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I just discovered a wonderful video on You Tube which explains the mortgage melt-down in terms that everyone can understand. It's very clear, and there's also part 2 to continue the explanation.
Click below to see part 1.
http://www.youtube.com/watch?v=Q0zEXdDO5JU
It applies to the current situation in NW Arkansas Real Estate in that in this area we are victim to what happened in the mortgage meltdown. In addition, there were some contributing factors.
For example, back a number of years ago, the stock market tanked. Local people (who maybe lost money in the stock market) started looking at real estate investment rather than the stock market. A piece of land or a house is a tangible entity after all. They invested in single-family rentals and other multi-family real estate.
Then in 2004 the Fayetteville-Springdale-Rogers MSA (Metropolitan Statistical Area--i.e. basically NW Arkansas) ranked #1 for the Millkin report on the economy for all of the US, ahead of Las Vegas. All of a sudden the vultures started circling. Investors from all over the country were trying to purchase the same homes that first time home buyers were trying to purchase. Prices skyrocketed on the low end as demand far exceeded supply. Builders were not constructing new homes on the low end, because land prices were too high.
The result was that it became almost impossible to purchase an affordable home in NW Arkansas.
Then the mortgage melt-down happened and the investors from elsewhere disappeared. Inventory in NW Arkansas was high (i.e. lots of homes on the market in all aprice ranges).
Now we have a lot of homes on the market including affordable homes. Prices have declined precipitously. Of course, it all depends on price range.
The bottom line is that now is a terrific time to purchase a home. There are a lot of homes on the market in all price ranges. The low end is showing homes for less than $100K, a phenomenon not seen in many years. Lots of foreclosures, but also lots of good deals.
If you want to purchase a home, give me a call. I can help. I mostly help buyers, but my knowledge of the market also helps sellers.
See my home search website: http://www.NWArkansasHomeSearch.com or my regular informational website at http://www.Judyluna.com
Tuesday, March 10, 2009
Saturday, March 07, 2009
Benton County Homeowners to Receive a Break on Property Taxes—Yeah!
Benton County will be lowering values on residential properties by 2% - 6%. The percentages vary by area. Northeast Benton County will decrease by 6%, the southwest portion of the county will decrease by 2%, and other areas will be between those two figures.
When homeowners received their property assessments in 2008 there were thousands of unhappy people. By law, those values were based on 2005-2007 sales when prices were rapidly escalating. Thousands of appeals were filed, which resulted in many lowered valuations.
Now that property values have decreased again the county assessor is taking the first steps to lower appraisals.
This is a bit of good news for homeowners who are seeing the value of their homes shrink.
Commercial and industrial property appraisals will remain unchanged.
Note: In Arkansas, counties assess properties every third year. Thus, the next reappraisal was not scheduled until 2011. (For more details about the hows and whys of Arkansas appraisals, see my blog “Benton County Reappraisal Process is Complete” which I posted July 19, 2008.)
For more information:
http://www.nwaonline.net/articles/2009/03/02/news/030309bzequalization.txt
http://www.nwarktimes.com/adg/News/253986/
When homeowners received their property assessments in 2008 there were thousands of unhappy people. By law, those values were based on 2005-2007 sales when prices were rapidly escalating. Thousands of appeals were filed, which resulted in many lowered valuations.
Now that property values have decreased again the county assessor is taking the first steps to lower appraisals.
This is a bit of good news for homeowners who are seeing the value of their homes shrink.
Commercial and industrial property appraisals will remain unchanged.
Note: In Arkansas, counties assess properties every third year. Thus, the next reappraisal was not scheduled until 2011. (For more details about the hows and whys of Arkansas appraisals, see my blog “Benton County Reappraisal Process is Complete” which I posted July 19, 2008.)
For more information:
http://www.nwaonline.net/articles/2009/03/02/news/030309bzequalization.txt
http://www.nwarktimes.com/adg/News/253986/
Sunday, March 01, 2009
$8,000 Income Tax Credit for First-Time Homebuyers--WOW what a deal!
The new economic stimulus bill which was recently signed into law has a tremendous benefit for first-time homebuyers – a credit of up to $8,000! This is phenomenal--basically a gift from the federal government if you buy a home this year before December 1.
The credit is 10% of the cost of the home up to a maximum of $8,000 and does not have to be repaid if the buyer lives in the home for at least three years.
This provision is the difference between night and day compared to the $7,500 tax credit that took effect last year for homes purchased after April 9, 2008. The 2008 credit had to be repaid over 15 years, which essentially meant it was an interest free loan. (See my blog of August 30, 2008, “First-Time Homebuyer Tax Credit Explained.”)
So, I repeat: under most circumstances, the credit does not have to be repaid.
The home must be purchased between January 1, 2009 and November 30, 2009. December 1, 2009 is too late! The date ownership legally passes to the buyer is the qualifying date.
Who is a "first-time home buyer?" People who have not had an ownership interest in a primary residence during the last three years are eligible. Ownership in a vacation home would not be considered a primary residence.
Income qualifications for the full credit are $75,000 or less if single or $150,000 for a married couple. Partial credit is available to singles with incomes between $75,000 - $95,000 or married people whose incomes are between $150,000 - $170,000.
This is a refundable credit taken on the buyer’s federal income tax return for 2010. For example, if you will have already paid your full tax liability through withholding, you would still receive a refund of $8,000. Another example: you owed $5,000 in taxes and your withholding was $6,000. Your refund would total of $9,000. Last example: you owed $5,000 in taxes and your withholding was $4,000. Your refund would be $7,000.
Another extraordinary provision of the new law permits the buyer to elect to treat the purchase as if it occurred December 31, 2008 and take the credit on his 2008 income tax return. Even if the return has already been filed, an amended tax return can be filed to obtain the credit. This is especially useful for buyers whose income qualified them for the credit in 2008 but may have too much income in 2009.
Of course, the situation can be turned around. If the buyer would be better served in taking the credit on his 2009 tax return, he can reduce his withholding or estimated tax payments now instead of waiting until tax time in 2010.
All in all, I believe this may be the impetus needed to get people off the fence and into a home. Interest rates are low, inventory is huge, and $8,000 means a lot to most people. And it is so much better than last years $7,500 credit that, as mentioned above, has to be repaid.
The sad part for first-time buyers who purchased last year is that their $7,500 credit still has to be repaid. There is no provision in the law to forgive that and simply avail oneself of the $8,000 credit that does not have to be repaid. I certainly commiserate with them – but who could have possibly foreseen what this year’s law would provide?
IMPORTANT NOTE: This is my interpretation of the basic provisions of the new credit. I have tried to simplify things to give a picture of how this credit works but I urge you to check with your tax professional or accountant for full provisions of the law.
In any case, if you have not owned a home in the past 3 years and are thinking of purchasing a home as your principal residence, now is the time to do so. There are a lot of homes on the market now in NW Arkansas and some very good deals (especially foreclosures and short sales). As the spring progresses a lot of these good buys will be snapped up.
For more information:
http://www.federalhousingtaxcredit.com/2009/faq.php#5
http://money.cnn.com/2009/02/13/real_estate/homebuyer_tax_credit_finalized/index.htm?postversion=2009021712
The credit is 10% of the cost of the home up to a maximum of $8,000 and does not have to be repaid if the buyer lives in the home for at least three years.
This provision is the difference between night and day compared to the $7,500 tax credit that took effect last year for homes purchased after April 9, 2008. The 2008 credit had to be repaid over 15 years, which essentially meant it was an interest free loan. (See my blog of August 30, 2008, “First-Time Homebuyer Tax Credit Explained.”)
So, I repeat: under most circumstances, the credit does not have to be repaid.
The home must be purchased between January 1, 2009 and November 30, 2009. December 1, 2009 is too late! The date ownership legally passes to the buyer is the qualifying date.
Who is a "first-time home buyer?" People who have not had an ownership interest in a primary residence during the last three years are eligible. Ownership in a vacation home would not be considered a primary residence.
Income qualifications for the full credit are $75,000 or less if single or $150,000 for a married couple. Partial credit is available to singles with incomes between $75,000 - $95,000 or married people whose incomes are between $150,000 - $170,000.
This is a refundable credit taken on the buyer’s federal income tax return for 2010. For example, if you will have already paid your full tax liability through withholding, you would still receive a refund of $8,000. Another example: you owed $5,000 in taxes and your withholding was $6,000. Your refund would total of $9,000. Last example: you owed $5,000 in taxes and your withholding was $4,000. Your refund would be $7,000.
Another extraordinary provision of the new law permits the buyer to elect to treat the purchase as if it occurred December 31, 2008 and take the credit on his 2008 income tax return. Even if the return has already been filed, an amended tax return can be filed to obtain the credit. This is especially useful for buyers whose income qualified them for the credit in 2008 but may have too much income in 2009.
Of course, the situation can be turned around. If the buyer would be better served in taking the credit on his 2009 tax return, he can reduce his withholding or estimated tax payments now instead of waiting until tax time in 2010.
All in all, I believe this may be the impetus needed to get people off the fence and into a home. Interest rates are low, inventory is huge, and $8,000 means a lot to most people. And it is so much better than last years $7,500 credit that, as mentioned above, has to be repaid.
The sad part for first-time buyers who purchased last year is that their $7,500 credit still has to be repaid. There is no provision in the law to forgive that and simply avail oneself of the $8,000 credit that does not have to be repaid. I certainly commiserate with them – but who could have possibly foreseen what this year’s law would provide?
IMPORTANT NOTE: This is my interpretation of the basic provisions of the new credit. I have tried to simplify things to give a picture of how this credit works but I urge you to check with your tax professional or accountant for full provisions of the law.
In any case, if you have not owned a home in the past 3 years and are thinking of purchasing a home as your principal residence, now is the time to do so. There are a lot of homes on the market now in NW Arkansas and some very good deals (especially foreclosures and short sales). As the spring progresses a lot of these good buys will be snapped up.
For more information:
http://www.federalhousingtaxcredit.com/2009/faq.php#5
http://money.cnn.com/2009/02/13/real_estate/homebuyer_tax_credit_finalized/index.htm?postversion=2009021712
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