U.S. home prices appreciate?

A major index that tracks home prices in 20 major metropolitan areas, called the Standard & Poor's/Case-Shiller home price index, is reporting a modest increase in September. Their index shows prices rose 0.3% in September.

Obviously this is not a major increase and does not represent home prices in every market. But it is more positive news after yesterday's favorable report on increasing existing home sales.

Read the full article here.

Home sales rise to highest level since February '07

Due in large part to the old deadline for the first-time home buyer credit. Before the credit was extended to April 30th, 2010, buyers were rushing to close on their first home by November 30th, 2009. Naturally, this caused October home sales to rise drastically.

A few weeks ago, President Obama signed an extension to the $8k credit into law. In addition, there is a new credit for current homeowners so they can get $6500 if they buy a new home. For both credits, you must have a new home under contract by April 30th. The rules of the credits allow until June 30th for those contracts to finalize financing and close the transaction.

I am not alone in thinking that the extension and expansion of the home buyer tax credits will bring the typical spring buying season a little bit earlier than usual.

Read the full article here.

4% appreciation in 2010?

The National Association of Realtors recently predicted that real estate nationwide will see a 4% gain in appreciating values in 2010. This might seem far-fetched but if the extended and expanded tax credits have their desired effect...such gain in value isn't too outrageous.

The extension of the $8k tax credit and the new $6500 credit for repeat buyers aims to entice more people to buy a home between now and June. A large influx of buyers in the next 6 months would deplete the inventory of homes for sale, thus causing prices to stabalize and theoretically rise in some markets.

The big question in my mind however will be what the market activity looks like after the credits finally expire for good. If everyone thinking of buying in the next 2 years decides to buy early to get their government money, then what happens after the credit runs out? Who will be in the market to buy a home? Granted, people always need to move...but we'll really see the health of the real estate market when people aren't getting fat $8,000 or $6,500 checks in the mail.

This past spring and summer, Seattle certainly saw bidding wars for nice homes under $400k. So perhaps any appreciation will be dependent on the price point, city, neighborhood and type of home. But in the end, that's how it always works...

Read full article here.

$6500 tax credit for repeat buyers

Lost amid the excitement of the recent extension of the first-time buyer credit is the NEW $6500 tax credit for current homeowners who buy another house. This particular credit could be more important than anything else for the real estate market.

Homeowners who have wanted to move for the last 2 years but remained in their home due to the soft market will hopefully be motivated to make the move when the government is giving away $6500. The middle range of the market nationwide has been slow for some time. Homes above $400k tend to languish on the market because the pool of buyers has been low.

Hopefully now that will change.

Here's a great article from the Seattle Times that explains the credit in more detail.

Tax credit extended and expanded...here are the details

Last Friday, President Obama signed the Tax Credit Expansion into law. This extends the first-time buyer tax credit and creates a new tax credit for current homeowners who buy a new house.

This is a really big deal - Just ask any first-time buyer who has been trying to make the old deadline!

The tax credit extension coupled with low interest rates, creates a prime opportunity to buy your first home, move up to fit your growing family or downsize while the government helps you!

Below is a summary of the new modifications in the extension and expansion of the tax credit:

• The $8,000 tax credit will be extended and available for first-time buyers through April 30th, 2010.
• Prospective purchasers with written contracts in place as of April 30th, 2010 will have until July 1st, 2010 to close the transaction.
• A NEW $6,500 tax credit will be available for current homeowners. To qualify for this provision, you must have used the home being sold as a principal residence consecutively for 5 of the previous 8 years.
• Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.
• The limitation on the cost of the purchased home is $800,000.
  

Here are some really great websites that provide more information and answer situational questions:

• www.federalhousingtaxcredit.com
• www.wahomeowners.com

Seattle sales trend upwards

It's nice to see the red 'pending sales' line continue it's upward trajectory. The continued increase is due in large part to the home buyer tax credit which was just extended. Let's see if the extension causes sales to continue during the typically slower winter months.