Inside Real Estate News » 000 tax credit

September home sales to be released Wednesday

John Rebchook — Mon, 05 Oct 2009 19:53:38 +0000

Metrolist, the Realtor group which tracks Denver-area home sales data, is scheduled to release its September report on Wednesday. It will be interesting to see what impact the $8,000 tax credit for qualified first-time home buyers will have on sales activity last month. Watch InsideRealEstateNews.com for details.

Title industry can handle tax-credit buying surge

John Rebchook — Wed, 23 Sep 2009 16:18:49 +0000

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Last week, I blogged that first-time home buyers should place homes under contract sooner, rather than later, if they want to take advantage of the $8,000 federal tax credit that expires at the end of November.

Mortgage lenders and real estate brokers are concerned that the home closing process could take as long as 45 days, which means that buyers should have homes under contract by Sept. 28 to be assured of getting the home closed in time for the tax credit as it currently stands.

A number of real estate groups are lobbying to extend, and even expand to $15,000 and to all home buyers. but it is a gamble.

But Brian Hamilton, executive vice president of Denver-based Land Title Guarantee Co., a co-sponsor of InsideRealEstateNews.com, told me late last week that he does not expect his industry to be part of any closing delays.

“My sense that the title insurance industry will not be the stumbling block,” Hamilton said. He added that consumers would still be wise to get homes they want to buy in the pipeline as soon as possible, because there could be delays on the lending side.

Indeed, he pointed out something that I hadn’t initially considered.

“The reality is how this really plays out is that you have Thanksgiving right before the deadline, so you are really going to lose two working days,” Hamilton said.

He said Land Title will be monitoring the situation closely, and is prepared to beef-up staffing, if necessary.

“We are going to make sure staff-wise that we have enough people,” he said. “We have talked about this internally. We are going to be working until the bitter end. And we have the ability to electronically disperse funds, which will be a help.”

But Land Title, and other title companies, may not need to increase staffing.

“When you look at our overall business, from a historic basis, we’re not that active on the residential resale side in the fall,” Hamilton pointed out to me. “Quite honestly, our normal real estate purchase business starts to fall off in October and November. The seasonal drop should give us ample excess capacity to handle any increases because of the tax-credit closings. In general, we see a 30 to 35 percent drop in closing volume in November from what we see in June, July and August.”

I said that it is a good thing that the program didn’t close in August, which would have sent people scrambling during the summer months.

“That would have been a train wreck,” he said.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865

Clock ticking on $8,000 tax credit

John Rebchook — Fri, 18 Sep 2009 18:56:28 +0000

First-time home buyers who want to take advantage of the $8,000 tax credit should have homes under contract in the next 10 days or so, if they want to be assured they can close under the current deadline for the program.

In order to qualify for the tax credit, a buyer must purchase the house before Dec. 1.

But the clock may be ticking faster than many qualified buyers realize.

Experts tell me that in order to be sure the home can be closed by the deadline, prospective buyers should allow 45 days for the buying process.

That means a prospective buyer should have the home under contract no later than Sept. 28, which is 45 business days until Nov. 30, the last day of the program.

“A year ago, I could close a loan in five days,” said Dan Brown, owner of Denver-based Spire Financial. “Now, witt the new Home Valuation Code of Conduct for appraisers, there is no way I can close a loan that fast. I need at least 20 business days.”

But he added he thinks prospective home buyers, to be on the safe side, should schedule 35 to 45 days from the time the house is placed under contract until it is closed.

Joan Rogliano, of the Rogliano Real Estate Group and Tim Smith, of Oxford Mortgage, on Thursday night held a workshop for first-time home buyers.

“Everybody needs to be prepared to to take a 45-day approach,” Rogliano said. “There is gong to be a huge rush and everyone involved in the home buying process – inspectors, title insurance companies, appraisers – are just going to be overwhelmed.”

Much like the cash-for-clunkers program that spurred auto purchases, the $8,000 tax-credit program is driving people to buy homes.

The tax-credit program is expected to cost about $15 billion, twice what was originally projected when the Congress passed the stimulus bill in February. The National Association of Realtors anticipated about 350,000 homes nationwide will qualify – that would translate to about 7,000 home sales in Colorado, based on the state’s population and homeownership rate.

Independent real estate broker Gary Bauer is estimating that 4,000 to 4,100 homes in the Denver metro area could be purchased under the program.

Both Bauer and the NAR would like to see the program extended, or even have the credit increased to $15,000 for all home buyers.

However, betting on a new or more lucrative program is a crap shoot. And Congress did not extend the cash-for-clunkers program, despite huge consumer demand.

“I’m working with a first-time home buyer right now, and I’m trying to get him to be under contract by Sept. 28,” Bauer said. “I don’t want him to be going down to the wire.”

Greg Nelson, a broker associate with the the Herman Group (formerly Prudential) in Cherry Creek, said that “almost 100 percent of my clients are first-time buyers,” planning to take advantage of the $8,000 tax credit.

“It’s really gotten some buyer’s butts off the fence,” Nelson said.

“Now, some of them are starting to panic,” about being able to find and close a home by the Nov. 30 deadline, he said. “More and more people are jumping on board. I can only imagine there is going to be a mad dash as we get closer.”

For some buyers, who want to buy homes with short-sale transactions, the ship has already sailed, unless they are far along the process.

“If you’re going to do a short sale, you have to plan it taking at least 90 days,” he said.

Most of his buyers have been snapping up homes from less than $100,000 to about $320,000. The vast majority of his buyers are in the market for homes less than $200,000s.

Mortgage broker Kevin Iverson said that the demand for low-priced homes makes it even tougher to close a home in time for the tax-credit deadline, which is another reason why anyone thinking of buying should begin house hunting immediately.

“Every real estate agent I talk to says there is a lot of action – the great majority of it, in fact – is at the lower-end,” said Iverson, of Reed Mortgage Co. “So there is a very, very short supply of good, move-in houses priced in the $200,000 range or below. These home are seeing multiple offers, and buyers who are kind of messing around on the price, lose the property. I would say if you find a house that you like, pull the trigger. First-time buyers have got a deadline coming up. If you really want to be safe, I would prepare for a 45-day closing.”

Rental housing market better off with tax credit expiring

John Rebchook — Thu, 20 Aug 2009 17:32:57 +0000

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The home building industry, Realtors and first-time home buyers have a lot to gain if the $8,000 tax credit available to qualified home purchasers is extended beyond this year.

Indeed, Margaret Jackson had an article in today’s Denver Post about builders lobbying Congress to extend the tax credit.

But there is one group that isn’t so enamored by the idea – apartment owners and managers.

“Selfishly, I would like to see it go away,” Bob Alldredge, principal of Jericho Properties, a housing management company, told me today, while I was talking to him ab out a Colorado Division of Housing report that showed the housing rental vacancy in the Denver area had risen to 5.2 percent, the highest rate since 2006. (See my previous blog for more details and a table listing historical vacancy rates.)

Susan Melton, of Assured Properties, which also manages properties, agreed.

“It is better for landlords,” if the tax credit ends, she said.

During the easy mortgage money days of 2003 until 2006 and part of 2007, Alldredge said 75 percent of his tenants were leaving to buy homes.

Now, about 50 percent of his renters leave to buy homes.

And almost all of them are first-time buyers, which makes sense, as buying a home is the next step for many young renters.

Qualified first-time buyers, of course, can take advantage of that $8,000 tax credit.

It will be interesting to see what Congress does. Stay tuned.

Renters taking advantage of $8,000 tax credit

John Rebchook — Thu, 25 Jun 2009 21:44:40 +0000

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Increasingly, people who have been renting homes in the Denver area are leaving to buy homes to and take advantage of the $8,000 tax-credit available to qualified first home buyers this year, experts told InsideRealEstateNews.com.

About 30 percent of the people who have been renting homes through Jericho Properties Realty in recent months, have left to buy their own homes and take advantage of the tax credit, said Robert Alldredge, owner of the residential real estate management company. He expects that trend to continue and accelerate. Susan Melton, owner of Assured Properties, which primarily handles rental homes in Jefferson County, as well as in Arapahoe and Douglas counties, also is noticing first-time buyers leaving rental homes take advantage of the tax credit, which is available for people who buy homes by Dec. 1.

Both Alldredge and Melton, who are active in the are active for the Denver board of the National Association of Residential Property Managers, made their comments regarding the tax credits, as University of Denver Daniels School of Business Professor Gordon Von Stroh released a first-quarter report on rental housing, which showed the overall vacancy rate, while still low at 3.6 percent in the first quarter, is up from 2.7 percent in the first quarter of 2008. Von Stroh authored the report on behalf the state’s division of housing. The vacancy rate fell from 4.9 percent in the fourth quarter of 2008, but much of that apparently is for seasonal reasons.

The report tracks for rent-condos, single-family homes and other small properties across the Denver area.

Overall, the housing rental market appears to have stabilized, said Alldredge and Melton. The number of renters leaving homes to purchase, is not approaching the days of easy mortgage money, when 75 percent of the renters were leaving apartments to buy homes, Alldredge noted.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

Inside Real Estate News » 000 tax credit

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