Is now a good time to buy?

The best thing I can do is help you answer this question is to point out some key factors you must consider, when deciding whether to buy a house now or wait until later.
Right now, mortgage rates are at their lowest point in decades. The average interest rate for a 30-year fixed mortgage has varied between 4.78 to 5.25% … and that’s a darn good! So that’s one thing home buyers have in their favor right now.
Home prices are also at record lows in this area, which is a direct result of the housing problems we just endured. Surplus is high too, so there are plenty of houses to choose from. Add to this the $8,000 tax credit for first-time buyers, and you have plenty of reasons to buy a house now instead of waiting until later. Low interest rates, low prices, plenty of inventory, and a tax credit of eight grand.

Also consider that rents, along with the cost of living, will always continue to climb. So no matter what conditions in the housing market are, the sooner you make the jump from renter to home owner, the quicker you begin to create and build up wealth for your family. After a few years, you will be able to leverage this investment and buy a larger house.

These are all good reasons to buy now. For answers to more questions about home buying, visit our website at www.themcfarlandgroup.net.

Overview of the 8k Tax Credit

The Obama administration, as part of the American Recovery and Reinvestment Act of 2009 has provided $288 billion in tax relief for individuals. As part of this relief, first time home buyers are able to claim an $8,000 credit on either their 2008 or 2009 tax return, depending on the closing date. This is a significant benefit for buyers, sellers and real estate investors alike. We wanted to provide you with a solid overview of the tax credit, and discuss what this means to anyone looking to buy or sell real estate soon. Here is an 8-point overview of the tax credit. 

1. Who qualifies? As mentioned, this tax credit is for first time home buyers… kinda. It’s important to note that the IRS defines words a little differently than the rest of us. In this case, the language rules of the IRS actually benefit the individual seeking the tax credit. The IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase. So, even if you’ve owned five houses in your life, as long as you haven’t owned one in three years, you qualify as a first time home buyer.

 2. How much is the credit? The actual amount of the tax credit is 10% of the home’s value, with a cap at $8,000. This is refundable, which means the IRS will actually send you a check for the entire amount of the credit with your tax return (granted you don’t owe the IRS taxes). CNN Money had a good 3-scenario rundown of filing results:

 “Scenario 1: Your final tax liability is normally $6,000. You’ve had taxes withheld from every paycheck and at the end of the year you’ve paid Uncle Sam $6,000. Since you’ve already paid him all you owe, you get the entire $8,000 tax credit as a refund check.

Scenario 2: Your final tax liability is $6,000, but you’ve overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.

 Scenario 3: Your final tax liability is $6,000, but you’ve underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.” (from CNN Money)
Regardless of what scenario you fall under, the bottom line is still… FREE MONEY from the United States Treasury! And, you can do whatever you want with it (invest, improve, save or spend).

 3. What are the conditions? Back to the wordplay of the IRS… the word refundable means two things. One, you get the refund in your return. But there is another provision that says you have to refund the government for the tax credit if you do not maintain ownership of the property for at least three years. This is also known as “recapture,” in that the Government can capture the money back from you.  It’s worth noting that the housing market is in a lull right now, and should rebound as the economy itself bounces back. There is a lot of room for optimism here – it is likely that the property that is available at such low prices today, will turn out to be a fruitful investment – hold on to it for three years and you will get to keep the $8K from the government, and profit thousands of dollars (probably tens of thousands) when you decide to resell.

4. When to file? In order to qualify for the tax credit, closing must happen between January 1, 2009 and December 1, 2009 (November 30 is the last day). The big date to note, though, was May 15 (2009). The importance of this date is that closings that were complete before May 15 can be filed on your 2008 tax return – even if you missed it when you filed, you can still file an amended return and get the credit now (most amended returns are mailed out within 3-5 weeks of filing).

 5. How to file? In order to receive the tax credit, you need to a) file your taxes and b) file the First-Time Homebuyer Credit form (aka Form 5405). This form can be downloaded from irs.gov right here. Aside from your name, the address of the property and the date of acquisition, there are only six fields to fill in. The entire form is just two and a half pages, two of which are instructions.

 6. Income Specifications. There are also income specifications that determine an individual or married couple’s eligibility for the tax credit. Individuals with a modified adjusted gross income of $75,000 or less qualify for the full credit, with the limit for married couples set at $150,000. Those with modified adjusted gross incomes above this amount, may still qualify for a percentage of the tax credit. According to the 5405 form, only those who make over $95,000 a year (or $170,000 for married couples) are ineligible for the tax credit altogether. Those within the $20,000 per year buffer can file for a reduced credit.

 7. What does this mean for the real estate industry? As mentioned earlier, there is a lot to be optimistic about with this credit. First, it adds incentive for people in the market – potential home buyers – to get out there and buy a home. The CNN Money article referenced above points to two potential effects of the credit:

 “…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.”

8. What does this mean for real estate professionals? Real estate professionals should be very excited right now. Not only is there an influx of great valued properties on the market, but there is the impetus of this tax credit (specifically the time parameters of it). All the potential first time home buyers who were patiently waiting it out, now have an incentive to move swiftly, so that the closing is complete before the December 1 deadline. Professionals will be wise to learn and share all the information they can concerning this tax credit with potential clients – who will be all the more enthusiastic about buying a home, knowing they’ll have $8,000 to decorate with.

It’s not all that implausible to imagine that lenders will begin to accommodate short term loans for the amount of the tax credit. This will make home sales and closings more attainable, as it will free up guaranteed funds that can be used towards down payments.

Downsizing Your Home

The new trend in real estate is to live big by living small! Check out this video from the Today Show and see why.

Downsizing Your Home- Watch more Videos at Vodpod.

What is Your Neighborhood Doing?

Overall median home price and volume were down in King and Snohomish Counties for February 2009, comparing year over year sales. However, there were five neighborhoods in King County with positive gains in Median Home Price. The winners are:

Belltown/Seattle – 10.4%
Des Moines/Redondo – 8.9%
Newcastle – 7.2%
Vashon Island – 4.3%
Central Dist/Seattle – 1.5%

We have the numbers for your particular neighborhood. Don’t hesitate to contact us anytime we can be of assistance at 425-330-0663.

For all you twitter fans…..

Would You Name Your Baby Marijuana Pepsi?

Someone did!  It’s the truth. Marijuana and Pepsi are her legal first and middle names, and the woman embraces them as a symbol of her struggle to succeed and to help other children overcome obstacles.

No Mary or Mary Jane or Mary Wanda for her. It’s Marijuana, thank you.  Check out her photo.  She is a tall, striking, self-assured, motorcycle-riding woman and a schoolteacher with a master’s degree in higher education administration.  Soon, she’ll start work on her doctorate.

Wow, you think you have an uphill battle?  Why do parents saddle their kids with goofy names.  Isn’t life tough enough?  Why make it more difficult by naming your baby something sure to bring on the jokes.  Ah, free will!  Click here  to read the story.

February existing home sales rise by 5.1 percent

Good news folks:  Sales of previously occupied homes jumped unexpectedly in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties.

The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.

Economists said sales, while still at levels not seen since 1997, may finally be coming back to life after declining sharply following the stock market plunge last autumn.

Why Do We Have To Pay?

Here is the question: Why are State Taxpayers on the hook for the bone head acts of some pathetic judge in Seattle?

Here is the story. A former Seattle Municipal Court employee said a presiding judge insisted on kissing and fondling her after she ended a sexual relationship with him, according to a $135,000 settlement agreement released by the City Attorney’s Office recently.

The judge, the city of Seattle and the employee reached the settlement in November, with the city and Mamiya each paying $67,500, according to documents provided by the city in response to public-document requests by the media.

The good Judge said “I want to acknowledge my horrible lapse in judgment. I have no excuse for my role in this incident, and my actions have hurt many people important to me, including my wife, family and my community. I take full responsibility for my behavior.”

Our state’s updated revenue forecast came in recently. It projects that tax collections will be another half billion dollars below what was forecast – that pushes our state deficit up to over $9-billion. I’ll ask the question again: Why are State Taxpayers on the hook for the bone head acts of some pathetic judge in Seattle?

It’s In the Text , or is it, The Text is In?

It’s a pretty sure bet that you have a cell phone. What about text messaging, do you use it? If you don’t, consider yourself in a very small minority.

Nielsen Mobile surveys shows that by the second quarter of 2008, text messages had exceeded the number of cell phone calls by an impressive margin.

And, if you think it’s all just teenagers, think again. The facts show that every age group up through 44 years old sent more text messages than they made cell phone voice calls. And it was close on the 45 to 54 group.

Text messaging is becoming a wildly popular way to exchange information. Marketers and retailers are now doing text message marketing. You can actually get a coupon text message and show it in a restaurant for a discount.

What if every person who drove by one of our listings could have text messaged a code to get price and other information? What if you needed to get a message to your kid in school but didn’t want to have the phone ring in class. How about text messaging a restaurant reservation. All of this is currently available technology.

Start looking at how you might use text messaging to enhance how you communicate. Just don’t do it while driving!

Are We Up, Down or Sideways!

Everybody from Los Angeles to Boston — your mom, your doctor, your dry cleaner — is puzzling over which way the nation’s real estate market is headed. Up or down? Sideways or not?

It’s a debate that’s been raging for months, and recently there have been clear signs of a up tick. The Northwest MLS reported 4,559 pending sales during February for a 4.7 percent improvement over January.

That total, was the highest volume since September 2008. We have seen a noticeable increase in open house activity, with part of the surge coming from transferees moving into the area who are looking to buy rather than rent. Home values are finally at a point where affordability has returned and the market is slowly beginning to respond to the $8,000 tax credit for first-time buyers.

The $8,000 tax credit for first time buyers does not have to be repaid. . . and first time buyers who purchase before April 15 can apply the tax credit to their 2008 tax return.
The combination of historically low interest rates and increased affordability is an opportune time for buyers to take a look at purchasing their first home.