Archive for May, 2009
Will the IRS make your downpayment? May 29th, 2009
Just today HUD announced that first time home buyers can use the $8,000 tax rebate for first-time-home-buyers for a down payment on their home. Here is the announcement dated today. Thanks to Howard Nugent of Wells Fargo for this timely news.
Previously you were only able to get this tax rebate after you closed on your house. You would close on the home and then apply for your tax rebate. If you hadn’t payed $8,000 in taxes for the past year you were/are able to stretch this rebate over a couple years.
Exactly how the new down payment program will work is very murky. Are you going to count on the IRS to send you the down payment money? How many forms will be needed to make sure this money is there on time?
Apparently you will not receive the money directly from the IRS, it will be give as a second mortgage that you can use to pay your closing costs and prepaids. You still need to come up with 3.5% of the loan amount with your own money but the the tax rebate money can be used for everything else. After you close and you actually receive this rebate, you can use it to pay off your second mortgage.
Personally, I will be surprised if this actually helps many buyers. It may work out great for a few buyers qualify with just the right qualifications. Lenders may bear the burden of sorting this out over time. They are the ones who will have to figure out the logistics of how much money a buyer really can hope to receive from the IRS and what are the chances that the money will really be there to close the deal.
Still, it’s interesting news worth watching.
Ratio of Pending to Actives in Wasilla and Palmer May 29th, 2009
Tim Vereide of Prudential Vista Real Estate sent me more of the data that he has been compiling. Thanks Tim.
Tim Has been watching the pendings compared to the total active listings on the market. It gives a pretty good idea of what the market has been doing over time. One of Tim’s colleages has graphed this data for him. Take a look at it below. Click on the image to expand it.
This graph shows the ratio of the pending sales to the sum of the actives and pendings. Obviously, if you are a seller you want to be on the market when the ratio is high. If you are a buyer, when the ratio is low you will have more inventory to choose from and likely a more motivated seller to work with.
There are many possible explanations for the rise and fall of this ratio, but I’ll leave it to the reader to draw their own conclusions. I have been studying this graph for a couple days and have discussed it with Tim as well. I may make some comments on it later but it’s open for your comments now.
Wasilla and Palmer Monday Market Memo for May 19-25, 2009 May 27th, 2009
Well, once again the Monday memo on Wednesday. Suffice it to say, I’ve been busy lately.
This week is almost identical to last week. Pendings are up but closings are down. Most of the pendings will turn into closings within a few weeks so that column should rise.
Total listings continues to rise. The median price for the inventory on the market went up this week by $100. It’s been hanging steadily around $240,000. That is important because the median sales price for the year so far is exactly $200,000.
Obviously, a lot of those houses that are on the market are just not going to sell anytime soon. Houses priced in those higher price ranges have to be VERY competitive because they have to beat out a lot of competition to attract the buyers.
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|
Average Price | Median Price | DOM | |
| New | 56 | $277,237 | $229,450 | . |
| Total Active | 858 | $289,927 | $240,000 | 137 |
| Pending | 36 | $214,747 | $205,000 | 51 |
| Closed | 11 | $275,136 | $255,900 | 106 |
It’s also instructive that there have been 341 sales of single family homes so far this year. Last year there were 442 sales in the same time frame and the year before that there were 548.
Although prices haven’t dropped much, it’s still more of a buyers market than a sellers market because buyers have more to choose from and can shop until they find exactly what they need rather than grabbing something before someone else does.
It’s not a screaming buyers market however. In the $200,000 price range the houses are still selling fairly quickly. Its when you get above $300,000 or $400,000 that the activity drops dramatically.
We sold several houses in the high $300K range lately. They were all priced very competitively and in great condition. They had to beat out many other competitors to find a buyer so the sellers did what it takes. It takes a good price, but it also takes good staging. A house has to look good when a buyer drives up, and it has to look good when a buyer walks in. Within 30 seconds after a buyer walks into a house you can tell if they are interested or not.
So sellers, make your presentation a good one! Call me for some further ideas on this 907 232-7900.
Interest Rates Going Up?? May 26th, 2009
I did some reading this weekend that makes me think interest rates may be going up in the near future. Every weekend I get a copy of John Maudlin’s weekly letter and Alice Roe’s “Mortgage Market In Review”. Both of them this week talk about the spectre of inflation. Here are a couple quotes….
John Maudlin, “I think the bond market is looking a few years down the road and saying that $1-trillion deficits are simply not capable of being financed. And if the debt is monetized, then inflation is going to become a very serious issue.”
Monetizing the debt means that the government may begin buying back some of the bonds that they sold to go into debt in the first place. If they buy the bonds back, they are increasing the money supply which causes inflation.
Here’s one from Mortgage Market In Review, “There are concerns all across the globe that the US will lose its AAA credit rating. Standard and Poor’s recently downgraded the UK from stable to negative. Many analysts expect the UK to lose its AAA credit rating. Market participants are concerned the US will follow as deficit spending continues. Bond guru Bill Gross said it would happen in “at least three to four years, if that, but the market will recognize the problems before the rating services – just like it did today.”
Just as in the case of a consumer, a lower credit rating would mean that the government would pay higher rates to borrow money. This is logical in that an investor requires more return for the additional risk of possibly not being paid on their investment. This would most likely result in interest rates rising on not only Treasuries but also mortgages. As warned last week, it is a great time to take advantage of rates at the current levels to avoid the uncertainty of where mortgage interest rates will be in the future.”
If we do get inflation we will see interest rates increase. If interest rates increase, the amount of house you can buy for the same amount of money decreases substantially.
For example, lets say you were qualified to buy a $200,000 house at 5% interest. That’s pretty close to where the interest rates are right now. But lets say the interest rates suddenly jump to 6%. Now you can only buy a $179,000 house. There is a substantial difference between a $200,000 house and a $179,000 house.
What if they jump by 2%, from 5-7 percent. That is not at all out of the question, in fact some people are predicting double digit interest rates soon. If your interest rates jump to 7% from 5% and you were qualified for a $250,000 house at 5% interest rate….now you can only buy a $202,000 house.
So it may be a good time to lock in these interest rates. In addition, you can take advantage of the AHFC’s $7,500 energy rebate and the US Government’s $8,000 tax rebate if you are a first time home buyer.
I want to temper my comments about rising interest rates to say that the more I read about economic forecasting the murkier it gets. There are also some people saying that we will get massive deflation. If so, it will be like the depression where interest rates will drop, but so many people will lose their jobs that they won’t be able to buy anything.
Palmer Alaska Website May 23rd, 2009
We are starting a website about Palmer... PalmerAlaska.net.
It seems that Wasilla is getting plenty of glory these days thanks to Governor Palin, but Palmer is is a nice town too.
My daughter Tamara is doing most of the writing but we are open to guest authors as well. If you would like to write about a Palmer business, or a place, or an article on Palmer’s history just send the article to [email protected]
We would be happy to post your article about your business or anything else Palmeranian. Of course, we want to retain editorial rights to censor objectionable material, but we are pretty open. We would be ecstatic if this became a community website for Palmer, but even if it isn’t that, we will continue to write about how great Palmer is.
Take a look… PalmerAlaska.net.
Marty Van Diest, Tele 907.232.7900 / marty[at]valleymarket[dot]com
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