Posts Tagged ‘Tax Credit’
Home Builder Sentiment Posts Biggest Gain in Over Year
Despite sluggish summer sales, confidence among the nation's home builders is gaining strength, posting its largest gain since April 2010, when the now-expired home buyer tax credit brought more buyers into the market.
Credit Rules the Housing Market
Existing home sales were basically flat in April, down close to one percent month to month and down nearly 13 percent year over year, but you have to remember last year we were heavily under the influence of the home buyer tax credit. Now we are heavily under the influence of the mortgage market, or lack thereof.
Home Prices Worse Than Expected
Hme prices started to falter even before the tax credit had finished doing its work. The numbers for July show a 3.3 percent drop in home prices year over year, which is a lot lower than many expected and has some folks revising long term price expectations yet again.
Homebuyer tax credit causing headaches and trouble
The federal homebuyer tax credit did its job to boost the real estate market, but many involved – from buyers to the IRS – have run into problems with confusing wording and stipulations. The result: Hundreds of thousands who’ve already filed for the credit will have to give the money back. More than 2.6 million eligible for the credit have bought homes since July 2008. They’ve received $19 billion in tax breaks. But it turns out nearly half of those who received the money for the credit, claimed on their 2009 tax returns, will have to return it, according to an audit from the U.S. Treasury Inspector General for Tax Administration. And a recording error could lead the IRS to ask tens of thousands more to return the money even though they are entitled to keep it. This means anyone who bought a home in 2008 or later should make sure they applied for the correct credit and compensated accordingly. Paperwork should be checked, and buyers who are asked to repay need to double-check that, too. Apparently, some mistakenly thought they qualified. Others tried to cheat the system, and the IRS failed to catch them until after the checks cashed. About 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 return should not have received the money. Part of the confusion was because homebuyers were eligible for two different types of credits, depending on when their homes were purchased. The government’s first version of the credit was a no-interest loan of up to $7,500. It was required to be paid back over 15 years. Congress eliminated the repayment requirement for homes bought in 2009, but those who claimed the credit for homes purchased in 2008 will still be required to repay it, beginning when they file their 2010 income tax return. Some who bought in 2008, the audit said, tricked the IRS into granting them the credit by lying about their closing date on their application. But the IRS caused part of the problem. Apparently, it recorded the wrong home purchase date for about 73,000 that claimed the credit. That could mean some will be asked to pay back money they weren’t required to repay, the report said. Here are some things to keep in mind if you haven’t yet claimed your credit or if you’re checking your paperwork. • You don’t have to wait to claim your credit on your 2010 return if you bought this year. If you purchased a home before the April 30 deadline, you can amend your taxes to claim the credit. • There are two credits available. One is for first-time buyers or those who have not owned a home in the past three years. The maximum for this credit is $8,000 and does not have to be paid back. It applies to purchases made this year between Jan. 1 and April 30. • Some buyers who already owned homes can claim a credit worth up to $6,500 for purchases made between Nov. 7 and April 30. To qualify, the buyer must have owned a primary residence for at least five consecutive years out of the past eight years. This credit also does not need to be paid back. • There are income and price requirements. If the home was purchased after Nov. 6, it can cost no more than $800,000. Also, if purchased after that date, individuals cannot earn more than $125,000 and married couples filing jointly cannot earn more than $225,000. • If you’re claiming the credit, a paper filing is necessary. Only taxpayers not claiming the credit can file electronically. Buyers can still use electronic forms, but must print them out and mail them in, along with form 5405. • Buyers must prove they are eligible. You’ll need to send a copy of the HUD settlement statement along with the tax form. If you’re claiming the longtime owner credit, also include proof, such as copies of mortgage interest statements, property tax records or homeowner’s insurance records. • The credit is for your primary home. If you decide to rent or sell the home within three years, the credit must be repaid. Copyright © 2010 Tampa Tribune, Fla
Home Price Double Dip Begins
Given the combination of the expiration of the home buyer tax credit and the increasing number of loans moving to final foreclosure, we knew that home prices overall would take a hit, but it would take a while. Well we're here.
Could we see another buyer tax credit?
Housing and Urban Development Secretary Shaun Donovan said Sunday on CNN’s “State of the Union” that the administration would “do everything we can” to stabilize the U.S. housing market. “The July numbers were worse than we expected, worse than the general market expected, and we are concerned,” Donovan said. “That’s why we are taking additional steps to move forward.” Whether HUD will resurrect the first-time homebuyer tax credit is up in the air. “All I can tell you is that we are watching very carefully,” Donovan said on the show. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.” Gov. Charlie Crist appeared on the same show and supported a new version of the homebuyer tax credit, saying it would “help enormously,” noting that Florida has the nation’s third highest foreclosure rate. Donovan also said the Federal Housing Administration will launch an emergency loan program to help unemployed borrowers stay in their homes and a program to help underwater borrowers refinance. Source: Bloomberg, Holly Rosenkrantz
Another Home Buyer Tax Credit?
From HUD to the hedge funds, it sounds as if a tax credit to spur home buying is gaining steam yet again.
Homeowner confidence in real estate market dips
Homeowners are more pessimistic about the short-term future of home values in their local market than they have been in the past three quarters, according to the Zillow second-quarter Homeowner Confidence Survey. One-third (33 percent) believe home values in their local housing market have not yet reached a bottom, while 38 percent believe they have already reached a bottom. When asked about local home values over the next six months, more than one-quarter (28 percent) of U.S. homeowners said home values would decrease, up from 20 percent in the first quarter. Additionally, less than one-third (30 percent) believes home values in their local market will increase, down from 42 percent in the first quarter. Despite the increasing pessimism, a large number of homeowners anxiously await the opportunity to sell. Five percent of U.S. homeowners say they are very likely to put their home on the market in the next six months if they see signs of a real estate market turnaround. This translates into 3.8 million homes with the potential to come into the market. By comparison, 5.2 million existing homes were sold in all of 2009. Looking backward, homeowners also became slightly more pessimistic about the performance of their own homes’ values in the past year. Less than a quarter (24 percent) of homeowners said their home had increased in value in the past year, compared to 27 percent in the first quarter. In reality, 34 percent of homes increased in value in the second quarter, according to the Zillow Q2 Real Estate Market Reports. “As homeowners have been inundated recently with news of declining home sales post-tax credit, it’s no surprise that they would become more pessimistic about the future of home values,” said Dr. Stan Humphries, chief economist at Zillow.com. “Homeowners have become much more responsive to current market conditions than they were just two years ago, when a more typical reaction was denial. “Given this sentiment, we’re surprised so many homeowners believe their market has already bottomed. Although our Q2 reports indicated signs of stabilization in 30 percent of markets we cover, we’re concerned that this was at least partly due to the homebuyer tax credits. We’re already seeing payback for the credits in the form of declining home sales, and this trend will push up inventory levels and exert downward pressure on home values. Add in the inventory from the millions of sidelined sellers and we’ll take more steps back. Our forecast remains largely unchanged: We’re in for an L-shaped recovery that will likely keep annualized home value appreciation very low for the next three to five years.” Homeowner perception by region Looking further into the future, the majority of homeowners believe their own homes’ values will either increase (27 percent) or stay the same (35 percent) in the next 12 months, while 12 percent expect a decrease and 26 percent don’t know. Of those who expect their home’s value to increase, the median expectation is a rise of 6 percent, although that varies by geography. Northeastern and Western homeowners who expect an increase anticipate a median rise of 10 percent, while Southern and Midwestern homeowners expect a median increase of 5 percent. Those who expect their home’s value to decrease in the next year anticipate a median decrease of 10 percent. © 2010 Florida Realtors®
Housing Double Dip is Not Just Tax Credit Hangover
There's no question that the home buyer tax credit, which expired at the end of April, pulled home buying demand forward and thus created an inevitable drop-off afterward. It would be wrong, however, to blame the current lull in home buying/selling entirely on the tax credit hangover.
Tax credit boosts building permits
Federal homebuyer tax credits are being credited for a 45 percent boost in new housing permits in the second quarter in Volusia and Flagler counties. "We're happy to see the movement and the promotion for homeownership," said Greg Blose, executive director of the Volusia Building Industry Association. "But we're keeping (the second-quarter increase) in perspective. Looking month to month, we expect a slide in the third quarter." Federal tax credits of at least $8,000 for first-time buyers and up to $6,500 for owners who move expire Sept. 30 for deals signed before the end of April. During the April-May-June quarter, builders in the two-county area pulled 322 permits for new single-family and multifamily units. That's up 45 percent from the 222 pulled during the same period a year ago, according to figures released this week by Hanley Wood Market Intelligence. Volusia saw a 6 percent gain while Flagler saw a 296 percent increase. Much of Flagler's jump is due to the 72 multifamily units at the Beach Village Apartments on State Road 100. Flagler County had zero multifamily permits in the second quarter of 2009. Multifamily permits in Volusia County were down 19 percent to 21, from 26 last year. Single-family permits rose in both counties. Volusia builders pulled 182 single-family permits, up 10 percent from the 166 issued last year. Flagler builders pulled 47 single-family permits, up nearly 56 percent from 30 last year. The 45 percent increase in permits in the two-county area was better than the state's 21 percent increase to 9,996 permits and the nation's 8 percent increase to 166,200 permits for the second quarter. Still, the numbers are low because of too many foreclosures and short sales closing at prices below what a new home costs to build, said Jason de Lorenzo with the Flagler County Home Builders Association. "The lack of jobs is the driving force here right now. We've been steady at 10 to 13 permits a month for about two years." If there is a positive trend, it's that the few permits are being spread out among more builders and not just a few, de Lorenzo said. "That shows me that there are customers and not just the large builders building spec homes." The opposite is the case in Volusia County where large national builders, including KB Home, Taylor-Morrison and Maronda Homes, are pulling the most permits, Blose said. "It's still a rough economy," he said. "The larger builders have the money, but some upper-end builders are also working." Through the first half of the year, Port Orange-based Paytas Homes has pulled 16 permits, equaling the same number of permits for all of 2009, said Jim Mather, Paytas production manager. "Most of our activity has been in the upper end. They're the ones who can afford to build a home for future retirement without having to sell their home up north right away," Mather said. "When they were nervous, they didn't spend. They feel more relaxed now and more confident about spending." But even the higher-end builders have cut prices and home sizes to attract customers. "The higher prices just don't work anymore," said David Kohn, president of ABD Developers, which has two model homes under construction in the gated Toscana community off Old Kings Road in Palm Coast. "These are $360,000 and $370,000 when we used to build in the $600,000s." Kohn said the models are not in response to short-term trends but to be ready for an optimistic positive turn in the market next year.
