recent days I have had a few phone calls from first time home buyers asking me if they should still buy a house even though they missed the $8,000 tax credit. In some cases they could not find the right house, or they did not hear that the credit was extended. Regardless of the reason they missed credit I tell the same thing; YES!
There are a number of reasons that this is a good time to purchase a home.
First is that over the long term Real Estate has been a solid long term investment. Over the years Cincinnati has seen relatively stable property value appreciation. Our property values did rise and fall with the rest of the country over the last 6 years, but we did not have the dramatic soar and crash like Miami, or Las Vegas. Invest in a home because you love it, not because you are looking for fast appreciation.
Second thing I point to is the closing gap between Rent and Ownership costs. With property values AND interest rates lower the gap between Rent and Ownership has shrunk substantially. According to a national study by Marcus & Millichap Real Estate Investment Services the difference between the cost of Rent and Ownership has decreased to as little as $100 a month in some markets. The study looked at 43 major markets and found that using the median home price and median rent the cost difference was $256. That is the smallest gap since 1993.
The third point is that there are still very good deals to be had. There are sellers who want to sell their home now and are willing to negotiate on price and terms to get the deal done. While it is still somewhat a buyers market sellers are also feeling the home values stabilize and may not be ready to give their home away in a fire sale. They key point I try to emphasize is that interest rates are at record lows. Home values have returned to 2003 levels, but the interest rates today are lower. Bottom line – the price may be the same but it will cost you less to buy the same hose today as it did in 2003 thanks to low interest rates.
For more information please e-mail me or call me at 513-518-1140
In real estate it is important to understand the life span of major household appliances. Did you know that your thermostat will last twice as long as your furnace? Did you realize that a tank-less hot water heater will last twice as long as a traditional water heater?
The report was published by the National Association of Home Builders/Bank of America Home Equity Study of Life Expectancy of Home Components. As a baseline it is important to understand the age of major appliances (and when they are expected to give out) when you purchase a home. To protect yourself against premature appliance failure i always recommend that my buyers take out a home warranty. For the price of an annual premium, and a reasonable deductible, the homeowner can get protection from mechanical failures that would otherwise cost thousands of dollars to replace.
Keep in mind that the life expectancy listed are just a general guideline—depending on the model and brand of appliances you buy and how well you treat them, your gear might last longer or might need replacing even sooner. Thanks to Consumer Reports for the chart.
| Appliance |
Life Expectancy (years) |
| Air Conditioners (room) |
10 |
| Air Conditioners (central) |
15 |
| Boilers (electric) |
13 |
| Boilers (gas) |
21 |
| Compactors |
6 |
| Dehumidifiers |
8 |
| Dishwashers |
9 |
| Dryers (electric and gas) |
13 |
| Freezers |
11 |
| Furnaces (electric warm air) |
15 |
| Furnaces (gas warm air) |
18 |
| Furnaces (oil warm air) |
20 |
| Garbage Disposers |
12 |
| Humidifiers |
8 |
| Microwave Ovens |
9 |
| Range/Oven Hoods |
14 |
| Ranges (electric) |
13 |
| Ranges (gas) |
15 |
| Refrigerators |
13 |
| Refrigerators (compact) |
9 |
| Thermostats |
35 |
| Washing Machines |
10 |
| Water Heaters (electric) |
11 |
| Water Heaters (gas) |
10 |
here has been a lot of talk recently about the impact of the Federal First Time Home Buyer tax credit. The newspapers, the talk shows, the blogs, and the radio dj’s have all been talking about how important it is. I wanted to take the opportunity and make clear, in detail, the benefits to first time home buyers, aside from the $8,000, and give some much needed insight into how this program is going to impact the number of home and condo sales in the Cincinnati real estate market in the winter/spring 2010.
The Federal Government extended the tax credit through April 30. This means that you must have an accepted contract signed by both parties by then and must close the sale on or before July 1, 2010. But there is more.
Did you know it now offers $6,500 to people who have already owned a home and are buying another larger or smaller home? So if, for example, you are looking to move out of Hyde Park and into the burbs, this credit is great news for you. The program is designed to create new inventory for first time home buyers. If you have owned and occupied your current home as your primary residence for 5 of the last 8 years then you may be eligible for a $6,500 tax credit depending on your income as there are income limits.
To qualify for the $8,000 tax credit you (and your spouse if you are married) cannot have owned a home within the last 3 years. If you owned a home and sold it back in 2005 to relocate and rented for 4 years then you may qualify! Never have you ever owned a home you say? I’d say it is worth finding out if you’re eligible for an $8,000 credit. There are income limits and sale price limits on this tax credit so please check with your accountant or Realtor to be sure you meet the criteria.
You should also know that you can use the tax credit in a number of ways. You can use it on your 2009 or 2010 tax returns. The credit amount is equal to 10% on the purchase price of the home up to $8,000 of credit, or $80,000 of purchase price. Now that you know there is an $8,000 credit waiting for you, how are you going to take advantage of it? What should you do? Who should you call? When do you need to take action?
The first step is thinking about your home as an investment, an investment you can sleep and entertain friends in. Start evaluating if home ownership is right for you right now. This is not a decision you should rush. It is always better to wait and buy when the time is right for you. Next, you need to speak with a mortgage lender and get prequalified for a loan that is within your financial means. Mortgage brokers or mortgage lenders can help you with this step. The third step is finding a house that is the best fit for you. But with an April 30th deadline when should you start and when should you write a contract?
If possible, you should start your home search in earnest in February, and submit your offer no later than mid April. You have to work backwards and look at the contracting process and the whole market to understand why February is the key month. Sellers who want to capture the surge of these qualified first time home buyers are going to need to get their houses prepared for sale and listed in February to give them the most exposure to the potential buyers. The same thing is true for buyers. If you are not actively looking for your dream home it may be purchased before you even see it. I believe that February is going to be a very active month for new listings and proactive buyers in every neighborhood in Cincinnati.
Typically the process of completing a contract from purchase to closing takes between 30 and 45 days. There are many steps that go into a real estate transaction, including home price negotiations, home inspections, repairs, remediations, loan applications and acceptance, appraisals and more. Another important tip is that it is best to try to secure a property before the April 30th deadline if possible to ensure enough time to find the property and negotiate agreeable terms. Inspectors will be busy, contractors will be booked, and banks underwriters will be backlogged. So the sooner you make an offer the better the chance you have of making the deadline.
If you have any additional questions about the Tax Credit and how you can take advantage of it please feel free to call me and ask questions. I would be happy to provide you resources and information that will make your home buying experience exceptional.
Alison Moss is a 9 year veteran of the real estate industry and can be reached at 513-518-1140 or by e-mail at Alison.moss@comey.com
Nationwide buyers are paying 2.7% below current listing price in October 2009 according to a recent report. This variation has been shrinking since January when buyers were selling 4.6% below list. All real estate is local, and in some Florida markets buyers are still paying more than 7% below listing price, and in some California area buyers are actually paying over list.
As a Cincinnati Realtor I can see what is going on locally in my market and this change is being driven by two main factors. The shrinking gap is being perpetuated by basic supply and demand economics, and a better understanding of fair market value by both buyer and seller. Buyers are more realistic about the price of their property, and agents are giving better advice.
As the year comes to a close sellers are reducing their price and creating a greater demand for their property which is yielding stronger offers. In addition the number of foreclosures being purchased is up and those properties tend to sell at or above list price skewing the data. What is most important as a prospective buyer is that your realtor provides you solid comparable data to help you make an informed decision on your purchase price.
Congress voted Thursday afternoon November 5, 2009 to extend the $8,000 First-time Homebuyer Tax Credit and created an additional $6,500 credit for existing property owners looking to sell their home and buy another.
The tax credit for both programs (first-time homebuyers and existing homeowners) will apply to all written binding contracts in effect by April 30, 2010 and closed by July 1, 2010.
NAR has provided this chart to easily explain the restrictions of both credits:
NON FIRST-TIME HOME BUYERS who have owned their current residence for 5 of the previous 8 years are eligible for $6,500 when they purchase a new primary residence. The income limit is $125,000 for single buyers and $250,000 for married buyers filing jointly or $3250 for married buyers filing seperately. This tax credit is only applicable only for single-family primary residences under $800,000, not investment properties.
FIRST TIME HOME BUYERS or anyone who has not owned a property for the past three years is eligible for this tax credit which is 10% of the property value up to $8000. The income limit is $75,000 for single buyers and $150,000 for married buyers. If married buyers are filing separately then they are only eligible for a $4000 tax credit. There is no purchase price limit for buyers using this tax credit
The Ohio Housing Financing Agency is currently offering an additional 2.5% financial assistance grant to Ohio College graduates! This is on top of the $8,000 Federal First Time Home Buyer Tax credit. Recent college graduates (within 18 months), including those earning postgraduate degrees, can receive money for a down payment, funds to cover closing cost, and a preferred mortgage rate through OHFA’s Grants for Grads Program. The funding is intended to reduce out of pocket expenses and make home purchases more affordable.
The grants money is forgivable over a period time. Think of it as a second mortgage with a 0% interest rate, and the principal declines the longer you stay in your home. After 5 years of home ownership your grant is completely forgiven. See the chart below for a payback schedule.
Grant Repayment Schedule
The restrictions include:
- Income eligibility
- Qualify for the Federal First Time Home Buyer Tax Credit
- Graduated from an Ohio high school
- Earned an associate, bachelor’s, master’s, doctorate or other postgraduate degree within the last 18 months
- Complete a free homebuyer education course offered by any housing counseling agency approved by the U.S. Department of Housing and Urban Development, or use the streamlined OHFA homebuyer education program
If you have questions please contact me immediately at 513-518-1140.
