High Association Dues Affect Resale Value

June 9, 2010 By 1 Comment

I sometimes run into condos and townhomes that have higher than average fees – sometimes the developments have been poorly managed in the past and are trying to make up for past transgressions and other times they are simply not being prudent with their budget.  Not only do high association fees cost each homeowner more money per month, outsized dues can also be detrimental to the resale value of these homes.

With so many condos and townhomes for sale today buyers are more picky than ever on what they buy and when they are figuring in their monthly payment they are certainly taking the association fee into account.  A good general guide is that each $1000 financed costs a borrower about $6 per month in payment so if one association’s dues are $30 more than another with similar amenities, to a borrower that’s equivalent to losing $5000 in buying power!  It is important to keep the total cost of ownership in mind when looking to buy a condo or townhome or when you live in one and are considering a day in the future when you have to sell it!

Filed Under: Community Issues, Info for Sellers, Neighborhood Info, Opinion

2010 Foreclosure “Tidal Wave” Just Another High Tide?

April 27, 2010 By 2 Comments

For a year or so there have been stories of more foreclosures coming.  While I don’t doubt the warning and we’re starting to see a tick up in sheriff sales, I do think that given the speed that the banks are going that it will be 2011 before we see much of this expected surge of foreclosure/REO inventory on the market.

Minnesota Home Ownership Center’s report of mortgage delinquency (pre-foreclosure) notices are very high, a lot of the increasing delinquencies are sitting in limbo in the period prior to a Sheriff Sale.  I’m sure some of these homeowners are working through mortgage modification programs and/or short sales but I also have experienced situations where the bank will take more than a year to begin the foreclosure process and/or delay the Sheriff Sale for months.  This leads to a backlog of “shadow inventory” that some day will show itself.

In Minnesota we have an unusually long Redemption Period – from the date of the Sheriff Sale most homeowners have 6 months in which to occupy the property and atwww.t to redeem it – unless the homeowner did a 5 month Sheriff Sale postponement and instead has a 5 week Redemption.  From my experience, on average it takes foreclosed homes 2 weeks to 2 months after the Redemption Period to find themselves on the MLS – length often varies by lender, occupancy of the property and condition.

So if a house is sold at Sheriff Sale on May 1, the we’re likely not to see that house on the market until mid-November to early January.  This is helpful in some ways as it allows us to get a feel for what future REO activity on the MLS will be.  Given that recent months of sheriff sales are up, it does suggest an increase of new foreclosure MLS listings late in the year but given the very low inventory in that category right now I don’t believe any increase of new REO listing activity will have an impact to our market dynamics yet this year.

Here’s a current set of charts from the data I collect (click charts for larger versions):

Filed Under: Community Issues, Crystal Ball Projections, Foreclosures and Short Sales, General, Info for Buyers, Info for Sellers, Market Stats, Neighborhood Info, Opinion Tagged With: , ,

Why Loan Modifications & Short Sales Are So Tough

January 22, 2010 By Leave a Comment

Minnesota Home Ownership Center does a great job of helping struggling homeowners determine and exercise their options.  Their blog post yesterday introduced me to a short article from Public Citizen that explains a large part of our problems in negotiating loan mods and short sales.

Filed Under: Community Issues, Foreclosures and Short Sales, Info for Sellers, Neighborhood Info, special financing Tagged With: , ,

100 Days Left to Take Advantage of Home Buyer Tax Credits

January 21, 2010 By 1 Comment

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

  • Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
  • Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.

Who Qualifies for the Extended Credit?

  • First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
  • Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

If you purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

  1. The price of the home.
  2. The buyer’s income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you  purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

Filed Under: Info for Buyers, Info for Sellers, Neighborhood Info, Questions and Answers Tagged With: ,
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