Minneapolis, Minnesota (December 10, 2009) – Extremely heavy buyer activity and shrinking inventory led to strengthening Twin Cities home prices in November.
The November median sales price of $170,000 was a slight increase from October—a rare occurrence in this month that typically marks the beginning of a temporary winter price swoon. This mark is 2.9 percent behind last October, the lowest year-over-year price decline in more than two years.
"This is the surest sign we've seen yet that we're on recovery road," said Steve Havig, President of the Minneapolis Area Association of REALTORS® (MAAR). "We've seen sales growing for almost a year and a half, and prices are starting to reflect that, particularly in the lower price ranges."
The median sales price of traditional homes (excluding foreclosures and short sales) in November was $190,000, down 15.6 percent from a year ago. Since a heavy share of buyers in November were likely first-timers who typically buy in the more affordable price ranges, prices in the traditional segment have been weighted downward. Foreclosures posted a November figure of $127,500, up 2.0 percent from a year ago, while short sales prices were at $143,500, down 15.6 percent from a year ago.
There were 2,987 signed purchase agreements in November, a big dip from October due to seasonal trends and to the tax credit's initial expiration date. That's still up 10.2 percent from a year ago—the 17th consecutive month of year-over-year increases in pending sales. Closed sales posted a whopping 67.0 percent jump from a year ago, again due to the tax credit.
The Months Supply of Inventory has dropped to 5.7 months, the lowest mark since April 2006. Traditional homes have 7.6 months of supply, foreclosures have 1.4 months and short sales have 12.8 months.
"Supply is dropping in the traditional and foreclosure markets," said MAAR President-Elect, Brad Fisher. "Short sale supply is stagnant because of the headaches involved in purchasing them. The process needs to improve, but industry and government efforts that are coming soon could help."
All information is according to the Minneapolis Area Association of REALTORS® (MAAR) based on data from the Regional Multiple Listing Service of Minnesota, Inc. MAAR is the leading regional advocate and provider of information services and research on the real estate industry for brokers, real estate professionals and the public. MAAR serves the Twin Cities 13-county metro area and western Wisconsin.
First Time Homebuyer Tax Credit Extended Into 2010!
Plus...A New Tax Credit for Certain Existing Home Owners!
http://www.federalhousingtaxcredit.com/faq1.php
http://www.federalhousingtaxcredit.com/faq2.php
It's official. President Obama has signed a bill that extends the tax
credit for first-time homebuyers (FTHBs) into the first half of 2010.
This program had been scheduled to expire on November 30, 2009.
In addition to extending the tax credit of up to $8,000 through June 30,
2010, the extension measure also opens up opportunities for others who
are not buying a home for the first time.
So Who Gets What?
The program that has existed for FTHBs remains intact with the one
exception that more people are now eligible based on an increase in the
amount of income someone may now earn.
Additionally, the program now gives those who already own a residence
some additional reasons to move to a new home. This incentive comes in
the form of a tax credit of up to $6,500 for qualified purchasers who
have owned and occupied a primary residence for a period of five
consecutive years during the last eight years.
Deadlines
In order to qualify for the credit, all contracts need to be in effect
no later than April 30, 2010 and close no later than June 30, 2010.
Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of
the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total
credit amount. Those who earn more than this cap can receive a partial
credit. However, single filers who earn $145,000 and above are
ineligible.
Joint filers who earn up to $225,000 are eligible for the total credit
amount. Those who earn more than this cap can receive a partial credit.
However, joint filers who earn $245,000 and above are ineligible.
Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of
$800,000.
First-Time Homebuyer Tax Credit - Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.
What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an
individual to the Internal Revenue Service (IRS). In the event no taxes
are owed, the IRS will issue a check for the amount of the tax credit an
individual is owed. Unlike the tax credit that existed in 2008, this
credit does not require repayment unless the home, at any time in the
first 36 months of ownership, is no longer an individual's primary
residence.
What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to
$8,000 or 10% of the purchase price for a home. If the amount of the
home purchased is $75,000, the maximum amount the credit can be is
$7,500. If the amount of the home purchased is $100,000, the amount of
the credit may not exceed $8,000.
Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months,
prior to closing and the transfer of title, is eligible. This applies
both to single taxpayers and married couples. In the case where there is
a married couple, if either spouse has owned a primary residence in the
last 36 months, neither would qualify. In the case where an individual
has owned property that has not been a primary residence, such as a
second home or investment property, that individual would be eligible.
As mentioned above, the tax credit has been expanded so that existing
homeowners who have owned and occupied a primary residence for a period
of five consecutive years during the last eight years are now eligible
for a tax credit of up to $6,500.
How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to
either apply for the credit with your 2009 tax return or you may apply
for the credit sooner by filing an amended 2008 tax return with Form
5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).
Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed
credits where a purchase had not taken place.
Can a taxpayer claim a credit if the property is purchased from a seller
with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though
the seller retains legal title, the taxpayer may file for the credit.
Examples of this would include a land contract, contract for deed, etc.
According to the IRS, factors that would demonstrate the ownership of
the property would include: 1. the right of possession, 2. the right to
obtain legal title upon full payment of the purchase price, 3. the right
to construct improvements, 4. the obligation to pay property taxes, 5.
the risk of loss, 6. the responsibility to insure the property and 7.
the duty to maintain the property.
Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your
situation, a credit would not be due.
* You buy your home from a close relative. This includes your
spouse, parent, grandparent, child or grandchild.
* You do not use the home as your principal residence.
* You sell your home before the end of the year.
* You are a nonresident alien.
* You are, or were, eligible to claim the District of Columbia
first-time homebuyer credit for any taxable year. (This does not apply
for a home purchased in 2009.)
* Your home financing comes from tax-exempt mortgage revenue
bonds. (This does not apply for a home purchased in 2009.)
* You owned a principal residence at any time during the three
years prior to the date of purchase of your new home. For example, if
you bought a home on July 1, 2009, you cannot take the credit for that
home if you owned, or had an ownership interest in, another principal
residence at any time from July 2, 2006, through July 1, 2009.
Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct
blood relative, the purchase would be allowed.
Can parent(s) who will not live in the property cosign for a mortgage
for their child and the child that is a qualifying FTHB still be
eligible for the credit?
Yes.
Can a separated spouse who has not owned a home for four years qualify
for the FTHB tax credit if the spouse has owned a property anytime in
the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The
best path to take in any situation regarding income taxes is to speak
with a professional tax preparer or CPA.
If you have any questions that fall outside the situations here, give me
a call and if you do not have an accountant to speak with, I can refer
you to one.
Minnesota home buyer programs available for different areas around the Twin Cities Metro.
Minneapolis and Saint Paul
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