Carmel and Hamilton County Real Estate Information

The Wall Street Journa's Home Buyer Tax Extension Q&A:

The Obama administration blessed the proposed extension of the $8,000 tax credit for first-time home buyers on Thursday as the Senate neared a compromise that would extend the credit to more potential buyers.

Here’s a primer on who might be able to get the expanded credit, and what it might do for the housing market:

Who gets the credit, and how much can they claim? First-time home buyers are eligible for up to $8,000 on the tax credit, which is the same as the current credit. The Senate version of the bill creates a new credit of up to $6,500 for homeowners who have lived in their homes for five years. That provision would start on Dec. 1.

How long will it last? The tax credits would expire on April 30, 2010, but home buyers under contract by April 30 would be able to qualify as long as they complete the sale within 60 days. Keep in mind, this would be the third iteration of a home buyer tax credit that has been in place since mid-2008. Sen. Johnny Isakson, the Georgia Republican who has been a staunch advocate of the credit, promised that this would be the “last extension” of the credit, according to Dow Jones Newswires’ Corey Boles. “Tax credits like this only work by creating the sense of urgency to take advantage of it,” Sen. Isakson said.

Will the tax credit do anything for the high-end of the market? Probably not. The tax credit phases out for home buyers with incomes above $125,000 for single filers and $225,000 for married couples. Also, homes that cost more than $800,000 aren’t eligible for the credit. Overall, the tax credit is likely to generate only a modest further increase in home sales, says Tom Lawler, an independent economist in Leesburg, Va.  For many well-paid people, he says, it won’t make a big difference: “A household earning around $150,000 is likely to buy a home of $500,000 plus, so a $6,500 credit won’t be much of a factor in pushing such households off the fence.”

What other limits does the credit have? Toddlers are out of luck. Last week’s congressional hearings spotlighted concerns about misuse of the credit, including some 500 tax filers under age 18 who had claimed the credit.

So will the expanded tax credit help sales? That’s a point of debate among housing analysts and economists. Alec Phillips, economist at Goldman Sachs, notes that expanding the credit to people who already own homes doesn’t necessarily make a big dent in the supply of housing on the market. “If these ‘step-up’ buyers already own a home and sell it to finance the new one, that hasn’t reduced the amount of inventory for sale,” he says.

But Mark Zandi, chief economist at Moody’s Economy.com, thinks the extension is a big deal. Based on a preliminary analysis, he said it should mean at least 500,000 in additional sales, atop the 400,000 he estimates already have been generated by the tax credits (twice the Goldman estimate). “The tax credit is not a very efficient tax cut, but not extending it would do significant damage to the still fragile housing market,” Mr. Zandi said.

By WSJ Staff

NIck Timiraos and James R. Hagerty report:

The average time a sold home stays on the market has dropped by 25% since the first quarter of the year. Carmel's inventory is shrinking and prices are holding relativel steady. I expect this trend to cintinue through 2010. Two things to watch out for: Extension of the First-time Homebuyer Credit and Interest rates. Both catalysts have the ability to significantly impact the market's direction. ~ Jason O'Neil

The following is an AP article posted on Thursday talking about the pending home sales on the rise nationally. This is a seven month trend. We see this trend falling tailing off as much of the "increase" in sales is seasonally based. 

WASHINGTON - Aspiring homebuyers rushed to take advantage of a tax credit for first-time owners that expires in November, driving up the number of signed sales contracts for the seventh straight month in August.

Construction spending also rose unexpectedly in August on the biggest jump in housing activity in nearly 16 years, another sign the real estate market is recovering from its four-year slump, data Thursday showed.

Sales and homebuilding are being fueled by a tax-credit of up to $8,000, low mortgage rates and cheap foreclosures. In some of the most hard-hit areas, like Phoenix and Las Vegas, there are bidding wars for deeply discounted properties. And in all but a few cities, home prices are slowly starting to rise, reversing their three-year descent.

To make sure first-time buyers can complete their purchases by the Nov. 30 deadline, real estate agents "have been pushing buyers to sign a contract at least a couple months in advance" according to Abiel Reinhart, an economist with JPMorgan Chase.

More than a dozen bills have been introduced in Congress to extend the credit, but it's unclear if lawmakers want to continue to subsidize the market.

The National Association of Realtors said Thursday its index of sales agreements rose 6.4 percent from July to 103.8, beating forecasts. It was the highest since March 2007 and 12 percent above a year ago. Economists surveyed by Thomson Reuters expected the index would rise to 98.6.

Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales. However, new rules for home appraisals and rigid lending standards have scuttled many sales agreements recently. In addition, the index may also double-count some buyers who agree to purchase other homes after the first deal falls through.

These factors have made the index a less reliable gauge for completed sales. Despite a steady increase in the number of signed contracts this summer, for example, completed sales actually took an unexpected 2.7 percent dip in August.

"Perhaps the real question is how many transactions are being delayed in the pipeline, and how many are being canceled," Lawrence Yun, the Realtors' chief economist, said in a statement. "Without historic precedents, it's challenging to assess."

Pending sales were up 16 percent in the West and 8 percent in the Northeast. They were up 3 percent in the Midwest and nearly 1 percent in the South.

Home prices, meanwhile rose 1.2 percent from June to July, according to the Standard & Poor's/Case-Shiller home price index of 20 major cities. On a seasonally adjusted basis, prices rose in all but three metro areas, Las Vegas, Detroit, and Seattle.

Housing experts, however, remain divided on whether the price gains signal a definite bottom to the worst housing downturn in decades or just a brief respite from plummeting prices.

If you are considering the sale of your home this is absolutely an excellent time if your home value falls in the price range of $300,000 or below.  There is heavy demand around this price point and in some cases it is truly a seller's market. In fact, some properties are receiving multiple offers.  This is due to low interest rates, attractive FHA financing available in this price range and the $8,000 tax credit for first time home buyers.

If the home you are considering selling falls within a price range higher than $300,000, it may be more difficult to sell.  In fact the higher the price range of your home, the harder it is going to be to sell right now.  There is a clear cut line between homes being in a buyers market or a sellers market and the price dividing line seems to be in the $300,000 area. Don't look for any change here soon. 

Hamilton County looks like this:

There are a number of factors that will dictate the future of our real estate market these are:

1.  The national and local economy

2.  Mortgage interest rates

3.  Inventories of bank owned or other distress sale properties

4.  Extention of the $8.000 1st time home buyer tax credit (ends Nov. 1)

I will do my best to keep you informed in the months ahead.  If you are considering selling a home, let us know if you have specific questions about your home, your neighborhood or your options.

If you are considering the sale of your home this is absolutely an excellent time if your home value falls in the price range of $300,000 or below.  There is heavy demand around this price point and in some cases it is truly a seller's market. In fact, some properties are receiving multiple offers.  This is due to low interest rates, attractive FHA financing available in this price range and the $8,000 tax credit for first time home buyers.

If the home you are considering selling falls within a price range higher than $300,000, it may be more difficult to sell.  In fact the higher the price range of your home, the harder it is going to be to sell right now.  There is a clear cut line between homes being in a buyers market or a sellers market and the price dividing line seems to be in the $300,000 area. Don't look for any change here soon. 

Hamilton County looks like this:

There are a number of factors that will dictate the future of our real estate market these are:

1.  The national and local economy

2.  Mortgage interest rates

3.  Inventories of bank owned or other distress sale properties

4.  Extention of the $8.000 1st time home buyer tax credit (ends Nov. 1)

I will do my best to keep you informed in the months ahead.  If you are considering selling a home, let us know if you have specific questions about your home, your neighborhood or your options.

Activity slowed a little bit this last week as Hamilton County saw 57 homes go under contract and Marion County saw 204 homes go under contract.

Will Congress pass a bill giving all home buyers a $15,000 tax credit?  Recent word is that this bill currently waiting for vote just may have a chance at passing.  We saw what the $8,000 first time buyer tax credit did for the lower end of our housing market.  This tax credit is responsible for much of the recent improvement in the housing industry nationally.  The question is will a $15,000 tax credit for all home buyers do the same for the entire housing industry, including new home and the upper end price ranges?  Our opinion is yes and we certainly urge everyone to make contact with their representatives and urge passage of this bill.  Remember, the housing industry lead us into the current economic slump and it will lead us out.  With unemplyment numbers continuing to climb, a spike in home sales would put thousands back to work.  Not a bad idea at this time.

Have a great week

Great video from an Indianapolis based company:

Good Monday Morning!

Last week Hamilton County saw 83 go under contract while Marion County saw 264! These are the numbers we are looking for!

The $8,000 tax credit for first time home buyers has given rise to a vastly increased number of sales for this buyer group.  This credit offer ends soon, but there is talk of an extension.  Currently developing is an abundance of pressure on legislators to enact a $15,000 tax credit for all home buyers. This was proposed as a part of the initial economic stimulus package but was cut. The thoughts here are that every single home transaction puts about $63,000 directly into the local economy. Economic recoveries have always begun with housing.  It would make sense for lawmakers to direct stimulus money right into and onto main street. If you agree, talk to your representatives, they do listen.

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Have a great week!