SellAustinTexas

Some first-time buyers risk losing an $8,000 tax credit if the sale and purchase of a  home is not completed by June 30, 2010.

With the June 30 deadline looming for first-time homebuyer tax credits, many homeowners struggle to close the deal, while many buyers drag their feet at the risk of losing it all.

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The 30 year fixed mortgage rate dropped to 4.72% last week, down from the previous week’s 4.79% and way down from 5.59% this time last year. Mortgage rates moved to new lows with another volatile week in the global financial markets. The primary concern revolves around the outlook for the global economy and the possibility of Europe’s debt dragging the U.S. into another recession.

Greece announced that the emergency loans it received will cover its obligations and help the country avoid defaulting on loans, helping to ease investor fears. For the week, this catapulted the Dow 279 points higher. If the stock markets continue this upbeat trend, we’ll see the demand for Treasuries start to wane, which will inevitably push interest rates higher. Although, with the way the global markets have been lately, that demand for U.S. Treasuries might not let up anytime soon.

It’s also looking highly unlikely the Fed will raise interest rates anytime soon, perhaps even until 2011. The uncertainty in the markets and the slow economic recovery will most likely keep mortgage rates low for a few more weeks.

These low interest rates combined with the high inventory of homes throughout the Austin area, provide the perfect opportunity for all home buyers to take advantage of this fantastic market.

The $8,000 First Time Homebuyer Tax Credit is scheduled to end November 30th. While that may seem like plenty of time, the Washington Post recently published a calendar with some potential roadblocks a house hunter might come across.

If you’re considering buying a home before the deadline, here is what they say your schedule should look like:

- September 15-October 15 Up to four weeks for house hunting. Allow a couple of days for negotiations and counter offers.

- October 15 Under Contract. Home inspections can be done within a few days, but it can take two weeks for an appraisal. New mortgage disclosure rules can delay closings by several days if the long terms change. That includes an increase in downpayment if the appraisal is low.

-November 2-6, 9-13 Ideal weeks to schedule a closing.

- November 16-20, 23 & 24 Crunch time for last minute closings. There’s a finite supply of one-hour slots at title companies. Long Thanksgiving weekend: few, if any, closings are likely to be scheduled November 25-29.

- Monday, November 30 Last day to close.

If you’re interested in cashing in on the credit, start your search today by looking at some listings and calling your Realtor.

Still thinking that house prices are going to decline further? Are you still anticipating the “deal of a lifetime” just around the corner? You’re about to be out of luck. It’s natural to look at the national economic news and think that we are going to see a further erosion in home prices but it looks like things are pointing up for Austin’s economy. We have seen a decline in high-end home prices but the average home price in Austin has remained relatively stable. The $8,000 first time home buyer tax credit is also about to run out (see the previous post). But by far the biggest reason: Interest rates are anticipated to go up and that is going to price a lot of people out of the market. Compared to the week prior to August 24, 2009, the national 30-year mortgage rate is up 4 basis points from 5.14%. Compared to three months ago, the 30-year rate is up 20 basis points from its average rate of 4.98%. Why are interest rates going up? The massive government spending has the potential to lead to long term inflation, causing interest rates to rise. Ted Jones, Senior VP and Chief Economist at Stewart Title explains it best:

“…let’s assume a loan amount today of $100,000 with a 30-year fixed-rate residential loan at 5 percent. Nationwide at the time of this writing, the average 30-year rate was 4.85 percent per Freddie Mac. Fannie Mae forecasts an average rate in all of 2009 of 5.13 percent. So the 5 percent is a reasonable assumption.

So if rates go up just 1 percent to 6 percent per year, then prices must drop at least 10 percent for that same buyer to qualify for the same monthly payment. A 1.5 percent increase in rates to 6.5 percent requires a 15 percent price decline, and a 2 percent increase necessitates a 20 percent price decline to qualify. Note: This 1 percent interest rate change to a 10 percent price change is only true when interest rates are 5 percent as they are today.”

Interest rates vs. price changes

Admittedly, at the same loan-to-value ratio, as prices decline so does the down payment. Since, however, many buyers select the price range of homes they consider buying based on their monthly payment potential, rising rates may force future buyers into less expensive homes and hence properties they find less desirable.

So, if you are waiting to buy your first home or if you are waiting to make that second home investment – don’t wait much longer! Postponing that purchase is going to price you out of the market and you are going to have to settle for something less or just wait for the next recession. Don’t get burned. Thanks to Ted Jones for letting us reprint part of his blog which can be found here.

Time is running out on taking advantage of the up to $8,000 Federal Housing Tax Credit for qualified first time home buyers. The tax credit is available for qualified first time home buyers purchasing a principal residence before December 1, 2009. That deadline is only 3 months away! If you are considering purchasing your first home, now is definitely time to get off the fence and buy. Interest rates are low, it’s still a buyer’s market for residential real estate and the government is offering an $8,000 tax credit. Don’t let this opportunity pass you up!

According to the Austin Board of Realtors, last month, June ‘09, Austin’s home sales were at their highest level in a year.

 April’s sales in ‘09 were down 18% from April ‘08. May ‘09 sales were down 19% from May ‘08. But June had a 4% decrease from ‘08, the smallest decrease since the 2% drop in  June ‘o8 from June ‘07.

Also in June, Pending Sales (sales set to close in July) were up 4%.

Reasons for the upturn include

• $8,000 tax credit (for homes closed on before December 1)
• Population increase – numbers of people moving from other cities or states
• People looking for lower risk investment opportunities (Real Estate is historically considered a strong investment choice)
• Builders have been building fewer new homes, affecting the balance of supply and demand, and putting more demand on resales.