Last April, home sales went into a tailspin after the tax credit breathed its last breath on the 30^th. Now, they have finally started to bounce back.

According to the Warren Group, a publisher of Banker & Tradesman, home prices dropped nearly 6 percent in December, hitting a statewide median price of $277,676. In December, sales rose by roughly 7 percent from December 2009.

Similar to the Warren Group’s report, the Massachusetts Association of Realtors reported a 6.2 percent year-over-year decline in December, with a statewide median of $285,950 and a sales jump of 5.4 percent.

While it is too early to know whether this is a self-sustaining trend, it is necessary for prices to keep falling. It may seem harsh to sellers, but it is an essential component that will entice buyers into the game. Buyers aren’t going to put money down in the current market, not unless they sense they’re getting a great deal. Falling prices will especially help first-time home buyers.

Letting prices fall may bring some pain in the short run, but it also has the potential to break the gridlock and stimulate capital investment. Overall, this could construct more productive sectors and create a net positive effect.

If you’re looking to relocate to the Boston area, contact Warren Residential to schedule a viewing with a qualified real estate professional.

I thought that with the sales season under way, that I would share some tips for home purchase and ownership:
1. Get your financing in order
Given tighter lending practices — and that it’s a competitive buyers’ market — would-be buyers need to have their ducks in a row so that they’re ready when they see the right home.

2. Understand your time horizon

As a shorter-term buyer, you might consider whether the place is a good investment, and if it’s the kind of property that’s going to be attractive for the next buyer. “What concerns you now is going to be a concern in a few years,” Hillman says. A house near train tracks, for instance, is probably not what most people are looking for.

3. Know the overall market conditions
Investigate what comparable properties have sold for over the past three to six months, Dwyer advises. If you’re working with a buyer’s agent, he or she should know what fair-market value is, not just the list price.

4. Search and buy within your means This bit of advice is always true, but if the housing crisis has taught us anything, it’s that buying with the expectation that prices will continuously go up — and that if you can eke out the payments each month, you’ll be in a good spot in the long run — isn’t such a good idea.

5. If you’re waiting for prices to go lower, think again
Real estate is a bit like the stock market, in that it’s unpredictable. Though some people might be waiting on the sidelines for housing prices to dip lower, she says, “looking at the numbers, I can’t see them continuing to go down.”

6. Don’t get too sucked in by appearances
Buyers should keep in mind that many sellers will try to present their homes in the best possible light. “If the house has been staged, what [potential buyers] forget is that all that stuff is going out when [the sellers] leave. Sometimes you’re better off buying something that needs a little decorating, because it’s going to take on your own look anyway.”

7. Have questions prepared
Sellers and their agents should be prepared to answer questions including how old the roof, heating system, hot water heater, and windows are; if the basement has taken water in the time the seller has been there, and if there’s a sump pump; and what utilities and homeowner insurance generally cost.

8. If you’re thinking of buying a brand new house…
Consider that a home that’s been lived in has been tested. The seller will be able to tell you if the basement takes on water in a rainstorm, for instance.

9. If you’re buying a condo, know the rules
Condo lending rules have become more stringent, making it difficult for some would-be buyers to get financing. Lenders generally want buildings to be at least 50 percent owner-occupied, Dwyer says.

10. Think about a home’s intrinsic value
The downturn in the housing market and the uncertainty about where it’s headed may lead people to think less about picking up an incredible bargain in the hopes of making a huge profit and more about the home in its own right.
“[Buying a home] has always been a consumption decision and an investment decision,” says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. In recent years, “we moved that dot along the continuum, and it became an investment decision.”
“Questions such as ‘Is this where I want to raise a family’ and ‘Is this close to the things that are important to me’ will factor more into the decision,” he says.

With this info in mind, browse some of our listings available and make an appointment today!

(This list compiled by Ami Albernaz, a Boston Globe Correspondant. Read the full article here. )

Christina Longo at Prospect mortgage sent me the following email this morning:

Senators have agreed to extend the $8,000 first-time homebuyer tax credit originally set to expire on November 30. Once the Senate officially votes on the bill it will move to the House of Representatives, which strongly supports the extension. The Obama administration has also signaled its strong support for an extension of the tax credit.

Aside from the first-time homebuyer credit, the new plan would offer a $6,500 credit for repeat or move-up homebuyers who have lived in their primary residence for five years or more. The tax credits would be available to buyers who sign purchase agreements on a new or existing primary residence between December 1, 2009 and April 30, 2010. Buyers would have until June 30 to close on their new homes.

There is an $800,000 price limit on all homes eligible for the credit. The income limits for all buyers would rise to $125,000 per year for individuals and $225,000 for married couples. Under the current program, the limits are $75,000 and $150,000 respectively. The first-time homebuyer credit is also available to those who have not owned a home in the previous three years. The credit does not have to be repaid unless the home is sold or ceases to be the primary residence within three years.

According to the Treasury Department, more than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the first-time homebuyer tax credit.

Please be advised that this legislation has not yet passed, but I will be sure to keep you informed as it moves through Congress toward approval.

My Thoughts:  Hurray!  This is great news.  I am really excited about the fact that they are most likely going to also allow move-up buyers to take advantage of the program with the $6,500 tax credit.  I think this is just what we need to keep home sales active during the slow season and really get them fired up during the Spring.  Let’s just cross our fingers that the House approves it too!

Brian Cavanaugh of Wells Fargo Home Mortgage just sent me an interesting email in regards to when to schedule your closing to take advantage of the $8000 tax credit:

The $8,000 First-Time Home Buyer Tax Credit expires November 30, 2009.  In order to claim the tax credit, the IRS requires that you’ve closed on or before that date.  December 1, 2009 is too late.

But that doesn’t mean that first-time home buyers should target November 30, 2009 as a closing date. In fact, there may not be a worse day in 2009 on which to try to close on a home.  The optimal time is during the week of November 16, 2009 and the earlier in the week, the better.

To understand why, let’s start with the fact the home sales volume is through the roof, and then we’ll look at a calendar.

New Home Sales data and Existing Home Sales data has been unexpectedly strong and first-time buyers account for nearly 1/3 of all transactions.  Furthermore, the Pending Home Sales reports tell us sales volume is still growing.

It’s reasonable to infer, therefore, with home prices still low and with mortgage rates still down, buyer interest will stay strong all the way through the November 30, 2009 deadline — especially as trade groups trumpet “The End Of The Incentive”. There will be a mini-panic as everyone tries to close in time to claim their $8,000.

This is when it starts to get messy.  Check out the calendar.

• November 30, 2009 is the Monday after Thanksgiving Weekend.
• November 28-29, 2009 is a weekend.  No closings on weekends.
• November 27, 2009 is the Friday after Thanksgiving — an unofficial holiday.
• November 26, 2009 is Thanksgiving — an actual holiday. No closings.
• November 25, 2009 is the day before Thanksgiving — a national “half-day”.

So, that backs up the November 30, 2009 first-time home buyer tax credit deadline by 6 days to November 24, 2009 — a Tuesday.

And I won’t tell you that closing on Tuesday, November 24, 2009 is a bad idea, but I’ve been in this business long enough to know that there’s always a chance for something to go wrong. And when it does, you’re going to want some sort of a cushion between the “the problem” and “the deadline”.

Maybe it will be a problem on your final walk-through, or with your mortgage loan documents.  But as the buyer of a home — the largest purchase you’ve made in your life to-date — the last thing you’re going to want is to feel pressured into signing your paperwork because of worries over an $8,000 tax credit.

Therefore, don’t mess.  Schedule your closing for the week of November 16, 2009, instead.  That way you’ll have plenty of time to work through whatever needs to be worked out in connection with your home and your home loan. With a closing set for the 16th, you’ll meet your tax credit deadline with plenty of time to spare.

That said, the clock is winding down.

If you haven’t started your home search yet or aren’t under contract, it’s seriously time to get cracking.  Purchase closings come 60-day default.  Sometimes, you can negotiate them down to 45 days or 30 days, but, for the most part, 60 days is the standard– especially if you’re buying a short sale.

Counting backwards from November 16, therefore, renders September 17, 2009 the last day to go under contract and be sure of collecting that $8,000 tax credit.

It’s a scant 24 days from now.

If you’re a first-time home buyer and just starting your research, I encourage you to call or // email me directly with your First-Time Home Buyer Tax Credit questions about how the program works.  The IRS has a straight-forward form  you can read but it may not be “personal” enough to address your particular needs.

Sometimes, you need the human element, though.

If there are any questions regarding this buyer please feel free to contact Brian Cavanaugh at (617) 771-5021.

Our good friend David Bolton over at Prospect Mortgage (one of Boston’s best mortgage brokers) just sent me an advisory memorandum from MassHousing explaining the new $8000 tax credit loan program.  I’ve posted it below and will explain some of the quick details in bullet points afterwards:

“Governor Patrick announced today the establishment of a Tax Credit Loan Program for
eligible first-time home buyers to be utilized in conjunction with MassHousing’s first
mortgage programs. The homebuyer credit is a new tax credit included in the recently
enacted federal Housing and Economic Recovery Act of 2008 (“HERA”) for homes
purchased in 2008 and 2009. The maximum available credit is $8,000 and it is claimed
when the homeowner files their 2009 tax return. To be eligible, the homeowner must
purchase the property before December 1, 2009. All other first time requirements
associated with MassHousing first mortgages will remain in place.

In an effort to stimulate home sales, several states have initiated programs that make this
tax credit available up-front in the form of cash by “monetizing” the tax credit. The
funding of this tax credit is through the state housing finance agencies and is used for
downpayment, closing costs, and other closing related expenses and is available at the
time of loan closing. The terms of this MassHousing program are similar to those offered
by other states.

Due to the complexity of this tax credit loan program, MassHousing has selected a small
number of our most active lenders to participate in the pilot phase of the program
implementation. Those lenders must be trained by MassHousing staff on the guidelines of
the program and the operational issues that differ from those usually associated with
registering and funding MassHousing loans. The training agenda will be announced next
week and new required documents, i.e., note and disclosure forms, will be available
shortly and distributed to the selected lenders.

MassHousing will be expanding the network of lenders to additional MassHousing
lenders in the near future.

Additional information will be sent to all “pilot” lenders in the next few weeks. If you
have any questions, please contact your Business Development representative.

A FAQ document will be available on the MassHousing website in the next few days.”

In case you didn’t understand what was said in the above memorandum or if you just don’t have the attention span to read the entire thing, here are some quick facts:

1. Homebuyers who are using a MassHousing first mortgage loan to purchase their first home apply for the Tax Credit Loan program through their lender
2. The Tax Credit Loan is used to cover closing costs or as part of the down payment
3. In 2010, the home buyer claims the $8,000 tax credit on their 2009 federal tax return
4. The home buyer then repays the MassHousing tax credit loan (No interest is charged if the Tax Credit Loan is repaid by June 1, 2010. Otherwise, the Tax Credit Loan is amortized over the next 10 years, at the same interest rate as the first mortgage).

So basically, MassHousing is allowing you to take a no-interest loan for your down payment which you then repay with your tax credit once you receive it.

Please feel free to contact me directly on my cell at 617-933-9776 or via email at nwarren@warrenre.com for more information or questions.