March Pending Home Sales Point To Stronger Spring Market

The Pending Home Sales Index moved higher in March as home sales were spurred by low mortgage rates and an expiring tax credit.

A "pending home" is a property that is under contract to sell, but not yet closed.
March marks the second straight month in which the Pending Home Sales Index improved after a series of weak showings this past winter.
March showed a 5 percent increase over the month, but the Pending Home Sales Index is still off its October 2009's peak.  October 2009 is a comparable period to March 2010 in that it marked the 1-month deadline before the home buyer tax credit's initial expiration date. The credit was later extended to April 2010, of course.
That said, March's surge in sales is being felt on the street.
Home buyers in Philadelphia no doubt noticed the change in activity. Both locally in our company and around the country, anecdotally, multiple offer situations were more common last month and "right-priced" homes tended to go under contract quickly.

The increase in March's Pending Home Sales is diminishing the nation's home supply which, in turn, should cause prices to rise in most markets -- including Philadelphia and surrounding counties including New Jersey.

Today's buyers should consider making an offer sooner rather than later.  We will probably see the trend continue as activity in the month on April as measured by our firm was even higher than in March, but for an  offical number, we'll  have to wait until next month. But looking at the data, it appears the best time to have found a "deal" on a home may have been in February, when snow kept many homebuyers off the streets, giving the hardy souls who braved the weather a competitive edge.

7 Weeks Remain To Find A Home, Claim Up To $8,000 In Tax Credits

In November, Congress extended and expanded the First-Time Home Buyer Tax Credit program to include a subset of "move-up" buyers -- homeowners that have owned and lived in their home for 5 of the last 8 years.

The credit ranges up to $8,000 per buyer. There's now just 7 weeks left to take advantage.

To be eligible, home buyers must be under contract for a new home no later than April 30, 2010, and must be closed no later than June 30, 2010.

In addition to meeting the deadline dates, there's a basic set of requirements to be tax credit-eligible:

• You can't purchase the home from a parent, spouse, or child
• You can't purchase the home from an entity in which the seller is a majority owner
• You can't acquire the home by gift or inheritance
• Each buyer in the purchase must meet eligibility requirements

There's other criteria, too.

For one, the sales price on the subject property cannot exceed $800,000. Homes sold for more than $800,000 are ineligible for the tax credit. Furthermore, households earning more than $125,000 as single-filers, or $225,500 for joint-filers, are ineligible.

You can read the complete eligibility requirements at the IRS website, or, you may just find it simpler to speak with your accountant about it. There are some nuances in qualifying for and claiming the tax credit on your returns and getting a professional's opinion is always wise.

And lastly, don't forget that government's tax credit program is a true tax credit. It's not a tax deduction. This means that a tax filer whose "normal" tax liability is $3,500 and who is eligible for $8,000 in credit will receive a $4,500 refund from the U.S. Treasury.

If you're currently in the House Hunt, mark your calendar for April 30, 2010. It's 7 weeks away and you can be sure that as the date gets closer, buyer traffic is going to increase. You may find sellers more willing to negotiate today than several weeks from now.

Less Than 100 Days Left To Claim The Homebuyer Tax Credit

November 6, 2009, Congress voted to extend and expand the First-Time Home Buyer Tax Credit program. There's 100 days left to claim it.

The expiration date of the up-to-$8,000 tax credit has been pushed forward to spring, requiring homebuyers in Philadelphia and New Jersey to be under contract for a home no later than April 30, 2010, and to be closed no later than June 30, 2010.

In addition, "move-up" buyers were also added to the program's eligibility list meaning you don't have to be a first-time home buyer to be eligible for the tax credit. If you've lived in your home for 5 of the last 8 years, you meet the IRS requirements.

Move-up buyers are capped at a total tax credit of $6,500.

In our marketplace, that's a substantial amount of money. Areas with much higher priced homes see onyl a moderate impact from these tax credits, but in our market, which has always been a more balanced market economically, these amounts can mean a significant benefit to the homebuyer lucky enough to qualify and smart enough to take advantage of the program.

The tax credit's basic eligibility requirements remain the same:

• You can't purchase the home from a parent, spouse, or child
• You can't purchase the home from an entity in which they're a majority owner
• You can't acquire the home by gift or inheritance
• All parties to the purchase must meet eligibility requirements

The new law includes some notable updates, however.

First, the subject property's sales price may not exceed $800,000. Homes sold for more than $800,000 are ineligible. And, also, household income thresholds have been raised to $125,000 for single-filers and $225,500 for joint-filers.

And lastly, don't forget that the program is a true tax credit -- not a deduction. This means that a tax filer who's eligible for the full $8,00 credit and whose "normal" tax liability totals $5,000 would receive a $3,000 refund from the U.S. Treasury at tax time.

The complete list of qualifying criteria is posted on the IRS website. Review it with a tax professional to determine your eligibility. Then mark your calendar for April 30, 2010.

There's less than 100 days to go.

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