Monday, November 16, 2009

Extended Tax Credit Information.

Senate Approves Tax Credit Extension, Expansion
The Senate yesterday passed legislation to extend the $8,000 home buyer tax credit to May 1, 2010, for first-time buyers and add a $6,500 tax credit for repeat buyers if they've lived in their home for five of the past eight years. Home prices are capped at $800,000.

The legislation was included in a bill to extend unemployment benefits and is expected to be passed by the House today or tomorrow. President Obama is expected to sign the legislation when it's sent to his desk.

Under the bill, income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

Households who have binding contracts in place by April 30 will be allowed an additional 60 days to complete their transaction. The deadline for members of the military serving out the U.S. for at least 90 days between Jan. 1, 2009, and May 1, 2010, has been extended one year.

Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a check. Taxpayers will be able to claim the credit on their 2009 income tax return for purchases made in 2


1. Existing homeowner credit: Must the new house cost more than the old house?

A. No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

2. I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?

A. Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

3. I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?

A. Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).

4. I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?

A. No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

5. I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?

A. Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.

6. I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?

A. You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Information provided by Bill Bacque' CEO of Van Eaton & Romero

Thursday, November 12, 2009

Market Stats January to October 2009

Lafayette Parish residential sales reported to the REALTOR Association of Acadiana’s Multiple Listing Service for September and October 2009 significantly outperformed the corresponding monthly sales reported in 2008. Typically, fourth quarter residential sales are the slowest for sales. The exception to that in our market was 2005 due to hurricanes Katrina and Rita which caused a enormous increase in sales for the end of that year. Also, last year with the national financial meltdown which began in July-August of 2008, closed sales for the fourth quarter were understandably slower beyond the normal seasonal dip. The sales numbers for September and October of 2009 for Lafayette Parish clearly indicates that stability has returned compared to last year. With Lafayette Parish cumulative sales reported through October 2009 just 2.89% below 2008 and the pace of the past two month’s sales well ahead of last year, we are becoming more confident that year end 2009 Lafayette sales will exceed those of 2008.

While Lafayette Parish residential sales have been surprisingly strong, those sales reported outside of Lafayette Parish (Acadia, Evangeline, Iberia, Jeff Davis, St. Landry, St. Martin, St. Mary and Vermillion parishes) continue to experience significant drops in sales when compared to 2008 levels. The cumulative January – October combined sales for those parishes declined by nearly 24% versus the same period in 2008.

Lafayette Parish new construction home sales reported through October 2009 are actually up by 1.25% over 2008 while re-sales are 4.5% below their corresponding 2008 level.

In comparing Lafayette Parish home sales to past years, 2009 sales are ahead of 2004 (pre-Katrina year) by 9.4%, but lag behind the post-Katrina boom years of 2005, 2006 and 2007 by 10.75%, 14.3% and 17.2% respectively.

Based on January – October 2009 sales reported, the average sale price for a home in Lafayette Parish was $195,777. The average sale price for the same period in 2008 was $199,420. That represents a 1.8% overall decline in average sales price of 1.8%. The median sale price for 2009 versus 2008 remained essentially the same with 2009 being $171,250 versus $171,500 for 2008.

The average sale price for Lafayette Parish new construction sales declined from $228,153 in 2008 to $207,062 in 2009. That is a 9.24% decline. The new construction median sale price also declined to $177,500 from $187,200; a drop of 5.2%. Caution should be taken not to interpret these figures as indicative of actual value loss for newly constructed homes, rather it indicative of the change in the product type that most builders have moved to over the past two years and what the consumer is purchasing – lower priced, entry-level homes. That conclusion is further evidenced in the data provided on page 16 which indicates that sales of new construction in the under $150,000 price range has increased over 2008 by 25%. Just two years ago it would have been difficult to find any new homes in Lafayette Parish available at all.

The number of months supply analysis for Lafayette Parish home sales, indicate that the demand/supply ratio remains quite positive in all price ranges except those above $300,000. That is consistent for both re-sales and new construction indicating that this segment of our residential marketplace remains significantly challenging.

Our overall forecast for the Acadiana residential marketplace remains positive. Certainly, Lafayette Parish appears more stable than our adjacent parishes. With interest rates remaining near or at historic lows and with the renewal and expansion of the housing tax credit, we remain confident in the value of home ownership in our area.

Provided & Written By: Bill Bacque', CEO of Van Eaton & Romero, INC