- Phoenix Metro Market: The Cromford Report - 9/22/09
- Deadline Nears For First-Time Home-Buyer Tax Credit
- Credit Reports Under Extra Scrutiny
- Unemployed Home Owners May Get Assistance
Cromford Report
Thanks to Mike Orr for providing this update on the Phoenix Metro real estate market:
We see sales continuing to fall while pending sales rise. There are a total of 19,566 listings under contract, even more than last week. Given that dollar volume is well down from August, it would be encouraging if we saw more of these homes under contract closing escrow before the end of the quarter.
Overall pricing has recovered from the brief downward trend that prevailed in August and is starting to move higher. Note that average price, median price and average $/SF are all up slightly over the August 22 reading. However pricing for luxury homes and normal sales is still moving downwards. Demand for affordable homes is very strong indeed, especially for the time of year.
- Mike Orr
Deadline Nears For First-Time Home-Buyer Tax Credit
Real estate groups also are urging Congress to extend the credit beyond its current deadline and expand the tax credit to up to $15,000. Now, buyers must close on their purchase by Nov. 30 to be eligible for the credit.
Home builders and real estate organizations are concerned that letting the tax credit expire could knock the wind out of the current housing recovery. And failing to expand the credit could imperil efforts to get more move-up buyers into the market.
"Right now, the recovery is in the first stage and getting entry-level buyers in, but it's having no impact on the move-up buyer," says Richard Smith, CEO of Realogy, the parent company of Century 21, Coldwell Banker and others. "If we can expand the credit to go after that move-up buyer, we'll be home free."
The tax credit available to first-time home buyers is already linked with an uptick in sales. For the first time in five years, existing home sales have increased for four months in a row, according to an August report by the National Association of Realtors (NAR).
Sales rose 7.2% in July from June, and pending sales are 5% above the pace seen in July of 2008
Many of those using the tax credit, however, are buying up foreclosed homes that are vacant. That does little to stimulate sales by homeowners looking to move up to more expensive properties. Getting more move-up buyers into the market is considered the second stage of the housing recovery.
And even though the tax credit doesn't expire until Nov. 30, today's home purchases take 45-60 days to close as the underwriting and appraisal process is taking longer because lenders are being more cautious. That means offers that will benefit from the tax credit really need to be in this or early next month.
"Buyers have more of a sense of urgency," says Tony Middleton, a Realtor in Los Angeles with ZipRealty, of the expiring tax credit. "They're serious about shopping for a home."
There is legislation in both the Senate and the House that would expand the tax credit. A proposal by Sen. Johnny Isakson, R-Ga., would raise the credit amount to a maximum of $15,000 for any buyer of any home over the next year. It would remove the income caps that currently apply (those limits are now $75,000 for an individual and $150,000 on couples).
"I think we've got a realistic chance of doing this," Isakson says. "Our problem is not with the first-time home buyer, it's the move-up buyer."
Lawrence Yun, chief economist at NAR, says extending or raising the tax credit would spur the housing recovery, which in turn would help bolster the economy.
Credit Reports Under Extra Scrutiny
Courtesy of REALTOR® magazine, the official magazine of the NATIONAL ASSOCIATION OF REALTORS®
Buyers who are under contract and hoping to close before Nov. 30 when the first-time home buyer credit expires should refrain from buying furniture and other things on credit.
Lenders are running credit checks prior to closing day and any increase in credit card or other debt can jeopardize the loan, says Lew Reich, an associate with Keller Williams Realty in Plano, Texas.
Reich warns buyers to even refrain from checking out a new large purchase because even an inquiry on a credit report could scare a lender.
Reich tells borrowers: “If someone’s squeaking by and, all of a sudden, they may be looking at increasing debt, the lenders will have a keener eye in looking at your loan,” he says.
“Don’t look until you’ve closed is basically what it comes down to. That’s the safest way. Stay out of the stores,” he adds.
Source: The Associated Press, Dawn Wotapka (09/18/2009)
Unemployed Home Owners May Get Assistance
Courtesy of REALTOR® magazine, the official magazine of the NATIONAL ASSOCIATION OF REALTORS®
The Obama administration has opened a dialogue with major lenders, economists, and government officials over the possibility of extending a financial lifeline to home owners who no longer can afford their mortgages because of job losses.
Possible strategies range from encouraging loan servicers to allow unemployed borrowers to skip some payments to providing grants or loans to temporarily cover mortgage obligations for home owners who become unemployed.
The talks have drawn praise from some real estate groups and other interests, who say that without aid to this subset of homeowners, the housing recovery could lose momentum.
Source: USA Today, Stephanie Armour (09/18/09)
© Copyright 2009 Information Inc.
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