The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.
While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.
The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”
For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.
Source: Washington Post (02/20/2010)
Saturday, February 27, 2010
Foreclosure Bargains Getting Harder to Find
Home buyers hoping to snag a really good deal on a foreclosed home are finding it increasingly difficult because supply is shrinking.
The number of foreclosures that are available for sale nationwide fell to 617,000 in December, down from 845,000 in November 2008, reports Barclays Capital.
Not only have attractive homes in popular neighborhoods already been snapped up, but also government help for distressed buyers is delaying more foreclosures.
Demand is driving up prices. Investors say typical prices have climbed from 75 percent of appraised value to 85 percent or higher when there are bidding wars.
Source: The Wall Street Journal, James R. Hagerty (02/23/2010)
The number of foreclosures that are available for sale nationwide fell to 617,000 in December, down from 845,000 in November 2008, reports Barclays Capital.
Not only have attractive homes in popular neighborhoods already been snapped up, but also government help for distressed buyers is delaying more foreclosures.
Demand is driving up prices. Investors say typical prices have climbed from 75 percent of appraised value to 85 percent or higher when there are bidding wars.
Source: The Wall Street Journal, James R. Hagerty (02/23/2010)
Bankers: The End of Foreclosure Crisis Is Near
The Mortgage Bankers Association is seeing signs that the foreclosure crisis is ending.
“The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight,” says Jay Brinkmann, MBA’s chief economist, in a published statement.
Brinkmann said that normally there is a large spike in short-term mortgage delinquencies at the end of the year because of high heating bills and holiday expenditures. This year, there was not only no spike, but the 30-day delinquency rate actually fell from 3.79 percent to 3.63 percent.
Thirty-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures, Brinkmann said.
“[This] gives us growing confidence that the size of the problem now is about as bad as it will get,” he said.
Source: Mortgage Bankers Association (02/19/2010)
“The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight,” says Jay Brinkmann, MBA’s chief economist, in a published statement.
Brinkmann said that normally there is a large spike in short-term mortgage delinquencies at the end of the year because of high heating bills and holiday expenditures. This year, there was not only no spike, but the 30-day delinquency rate actually fell from 3.79 percent to 3.63 percent.
Thirty-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures, Brinkmann said.
“[This] gives us growing confidence that the size of the problem now is about as bad as it will get,” he said.
Source: Mortgage Bankers Association (02/19/2010)
Thursday, February 25, 2010
Could the Tax Credit Be Extended Again?
The pressure is increasing on Congress to renew the homebuyer tax credits for a third time.
The first $7,500 tax credit was passed in 2008 and required first-time buyers to repay the credit over 15 years. A few months later in 2009, Congress expanded the credit to a maximum of $8,000 that didn’t have to be paid back.
At the end of last year, Congress extended the benefit again until April 30 with an extra two months on top of that to close. A new credit of $6,500 was added for move-up buyers, too.
Now representatives of the housing industry are lobbying for another extension. Some experts, including Mark Zandi, chief economist at Moody’s Economy.com, who supported the earlier credits, think the time has come to let it go.
“It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”
Source: The Wall Street Journal, Nick Timiraos (02/22/2010)
The first $7,500 tax credit was passed in 2008 and required first-time buyers to repay the credit over 15 years. A few months later in 2009, Congress expanded the credit to a maximum of $8,000 that didn’t have to be paid back.
At the end of last year, Congress extended the benefit again until April 30 with an extra two months on top of that to close. A new credit of $6,500 was added for move-up buyers, too.
Now representatives of the housing industry are lobbying for another extension. Some experts, including Mark Zandi, chief economist at Moody’s Economy.com, who supported the earlier credits, think the time has come to let it go.
“It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”
Source: The Wall Street Journal, Nick Timiraos (02/22/2010)
Wednesday, February 24, 2010
Housing Affordability Hovers Near Record-High Level
WASHINGTON, Feb. 17—Nationwide housing affordability, bolstered by favorable interest rates and low house prices, closed out the year near its highest level since the series was first compiled 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).
The HOI showed that 70.8% of all new and existing homes sold in the final quarter of 2009 were affordable to families earning the national median income of $64,000, slightly higher than the previous quarter and near the record-high 72.5% set during the first quarter of 2009. That’s up from 62.4% during the fourth quarter of 2008.
“Favorable mortgage rates and sliding house prices that have now started to stabilize nationally have both contributed to a record year for housing affordability in 2009,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “With interest rates still hovering at low levels and the economy beginning to rebound, the federal housing tax credit will encourage even more first-time and repeat home buyers to enter the market and help further stabilize housing and the economy by creating new jobs, stimulating home sales, and reducing foreclosures.”
Tuesday, February 23, 2010
Nationwide median appraisal fees
With new FHA guidelines requiring participating lenders to ensure that appraisers are paid "reasonable and customary" fees, a la mode, inc. recently developed an online resource called the Appraisal Fee Reference (AFR). Using the data from verified and validated appraisals, the Appraisal Fee Reference reports the median appraisal fees for each of the 3,221 counties and districts in the fifty states, the District of Columbia, Puerto Rico, and Guam.
For compliance with HUD's new 2010 RESPA rules and the revised Good Faith Estimate, the AFR gives a lender a defensible basis for estimating closing costs on a GFE for loans using independent fee appraisers. As for the actual report, the February 2010 edition of the AFR reveals that the most expensive counties to get an appraisal were not in the major cities. Instead, counties in Alaska, Hawaii and Wyoming dominated the 50 most expensive locations.
Of the locations with the lowest fees, appraisers in Ohio were represented disproportionately, with 18 of the bottom 50 slots being taken by counties in the state. Four nearby states -- Pennsylvania, Kentucky, Illinois, and Wisconsin -- also had three to four counties each in the bottom 50.
For compliance with HUD's new 2010 RESPA rules and the revised Good Faith Estimate, the AFR gives a lender a defensible basis for estimating closing costs on a GFE for loans using independent fee appraisers. As for the actual report, the February 2010 edition of the AFR reveals that the most expensive counties to get an appraisal were not in the major cities. Instead, counties in Alaska, Hawaii and Wyoming dominated the 50 most expensive locations.
Of the locations with the lowest fees, appraisers in Ohio were represented disproportionately, with 18 of the bottom 50 slots being taken by counties in the state. Four nearby states -- Pennsylvania, Kentucky, Illinois, and Wisconsin -- also had three to four counties each in the bottom 50.
First November-to-December increase in home prices since 2004
The key findings of the December 2009 RPX Monthly Housing Market Report released today by Radar Logic Incorporated include the following:
· The RPX Composite price increased between November and December for the first time since 2004.
· The 25-metropolitan-area transaction count increased 44% relative to December 2008.
· Sales of foreclosed homes increased as a percentage of total sales during early December. This reversed the trend during the prior two months, when sales of distressed homes decreased as a share of total transactions.
The RPX Composite price increased in December 2009 on a month-over-month basis, marking the first time it has increased during the month of December since 2004. The RPX Composite tracks housing prices in 25 of the largest U.S. metropolitan statistical areas (MSAs).
On a month-over-month basis, the composite price for housing markets in the Northeast increased by 2%, while the Midwest composite decreased by 5%. The West composite price remained flat month over month, as price increases in San Francisco, Denver and, surprisingly, Las Vegas were offset by price declines in the other western cities. The composite price for the South also remained essentially flat month over month.
Home sales, as indicated by RPX transactions counts, increased in all 25 metropolitan areas covered by the report relative to a year prior. Home sales across all 25 cities have increased 44% year over year.
· The RPX Composite price increased between November and December for the first time since 2004.
· The 25-metropolitan-area transaction count increased 44% relative to December 2008.
· Sales of foreclosed homes increased as a percentage of total sales during early December. This reversed the trend during the prior two months, when sales of distressed homes decreased as a share of total transactions.
The RPX Composite price increased in December 2009 on a month-over-month basis, marking the first time it has increased during the month of December since 2004. The RPX Composite tracks housing prices in 25 of the largest U.S. metropolitan statistical areas (MSAs).
On a month-over-month basis, the composite price for housing markets in the Northeast increased by 2%, while the Midwest composite decreased by 5%. The West composite price remained flat month over month, as price increases in San Francisco, Denver and, surprisingly, Las Vegas were offset by price declines in the other western cities. The composite price for the South also remained essentially flat month over month.
Home sales, as indicated by RPX transactions counts, increased in all 25 metropolitan areas covered by the report relative to a year prior. Home sales across all 25 cities have increased 44% year over year.
Obama pledges $1.5B for unemployed and underwater homeowners
The administration announced a new initiative to help the nation's hardest hit housing markets. President Obama has allocated $1.5 billion in aid for states where unemployment is high and home prices have fallen more than 20 percent in the aftermath of the housing bubble.
The president is setting up an "innovation fund" for state housing agencies to develop assistance programs for underwater, as well as unemployed homeowners in their communities. There will be a formula for allocating funding among eligible states based on home price declines and unemployment rates.
According to House Speaker Nancy Pelosi, the money will go to support homeowners in California, Nevada, Arizona, Florida, and Michigan. The Treasury must approve each Housing Finance Agency's (HFA) program design, which can include direct assistance for the unemployed and borrowers who owe more than their home is worth, as well as programs that address the challenges of second liens. The Treasury is expected to announce maximum state level allocations in the next two weeks, along with rules governing the submission of program designs by HFAs.
Source: DSNEWS.com, Carrie Bay, (02/19/2010)
The president is setting up an "innovation fund" for state housing agencies to develop assistance programs for underwater, as well as unemployed homeowners in their communities. There will be a formula for allocating funding among eligible states based on home price declines and unemployment rates.
According to House Speaker Nancy Pelosi, the money will go to support homeowners in California, Nevada, Arizona, Florida, and Michigan. The Treasury must approve each Housing Finance Agency's (HFA) program design, which can include direct assistance for the unemployed and borrowers who owe more than their home is worth, as well as programs that address the challenges of second liens. The Treasury is expected to announce maximum state level allocations in the next two weeks, along with rules governing the submission of program designs by HFAs.
Source: DSNEWS.com, Carrie Bay, (02/19/2010)
Charlotte home prices still struggle
Charlotte-area home prices ended last year at a new low for this downturn but with a smaller decline than the previous year, based on a closely watched index released today.
As of December, area prices had fallen 3.8 percent compared with December 2008, according to the S&P/Case-Shiller Home Price Index. That’s an improvement over 2008, when Charlotte prices first turned negative, and the market saw a 7.2 percent decline, but still below the national decline of 2.5 percent for last year.
Month to month, Charlotte posted four gains last year, in the spring and summer, when the national housing market also showed signs of strengthening. Since August, the area has shown declines every month, compared with the previous month.
“As measured by prices, the housing market is definitely in better shape than it was this time last year…,” said David Blitzer, chairman of S&P’s index committee. “However the rate of improvement seen during the summer of 2009 has not been sustained.”
Charlotte-area home sales have been trending up, compared with extremely low levels late in 2008. But prices, by other measures, also remain down.
Housing here and nationwide is expected to continue struggling, amid high unemployment, weak job growth and rising foreclosures. The April 30 expiration of two big tax credits also could stall sales again and lead to more price declines.
Case-Shiller is an index, like the stock markets, not an actual price. For Charlotte, the December index reading of just under 118, was about the same as the level in June 2005. The index tracks the price of repeat sales, so it’s an especially precise measure of how home values are holding up.
Case-Shiller tracks sales nationwide, but only reports specific results for 20 markets. Charlotte’s 3.8 percent decline last year put it in the middle, with nine markets showing gains or smaller losses. San Francisco was the leader, with a 4.8 percent gain. Las Vegas, one of the hardest hit, ended with a loss of 20.6 percent.
By Stella M. Hopkins
shopkins@charlotteobserver.com
Posted: Tuesday, Feb. 23, 2010
As of December, area prices had fallen 3.8 percent compared with December 2008, according to the S&P/Case-Shiller Home Price Index. That’s an improvement over 2008, when Charlotte prices first turned negative, and the market saw a 7.2 percent decline, but still below the national decline of 2.5 percent for last year.
Month to month, Charlotte posted four gains last year, in the spring and summer, when the national housing market also showed signs of strengthening. Since August, the area has shown declines every month, compared with the previous month.
“As measured by prices, the housing market is definitely in better shape than it was this time last year…,” said David Blitzer, chairman of S&P’s index committee. “However the rate of improvement seen during the summer of 2009 has not been sustained.”
Charlotte-area home sales have been trending up, compared with extremely low levels late in 2008. But prices, by other measures, also remain down.
Housing here and nationwide is expected to continue struggling, amid high unemployment, weak job growth and rising foreclosures. The April 30 expiration of two big tax credits also could stall sales again and lead to more price declines.
Case-Shiller is an index, like the stock markets, not an actual price. For Charlotte, the December index reading of just under 118, was about the same as the level in June 2005. The index tracks the price of repeat sales, so it’s an especially precise measure of how home values are holding up.
Case-Shiller tracks sales nationwide, but only reports specific results for 20 markets. Charlotte’s 3.8 percent decline last year put it in the middle, with nine markets showing gains or smaller losses. San Francisco was the leader, with a 4.8 percent gain. Las Vegas, one of the hardest hit, ended with a loss of 20.6 percent.
By Stella M. Hopkins
shopkins@charlotteobserver.com
Posted: Tuesday, Feb. 23, 2010
Wednesday, February 17, 2010
Charlotte area home sales, prices up again
Housing market logging gains
By Stella M. Hopkins
shopkins@charlotteobserver.com
The Charlotte-area housing market continued posting gains in January, with home prices and sales now showing several months of steady increases.
The average sales price last month was $200,592, up 6.1 percent from January 2009, according to results released Wednesday by the Charlotte Regional Realtor Association. That’s the third consecutive month with a gain and slightly stronger than the December increase, for transactions through the association’s Carolina Multiple Listing Services.
The number of houses, townhouses and condos sold last month rose 8 percent from a year ago during the deepest part of the slump. January marked the fourth month of sales gains and is particularly notable because it is typically a slow month.
The number of pending contracts – deals signed but not yet closed – was about the same as a year ago. However, pendings were up 25 percent from December, a sign of rising demand. Experts expect sales will strengthen through the spring, in part because of several hefty tax credits for deals signed by April 30.
By Stella M. Hopkins
shopkins@charlotteobserver.com
The Charlotte-area housing market continued posting gains in January, with home prices and sales now showing several months of steady increases.
The average sales price last month was $200,592, up 6.1 percent from January 2009, according to results released Wednesday by the Charlotte Regional Realtor Association. That’s the third consecutive month with a gain and slightly stronger than the December increase, for transactions through the association’s Carolina Multiple Listing Services.
The number of houses, townhouses and condos sold last month rose 8 percent from a year ago during the deepest part of the slump. January marked the fourth month of sales gains and is particularly notable because it is typically a slow month.
The number of pending contracts – deals signed but not yet closed – was about the same as a year ago. However, pendings were up 25 percent from December, a sign of rising demand. Experts expect sales will strengthen through the spring, in part because of several hefty tax credits for deals signed by April 30.
Quick tips for saving money on utility bills
By Tara McAlister
Posted: Sunday, Feb. 14, 2010
You know you're in trouble when your utility bill is more than your 401(k). Here are a few tips that should help:
Tighten your belt by tightening your home. Caulk around windows, apply weatherstrips to door frames and close your fireplace flues.
Add more insulation to your attic and consider sealing the edges of your attic to keep cold air from seeping into your home.
Make sure your dishwasher is full to make the most of the energy and water. Skip the dry cycle and open the dishwasher door so the dishes can air dry. Don't use your garbage disposal, start a composting bin for vegetable and fruit scraps.
Set your water heater at about 120 degrees and wrap it with insulation. Consider getting a rain barrel, which not only provides a great resource for free water but can also help protect our waterways. According to Charlotte-Mecklenburg Utilities, a one-inch rainfall over a 1,000-square-foot roof provides more than 620 gallons of water. You can buy one from the county; prices range from $95 for a 60-gallon barrel and $110 for an 80-gallon barrel. On its site, charmeck.org/ Departments/ Utilities/ , check out the utility department's Water Star program, a cash incentive program for saving water.
Wash your clothes in cold water when possible. Use the suggested amount of detergent by using the cap provided, instead of just pouring in what you think you might need.
Keep your equipment up to date and well maintained. Many companies will offer a low-cost annual fee for two visits and give discounts on repairs. Not only is a dripping faucet annoying, but that is money going down the drain. According to consumers energy.com , a single dripping hot water faucet can waste 212 gallons of water a month. That will affect not only your water bill but also your energy bill.
Duke Power offers several opportunities to save money. On its Web site, duke- energy. com, there's a dashboard for your house that compares the energy use in your house from the prior year to another similar home. Duke also offers home energy audits.
Posted: Sunday, Feb. 14, 2010
You know you're in trouble when your utility bill is more than your 401(k). Here are a few tips that should help:
Tighten your belt by tightening your home. Caulk around windows, apply weatherstrips to door frames and close your fireplace flues.
Add more insulation to your attic and consider sealing the edges of your attic to keep cold air from seeping into your home.
Make sure your dishwasher is full to make the most of the energy and water. Skip the dry cycle and open the dishwasher door so the dishes can air dry. Don't use your garbage disposal, start a composting bin for vegetable and fruit scraps.
Set your water heater at about 120 degrees and wrap it with insulation. Consider getting a rain barrel, which not only provides a great resource for free water but can also help protect our waterways. According to Charlotte-Mecklenburg Utilities, a one-inch rainfall over a 1,000-square-foot roof provides more than 620 gallons of water. You can buy one from the county; prices range from $95 for a 60-gallon barrel and $110 for an 80-gallon barrel. On its site, charmeck.org/ Departments/ Utilities/ , check out the utility department's Water Star program, a cash incentive program for saving water.
Wash your clothes in cold water when possible. Use the suggested amount of detergent by using the cap provided, instead of just pouring in what you think you might need.
Keep your equipment up to date and well maintained. Many companies will offer a low-cost annual fee for two visits and give discounts on repairs. Not only is a dripping faucet annoying, but that is money going down the drain. According to consumers energy.com , a single dripping hot water faucet can waste 212 gallons of water a month. That will affect not only your water bill but also your energy bill.
Duke Power offers several opportunities to save money. On its Web site, duke- energy. com, there's a dashboard for your house that compares the energy use in your house from the prior year to another similar home. Duke also offers home energy audits.
Where's housing headed? Follow rents
It may not be the most widespread measure of housing prices, but if you want to follow a powerful driver, look at rents. Specifically, it's the rents Americans pay on condos, apartments or houses that are about the same size, and share the same neighborhood as your ranch or colonial, that in the end determine what your house is worth.
In recent reports, Deutsche Bank demonstrates how steady or even falling rents have pulled down housing prices, to the point where in many markets it costs about the same amount to own as to lease. That's a golden mean that America hasn't seen in almost a decade. The DB research also offers convincing evidence that the wrenching adjustment in housing prices is finished for much of the nation, with a bit more pain to come in selected areas.
In normal times, people won't pay much less to lease a house than to own it. After all, if you're paying rent instead of a mortgage and taxes, you still get to enjoy the same rec room, chef's kitchen, and casita for visiting grandparents. So the surest sign of frenzy appears when owning becomes far more expensive than renting. That's precisely what happened during the last bubble. And the surest sign that prices have fully adjusted arrives when the ratio of what people pay in rent versus what owners spend on the same property returns to its historic average. That brings us to the Deutsche Bank studies. Its REIT research team first established a benchmark for a "normal" ratio of rents to ownership costs -- what it calls ATMP, or after-tax mortgage payment -- for 53 U.S. cities.
On average, DB found that families across America were spending about 87% as much to rent as to own in 1999. Hence, they were traditionally willing to pay a premium as homeowners, though not a big one. Given that analysis, it's likely that prices will fall another 5% or so nationwide. The drop could even be slightly greater. One reason: Rents, the force that govern housing prices, are still falling.
Source: Forbes, Shawn Tully, (2/12/10)
In recent reports, Deutsche Bank demonstrates how steady or even falling rents have pulled down housing prices, to the point where in many markets it costs about the same amount to own as to lease. That's a golden mean that America hasn't seen in almost a decade. The DB research also offers convincing evidence that the wrenching adjustment in housing prices is finished for much of the nation, with a bit more pain to come in selected areas.
In normal times, people won't pay much less to lease a house than to own it. After all, if you're paying rent instead of a mortgage and taxes, you still get to enjoy the same rec room, chef's kitchen, and casita for visiting grandparents. So the surest sign of frenzy appears when owning becomes far more expensive than renting. That's precisely what happened during the last bubble. And the surest sign that prices have fully adjusted arrives when the ratio of what people pay in rent versus what owners spend on the same property returns to its historic average. That brings us to the Deutsche Bank studies. Its REIT research team first established a benchmark for a "normal" ratio of rents to ownership costs -- what it calls ATMP, or after-tax mortgage payment -- for 53 U.S. cities.
On average, DB found that families across America were spending about 87% as much to rent as to own in 1999. Hence, they were traditionally willing to pay a premium as homeowners, though not a big one. Given that analysis, it's likely that prices will fall another 5% or so nationwide. The drop could even be slightly greater. One reason: Rents, the force that govern housing prices, are still falling.
Source: Forbes, Shawn Tully, (2/12/10)
Fourth Quarter Existing-Home Sales Surge in Most States, Including N.C.
Strong gains in existing-home sales were the predominant pattern in most states during the fourth quarter, with many more metro areas seeing prices rise from a year earlier, according to the latest survey by the National Association of REALTORS®.
Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the fourth quarter of 2008.
N.C. was no exception. Existing home sales for the state increased 8.4 percent in the fourth quarter and increased a staggering 31.4 percent over last year's figures.
Lawrence Yun, NAR chief economist, said the first-time homebuyer tax credit was the dominant factor. "The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates," he said. "With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices."
For more information, follow the link below.
http://www.realtor.org/press_room/news_releases/2010/02/metro_state
Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the fourth quarter of 2008.
N.C. was no exception. Existing home sales for the state increased 8.4 percent in the fourth quarter and increased a staggering 31.4 percent over last year's figures.
Lawrence Yun, NAR chief economist, said the first-time homebuyer tax credit was the dominant factor. "The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates," he said. "With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices."
For more information, follow the link below.
http://www.realtor.org/press_room/news_releases/2010/02/metro_state
Tuesday, February 9, 2010
Replace Old Windows with Energy-Efficient Models
If your windows are more than 15 years old, you may be putting up with draftiness, windows that stick in their frames, and skyrocketing energy bills. Energy-efficient windows would be a great improvement, but replacement can be very expensive. In a 2007 survey conducted by Consumer Reports, half of respondents spent $8,000 or more to replace all the windows in their homes, and 16% shelled out $15,000+.
Windows recoup much of their cost
The range for energy-efficient window pricing is wide, but Energy Star-qualified windows start around $120 for a 36” x 72” single-hung window and can go up 10 times that. With labor, you’re looking at about $270 to $800+ per window. Typically, windows at the low end of the price spectrum are less energy efficient.
But that doesn’t mean the numbers can’t make sense for you. For starters, window replacement is one of the best home remodeling projects in terms of investment return: For vinyl windows, you can recoup about 75% of the project cost in added home value, according to Remodeling Magazine’s annual Cost vs. Value Report.
Based on the projects outlined in Cost vs. Value, that’s a value add of about $8,200 to $10,600. Plus, if you choose windows that qualify for the new federal tax credit (U-factor and solar heat gain coefficient ratings must be 0.3 or less), you can effectively lop $1,500 off the purchase price.
You’re also likely to see modest savings on your energy bill. In general, you’ll save $126 to $465 a year if single-pane windows in a 2,000-square-foot house are replaced with tax-credit-eligible windows, according to the Efficient Windows Collaborative, a coalition of government agencies, research organizations, and manufacturers that promotes efficient window technology.
Keep in mind, though, that the savings can vary widely by climate, local energy costs, and the energy efficiency of both the windows purchased and the windows being replaced. Finally, you may qualify for low-interest loans or other incentives offered by your local utility that can sweeten the deal.
Sample costs, incentives
Here’s a hypothetical situation to help frame your purchase decision:
Location: Des Moines, Iowa
Old windows: Double-pane, non-Energy Star windows
New windows: Energy Star-qualified, tax credit-qualified vinyl windows
Purchase price plus installation: $10,500
Subtract tax credit: -$1,500
Subtract local utility rebate for installing Energy Star replacement windows (12 windows, $25 each): -$300
Net price: $8,700
The Des Moines homeowner could recoup about 70% of the project cost at resale, according to estimates in Cost vs. Value. From a net price of $8,700, the owner has “lost” only $1,350.
And his annual energy savings will be $91. Had the original windows been single-paned non-Energy Star, his annual savings would be $385. Double-paned windows are more common.
Evaluate price vs. energy efficiency
The range for energy-efficient window pricing is wide, but you can expect to pay about $500-$1,000, including installation per window. The most efficient windows on the market are usually the most expensive, but it’s not necessary to buy the highest-end products to realize utility bill savings or improve comfort and aesthetics. So how do you choose the most energy-efficient models for the price?
Thanks to Energy Star, you really don’t have to, according to Nils Petermann, project manager for the Efficient Windows Collaborative. Energy Star labels will tell you whether a window performs well in your climate based on ratings from the National Fenestration Rating Council.
However, if you’re looking for windows that qualify for the $1,500 federal tax credit, make sure the U-factor and SHGC are both less than or equal to 0.3 regardless of climate zone. Not all Energy Star windows qualify.
Know the language of windows
It’s also helpful to familiarize yourself with terms that appear on many window labels:
Glazing is simply the glass used in the window. The number of layers of glazing (single, double, or triple) don’t necessarily equal greater efficiency; the presence or absence of the other items in this list affects a window’s total energy performance, says Petermann. Glazing coatings can substantially affect a window’s U-factor, or degree of insulation against the outdoors.
Low-E stands for low emissivity, the window’s ability to reflect rather than absorb heat when coated with a thin metallic substance. Low-E coatings add up to 10% to the price of a window.
If your windows are in relatively good shape but you’d like better insulation, you can buy and apply Low-E films to your windows. They’re effective, but not as much as those put between glazing layers during manufacture. Look for the NFRC rating on these films, Petermann says. Low-E films start at about 50 cents per square foot, but you may want to check into the cost of having them professionally installed for large or complicated applications.
Gas fills typically consist of argon or krypton gas sandwiched between glazing layers to improve insulation and slow heat transfer. They often won’t work at high altitudes because differences in air pressure cause them to leak out.
Spacers separate sheets of glass in a window to improve insulating quality; the design and material are important to prevent condensation and heat loss.
Frame materials include vinyl, wood, aluminum, fiberglass, and combinations of. They each have different strengths: Vinyl windows are good insulators and are easy to maintain, but contract and expand with temperature changes, affecting the window’s air leakage; wood offers a classic look but is similarly affected by moisture changes and needs regular maintenance; fiberglass is very stable and low-maintenance but can be expensive; and aluminum is lightweight, stable, and a good sound proofer but is a rapid conductor of heat, making it a drain on energy efficiency.
Karin Beuerlein has covered home improvement and green living topics extensively for HGTV.com, FineLiving.com, and FrontDoor.com. She has also written for dozens of national and regional publications in more than a decade of freelancing, including Better Homes & Gardens, The History Channel Magazine, Eating Well, and Chicago Tribune. She and her husband started married life by remodeling the house they were living in. They still have both the marriage and the house, no small feat.
Monday, February 8, 2010
The Basics: Extended Home Buyer Tax Credit 2009/2010
Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
- Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
- Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.
Recent news:
IRS Releases Revised Tax Forms, Instructions for Claiming Tax Credit (Jan. 25)
Economists' Podcast: Lawrence Yun Discusses Market Recovery, the Tax Credit, and Employment (Jan. 12)
Economists' Commentary: Existing-Home Sales and the Tax Credit (Dec. 22)
Who Qualifies for the Extended Credit?
- First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
- Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.
Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
How is a Buyer's Credit Amount Determined?
Each home buyer’s tax credit is determined by two additional factors:
- The price of the home.
- The buyer's income.
Price
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Buyer Income
Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.
The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
Saturday, February 6, 2010
Housing in America: The Next Decade
As the economy recovers, markets will stabilize but the old "normal" will not return, according to a new study by John McIlwain for The Urban Land Institute.
Here are ULI's predictions:
· Home prices are stabilizing in many parts of the country but overwhelming challenges remain; national housing prices will fall another 10 percent this year until they stabilize in the second half of the year or in early 2011. This assumes that job losses come to an end in the next few months and unemployment begins to decline this year.
· The biggest challenge to the housing markets today is the growing number of homes with mortgages that are underwater. By the end of this year some 40 percent of all homes with mortgages are predicted to be underwater.
· After the recession, demand for housing will increase. There are four demographic groups that will drive housing markets for the next decade:
· Older Baby Boomers will become seniors in unprecedented numbers. Many younger Baby Boomers may be unable to sell their current suburban homes to move to new jobs.
· Generation Y will be renting far longer than past generations.
· Immigrants and their children may want to move to the suburbs but may find them too expensive even after current drop in housing prices.
· Workforce housing will remain a challenge. The outer suburbs will have the least expensive housing but the cost in time and money of long commutes will eliminate the any savings.
Here are ULI's predictions:
· Home prices are stabilizing in many parts of the country but overwhelming challenges remain; national housing prices will fall another 10 percent this year until they stabilize in the second half of the year or in early 2011. This assumes that job losses come to an end in the next few months and unemployment begins to decline this year.
· The biggest challenge to the housing markets today is the growing number of homes with mortgages that are underwater. By the end of this year some 40 percent of all homes with mortgages are predicted to be underwater.
· After the recession, demand for housing will increase. There are four demographic groups that will drive housing markets for the next decade:
· Older Baby Boomers will become seniors in unprecedented numbers. Many younger Baby Boomers may be unable to sell their current suburban homes to move to new jobs.
· Generation Y will be renting far longer than past generations.
· Immigrants and their children may want to move to the suburbs but may find them too expensive even after current drop in housing prices.
· Workforce housing will remain a challenge. The outer suburbs will have the least expensive housing but the cost in time and money of long commutes will eliminate the any savings.
Friday, February 5, 2010
The 10 Must-Haves in New Homes
Americans want smaller houses and they are willing to strip some of yesterday's most popular rooms -- such as home theaters -- from them in order to accommodate changing lifestyles, consumer experts told audiences at the International Builders Show here this week.
"This is a traumatic time in this country and the future isn't something we're 100% sure about now either. What's left? The answer for most home buyers is authenticity," said Heather McCune, director of marketing for Bassenian Lagoni Architects in Park Ridge, Ill.
"This is a traumatic time in this country and the future isn't something we're 100% sure about now either. What's left? The answer for most home buyers is authenticity," said Heather McCune, director of marketing for Bassenian Lagoni Architects in Park Ridge, Ill.
Buyers today want cost-effective architecture, plans that focus on spaces and not rooms and homes that are designed 'green' from the outset," she said. The key for home builders is "finding the balance between what buyers want and the price point."
For many buyers, their next house will be smaller than their current one, said Carol Lavender, president of the Lavender Design Group in San Antonio, Texas. Large kitchens that are open to the main family living area, old-fashioned bathrooms with clawfoot tubs and small spaces such as wine grottos are design features that will resonate today, she said."What we're hearing is 'harvest' as a home theme -- the feeling of Thanksgiving. It's all about family togetherness -- casual living, entertaining and flexible spaces," Lavender said.
Paul Cardis, CEO of AVID Ratings Co., which conducts an annual survey of home-buyer preferences, said there are 10 "must" features in new homes.
1. Large Kitchens, With an Island
"If you're going to spend design dollars, spend them where people want them -- spend them in the kitchen," McCune said. Granite countertops are a must for move-up buyers and buyers of custom homes, but for others "they are on the bubble," Cardis said.
2. Energy-Efficient Appliances, High-Efficiency Insulation and High Window Efficiency
Among the "green" features touted in homes, these are the ones buyers value most, he said. While large windows had been a major draw, energy concerns are giving customers pause on those, he said. The use of recycled or synthetic materials is only borderline desirable.
3. Home Office/Study
People would much rather have this space rather than, say, a formal dining room. "People are feeling like they can dine out again and so the dining room has become tradable," Cardis said. And the home theater may also be headed for the scrap heap, a casualty of the "shift from boom to correction," Cardis said.
4. Main-Floor Master Suite
This is a must feature for empty-nesters and certain other buyers, and appears to be getting more popular in general, he said. That could help explain why demand for upstairs laundries is declining after several years of popularity gains.
5. Outdoor Living Room
The popularity of outdoor spaces continues to grow, even in Canada, Cardis said. And the idea of an outdoor room is even more popular than an outdoor cooking area, meaning people are willing to spend more time outside.
6. Ceiling Fans
7. Master Suite Soaker Tubs
Whirlpools are still desirable for many home buyers, Cardis said, but "they clearly went down a notch," in the latest survey. Oversize showers with seating areas are also moving up in popularity.
8. Stone and Brick Exteriors
Stucco and vinyl don't make the cut.
9. Community Landscaping, With Walking Paths and Playgrounds
Forget about golf courses, swimming pools and clubhouses. Buyers in large planned developments prefer hiking among lush greenery.
10. Two-Car Garages
A given at all levels; three-car garages, in which the third bay is more often then not used for additional storage and not automobiles, is desirable in the move-up and custom categories, Cardis said.
Tuesday, February 2, 2010
Obama housing rescue threatened by foreclosures, unemployment
President Barack Obama's efforts to bolster the U.S. housing market may be undone by record unemployment and repossessions by lenders, according to an article on Bloomberg.com. Foreclosures are expected to reach 3 million this year, surpassing the record of 2.82 million in 2009, according to Irvine, California-based RealtyTrac Inc. That would more than offset an estimated 448,000-unit rise in home sales, based on the average forecast of the National Association of Realtors, the Mortgage Bankers Association and Fannie Mae.
The housing industry remains a challenge for Obama as he enters his second year of office and government assistance programs near expiration. Data this week showed home sales tumbled after the expected end of an $8,000 tax credit for first-time buyers boosted transactions the prior month.
Employers have cut more than 7 million jobs in the last two years, the biggest employment loss since the Great Depression. The U.S. jobless rate is expected to average 10 percent in 2010, according to the median estimate of 59 economists surveyed by Bloomberg. That would be the highest yearly rate in government records dating to 1948. Unemployment was 9.3 percent in 2009, the most in 26 years.
One in four U.S. homeowners holds a mortgage with a balance higher than the property's value. The number of borrowers with so-called negative equity reached 10.7 million, or 23 percent, at the end of the third quarter, according to a Nov. 24 report by First American CoreLogic, a California-based real estate research firm. Government programs to help underwater borrowers exclude jumbo mortgages that aren't eligible to be purchased by Washington-based Fannie Mae and Freddie Mac of McLean, Virginia.
Source: Bloomberg.com, Kathleen M. Howley
The housing industry remains a challenge for Obama as he enters his second year of office and government assistance programs near expiration. Data this week showed home sales tumbled after the expected end of an $8,000 tax credit for first-time buyers boosted transactions the prior month.
Employers have cut more than 7 million jobs in the last two years, the biggest employment loss since the Great Depression. The U.S. jobless rate is expected to average 10 percent in 2010, according to the median estimate of 59 economists surveyed by Bloomberg. That would be the highest yearly rate in government records dating to 1948. Unemployment was 9.3 percent in 2009, the most in 26 years.
One in four U.S. homeowners holds a mortgage with a balance higher than the property's value. The number of borrowers with so-called negative equity reached 10.7 million, or 23 percent, at the end of the third quarter, according to a Nov. 24 report by First American CoreLogic, a California-based real estate research firm. Government programs to help underwater borrowers exclude jumbo mortgages that aren't eligible to be purchased by Washington-based Fannie Mae and Freddie Mac of McLean, Virginia.
Source: Bloomberg.com, Kathleen M. Howley
Obama gets low grades for housing
A national survey released by Trulia shows that many Americans feel that President Barack Obama has not lived up to the hope he created during his campaign and his first 30 days in office. In Trulia's latest American Dream survey conducted online by Harris Interactive from January 19-21, 2009, President Barack Obama scored considerably lower marks on the topic of restoring the American dream of home ownership compared to a survey conducted February 20-24, 2009, after his first 30 days in office.
The current survey found that 37 percent of Americans gave President Obama a grade of "D" or "F" on the decisions he's made towards restoring the American dream of home ownership compared to only 22 percent in the February 2009 survey. Additionally, 54 percent gave him a grade of "A" or "B" in February 2009 compared to only 37 percent in January 2010.
Despite these lower grades, and the troubles that have continued to plague the U.S. housing market, the survey found that the "American Dream" of homeownership continues to be alive and well with more than three out of four Americans considering owning a home as a part of achieving their personal American dream.
Democrats and Republicans agree on the areas President Obama needs to focus on in 2010 to stabilize the U.S. real estate market. Creating jobs and job security continues to be at the top of the list with 62 percent of adults referencing it as a key priority for the President.
With foreclosures reaching record levels in 2009 and expected to grow even more this year, it's not surprising that 45 percent of adults included this as an important area of focus. Rounding out the top three priorities for President Obama is bringing/keeping low interest rates at 39 percent. Only 27 percent of Americans surveyed believe extending the home buying tax credit through the end of 2010 should be a key initiative to help stabilize the housing market.
The current survey found that 37 percent of Americans gave President Obama a grade of "D" or "F" on the decisions he's made towards restoring the American dream of home ownership compared to only 22 percent in the February 2009 survey. Additionally, 54 percent gave him a grade of "A" or "B" in February 2009 compared to only 37 percent in January 2010.
Despite these lower grades, and the troubles that have continued to plague the U.S. housing market, the survey found that the "American Dream" of homeownership continues to be alive and well with more than three out of four Americans considering owning a home as a part of achieving their personal American dream.
Democrats and Republicans agree on the areas President Obama needs to focus on in 2010 to stabilize the U.S. real estate market. Creating jobs and job security continues to be at the top of the list with 62 percent of adults referencing it as a key priority for the President.
With foreclosures reaching record levels in 2009 and expected to grow even more this year, it's not surprising that 45 percent of adults included this as an important area of focus. Rounding out the top three priorities for President Obama is bringing/keeping low interest rates at 39 percent. Only 27 percent of Americans surveyed believe extending the home buying tax credit through the end of 2010 should be a key initiative to help stabilize the housing market.
Pending home sales stabilize
Pending home sales have leveled from a market swing driven by response to the home buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS®. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, increased 1 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1. In November, the monthly index had fallen by 16.4 percent from surging activity in preceding months.
Here's a breakdown by region for the PHSI:
* Northeast: rose 2.3 percent to 76.1 in December and is 14.9 percent higher than December 2008.
* Midwest: increased 5.2 percent to 86.9 and is 8.7 percent above a year ago.
* South: rose 2.2 percent to an index of 98.4, and are 5.5 percent higher than December 2008.
* West: fell 3.8 percent to 119.9 but is 18.6 percent above a year ago.
Here's a breakdown by region for the PHSI:
* Northeast: rose 2.3 percent to 76.1 in December and is 14.9 percent higher than December 2008.
* Midwest: increased 5.2 percent to 86.9 and is 8.7 percent above a year ago.
* South: rose 2.2 percent to an index of 98.4, and are 5.5 percent higher than December 2008.
* West: fell 3.8 percent to 119.9 but is 18.6 percent above a year ago.
Falling home values: The worst may be over
During the past several years, the nation's housing sector has been weighed down with a disturbing trend that had been absent since the Great Depression: falling home values. However, most of the damage has already been done. In the past six months home prices have shown signs of stabilizing.
The Case-Shiller 20-city index has risen 5.3 percent since April of this year. The worst may be over but it is likely that prices may drop further due to a mounting foreclosure problem. According to a recent Realty Trac report, there were almost 3 million foreclosure filings last year, an all-time record. Foreclosures are one of the primary reasons for falling home prices since a foreclosed homes sell at a discount to non-foreclosed homes, bringing down the mean and median price for all homes sold in a marketplace.
Source: David Lereah, RealEstateEconomyWatch.com, (1/25/10)
The Case-Shiller 20-city index has risen 5.3 percent since April of this year. The worst may be over but it is likely that prices may drop further due to a mounting foreclosure problem. According to a recent Realty Trac report, there were almost 3 million foreclosure filings last year, an all-time record. Foreclosures are one of the primary reasons for falling home prices since a foreclosed homes sell at a discount to non-foreclosed homes, bringing down the mean and median price for all homes sold in a marketplace.
Source: David Lereah, RealEstateEconomyWatch.com, (1/25/10)
Fannie Mae announces 3.5 % seller assistance
Fannie Mae announced that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010.
Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing which offers homebuyers an opportunity to purchase with as little as 3 percent down.
Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing which offers homebuyers an opportunity to purchase with as little as 3 percent down.
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