Wednesday, November 18, 2009

Take the Distress Out of Distressed Properties

Foreclosure filings have decreased slightly for the past three months in a row, according to RealtyTrac. While that’s certainly welcome news from a short-term perspective, the larger picture concerning distressed properties remains grim. October 2009 marked the 45th straight month of year-over-year increases in foreclosure activity. In the third quarter of this year alone, there were still more foreclosures than in all of 2006.

At the RISMedia Power Broker Perspective Panel on Distressed Properties, RealtyTrac’s Rick Sharga noted that the year will end with about 3.3 million households having gone into foreclosure. And because of rising “shadow inventory” another 4 million properties are expected to hit foreclosure status in 2010.

The Obama Administration’s recent push to accelerate the pace of loan modifications to keep struggling borrowers in their homes also has a dark side. Some 50-60% of those whose loans are modified are expected to redefault eventually nonetheless.

This massive inventory of distressed properties continues to put significant downward pressure on home prices nationally, and makes it tempting for real estate practitioners to slip into a state of powerlessness and discouragement. That’s a huge mistake.
Just ask Mark Stark, CEO of the Prudential Americana Group. He could be forgiven for a fair degree of despondency about these seemingly horrific events in the real estate world. He’s based in the foreclosure epicenter of Las Vegas, where homes that a year and a half ago listed for $444,000 are now on the market for $150,000, and still barely moving.

But appearing as RISMedia panelist he was positively evangelical in his remarks to real estate pros about coping with a changed market:

■Don’t label your market. Take “good” and “bad” out of your vocabulary. What’s happening now is an event, and it’s your challenge to be informed, work through the problems and find answers.
■You need to live in the truth. Don’t confuse the facts with what you’d like the facts to be.
■Question your limiting beliefs. Ask yourself tough questions and acknowledge that sometimes you will be wrong.
■Be part of the solutions and the opportunities. There will be more opportunities from this debacle than there were before. A lot of good will come out of this–eventually.
By Wendy Cole, Senior Editor, REALTOR® Magazine

Milicki & Associates, Inc.
110 Evans Mill Dr. Suite 103
Dallas, GA 30157


Wednesday, November 11, 2009

$8,000 homebuyers tax credit extended

President Obama reups popular tax credit through June 2010 and expands it to include people with higher incomes and some who want to trade up into new homes.

NEW YORK ( -- President Obama signed an extension and expansion of the first-time homebuyers tax credit on Friday.

The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30.
The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.

The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

"The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.

Who qualifies?

Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:

• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.

• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.

• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.

• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.

How it helps the economy

Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.

"This bill will shift demand from the second half of 2010 into the first half," said Pat Newport, a real estate analyst with IHS Global Research. "As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second."

That's not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It's important to stabilize real estate markets quickly to help bring the economy out of its tailspin.

The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.

Would it have happened anyway?

But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.

Furthermore, buyers do not, in reality, receive the entire benefit. "The credit helped prices stabilize," said Newport. "So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it."

The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.

The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional "move-up" sales.

That did not happen, according to Lawrence Yun, NAR's chief economist.

"It did not have the chain reaction impact it was supposed to," he said. "Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers."

So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.

"Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending," said Yun. "They're more likely to go out to the stores or buy a new car. That provides a boost to the overall economy."

Milicki & Associates, Inc.
110 Evans Mill Dr Suite 103
Dallas, GA 30157

Friday, November 6, 2009

Tax Credit Extended and Expanded

As of – Thursday, November 5th – that bill has passed and will be sent to President Obama for his signature

Upon Passing the extension of the HomeBuyers Tax Credit there will be several changes to assist homebuyers. It is no longer limited to First-time buyers bu has been extended to others also looking to purchase a home.

Let's summarize the changes quickly:

Once President Obama, has signs the bill, the expiration date for the credit will move to April 30, 2010.

First-time buyers who have not had interest in a principle residence for three years are still eligible, and the maximum amount remains the same – $8,000 for married couples, $4,000 for those filing separately.

Current homeowners, who have consecutively maintained the home they want to sell as their primary residence for five of the last eight years, are also eligible. However, the maximum amount for those homeowners is lower: $6,500 for married couples and $3,200 for those filing separately.

The tax credit may not used to purchase a home for more than $800,000. All buyers who want to get the credit must include documentation of the purchase on their tax returns. (Usually a copy of the HUD statement given at closing will suffice)

Milicki & Associates, Inc.
110 Evans Mill Dr Suite 103
Dallas, GA 30157

Tuesday, November 3, 2009

Senate Votes On Home Tax Credit

Senate Committee Says YES
House & Senate Vote Next!

BREAKING NEWS: Senate Plans to Extend and Expand Tax Credit
The Senate has reached a compromise on extending and expanding the $8,000 tax credit for 1st time home buyers, a boost for the housing industry and a great opportunity for both buyers & sellers!

While its final passage remains uncertain, the agreement would extend the existing credit for 1st time home buyers, worth up to $8,000, plus offer a new credit of up to $6,500 for some existing homeowners. The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years. Lawmakers also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000, housing-industry sources said. Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, said the sources. The measure still faces votes in the full Senate and the House.

The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real estate market a bigger boost while preventing real estate investors from benefitting. While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor.

This Is Great News For Buyers and Sellers!
There are incredible properties available for buyers at prices that may not be seen again in our lifetimes. This means that more buyers will be in the market and that increases the odds for sellers. Insiders do not expect these incentives to be renewed again so buyers must take action now to get pending contracts before April 30th 2010.

Stay tuned for additional details as the legislative process continues. Please contact your elected officials and encourage them to "vote yes" to pass this important legislation!

The Window Of Opportunity Is Officially Open - Don't Miss It!
Please Contact Us To Get Started Today!

Milicki & Associates, Inc.
110 Evans Mill Dr. Suite 103
Dallas GA, 30157