Statewide Open House, $8k credit ending soon, March Statistics

STATEWIDE OPEN HOUSE

Spiffy idea: this Saturday and Sunday, 10 and 11 April, Florida Realtors are holding the first statewide Open House Weekend. 

The purpose of the event is twofold: it offers prospective buyers a convenient way to see as many homes as they can cram into two days. And it gives curious people an insight into their neighbors' living rooms. (That is not the second reason according to the Florida Association of Realtors, that’s my take). It is also a coordinated approach to attract buyers and help them learn about prices and availability in their local housing market.

How do you find participating houses? More than 35,000 blue balloons featuring the Realtor® logo will be flying above mailboxes at participating open houses from the Panhandle to Key West. Not sure how a blue balloon with the Realtor®-logo looks like? No sweat:

The timing is no coincidence: interest rates are low, inventory is still above average (see graph below), and the Florida Open House Weekend is two weeks before the April 30 deadline for the home-buyer tax credit (see below).

Florida Realtors aren’t the only ones giddying up: colleagues on LinkedIn told me that – among other states – North Carolina, South Carolina, New Jersey, Ohio and Illinois also designated April 10 and 11 as Open House Weekend.


$8,000 TAX CREDIT ENDING IN TWO WEEKS

If you’re not in a home-buying mood while reading this: you’re not missing out on anything. But: if you happen to be in the market for a house (or condominium), please don’t throw $8k into the Intracoastal. Take advantage of the federal tax credits for house purchases.

But they expire soon: buyers must sign a purchase contract by April 30 and close on the deal by June 30. First-time buyers get up to $8,000 in tax credits, existing owners can get up to $6,500 in tax credits.

Email or call me immediately if you feel the itch to go out now and buy a little something. Ideally something modern, please.


MARCH STATISTICS

THE RESIDENTIAL MARKET OVERALL

It may be an effect of the federal tax credits (see above), or it may be... I don’t know what else it may be. A major jump for sure. But a turn?

One swallow doesn’t make a summer, as they say in German (speak after me please: “Eine Schwalbe macht noch keinen Sommer”). So let’s not get overly excited. But the numbers baffled me. The March market for all single family homes in the Tri-County area*:

• Inventory for sale: 26,358 units, 10 months supply
• Median asking price: $316,333
• Median asking price per sf: $158

• Units sold last month: 2,739
• Median selling price: $210,233
• Median selling price per sf: $112

(Mar 2009 – Mar 2010. Red: SFH asking prices in Tricounty area, green: selling prices, blue: inventory in months)

From February to March, nothing really changed, except that a truckload more houses (+50.1%) sold, at a slightly higher price (+9.0%). If nothing internally is different, what else could it be? External factors. Compare the September/October-dip in inventory (when everyone thought the tax credits would expire in November) with March. So for the likely culprit, you don’t need to look farther than one chapter up.


THE MODERN MARKET

Following this market-segment closely, I counted 13 modern sales last month. 26 modern properties dropped out of the race as unsold, 31 homes had price reductions, resulting in a $151,000 drop in median asking price. One bold seller went up 10%; talk about anti-cyclical behaviour. 

• Modern houses for sale per 31 March*: 273
• Asking price range: $189,000 – $42,000,000
• Median asking price: $1,299,000
• Median asking price per sf: $364

• Modern houses sold March: 13
• Volume sold: $18,263,250
• Median asking price of sold homes: $829,000
• Median selling price: $754,250
• Median selling price per sf: $260 (more than double than general inventory)
• Median Days on Market: 89

The increases are staggering: +66% median list price, +31% median list price per sf, +51% median selling price, and +12% median selling price per sf. As in previous months, sellers are jumping the gun: asking for more doesn’t directly translate into getting more. But the spike in March is strong.

Again: if this is a trend-change or a fad we will know earliest in August or September, when all possible effects of the tax credits are eliminated (for the credits to be applicable, closings have to place by 30 June, means we will see July figures by mid-August). My feeling: it won't last.

Two comments about available homes: Sometimes prospective buyers want to hire me with unreasonable expectations. At the lower end of the price range, one can expect a fixer-upper with modern bones, and a major need to strip and renovate. At $189,000, there are no Singers, Nims or Duckhams. Please be realistic.

And: could one qualified reader please contact me about this $42m house and buy it?

It skews my data. And it’s just sitting around, right on that ocean there, lonely and not getting any younger. Do you have my number?

I sure hope you enjoyed reading my April 1 post last week as much as I had fun writing it. Have a good weekend, and happy open-house hunting.

(*known/observed properties only)

President Obama approves Extension + Expansion of Homebuyer Credit

On Friday, President Barack Obama signed the bill that includes the extension and expansion of the homebuyer tax credit. The credit will thus not expire on November 30, 2009, but continue in its extended form until 30 April 2010, with the following stipulations:

• $8,000 tax credit to first time homebuyers (Definition of a first-time homebuyer according to the IRS: you did not own a home in the past 3 years).
• The tax credit will actually be 10 percent of the home purchase price, up to $8,000.
• New: tax credit of up to $6,500 for existing homeowners looking to purchase a different primary residence. Conditions: primary residence “swap”, buyers must have owned their home for five consecutive of the previous eight years.
• New: income limits raised to $125,000 for single filers and $225,000 for joint filers (read: if you don’t file a US tax return, you don’t qualify – my apologies to my Canadian, South-American and European friends)
• Purchase agreements have to be signed by April 30, 2010 and closed by June 30, 2010.
• Purchase price of home must not exceed $800,000.

I consider the measure a necessary evil. It will certainly help the housing market, which is far from being healthy yet, especially in those areas that bubbled and burst, like Southern Florida.

Senate approves Homebuyers Credit Extension and Expansion

Last night, with a vote of 98-0, the United States Senate approved extending and expanding the homebuyer tax credit.

CONTENTS:

As previously mentioned:

• $8,000 tax credit to first time homebuyers (Definition of a first-time homebuyer according to the IRS: you did not own a home in the past 3 years).
• The tax credit will actually be 10 percent of the home purchase price, up to $8,000.
• New: tax credit of up to $6,500 for existing homeowners looking to purchase a different primary residence. Conditions: primary residence “swap”, buyers must have owned their home for five consecutive of the previous eight years.
• New: income limits raised to $125,000 for single filers and $225,000 for joint filers (read: if you don’t file a US tax return, you don’t qualify – my apologies to my Canadian, South-American and European friends)
• Purchase agreements have to be signed by April 30, 2010 and closed by June 30, 2010.
• Purchase price of home must not exceed $800,000.

NEXT STEP:

The United States House of Representatives will have to approve the language later this week, as early as today. If there are no further modifications made by the House, President Obama could see this bill on his desk by Friday.

Please do contact me if I can help you in any way or if you have further questions.

$8k Homebuyers Credit extension? Probable.

A major role in the improved US housing numbers - for resales, which are the major part of the housing market, as well as new construction - has been accredited to the $8,000 First Time Homebuyer Tax Credit. This credit was set to expire on Nov 30, 2009. Realtors supported the buying public strongly by lobbying hard for an extension of the credit, arguing that it helped stabilize the housing market, which in turn is a major economic factor.

Status: Last week, a major hurdle was taken when the Senate came to a - bipartisan! - agreement to extend the measure.

Content of the extension proposal: (1) to qualify, purchase agreements for first-time home-buyers have to be signed by April 30, 2010 and closed by June 30, 2010. Definition of a first-time homebuyer according to the IRS: you did not own a home in the past 3 years.
(2) The tax credit will be 10 percent of the home purchase price, up to $8,000.
(3) New: existing homeowners looking to purchase a different primary residence could be eligible for a tax credit of up to $6,500. Conditions: primary residence “swap”, buyers must have owned their home for five consecutive of the previous eight years, max. purchase price $800,000.
(4) New: qualifying income limits may be increased from $75,000 to $125,000 for singles, and from $150,000 to $225,000 for joint tax filers

Next step: The extension Bill must be reconciled between the House and Senate, and then voted on for final approval.

Next step for prospective homebuyers: Don’t snooze. Mortgage rates could rise, selection will fall. In all local market segments I observe, inventory is being gobbled up (nice segue to Thanksgiving?) from the low end of that segment. The longer you wait, the less selection you will have. And that includes not only condos and the “average” house, but also midcentury and contemporary modern homes.