Real Estate New York

Market Update December 2009
5 Months Left to Use $6,500-$8,000 Buyer Tax Credit information

Nuances of Home Tax Credit Extension

Home buyer credit The new law not only extends the $8,000 tax credit, it also extends the credit to higher-income taxpayers and allows a reduced credit to some non-first-time home buyers. The new law also expressly excludes high-end homes from the credit.

These tax breaks are effective only for purchases made after the date of enactment (Nov. 6, 2009). No credit is allowed if the purchase price of the principal residence exceeds $800,000.

The first-time homebuyer credit was scheduled to expire after Nov. 30. The new law provides a new expiration date of April 30, 2010. If a taxpayer enters into a binding contract by April 30, he or she has until June 30, 2010 to close on the purchase of a principal residence.

For principal residences purchased in 2009 and 2010, there is generally no requirement to repay the first-time home buyer credit. However, a taxpayer may have to repay the credit if the residence ceases to be his or her principal residence within 36 months from the date of purchase. Exceptions, such as death, continue to apply.

The first-time home buyer credit may be allocated between two or more unmarried taxpayers using any reasonable method. For example, the credit may be allocated between unmarried taxpayers based on their respective contributions toward the purchase price of the residence or their respective ownership interests.

Non-first-time home buyers will benefit from the credit but at a reduced amount. Their maximum credit will be $6,500 rather than $8,000 ($3,250 for married taxpayers filing separately rather than $4,000).

Home Buyers' Negotiating Power Falls: Zillow

Home buyers in much of the United States paid thousands of dollars below asking prices in September, but had slightly less negotiating power than in August, real estate website Zillow.com said on Wednesday.

According to the September Zillow Real Estate Market Reports, buyers paid 2.9 percent less, or a median of $6,161, below the listing price on homes bought in September, down from 3 percent, or $6,525, for homes bought in August.

Buyers' negotiating power peaked in January, when buyers paid 4.5 percent below list price, a median of $10,096, Zillow said.

Meanwhile, 22.7 percent of all homes listed for sale on Zillow had at least one price reduction as of the end of September. The median U.S. reduction was 6.5 percent off the original listing price, the reports showed.

Region Homeowners Undervalue Increase in Value

up-down-graph U.S. homeowner confidence varied significantly by region in the third quarter as home values in parts of the country stabilized while others saw declines, real estate website Zillow.com said on Wednesday.

Homeowners in the Northeast were the most cynical about their own homes' values over the past 12 months, although the region posted the highest percentage of homes increasing in value during that same time period, according to the Zillow Q3 Homeowner Confidence Survey and the Zillow Q3 Real Estate Market Reports.

One in five, or 20 percent, of Northeastern homeowners believes their own home gained value in the past 12 months, according to the survey.

But in reality, 31 percent of homes in the region increased in value, according to the reports.

That translates to a Zillow Home Value Misperception Index of negative 6, which means Northeastern homeowners believe values performed worse than they did in reality -- a first in Homeowner Confidence Survey history, which dates back to the second quarter of 2008. A Misperception Index of 0 would mean homeowners' perceptions were in line with reality.

"Homeowners are clearly confused about the housing market, and with good reason," Stan Humphries, Zillow chief economist, said in a statement.

"Home values in different parts of the country have shown varied performance in the third quarter," he said.

Architecture Coach: Small-Home Living

ssmall-house More buyers are being lured to the simplicity and affordability that small homes bring. Plus, these smaller homes are often situated within walking distance to restaurants, stores, and shops.

After Sarah Susanka published The Not So Big House (The Taunton Press) 11 years ago, a groundswell of interest emerged about small home living. Tiny prefab homes began popping up on urban lots and prairie pastures alike. There was also renewed interest in downsizing the size of one's home for the sake of simplicity.

Now, with an economic slowdown and a desire to live very close to jobs and other services, the trend is just as hot now as it was then.

"I call it the cappuccino factor. They want the cappuccino to be within walking distance," says BJ Droubi, a Coldwell Banker broker in San Francisco. Homes in Noe Valley—an area she specializes in—are between 900 and 1,100 square feet.

For buyers trying to play it safe in the softening housing market, a smaller home may be the way to go. Smaller homes tend to not only be more affordable but more energy efficient.

"'Not so big' has almost become chic. Conspicuous consumption is no longer cool," says Susanka, who defines a small home as a third less space than the buyer needs. "It doesn't mean 'less than.'"

Maximizing Square Footage in a Smaller Home

As an architect, Susanka became frustrated when discussions with clients always began with square footage. "I really tried to change the discussions away from size into the things that really matter," she says.

Genevieve Ferraro shares a 1,800-square-foot house in Evanston, Ill., with her husband, two children, and a dog. "Long story short, my husband refused to move to a larger house and I couldn't find a professional decorator who could help me design the house," she says.

Ferraro launched a business, The Jewel Box Home, two years ago where she helps owners of small homes address storage, child-rearing, landscaping, and color choices. She works with various budgets and sometimes all it takes is just a simple rearranging of furniture to make a small space appear bigger and more cozy.

"A smaller space needs a certain type of flow," Ferraro says. "There's this conventional wisdom that bigger is always better and we have all sort of bought into that. There's a stigma that small homes are second-rate."

With a small home, you don't have to sacrifice design or functionality. For example, Ferraro offers some of the following tips for making a small home feel not so small:

Decide on the room's primary function and let that guide your decorating.
Keep color, furniture, lighting, and accessories in proportion. In other words, no large-scale pieces should be in a small room. Keep all the furnishings small and it will enlarge the space.
Rearrange furniture so that the legs show on all of your upholstered pieces. This creates a feeling of space and light and allows the eye to travel across the room and see "through" furnishings.
Keep tabletop accessories to a minimum. Have no more than three coffee tables and side tables. If you have a large collection of accessories, display them in rotating groups.

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Consumer Confidence Unexpectedly Increased

Confidence among U.S. consumers unexpectedly rose in November as a brightening outlook masked growing concern over joblessness.

The Conference Board’s confidence index increased to 49.5 from 48.7 the prior month. The New York-based Conference Board’s index, which focuses on the labor market and purchase plans, averaged 58 in 2008 and 103.4 in 2007.

The report showed Americans fretted over jobs, signaling the highest unemployment rate in 26 years may restrain spending and limit the recovery from the worst recession since the 1930s. Target Corp. last week said it remains cautious about sales this quarter and expects to offer incentives spur holiday shopping.

“Labor market perceptions are very weak,” said David Sloan, chief U.S. economist at 4Cast Inc. in New York, who forecast an increase in confidence. “What did drive is up was expectations, optimism that things will get better, not that things have gotten better.”

Existing Home Sales Jump as Prices Fall

Family Jump Sales of existing U.S. homes jumped 10 percent in October to the highest level since February 2007 as Americans rushed to take advantage of a tax credit, cheaper properties and lower mortgage rates.

Purchases rose more than forecast to a 6.1 million annual rate from a 5.54 million pace in September, the National Association of Realtors said today in Washington. The median sales price decreased 7.1 percent from October 2008.

Stocks extended gains on signs the industry at the center of the deepest recession since the 1930s may contribute to a recovery. The extension of a tax credit originally due to expire Nov. 30 and its expansion beyond first-time buyers may fuel further gains in home sales, helping to overcome the drag from rising foreclosures and unemployment.

“It’s an impressive increase and shows a lot of pent-up demand for housing,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “Buyers have enough confidence to take the plunge. The housing market recovery will be a durable one.”

The Standard & Poor’s 500 Index rose 1.4 percent to 1,106.24 at 4:07 p.m. in New York. The Dow Jones Industrial Average climbed to a 13-month high, adding 1.3 percent to close at 10,450.95.

Existing home sales were forecast to rise to a 5.7 million annual rate, according to the median estimate of 66 economists in a Bloomberg News survey. Estimates ranged from 5.2 million to 6 million, after an initially reported 5.57 million rate in September.

Existing Sales Rise 10%, More Than Forecast

Sales of existing U.S. homes increased more than forecast in October to the highest level since February 2007, spurred in part by a tax credit that lured first-time buyers.

Purchases rose 10.1 percent to a 6.1 million annual rate from a 5.54 million pace in September, the National Association of Realtors said today in Washington. The median sales price decreased 7.1 percent from October 2008, the smallest decline in more than a year.

Cheaper homes and stimulus such as the $8,000 incentive, extended and expanded by the Obama administration this month, have revived an ailing housing market that contributed to the worst economic slump since the Great Depression. Further improvement that would aid the economy’s recovery depends on an easing in unemployment and foreclosures.

Existing home sales were forecast to rise to a 5.7 million annual rate, according to the median forecast of 66 economists in a Bloomberg News survey. Estimates ranged from 5.2 million to 6 million, after an initially reported 5.57 million rate in September.

Foreign Buyers Snapping Up U.S. Real Estate

In the 1990s, waves of foreign buyers snapped up U.S. real estate bargains. And they're poised to do it again.

The good news is that international buyers are bullish on U.S. real estate. "Many of our members (primarily banks, pension funds, and other institutional investors) are heartened by the price corrections they're beginning to see in the U.S. market and expect to increase their debt and equity investments in late 2009 and 2010," says James Fetgatter, chief executive of the Association of Foreign Investors in Real Estate in Washington, D.C.

"The yield compression in the U.S. market between 2006 and 2008 wasn't an attractive proposition for global investors, but as U.S. property prices recalibrate, they are becoming much more active," says Joel Coren, senior director of CBRE Global Property Advisors, also in Washington.

"We've definitely seen an increase in interest in the last six months, but there's still not a lot of buying. International investors are waiting to see what's going to happen," says Andre J. van Rensburg, ALC, CIPS®, president of Prudential Commercial Real Estate in Jacksonville, Fla. Concerns about the fallout from CMBS debt that can't find refinancing is also keeping some overseas investors on the sidelines, says Fetgatter.

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Mortgage Rates and Trends

The link to up to the minute New York State mortgage information seems to work better than presenting the actual graph.

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Buyers' versus Sellers' Market Report

Buyer Seller Graph

The graph above shows the number of sales in a given month divided by the number of homes on the market in the four main counties of the Capital Region.

Novemeber sales figures show a continual reversal back towards seller territory. For the moment, the market is well balanced in what we call a Realtor's Market, neither wholly favoring buyers or sellers

*This ratio can be used to determine whether we are in a buyers' or sellers' market as indicated in Dennis Maier's article on Market Timing featured in eZine Real Estate. In general, if it would (theoretically) take less than 6 1/2 months to sell the current inventory it's a sellers' market. If it would take more than 9 months to sell all the homes on the market it's a buyers' market.

Market Statistics as of December 1, 2009

Average Sale & List Prices for Albany, Schenectady, Rensselaer, Saratoga Counties

The average list and sale prices for the month of November 2009 show a further decline in both average list and sale prices as is typical for this time of year. However, both the list prices and sale prices remain below levels seen in past years.

The average asking price to sale price has increased slightly from 96.49% in October to 96.82% for November. The number of sales at 559 is down one home from 560 last month.

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Mortgage Rates and Trends

The link to up to the minute New York State mortgage information seems to work better than presenting the actual graph.

Click for up to the minute mortgage rate information

Not Getting First Look Listings?

A number of people have told us that our First Look listings have stopped arriving in their email box.

Most often this is caused by the clients spam filter stopping the email listing from arriving.

Usually this can be remedied by including: Email@ParagonMessaging.com as a Safe Sender or white listing the above email address as safe. If help is needed to do this you may contact:

Dennis Maier 518-312-4030 extension #1 or 888-749-3384 toll free

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Real Estate New York

Market Update December 2009 5 Months Left to Use $6,500-$8,000 Buyer Tax Credit information

Nuances of Home Tax Credit Extension

Home Buyers' Negotiating Power Falls: Zillow

Region Homeowners Undervalue Increase in Value

Architecture Coach: Small-Home Living

Home Tweat Home

Consumer Confidence Unexpectedly Increased

Existing Home Sales Jump as Prices Fall

Existing Sales Rise 10%, More Than Forecast

Foreign Buyers Snapping Up U.S. Real Estate

Mortgage Rates and Trends

Buyers' versus Sellers' Market Report

Market Statistics as of December 1, 2009

Average Sale & List Prices for Albany, Schenectady, Rensselaer, Saratoga Counties

Mortgage Rates and Trends

Not Getting First Look Listings?

Tell a Friend

Archives

Market Update December 2009
5 Months Left to Use $6,500-$8,000 Buyer Tax Credit information