It has certainly been a rare event to say that there is positive news in the Real Estate world but yesterday was that day. The National Association of Realtors released the February existing home sales figures and bucking the steady downward trend that we have been in we saw an increase of 5.1 percent in February.

The news is something to pause and reflect on. I would not get overly exuberant on the report. It is a good sign that finally we are seeing buyers coming into the market. Home prices are cheap. I think the movement in sales figures has a lot to do with the fact that interest rates are low, as are home prices and you are getting a lot of buyers that for the past year have been on the fence. At my mortgage company Eversley Capital Mortgage LLC Norwalk, Ct I have seen a stream of first time buyers entering the market and looking to get pre-approved for their mortgage. The $8,000 tax credit, low rates and good deals out there are bringing out first time buyers.

While the existing sales figures are a good sign we still have hurdles to jump. The key to a somewhat stable housing market is jobs. The job market is the key, I have said it repeatedly. We still have a large foreclosure inventory of homes to work through. The current figure in the report of unsold homes suggests an almost 10 month supply of inventory and the job market is still retracting which in my opinion will not lead to a huge follow through in future months existing sale figures. I would anticipate that if the job market can stabilize somewhat by midsummer we could see a steady increase in existing sales figures to round out the year. Time will tell but in the meantime I will take some positive news.

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The financial crisis has forced professionals in the housing market to try and reinvent themselves during the hard times. Whether they are Real Estate agents, contractors or builders or mortgage professionals they all are finding and looking for ways to reinvent themselves.

Long gone are the days of walking into your bank branch and getting that “free” toaster for opening up a new checking or savings account. We have moved to bigger and better promotions in this economy and it is not just the high end market that is looking to entice buyers, it is at both price spectrums.

In Milford, CT you will find a brand new condo conversion located by the Long Island Sound Coastline. In their ad below Ocean Point condominiums is offering a free plasma TV when buying a newly built condo. The starting price-range of these condos is $199,900.

www.LoanClassroom.com

In Paradise Valley, AZ a wealthy suburb of Phoenix one local builder of high end homes is throwing in a 2009 Bentley Continental GT valued at more than $200,000. The luxury homes in the Paradise Valley are at the “high end” of the spectrum and priced between $3 million and up.

Similar “buy a house and get a car” incentives seem to be the trend across the US. A woman in Easton, MD was throwing in an option of a new Toyota Prius with the purchase of a home she bought, renovated and is now trying to sell for a current list price of $595,000. And in Titusville, FL a developer is throwing in a 2008 Ford Focus along with the purchase of one of the two-bedroom, two-bath villa’s that are selling at $99,900. So as the housing woes continue it will be interesting to see in what new and creative ways people will come up with to reinvent and draw attention to their homes.

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Selling real estate today in my opinion means that you as the seller need to be creative. There are some factors that are on your side. For one, interest rates are the lowest they have been in six years. Secondly there is an $8,000 tax credit for first time home buyers. It is a buyer’s market out there so you need to find ways to differentiate your home from your neighbors.

The first step is finding a good realtor. With as many homes as there are presently listed for sale you need to get a realtor that knows the market and has experience. He or she will tell you what will help your house sell. I had a recent conversation with Carlos Perez with Re/Max Right Choice in Trumbull, Ct who is a seasoned Realtor and asked him what his advice has been for his clients who are looking to list and sell their home. His response was “It is obviously a buyer’s market out there so pricing your home correctly is extremely important. You need to price the home right. Also getting your home in the best condition possible to show is extremely important as well.”

Some other suggestions to be creative would be to hire and pay for a home inspector to come out and do an inspection. Odds are the potential buyers are going to do one anyway so if there are any potential issues you can address them and have them corrected ahead of time. You may want to offer to pay for some of the buyers closing costs or look into buying a one year home warranty that can be passed along to the buyer. Pricing the home correctly for sale is the most important but if you find your home up against your neighbor’s at the same price some of the creative extras I mentioned may help you close the sale.

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As the economy and job market worsen the number of Connecticut residents finding they are facing foreclosure is growing. More and more people are finding they are falling behind on their mortgages. If you do find yourself up against the risk of losing your home to foreclosure or fall behind on your mortgage there are places to turn to get help. Refinancing is typically not an option so here are some suggestions.

                ACORN (Association of Community Organizations for Reform Now)

                            The main phone number is (860) 232-2675

                              There is also an office located at 2310 Main St. in Bridgeport CT (203) 366-4180

                                http://www.acornhousing.com/index.php

                CHFA (Connecticut Housing Finance Authority)

                          (860) 571-3500 or (877) 571-2432

                                http://www.chfa.org/MainPages/default.asp

                Housing Development Fund 100 Prospect St Suite 100 Stamford CT (203) 969-1830

                                http://www.hdf-ct.org/multifamilylending/clientspastpresent.html

                Hope Now the toll free hotline number is (888) 995-HOPE

                                http://www.hopenow.com/contact_us.html

More often than not people end up losing their homes to foreclosure when there could have been a way to prevent it. So the best advice that I can give to anyone who is in this situation is to contact one of the above agencies or contact your lawyer for advice. The worst mistake that is made is people do not seek help or assume there are no options for them. Never try and tackle the problem yourself.

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If you have not already heard this is the part that you need to pay close attention. Under the new stimulus bill that President Obama just signed was the extension of the “first time home buyer tax credit.” If you are a first time home buyer and I will clarify what that constitutes you are potentially eligible for an $8,000 tax credit. You need to close on the purchase between the dates of Jan. 1, 2009 and Nov. 30, 2009.

A very important part to understand is the “tax credit” is refundable. When I say refundable I am referring to a tax refund. A couple scenarios here will show what I mean. If you do your tax return and are looking at a refund you can get your tax refund as well as the $8,000 tax credit. Same would hold true if you owe Uncle Sam money after figuring your taxes and you apply the tax refund, it could alleviate your tax liability. Keep in mind that you need to qualify for the credit. Here is a list of what qualifies and what would not.

·         Dates are from Jan 1 –Nov 30 2009

·         $8,000 or 10% of the homes worth whichever is less

·         First time home buyers only

·         First time home buyer may also be someone who previously owned a home but not in the last three years

·         You must live in the home for a minimum of three years

·         Individual borrowers must make less the $75,000

·         Joint borrowers combined must make less than $150,000

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As we head into the spring housing market there a lot of great homes that are out there. You have your pick of the litter so to speak of homes. There are some incredibly cheap finds out there, you just need to be patient and look. If you are a first time home buyer now is as good a time as any to look for your first home. First off, if you are a first time home buyer and close on a purchase between now and the end of the year you can qualify for an $8,000 tax credit. That is a big incentive that the Government is giving to help stabilize the housing market. Aside from the tax credit and the fact that there are great buys to find out there here are some highlights to follow if you are a first time home buyer. Happy house hunting.

·         Find a seasoned real estate agent. One that knows the market you are looking in.

·         Get pre approved before you start looking at a home. There is no point in looking if you cannot secure financing to purchase it.

·         Some bullet points of what to expect as far as mortgages go

1)      Putting less than a 10% down payment, FHA is most likely your best bet for financing

2)      Any down payment over 10% and a conventional mortgage is your best choice

3)      The least amount that you can put down is 3 ½% through FHA. Although in some instances for those that qualify you can still get 100% financing through a VA loan or through a USDA loan.

4)      If you have low to moderate income and are looking to purchase a moderately priced home as a first time home buyer you may want to check and see if you qualify for a CHFA loan

·         Ask your real estate agent or lender to explain the process and steps with you in the beginning. The more that you know about the process the smoother the transaction will be. Besides getting a good idea of how the process takes place keeps everyone involved on the same page.

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UPDATE:

            I recently wrote that the Real Estate investor in this market, you know the one who has a long history of owning and managing properties had been squeezed out. Freddie Mac and Fannie Mae both adopted guidelines stating that if you have more than four mortgaged properties they will not finance the fifth property. That left investors virtually UN mortgage able.

            This guideline was extremely hard to wrap my hands around. Why shun the one borrower that has the ability to become a buyer in this market? Aside from being sarcastic who limits the type of borrower who has a proven track record of owning multiple properties, paying their bills on time and quite simply is an investor? In a beaten down real estate market the first two types of borrowers that are going to start the buying recovery are first time home buyers and investors. The first time home buyers are going to see value in buying cheap property and the investor obviously said is looking for that great investment.

            Thank God somebody at the top of the GSE’s decided to use some common sense and revise their previous stance. In a memo from Fannie Mae, announcement 09-02 they have since revised their policy. They have issued guidelines for borrowers to finance up to 10 properties.  

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The 1031 exchange or “the real estate exchange” or “tax deferred exchange” as it is also known as was created by the I.R.S in the early 90’s. It is a great tool for the real estate investor. In fact one that I believe that is not used enough.

In a 1031 exchange there is a sale and purchase of “like” properties. Using the 1031 exchange can offset and even sometimes avoid capital gains tax. KEEP in mind there are very important and strict guidelines to adhere to. Definitely consult your accountant as well as your attorney when looking to perform the transfer.

The main benefit of doing a 1031 exchange is the potential offset of capital gains but also the ability to sell an investment property and use the proceeds at a later date to purchase a like property.

Some of the highlights are that the properties need to be “like” properties. Selling a single family and purchasing a single family. Not selling a multi family and buying a condo. The transaction has an allotted time frame window where the purchase needs to take place. All proceeds from the sold property must be used in the purchase of the new property. There must be an actual exchange overseen by a Qualified Intermediary.

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On December 5th of 2008 I wrote a blog on this very subject. I said if you are looking to buy it was a great time. Fixed rates then had just cracked 6 percent. Home values were getting cheap and there were some great buys popping up. Let’s fast forward about 45 days to today. Rates are unbelievable! In fact they are the lowest the have been in over 50 years. Interest rates poked through 5 percent. Rates in my opinion look to hang around here for a while or continue to go lower. There are several reasons we are seeing mortgage rates plummeting. For one the Fed has been a huge buyer of 10 year treasury notes pushing the yield close to 2%. It is also in their best interest to keep rates at these levels for as long as possible to help stimulate an absolutely dead housing market. Secondly there is still weakness in the MBS (mortgage backed security) market. The combination of the two and the Fed wanting low rates to help in jump starting the economy has brought us to where we are today.

If you are a buyer now there are some absolutely silly home prices out there right now. You just need to look. I have seen and heard of some staggering discounts on property. Homes that had sold for $3 million and now are being sold via a short sale for $1 million, Property that had sold in the $300k range are now selling in the $175-190k range.

If you have the patience you will be rewarded in this market. There are just getting to be too many good opportunities out there. And to boot with rates being this low it makes it all the better.

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While the Connecticut housing market may not be as bad as some of the “ground zero states” of the housing meltdown it is certainly on the decline. The state has heavy ties from a population stand point to the financial markets especially in Fairfield County and the insurance sector in Hartford and its surrounding areas.   

Late last week The Warren Group, the Boston based publisher of The Commercial Record  reported a 26.6 percent drop in single family home sales as well as a 16.2 percent median price drop between November 2007 and November 2008.

It will certainly be interesting to see what the years’ end figures will be. Being a mortgage broker I see appraisals on a regular basis and in some towns the prices have been flat but that is mainly due to a lack of sales in that respective town.  In some instances I have seen sharp declines and in speaking with several appraisers that cover the state they are reporting the same thing.

Below is a brief look on a Town by Town basis:

 Town                 07 sales-08 sales            Median price 07-08

Ansonia Homes sold 14-7 -50%              Price $236,650 - $190,000 -19.71%

Bridgeport Homes sold 40-33 -17.5%     Price $235,950 - $168,500 -28.59%

Derby Homes sold 4-4 0.00%                  Price $260,500 - $249,000 -4.41%

Easton Homes sold 4-10 150%                Price $618,750 - $577,500 -6.67%

Fairfield Homes sold 46-19 -58.7%         Price $598,000 - $615,000 2.84%

Milford Homes sold 41-22 -46.34%         Price $355,000 - $261,250 -26.41%

Monroe Homes sold 17-16 -5.88%           Price $439,000 - $423,750 -3.47%

Oxford Homes sold 5-13 160%                 Price $363,400 - $345,000 -5.06%

Seymour Homes sold 8-6 -25%                 Price $241,250 - $263,500 9.22%

Shelton Homes sold 27-16 -40.74%          Price $375,000 - $327,500 -12.67%

Stratford Homes sold 26-24 -7.69%           Price $264,950 - $266,950 0.75%

Trumbull Homes sold 28-22 -21.43%        Price $423,000 - $362,500 -14.3%

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