NEW AND IMPROVED HOUSING TAX CREDIT

According to the National Association of Realtors, this is how the whole first time buyer tax credit scenario is going to play out: 

So here’s what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES’s thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.In addition, we preserved what we have - which some tend to forget is always on the table when these negotiations start up again - mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).


The Loan limits have to do with FHA loans.  Remember to check with your lender regarding which areas are considered “high cost areas”.  The $8,000 tax credit (I believe it is $7,500 for an unmarried individual) will not need to be paid back.  This will apply to homes bought January 1, 2009 through at least December 31, 2009.  Also, if you previously owned a home, but have been renting for awhile, check with your lender to see if you qualify as a “first time home buyer”. 

So, if you are thinking at all about buying, now’s the time.  I would love to help you within the Phoenix metropolitan area. 

SPENDING BILL $15K TAX CREDIT - NO MORE

Leave it to our politicians to eliminate a true economic stimulus from this outrageous bill they are set to pass.  The $15k (or 10% of the purchase price) tax credit for first time home buyers would have super charged the housing market.  Instead, once again the people who think they know what’s best for us have screwed it up.  In lieu of the credit, they are raising the limits for Fannie and Freddie.  This is good, but it should have been both. 

Be sure that you have a lender who knows what they are doing and can advise you properly with regard to this whole situation. 

In addition, make sure that your realtor has got a grasp of what’s happening.  It’s a good time to buy and especially if you are a first time home buyer!

STAGING YOUR HOME FOR SALE

Today more than ever, it is important to stage your home.  There are so many homes on the market and competition is fierce.  Your home/listing needs to stand out.  Put your best foot forward — so to speak. 

Take the time to really look at your house.  Notice how I say “house” and not “home” because once you’ve decided to sell, your home is another house on the market.  I know it’s hard to do, but you must now think of your house as a commodity.  Once you can take the emotion out of it, you’ll be fine.

Be sure to eliminate as much clutter as possible.  Remember, you are selling the space, not your belongings.  Put away all personal items.  Begin to pack your things into boxes and stack them neatly in the garage.  The vast majority of buyers cannot “see the forest through the trees”.  So, it is important to “trim those trees”. 

Be sure to start outside.  Stand on the sidewalk or street in front of your home.  Be objective, perhaps call a friend or relative to help you.  Pretend it’s a home that you were going to buy.  What would be your first impression?  First impressions are huge!  Don’t we all judge a book by its cover?  Why would people want to walk into a home that had a terribly messy outside?

Sweep the walk, trim the trees, paint the door if it needs it, fix the screen door; make sure that the door frame is clear and clear of debris.  If it’s spring, plant flowers, or get a flower pot.  It’s amazing what a few dollars and a little elbow grease will accomplish. 

Here are a few pictures of before ….

and after…….

Here’s a before of a family room…..

Here’s that same room after…..

Just by moving furniture around, changing the lighting and adding other pieces from other rooms in the house, this room looks much more inviting…..

Staging is not about decorating your home, it’s about SELLING your home….B. Schwarz

CAUTION: KNOW WHAT THE NEW “STIMULUS” HOUSING PROVISIONS ARE

I’m quoting from a lender I know and he warns that the public must be aware that the promises made by the government regarding lower rates and tax incentives need to be carefully scrutinized. 

Here’s the truth.

Yes, the Fed has been buying Mortgage Bonds, but if you look at what they are purchasing, they are buying a lot of FNMA 30-yr 5.5% and 5.0% Bonds…which won’t have much of an impact on present interest rates. Why? First, see the Fed’s purchases for yourself by hitting this link: Fed Mortgage Bond Buying

So why is the Fed buying these Bonds? Well if you think about it, it’s very smart of the Fed…and maybe even a little sneaky…because 5.5% Bonds actually represent outstanding mortgages with rates of 6 - 6.50%, which are precisely the loans being refinanced at today’s great interest rates.

Stay with me here…

With rates at present low levels, many of the mortgages in these FNMA 5.5% pools being bought up by the Fed will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment. And this is likely a big reason why the Fed said they could continue this purchasing program beyond June, if necessary. Bottom line, the Fed buying these higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today’s low rates.

Here’s the most important part.

Sometimes I talk to clients who are in a situation where it makes sense to refinance right now, and save $250 per month for example. But when they hear the media throwing around teases of lower rates ahead, they decide to hold off on making the decision to save the $250 per month right now, in the hopes of gaining another $30 per month in additional savings with a lower rate than where we stand presently. Now clearly, rates could turn higher, and this window of opportunity could pass them by entirely.

The clincher is this:

Even if those clients ultimately are correct in timing the market, and eventually grab that lower rate and save another $30 per month - think of what they have lost by waiting. While they delayed, they lost the savings they could have gained by taking action sooner - or in the example used, $250 - for every single month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.

Buyer beware could not be more appropriate than now.

SNOWY CHICAGO — GLAD TO LIVE IN ARIZONA

I was born and raised in Chicago.  We moved to Phoenix in

1997.  I am visiting my sister and am watching the snow fall.  I love this weather because I’ve always been the type to bake and what better weather to bake than winter in the Midwest.  I can honestly say that I love a gloomy day in Arizona.  There’s something warm and cozy about a home that smells of fresh baked goods. 

I drove for the first time in rush hour traffic in the snow yesterday in probably 10 years.  It’s like riding a bike….I just drive slower! 

Chicago’s a great city.  I miss the Midwest values or at least what I remember were the Midwest values.  There are a lot of Midwest transplants in Arizona and it’s always fun to meet people who have lived in this part of the country.  They are truly salt of the earth. 

I think I’ll go take a few pictures, so when it’s 110 degrees in Phoenix, I can look at the beautiful blanket of snow!

WHY ARE BUYERS WAITING AND SHOULD THEY?

Do you have a buyer who is fence sitting?

The climate of this real estate market lends itself to a lot of waivering when it comes to buyers.  This is very typical in a buyer’s market as opposed to a seller’s market.  A lot of people are just waiting for the “right time” to buy.  Face it, you want to buy low and sell high.  That is just human nature.  However, the paradox here is that people don’t know if they are facing a further decline in the value of the home they are going to buy.  Can  we blame them?  If you watch the news, it’s one bad thing after another.  Everyone and his brother has an opinion about if the market is at the bottom.

Because different parts of the country are experiencing various levels of price declines when it comes to real estate values, you must check your local area.  There are cities in metro Phoenix that have declined more than 50% and then there are areas such as Scottsdale that have not seen as much of a decline.  If you are waiting to buy to see if the prices will drop more, you may miss the boat.  Because inventory is high right now, that is partially why the prices are lower.  When people start buying again, the prices will go up accordingly.  In addition, keep in mind that Phoenix is the 2nd largest growing city in the country.

Loan are being closed every day.  However, there are tighter regulations.  No more “no doc” loans and there are some programs out there that will help with down payment assistance.  However, if you have bad credit, that may be an issue and something you need to discuss with your lender.  We are back to the days of buying a home if you have the money set aside to make a down payment.  This is a good thing.  We certainly don’t want this mortgage meltdown again. 

Be sure that if you have already started to look for a home or are thinking about it, you really should contact a lender to know what you can afford.  This may narrow down your options as far as the area(s) you are looking into.  This will put you one step ahead.

Bottom line is, if you are waiting to see if the prices drop more, you may just miss the boat altogether.  If you find a home and it’s everything you want and can afford, then take the next step.  This is actually a really good time to buy!

SKIING IN THE WHITE MOUNTAINS OF ARIZONA

Are you thinking of heading up north to ski?

I was just in Show Low.  The drive there was beautiful.  There’s plenty of snow on the rim and through Forest Lakes.  It’s a true winter wonderland.  When you get into Heber/Overgaard there is minimal snow and Show Low is about the same.  There was snow on the golf course, but with yesterday’s 40 degrees, I’m sure much has melted. 

However, Sunrise in Pinetop/Lakeside is open and there’s plenty of snow there.  So pack your skis and/or snowshoes and head up north.  It was so quiet on Friday and Saturday morning, but I’m sure the holiday will bring plenty of outdoor lovers to the area. 

There are plenty of wonderful places to stay and enjoy the winter weather.

FOUR CHRISTMASES

Review Of Four Christmases

Last weekend I went to see the movie Four Christmases with Vince Vaughn and Reese Witherspoon.  A very funny movie to say the least.  I love movies at this time of the year that make fun of the craziness within many families celebrating the holidays.  All the actors did a good job and I’m sure many people can relate to the situations presented at each of the Four Christmases.  Reese Witherspoon is too cute and even in her 4 inch stilletos, Vince Vaughn towered over her.

The theatre was packed and I’m glad to see people out enjoying themselves during the holidays.  Go out to the movies….don’t watch the news!  Happy Holidays and enjoy the show.

RETURN ON INVESTMENT

If you have remodeled, or are thinking about it, here’s how you

can have many happy returns on your investment.  In spite of the declining value of your home in many cities across the country, many remodeling projects are holding their value.

Even in a market that doesn’t seem to have seen the bottom in some areas, people who are deciding to stay put for the time being can rest assured that should they improve on what they have they will reap the benefits.  Of course, there are exceptions to every rule and this one being that if you are living in the midwestern part of the United States, it is tougher to get your money back. 

However, for the most part you can expect to get a return on your investment — depending on your geographic location – for improvements made in kitchens, bathrooms, window replacement, flooring, siding and outdoor decks. 

The website I’ve linked gives you actual percentages in various metropolitan areas.  But remember, when doing any home improvement project you should ask yourself why you are doing it.  Is it because you will reap the benefits as well or are you just looking at the bottom line.  If you will enjoy the fruits of your labors then I think that speaks volumes about whether or not you should take the plunge.  In these tough real estate times, if you are able to stay in your home and make improvements to better your lifestyle and in the long run your potential to make money, then do it!