Massachusetts Home Buyer Guide

Home Buyer Tax Credit Extended And Expanded

With the expiration of the first-time home buyer $8,000 tax credit set to expire in less than a month, the U.S. House of Representatives voted 403-12 November 5, 2009 to extend and expand the tax credit to include many buyers who already own homes, the Associated Press reported.

The U.S. Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it Friday November 6, 2009.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time home buyers, defined as anyone who hasn't owned a home in the last three years, would still get up to a $8,000 tax credit. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30, 2010.

The latest extension is expected to be the last.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000. The previous income limits were $75,000 for individuals and $225,000 for joint filers.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

U.S. Pending Homes Sales Up 8th Straight Month

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, increased 6.1 percent compared to August, and the index is 21.2 percent higher than September 2008.

The index, which covers the United States, is at the highest level since December 2006, the National Association of Realtors® (NAR) reported November 2, 2009. The following is a video featuring the NAR chief economist Lawrence Yun.

Massachusetts Sept. Condo Sales Up, YTD Down

Condominium sales in Massachusetts, which have plunged by double-digit percentages in 2009, took a turn for the better in September, marking the first year-over-year increase in condo sales in more than two years.

Condo sales increased 3.7 percent in September to 1,693 from 1,633 in September 2008. A total of 5,989 condos sold in the third quarter, 2.9 percent lower than the 6,166 condo transactions recorded in the third quarter of 2008.

In the first nine months of 2009, condo sales fell 15.9 percent to 13,453 from 16,004 during the same period in 2008.

September’s median selling price for a condominium declined 2.3 percent to $259,000 from $265,000. The third quarter median condo price dropped 4.2 percent to $273,000 from $285,000 in Q3 2008. Year-to-date, the median condo price has declined 8.2 percent to $257,000 from $280,000.

MA Q3 Single-Family Home Sales Up 6 Percent

Single-family home sales in Massachusetts increased for the third consecutive month in September, resulting in a third quarter sales increase of 6 percent compared to Q3 2008, The Warren Group, a publisher of real estate data, reported October 27, 2009.

“The increase in home sales for three months straight is giving us some hope that the housing market is truly on the mend. We believe that some of these gains were the result of [the] first-time home buyer tax credit, which is due to expire in several weeks,” said Timothy M. Warren Jr., CEO of The Warren Group. “If this trend of increased sales volume continues through October, we may end the year with about the same number of home sales as 2008.”

Single-family homes sales increased 4.5 percent in September to 3,785 from 3,623 in September 2008. Third quarter home sales totaled 13,215, a 6 percent increase from 12,466 in third quarter 2008.

Year-to-date single-family home sales declined 3.9 percent to 29,767 from 30,987 last year. About 5 percent of single-family home sales in the first nine months of the year were real estate-owned or bank-owned properties.

The median price for single-family homes sold in September slipped 1.4 percent to $285,000 from $289,000 last year. The median price decline was the smallest drop in year-over-year monthly median home prices in about two years. The third quarter median home price dipped 3.9 percent to $299,900 from $312,000 in the previous year’s third quarter. The year-to-date median price is down 9.5 percent to $285,000 from $315,000.

The Massachusetts Association of REALTORS® reported October 27, 2009 that single-family home sales increased 4.6 percent.

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Westford, MA Median Price, Sales Up In August

Median prices for single-family homes in Westford, Massachusetts in the month of August dropped significantly from August 2006 to August 2007 and again from August 2007 to August 2008; however, the median home price increased 11.1 percent ($440,000) in August 2009 compared to 2008.

The median home price in August 2006 was $557,000, then dropped 8.98 percent to $507,000 in August 2007, and again dropped in August 2008 by 21.89 percent to $396,000.

The number of single-family sales in Westford, MA has remained relatively stable over the last four years in the month of August, ranging from 29 sales in August 2006 to 23 sales in August 2007. Although the number of sales decreased by three sales between August 2006 and August 2007, and again decreased by three sales between August 2007 and August 2008, there was an increase of 8.7 percent between August 2008 and August 2009, from 23 to 25 sales. 

The number of days single-family homes in Westford were on the market decreased 47.2 percent from August 2008 compared to August 2009.

The data come from MLS Property Information Network, Inc.

Westford, Massachusetts Real Estate Market Data

               Median Price     Number of Sales     Days on the Market

August 2006:     557,000                 29                                 119
August 2007:     507,000                 26                                 110
August 2008:     396,000                 23                                 127
August 2009:     440,000                 25                                  67

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Westwood, MA Home Sales Jump In August

The number of single-family homes sold in Westwood, Massachusetts in August 2009 (23) increased 91.6 percent compared to August 2008 (12).

The median price of a single-family home in Westwood, MA increased 8.9 percent in August 2009 compared to August 2008.

The median price in August 2006 was $498,000. The median price spiked 41.6 percent to $705,400 in August 2007, and the median price declined 32.4 percent to $476,450 in August 2008. The median price increased to $519,000 in August 2009.

For both August of 2006 and August 2007 the number of days that single-family homes were on the market in Westwood was 104. August 2008 saw an average of 93 days on the market, a drop of 10.5 percent compared to August 2007. In August 2009, the number of days on the market for single-family homes rose 20.4 percent compared to August 2008, with an average of 112 days.

The data come from MLS Property Information Network, Inc.

Westwood, Massachusetts Real Estate Market Data

                      Median Price     Number of Sales     Days on the Market
August 2006:         498,000                 15                         104
August 2007:         705,400                 18                         104
August 2008:         476,450                 12                           93
August 2009:         519,000                 23                         112

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First-time Home Buyer Tax Credit Debate Rages On

The $8,000 first-time home buyer tax credit has generated a lot of discussion in the main stream media, as well as on various blogs and in YouTube videos.

Those opposed to the first-time home buyer tax credit argue that it is a federal government hand out that the nation cannot afford. In addition, opponents of extending the first-time tax credit believe the vast majority of people who purchased a home would have done so without the credit; however, some reports put the number of people who purchased a home because of the tax credit at between 300,000 and 400,000. 

A recent report that thousands of tax credit are fraudulent (apparently a four-year-old filed a claim) has given opponents more evidence that the program is a waste of federal tax dollars.

With local, state and national Realtor and home builder associations voicing strong support to Congress and the Obama Administration, a tax credit extension seems likely. Various proposals to extend the tax credit are competing in the U.S. Senate. One proposal would simply extend the tax credit through June. Another proposal would increase the tax credit to $15,000.

U.S. Senate Majority Leader Harry Reid of Nevada recently suggested yet another proposal that would extend the current tax credit four months and then phase it out over the course of 2010. The value of the credit would decline $2,000 every quarter. U.S. Speaker Nancy Pelosi apparently wants to extend the credit to all home buyers, not just first-time home buyers.

Supporters of the tax credit argue that the tax credit has stabilized the U.S. housing market, an important piece of the nation's economy. Realtor groups claim that each home purchase adds $63,000 to the economy. In addition, housing inventory around the U.S. has declined, putting inventory closer to normal levels.

I think the tax credit should be extended and expanded. I would be happy with an extension until June 30, 2010. I also think all home buyers, not just first-time home buyers, should be eligible for the tax credit. In addition, the income limits should be double to $150,000 for an individual and $300,000 for joint filers. Finally, the tax credit should be for existing homes only, not new construction. Such a limitation would discourage building in states that still have a glut of new homes.

Virtually all of my clients that are eligible for the tax credit have told me they plan to use the tax credit to improve the property. There isn't any doubt in my mind that this tax credit is putting people back to work, and that is not a waste of taxpayer money.

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Massachusetts Q3 Foreclosures Increase, YTD Decline

Lenders started and completed more foreclosures in Massachusetts during the third quarter than Q2, but foreclosures have declined nearly 30 percent compared to Q3 2008, The Warren Group reported October 20, 2009.

A total of 2,048 foreclosure deeds were recorded from July through September 2009, a 3.9 percent increase from the 1,971 in the second quarter of 2009; however, foreclosures dropped 29.4 percent from 2,903 in the third quarter of 2008. There were 702 foreclosures in September, a 6.7 percent increased from 658 in August and down 12.1 percent from 799 in September 2008. Year-to-date foreclosure deeds fell 29.5 percent to 6,778 from 9,610 the prior year.

For more details, get the latest Massachusetts foreclosure news from MassForeclosed.com.

U.S. Existing Homes Sales Rise In September

Sales of existing homes in the U.S. increased 9.4 percent in September, marking the fifth month out of the last six that sales increased, the National Association of REALTORS® (NAR) reported October 23, 2009.

The home sales data includes single-family, townhouses, condominiums and co-ops.

“Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” Lawrence Yun, NAR chief economist said.

Regionally, existing-home sales in the Northeast increased 4.4 percent. In the Midwest sales jumped 9.6 percent. The South saw existing-home sales rise 9 percent, and existing-home sales in the West surged 13 percent.

Fox Biz News Video On $8,000 Tax Credit

Rebecca Diamond on Fox Business News' "Happy Hour" discusses whether to extend the $8,000 first-time home buyer tax credit that is set to expire November 30, 2009.

Massachusetts Short Sales 101

The following video contains a basic tutorial on short sales in Massachusetts. It is presented by my business partner, Dave Kres. Many short sales are in pre-foreclosure status, and completing a short-sale transaction typically takes from two to six months. Buying a short sale requires a great deal of patience.

Podcast: Shopping Around For A Mortgage

The attached podcast is about shopping around for a mortgage loan. If you would like a referral to a competent mortgage professional, please visit Buyers Brokers Only, LLC.

Shopping_Around_For_A_Mortgage

Buyers Rush To Qualify For Tax Credit

A recent article in The Boston Globe suggested that Massachusetts first-time home buyers were hurrying to purchase their first home in order to qualify for the federal first-time home buyer tax credit.

Real estate professionals claim these buyers are bidding up prices for homes.

"[A real estate broker] said he recently listed a two-family home in Dorchester that attracted nearly 200 potential buyers and result ed in more than 30 offers, some of which were significantly above the $194,000 asking price."

Although I have had many clients over the past several months buy a home this year, in part, to take advantage of the tax credit, I have not seen home buyers loose sight of the true value of a single-family home or condo. It certainly doesn't make sense to pay more than a home is worth, just to receive an $8,000 tax credit. 

Massachusetts Pending Home Sales Rise In August

The number of single-family homes put under agreement in August increased 6 percent compared to the same time in August 2008 (4,298 homes in 2008 to 4,570 homes in 2009), the Massachusetts Association of REALTORS® reported September 29, 2009. 

It was the third straight monthly year-over-year increase in pending sales and the largest single-month increase in 2009. On a month-to-month basis, single-family homes put under agreement were down 8 percent from 4,966 homes in July. 

The number of condos put under agreement in August was up 1 percent compared to August 2008 (1,750 units in 2008 to 1,770 units in 2009).  It was the second straight month of monthly year-over-year increases for condos in 2009.  On a month-to-month basis, condos put under agreement were down 12.6 percent from 2,025 units in July.

Pending sales or sales “under agreement” are homes that have a signed purchase and sale agreement, but have yet to close and be recorded. Of course, these deals can still fall apart for a variety of reasons, including a buyer not being able to obtain financing.

Massachusetts Real Estate Inventory Declines

The inventory of residential properties on the market as of August 31, 2009 decreased 16 percent compared to the same date last year (from 47,245 listings in 2008 to 39,691 listings in 2009), the Massachusetts Association of REALTORS® reported September 29, 2009. 

At the current sales pace, this represents approximately 6.8 months of supply, down from 8.1 months of supply in August 2008.  On a month-to-month basis, the average months of supply was up from 6.4 months in July.  It is considered a balanced market when there are between 7.5 and 8.5 months of supply.

Single-family home inventory decreased 16 percent from August 2008 (33,531 listings in 2008 to 28,251 listings in 2009) to 7 months of supply in August 2009.  This was down from 8.3 months of supply last year and up from 6.4 months of supply in July.  This was the fewest single-family home listings since August 2004, and it is the 17th straight month that single-family inventory has gone down compared to the year before.

The condominium market saw August inventory decrease by 17 percent from last year (13,714 listings in 2008 to 11,440 listings in 2009) to 6.5 months of supply in August 2009, down from 7.6 months in 2008, and the condo inventory was virtually the same as this past July (6.4 months).  This was the fewest August condominium listings since August 2004, and it is the 17th straight month that inventory has gone down compared to the year before.