The Stimulus Package & Buying Up in a Down Market

So here you are, living in a home that no longer meets your needs and you want to know if it makes any sense to make a move “in this market.” If you have a home or condominium that is now too small for you and your family you should keep reading. Let’s set up the following scenario. Two years ago, when you did not want to sell, you might have gotten $250,000 for your home. Now, two years later, your house is not getting any bigger, and your home is worth $225,000. If you do sell, you are planning to stay in the area, or moving to an area that has had housing prices that have fallen far more dramatically than here in VT. In either case , you will be buying a bigger, more expensive home. Two years ago that home would have cost you $375,000 but now you see that homes of that size are now selling for $325,000. As an added bonus, the interest rate has dropped from 6% to 5% or less. Under these circumstances, assuming your employment situation has not changed, you have a better opportunity than ever to buy up for less total purchase price and at a lower interest rate.
The difference in your monthly mortgage payment will be far less than it would have been 2 years ago. In addition, that larger house that you just bought at a bargain price is now going to appreciate in value at a higher rate and out perform the appreciation of the home your currently in during the next up swing in the market. Although there is more inventory available in the 0-$250,000 price range, the rate of sales year to date actually results in a shorter market time for the house you will be selling than price range you will be buying into. With longer market times at the higher price ranges, you will have time to sell your home in order to buy the next one and the sellers may be more flexible on price. And this is where the stimulus package starts to work for you. As the deadline of December 1, 2009 approaches, more and more first time home buyers will recognize the opportunity and make their first home purchase driving the market for your home and others like it. As a result, we should actually see the market time for the first time home shorten as demand increases which will further improve your chances of you achieving your goal. In short, if you are looking to step up into a larger home, now may be the time to make the move.

Homebuyers Fair

Home Buying Made Easy! A Free Semiar Hosted by Seven Days!

Presented by Chris von Trapp, Coldwell Banker Hickok & Boardman and Jay Vallieres, Mark Chaffee Group of Mortgage Financial

Find out everything you need to know before buying a home — from loan pre-approval to closing.
*PLUS get information about the 2009 First Time Home Buyer Tax Credit — up to $8000 in your pocket!
Thursday, March 26, 6-8 p.m.
ECHO Lake Aquarium & Science Center
5:30 Check-in, light dinner provided
RSVP required http://www.sevendaysvt.com/

Do you qualify for the First Time Home Buyer Tax Credit included in the Stimulus Package?

Now that the Stimulus Package has been signed into law, buyers are asking a lot of questions and want to know if they qualify and what it may mean to them for there first home purchase. Here are some resources that may help.

Enjoy,

Chris

WCAX-TV helps explain how the First Time Home Buyer Tax Credit can benefit you when purchasing your first Vermont home
The National Association of Home Builders has provided a list of frequently asked questions related to the $8000 First Time Home Buyer Tax Credit
Use this chart to understand the difference between the previous $7500 tax credit and the current $8000 tax credit passed by Congress
Related Links
Open HouseVisit an Open House this Sunday from 1 - 3Know Your TermsReal Estate Glossary Free Credit Consultation
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Sleeping Burlington Vt Market Stirred by Stimulus

Here is a bit of good news for buyers and sellers alike. The Stimulus Package was just signed into law last week and seems to be having an immediate effect here in the Burlington VT area. This impression is not based on any sound scientific study or empirical data, so take it for what it is worth. It is based on a "boots on the ground" observation I made over this past weekend. Here is the story.
I am helping a family relocate here from out of state and they had a schedule that required us to be out seeing all we could see yesterday, Sunday. I had attempted to make an appointment at one particular property, along with several others, and we were asked if we could come by during the Open House from 1-2pm rather than disturb the occupants in the morning of the same day. With a little bit of re-schedule we were easily able to accommodate the request and agreed amongst ourselves to see it at 1:30pm.
I arrived a little early and thought I would pop in and get a quick preview as I had only seen the home on the Internet. As I approached the house I observed cars lining the street and one in the driveway that was not the Realtor's car who was holding the Open House. Car count was four at 1:30pm. I parked on the street and went in too take a look. As I was entering , two parties left. I dropped my shoes at the door and began to look around. In the next 15 minutes four more parties showed up and then the family I am working with. Counting my clients, there were eight showings of this one home in the first hour of the Open House.
This home was built in the late 1960's but has been well maintained with new paint and carpet and other improvements. It is not a foreclosure nor is it owned by a relocation company or being offered in a short sale. All of these issues might be the cause of a high traffic count but this was not the case in this situation. This house has been on the market since last August so it was also not new to the market. The REALTOR holding the Open House was overwhelmed since she had been holding Open Houses since the beginning of the year in similar homes and always brought other work to do as she as she sat there with no viewings.
Maybe this is an isolated case or the Denny's at the foot of the street was offering free Grand Slam Breakfasts for all attendees. What ever the case, the renewed interest in buying real estate by those viewing this house felt invigorated and fresh. So if you are selling your current home , take heart as there appears to be the beginning of a Spring real estate market taking shape.
If you are a buyer and you have been sitting on the sidelines waiting for all the stars to line up, this could be it. The pricing has adjusted, sellers are motivated and want to get on with their lives. The interest rates are hovering just below 6% and I have heard of some 5% quotes to buyers from some lenders, depending on credit scores. The inventory in and around Burlington that is affordable priced is low and once these looking buyers act, it will not last long. The good news is if the sellers who have been sitting on the sidelines, sense that they may get a fair price on their home this Spring , you will see more inventory enter the market and replace the homes that are purchased.
What this market needs is some active and motivated buyers who are well positioned to get off the fence and get this market moving again.

Stimulates the First Time Homebuyer but You Have to Buy to Win!!!

I was sent this this morning from our in house mortgage loan originator. I thought it might add some clarity for the first time home buyer.
Enjoy!!

Chris

By Les Christie, CNNMoney.com staff writerFebruary 16, 2009: 5:38 PM ETNEW YORK (CNNMoney.com) --
There's a nice windfall for some homebuyers in the economic stimulus bill awaiting President Obama's signature on Tuesday. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:
"I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"
Not exactly. Billings won't get $8,000 on top of his current refund, but he would turn that small refund into a much larger one. If his total tax liability came to $6,000, but he had $7,000 withheld from his payroll, he would normally receive a $1,000 refund. With this credit, his refund would total $8,000. If the credit were non-refundable, as was originally proposed in the Senate version of the stimulus package, he would have only received $6,000, or the total amount he paid in.
To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.
Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.
Lukewarm reception
The housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.
"[The Senate version] would have done a lot more to turn around the housing market," said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). "We have a lot of reports of people who would be coming off the fence because of it."
Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors.
The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. "I think there are many homeowners who would be trading-up but they have had no buyers for their own homes," Yun said.
Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.
Instead, many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.
And it provides a nice nest egg for the often-difficult early years of homeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.

Historic Colonial with Studio/Workshop

This stately home was purchased nine years ago and lovingly painted, repaired and rejuvenated form top to bottom all the while retaining the original charm. Most of the woodwork has been brought back to it's original condition or replaced with perfectly matched new wood. The exterior porches have all been re-built and the slate roof has been repaired as needed. All of the interior surfaces have been painted in period colors and the exterior is a classic yellow, with cream trim and dark green windows and mutton's.

In short, all the work has been done and it is now ready for you to enjoy. If you an old home lover , this home will really catch your attention, as it has all the positive qualities of a center hall colonial of that era, large center hall with stairway, large four square floor plan, large windows, wide pine floors and understated, but classic, window and door trim details. Speaking of doors, the interior six panel doors in on the two front rooms are a full 36" wide, something I have never seen in any other home of it's kind.

Some people have questioned my classification of the house as a center hall colonial due to the Italianate Exterior roof trim and the hip roof design. The answer for that is that around the turn of the century , this house was on a different part of this two acre lot, and for some reason , it was moved one winter over the hard frozen ground by a team of oxen and placed on it's current foundation. I believe at that time, the roof was replaced with the current hip roof and the Italianate features added along with the porches and most likely the attached portico and studio.

Speaking of the portico, this is my absolute favorite aspect of this truly wonderful home. This covered patio connects from the north kitchen door and the west porch to the studio/workshop. In the summer it functions as a large open and airy patio that is protected from foul weather and the hot summer sun by a post and beam supported slate and metal roof. Fully opened sides on the east and the west allow for the cool breezes to flow through and make this area a truly magical one all summer long.

Directly across from the kitchen door and at the end of the breezeway is the studio or workshop. This space was originally an unfinished barn but the current owners have transformed it into a radiant heated fully insulated cabinet shop. With it's large windows and open story and a half interior, this would make a terrific studio for any artist, or a fantastically private in home office . I could see this space lined with bookshelves from floor to ceiling and into the half loft that runs along the east wall. With the double french doors to access from the drive, this is space could easily be transformed to accommodate any hobby or work interest.

2008 Real Estate Market Summary

Office Market Share- 2008 Chittenden County-Sides sold*


2008 proved to be a year of market adjustments; not only in the real estate market but for the nation's financial markets as well. As REALTORS® serving Chittenden County and the surrounding areas, the question we are often asked is "How is the real estate market - really?" There is no such thing as a national real estate market. It is critical to know that market conditions vary, not only from county to county, but also town by town.
Despite a slowing in appreciation of the average sales price of a home over the past 2-3 years, there has been a substantial increase since 2003. Unlike the financial markets, we have not see substantial drops in value. This drives home the point that real estate remains an excellent investment for the long term.
In 2008, the number of property sales declined as compared to 2007 and in most cases declined from the 6 year average number of home sales. However, in reviewing the 6 year snapshot, it mightbe concluded that 2008 was an exception to the relatively stable number of property sales throughout the years.
Increased inventories and decreased transactions add up to a strong buyer's market. Coupled with historically low mortgage interest rates, some buyers will be scrambling to purchase their first home or "move up" to a larger home in 2009. Sellers who have their homes well maintained and priced competitively can close in less than 90 days on average.
If you have any questions or would like to talk about your specific neighborhood -please don't hesitate to give me call.
(802) 846-9525
Chris@ChrisvonTrapp.com

*Soure: Vermont Real Estate Information Network (VREIN)