President Bush Signs Economic Recovery Act of 2008

Are you a first time home buyer on the fence deciding if you should buy a new home? Well there is now more incentive for first time buyers to purchase a new home before July 1st of next year. A $7,500 savings on your taxes that is. Today President Bush singed the “Economic Recovery Act of 2008.” This bill helps provide incentive for first time home buyers by giving them a $7,500 tax credit. It also helps foreclosure victims by making it easier to refinance with FHA loan products, and makes it easier to get financing on more expensive homes by increasing the FHA loan limits for Freddie Mac and Fannie Mae Jumbo Loans.

The $7,500 tax credit is only available to first time home buyers, or people who have not owned a home in atleast three years who make less than $75,000 if single or $150,000 if married. So, nearly all Utah first time home buyers would qualify for this tax credit. The big catch on on this “tax credit” is that if you keep the house for a long time, and gain equity, then you have to repay it; 500 a year for 15 years. If you have no equity when you sell the house you bought receiving the tax credit you don’t have to repay it. It’s really just an interest free government loan.

There is plenty of housing inventory in Utah right now and a lot of motivated sellers who are slashing prices. This winter could be a great time to get a house for way less than list price and save $7,500 on your taxes.

$7,500 Tax Credit for First Time Home Buyers

First Time Buyer Tax Credit

July 30th 2008 - Update! $7,500 tax credit for first time home buyers is approved by President Bush in the 2008 Housing and Economic Recovery Act. All first time buyers planning on purchasing a primary residence before July 1st of 2009 who make less than $75,000 if single and $150,000 if married qualify for this huge tax credit. Home Buyers who have not owned a home in atleast three years may also qualify as first time buyers.

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July 12, 2008
President Bush is considering another economic stimulus package that could give first time home buyers a $7,500 tax credit, virtually eliminating having to pay taxes if they buy a house this year. Congress tried this housing stimulus tactic in the 1970’s and it worked fairly well.

Apparently if the house bill is asking for a one year tax credit for the purchase of a primary residence. Only first time home buyers with income less than $70,000 would qualify. The Senate version of the bill has a lower tax credit of $7,000 rather than $7,500, but it would be available to any buyer who purchases foreclosed properties as their primary residence, not just first time buyers. This approach is obviosly geared to drastically reduce the huge surplus of foreclosure homes.

If a tax credit like this passed, it would jump start the real estate economy by giving incentive for the surplus of renters to take the plunge and buy a new house. With new homes being purchased, sellers will actually be able to sell and move on. These sellers will then in turn begin purchasing the huge surplus of unsold high end and new construction spec homes. This should create instant optimism in the housing market and help homes in struggling markets appreciate once again.

Nothing is definite at this point, but if this passes this should provide immediate relief to the national housing woes. This should also lighten the load on banks with a large inventory of foreclosure homes by providing more qualified home buyers.

The tax credit does have a catch though. It is really just an interest free tax loan. Buyers get the tax credit at tax time, but two years later they must start paying it back. $500 a year for 15 years, or if they sell the home before 15 years must pay it back if their capital gains are sufficient enough to cover the tax credit. If there is no equity in the home when it sells, the loan… errr tax credit, doesn’t have to be repaid.

1 in 25 Utah Homes predicted to be in Foreclosure.

According to the Pew Charitable Trust, 1 in 25 Utah homes are predicted to be in some stage of foreclosure during the next two years. Nearly 25% of all home loans given during Utah’s housing boom in 2005 and 2006 were given to subprime borrowers. Nationally, about 1 out of 10 subprime loans have experienced atleast the initial stages of foreclosure.

If these stats hold accurate it could have a severely negative impact on the Utah housing market and the economy. Utah’s previous high foreclosure rate was 2% in 2002. This would be double that amount.

On the positive, if Utah does receive a huge flux in the rate of foreclosures, housing prices will likely decline as inventory of available homes for sale will rise. This is also positive news for real estate investors looking for deals and ways to take advantage of distressed homeowners who may actually have equity.

Increased foreclosures further justify the recent changes the lending industry has made in required down payments and required documentation and credit status for getting mortgage loans. As many properties that are in distress are upside down with the recent decline in housing values along much of the Wasatch Front, banks will need to allow more short sales and loan modifications to reduce foreclosures.

This prediction also could prove to be completely inaccurate, and number of foreclosures will only slightly increase in Utah. All in all, this just the news of possible foreclosures in Utah gives a decrease in buyer confidence for the average potential home buyer. Buyers on the edge will not make the plunge if they believe that the value of the new property they will purchase will decline. It’s a buyers market in most of Utah, and when the interest rate is good real estate will still be a good long term investment.

Quarter 1 Sales Graphs for Salt Lake in 2008

 The first quarter of 2008 is officially over. Although the official home sales stats aren’t in yet, here are some unofficial numbers that give us a little picture of the housing market in the Salt Lake Area.  Home sales are way down, listing prices are substantially more than sold prices, and high end homes are having trouble selling. It’s a great time to be a buyer in Salt Lake, and if you’re in the market for a high end home, make sure you offer low….really low because there are lots of expensive homes on the market, and they aren’t going anywhere anytime soon.

This graph shows the relationship of the average list price of the major Salt Lake County cities. In every city the average list price is substantially more Expensive.

The blue column of this graph shows the number of single family houses sold in the larger cities of Salt Lake County during the 1st quarter. The second column is the number of active listings as of March 3, 2008.  Most cities have more than three times the number of listed homes vs. sold homes in the first quarter. Seasonally, the first quarter is always the slowest quarter for home sales in Utah.

Here are the same statistics for the major smaller cities in Salt Lake County.

	Average Sold	Average Active		Number  Sold	Number Listings
Kearns	$         172,000	$     184,000	Kearns	43	78
Midvale	$         226,000	$     280,000	Midvale	26	104
Bluffdale	$         495,157	$     617,000	Bluffdale	9	126
Murray	$         256,000	$     355,000	Murray	41	142
Taylorsville	$         221,000	$     274,000	Taylorsville	75	149
Cottonwood Heights	$         378,000	$     544,000	Cottonwood Heights	33	169
Magna	$         180,000	$     196,000	Magna	59	172
Holladay	$         377,000	$     820,000	Holladay	26	180
	Average Sold	Average List Price		#of Houses Sold	#of House Listings
Riverton	$         317,000	$     426,000	Riverton	74	304
Herriman	$         328,000	$     460,000	Herriman	77	377
West Valley	$         196,000	$     234,000	West Valley	152	465
South Jordan	$         381,000	$     466,000	South Jordan	112	559
Draper	$         499,000	$     685,518	Draper	85	562
West Jordan	$         247,000	$     297,000	West Jordan	247	592
Sandy	$         331,268	$     535,000	Sandy	169	636
	Average Sold	Average Active		Number  Sold	Number Listings
	Average Q1 Sold	Average List Price
SLC Houses	$         286,000	$     418,000	SLC Houses	529	1506
SLC Condos	$         226,000	296000	SLC Condos	161	525
SL County	$         290,000	442000	Salt Lake County	1772	6222

What does your credit score need to be for a mortgage loan?

Since the mortgage meltdown and sub-prime lender crisis of 2007, a lot of potential buyers wonder, “What does my credit score need to be to buy a house?

Mortgage Loan approval requires a good credit score, verification of stable employment, and an appropriate debt to income ratio. Since September of last year these criteria have changed. With all time high foreclosures, lenders are more cautious in who they will approve for mortgage loans. “Sub-Prime” loans have almost died.

Buying a house with questionable credit is still possible, by using methods such as seller financing, rent to own, and lease options. Even with these options, buyers still usually need a substantial down payment, good debt to income ratio, and signs of credit improvement. Credit is very important for buying a home.

read more | digg story

Utah FHA Loan Limits Increased

The loan limits for FHA,  Freddie Mac, and Fannie Mae, home loans were substantially increased. These new limits are approximately 125% of the median home prices in the individual markets. Here are the new limits for the major Wasatch Front Counties:

• $271,050 in Box Elder County
• $271,050 in Cache County
• $397,500 in Davis County
• $397,500 in Morgan County
• $729,750 in SL County
• $729,750 in Summit County
• $729,750 in Tooele County (this one seems too high, but thats what HUD says)
• $397,500 in Weber County 

This is good news for first time home buyers and other  borrowers in more expensive areas. Since the “credit crunch” and “mortgage meltdown,.” 100% financing and no money down loans have been harder to obtain. Because the median home was priced much higher than the loan limits in some markets, it made no money home buying nearly impossible for many Utah first time home buyers.   This increase should help the housing market in general. For more areas visit HUDS Website 

Vacant New Houses in Utah Reach Record Highs

According to a Deseret News Article, the number of vacant new construction houses is at an all time high along the Wasatch Front. This is in large part result of over speculation for  home builders, and a slowing housing market in Northern Utah. Many builders will be required to slash prices and sell vacant homes at cost or even at a loss to clear the books of of costly construction loans. This offers home buyers and real estate investors a good opportunity to find deals on new construction homes that have had trouble selling.

Click this link to search MLS listings of Utah new construction houses for Sale.

 

The number of completed, unoccupied new houses and condominiums in Salt Lake County jumped 205 percent in the last quarter of 2007 to historic levels, compared with the same period in the previous year.A report released Wednesday by Newreach, a Salt Lake City-based real-estate research firm found that the county had a record 1,037 new units available in the fourth quarter of 2007, compared to 340 units in the fourth quarter of 2006. As of Dec. 31, 2007, there were 1,605 homes and condominiums under construction in Salt Lake County, a 39 percent decline from the 2,613 residential units under construction in the fourth quarter of 2006. read more | digg story

Salt Lake named best place to find “Real Estate Bargains”

Forbes Magazine names Salt Lake City Utah the best place in the west to find Bargain Properties.Forbes magazine ranked Salt Lake number one in its top 10 list of cities with the best bargains for house hunters.It claims that SLC “is promising for those with a sharp eye for real estate, where sellers are cutting prices and lending is not in a depression.”This is rated by economic indicators such as healthy job outlook, number of houses on the market, number of foreclosures on the market compared to the number of potential buyers.read more | digg story

Search for homes in the Salt Lake City MLS

Real Estate Sales Tip: How to Seal The Deal

Money isn’t the only important aspect in the negotiation of a home sale. What makes a deal a good one for both the buyer and the seller depends on their individual situations — and it can make the situation go more smoothly if everyone, including the real estate professionals, remember that. Here are some key factors to help insure the real estate deal actually goes through…read more | digg story

Utah Housing Market Outlook, Is it a good time to buy?

A lot of people are concerned about the housing market in Utah. With a nationwide housing slump, potential recession, and increased foreclosures, many want to know if the Utah Market will continue to appreciate, and if it is still a good time to buy a house.Last year Utah was immuned from the housing slump. It has led the nation in home price appreciation in the last two years. Can this pace continue, or will it follow the same path that happened to Arizona, Nevada, and California?Utah did not appreciate as much, and as fast as the neighboring states during their boom. But, the appreciation over the last two years was still a little too fast in some areas. During the boom year of other states Utah’s appreciation was almost non existent. When the other markets began to tank, Utah boomed. Part of this booming was created artificially by out of state investors investing off of speculation. They didn’t want to invest in their own slowing markets and looked here. There has also been artificial appreciation created by mortgage fraud scam where houses were artificially sold for more than they are really worth to straw borrowers. These factors will come back to haunt the overall housing economy in ‘08.Utah also has a problem with a huge inventory of vacant new construction spec homes priced far above the median sales price. These properties were built in much by speculators, overzealous builders and real estate investors. There will be a serious let down with this over supply problem in the high end homes. This problem is especially prevalant with Utah Valley Homes.The Utah Economy is still very strong. Utah continues to lead the nation in Job Growth and there is still lots of demand for employees in many high end jobs. This should help keep the moderate and lower housing markets fairly stable.Interest rates are also incredibly low again. With housing problems, and recession fears in many areas nationally, interest rates have been driven downward. This will also help ease any potential housing crisis in Utah as it lowers the cost of housing even though prices have gone up. Thirty Year fixed mortgages can easily be obtained at rates less than six percent.read more | digg story