For those who refuse to believe that the housing market in the majority of areas and/or price ranges in Massachusetts has bottomed and is beginning to improve, here are some statistics recently released by the Massachusetts Association of Realtors:
The median single family home price for June 2009 was $306,000. This is the first time the median home price has been over $300,000 since August 2008. Moreover, the June 2009 median price is up 21% from its low of $252,000 in February of this year. With that said, this is still a decrease of 8.6% year over year (June 2009 compared to June 2008). As a frame of reference, consider today's prices to be in line with those of 2003. (Source:MAR)
In my opinion, the more important - and thus more impressive - turnaround has been in residential home inventory. (Home inventory is based on a fiction wherein we assume no more homes will become available for sale. In that instance, at the then current rate of sales, how long would it take to sell all the homes on the market at that point and time? The answer represents the "home inventory".) A decrease of 16% in inventory from June 30, 2008 as compared to June 30, 2009 should markedly improve real estate sales conditions. As of June 30 of this year, inventory was at 7.2 months. This is actually considered to be at the low end of the spectrum for inventory levels in a healthy market. (Source: MAR)
In short - and I am not a fan of statistical data - one cannot deny that these numbers show an improvement in the housing market. If you prefer to rely on perception/consumer sentiment as do I (statistics are, by definition, backward looking), pick up a newspaper or turn on the news. Fewer and fewer of the real estate related stories are solely negative. This could not be said three months ago. In fact, as I write this, the story on CNBC relates to the drastic rebound in stock values of home builders.
Friday, July 31, 2009
Wednesday, July 15, 2009
Tax Credit - Added Benefit
Yet another incenitive has been put forth to entice potential first-time buyers to take advantage of the current real estate market, not that potential buyers should need further enticing given the current climate. With that said, here is the latest carrot to be dangled...
The federal tax credit of up to $8,000 for first-time home buyers is now eligible to be used toward closing costs and/or a down payment in Massachusetts. (Source: MAR)
In order to take advantage of this program, a borrower will need to apply through his or her lender for an $8,000 loan via MassHousing. This loan is now available for homes purchased by December 1, 2009. The borrower must then claim the tax credit on his or her 2010 federal tax return. So long as the loan is repaid by June 1, 2010, the loan is interest fee. In the event the loan is not repaid by June 1, 2010, the loan will be amortized over 10 years at the rate of the first mortgage. (Source: MAR)
Similar programs are currently being developed and implemented by other states. (Source: MAR)
A caveat to the above is that borrowers must first determine whether they qualify for the credit in whole or in part. For an overview of the credit paramaters, refer to my prior entries regarding the same. As always, I recommend consultation with a tax specialist (CPA or tax attorney) prior to making any real estate decisions predicated on tax strategies.
The federal tax credit of up to $8,000 for first-time home buyers is now eligible to be used toward closing costs and/or a down payment in Massachusetts. (Source: MAR)
In order to take advantage of this program, a borrower will need to apply through his or her lender for an $8,000 loan via MassHousing. This loan is now available for homes purchased by December 1, 2009. The borrower must then claim the tax credit on his or her 2010 federal tax return. So long as the loan is repaid by June 1, 2010, the loan is interest fee. In the event the loan is not repaid by June 1, 2010, the loan will be amortized over 10 years at the rate of the first mortgage. (Source: MAR)
Similar programs are currently being developed and implemented by other states. (Source: MAR)
A caveat to the above is that borrowers must first determine whether they qualify for the credit in whole or in part. For an overview of the credit paramaters, refer to my prior entries regarding the same. As always, I recommend consultation with a tax specialist (CPA or tax attorney) prior to making any real estate decisions predicated on tax strategies.
Wednesday, July 1, 2009
Refinancing Change
The Treasury Department just announced that, as part of its home rescue package, Fannie Mae and Freddie Mac are expanding their efforts to refinance people who are upside down (have negative equity) on their mortgages. Specifically, Fannie and Freddie will now allow refinancing on homes with up to 125% loan to value ratio. Until this announcement, the cap was a 105% loan to value ratio. (Source: CNBC)
Whether this is good or bad news is dependent largely on your priorities (moral hazard, compassion for upside down homeowners, investment opportunity, etc.). However, at least in the short term, this should slow the pace of foreclosures and short sales. This in turn should help to stabilize house prices. The elephant in the room is whether this is merely a stop gap. Will these additional refinances lead to higher losses on bad loans and future increases in foreclosures, or will it buy these borrowers the time to allow house values to return to such a level so as to make it cost-effective to eventually sell these homes? We shall see...
Whether this is good or bad news is dependent largely on your priorities (moral hazard, compassion for upside down homeowners, investment opportunity, etc.). However, at least in the short term, this should slow the pace of foreclosures and short sales. This in turn should help to stabilize house prices. The elephant in the room is whether this is merely a stop gap. Will these additional refinances lead to higher losses on bad loans and future increases in foreclosures, or will it buy these borrowers the time to allow house values to return to such a level so as to make it cost-effective to eventually sell these homes? We shall see...
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