Archive for February 2011
February 23, 2011
WASHINGTON (February 23, 2011)—The uptrend in existing-home sales continues, with January sales rising for the third consecutive month with a pace that is now above year-ago levels, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales, including single-family, townhomes, condominiums, and co-ops, increased 2.7% last month and are 5.3% above January 2010. This is the first time in seven months that sales activity was higher than a year earlier.
The improvement is good but could be better, said NAR chief economist Lawrence Yun. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”
Who’s buying homes?
A separate NAR survey shows first-time buyers purchased 29% of homes in January, down from 33% in December, and 40% in January 2010 when an extended tax credit was in place.
Investors accounted for 23% of purchases in January, up from 20% in December and 17% in January 2010. All-cash sales rose to 32% in January from 29% in December and 26% in January 2010.
“Increases in all-cash transactions, the investor market share, and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said.
All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15% of the market. The average of all-cash deals was 20% in 2009, rising to 28% last year.
Median home price falls slightly
The national median existing-home price for all housing types was $158,800 in January, down 3.7% from January 2010. Distressed homes edged up to a 37% market share in January from 36% in December, but down from the 38% market share of January 2010.
Unusual market factors are dampening the median price, said NAR President Ron Phipps. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”
Fewer homes on market
Total housing inventory at the end of January fell 5.1% to 3.38 million existing homes available for sale, which represents a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December.
The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply.
Single-family, condo, co-op home sales rise
Single-family home sales rose 2.4% in January and are 4.9% higher than the level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7% from a year ago.
Existing condominium and co-op sales increased 4.7% in January, and are 7.9% above the sales pace one year ago. The median existing condo price was $154,900 in January, which is 10.2% below January 2010.
Regional home sales
Regionally, existing-home sales in the Northeast fell 4.6% in January from a spike in December and are 1.2% below January 2010. The median price in the Northeast was $236,500, which is 4% below a year ago.
Existing-home sales in the Midwest rose 1.8% in January and are 3.6% above a year ago. The median price in the Midwest was $126,300, which is 3.2% below January 2010.
In the South, existing-home sales increased 3.6% in January and are 8% higher than January 2010. The median price in the South was $136,600, down 2.1% from a year ago.
Existing-home sales in the West rose 7.9% in January and are 7% above January 2010. The median price in the West was $193,200, down 5.7% from a year ago.
There’s great news for homeowners! Congress recently extended legislation making private mortgage insurance (PMI) premiums tax deductible through 2011!
So why is this significant? PMI can help people buy a home sooner, by enabling them to put less than 20% of the purchase price down when buying a home. This increase in purchasing power can sometimes be the difference between affording the home of your dreams…or not.
What’s more, this deduction is not just for first-time homebuyers, so it can be used by current homeowners looking to upgrade to a new home. However, it does only apply to “qualified” residences, which typically include a primary residence and a vacation home, but not an investment property.
It’s important to note that PMI is only tax deductible for homeowners with adjusted gross incomes of less than $110,000. Borrowers with adjusted gross incomes up to $100,000 may be able to deduct 100% of their 2011 premiums. Deductions are phased out in 10% increments for borrowers with adjusted gross incomes between $100,000 and $109,000.
As with any deduction, be sure to consult your tax advisor if you have any questions.
Source: Courtesy of Sean Fleming Mortgage Advisor
By Robert Freedman
The fiscal year 2012 budget that the Obama administration released Monday, Feb. 14, 2011, hikes the annual FHA mortgage insurance premium and takes a third stab at a twice-rejected proposal to trim the value of itemized deductions, including the mortgage interest deduction, available to upper-income households.
The president’s budget proposes cuts to 200 programs, including the majority of the programs administered by the U.S. Department of Housing and Urban Development, which saw its budget cut by almost 3%.
Importantly, a part of the budget savings would come from the administration’s proposal to trim the value of itemized deductions for higher-income households. Individuals earning at least $200,000 and couples earning $250,000 could still take all their deductions, including the mortgage interest deduction, but the value of the deductions would be capped at 28% instead of 35%.
Another budget proposal that would cost home owners is a 25 basis-point increase in the annual mortgage insurance premium on FHA-backed loans, which the administration already has the authority to implement.
That hike will raise the premium to 1.15% from 0.9% of the loan amount, and is expected to generate $2 billion in funds for the agency. The increased funds will build the agency’s insurance fund, but is expected to also drive some borrowers out of the program.
HUD Secretary Shaun Donovan in a conference call on Wednesday said he expects lending volume on FHA loans to drop to $218 billion. “That is substantially below the volumes which we’ve done this past year,” he said.
The administration’s release of its budget proposal is just the first step in a multi-step process that in years’ past has taken much of the year to complete. Once the House and Senate Budget Committees put forward their resolutions for setting spending parameters (which might end up bearing little resemblance to what the administration has proposed), the appropriations committees will write the legislation to flesh out the actual spending bills, and the tax-writing committees will work on their side of the legislation.
The deadline for all this action is the end of the fiscal year, Sept. 30. But it’s not uncommon for Congress to let that deadline slip.
Reminder: Fourth quarter taxes are due April 25,2011.
New address for mail-in payments or pay online:
City of Providence Lockbox
PO Box 9100
Providence, RI 02940-9100
DEADLINES FOR ALL QUARTERS!
- First Quarter - September 24
- Second Quarter - November 24
- Third Quarter – January 24
- Fourth Quarter – April 24
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