Duplex Chick

Comment

As we race like Kentucky Derby entries toward the finish of the first time and repeat home buyer tax credits, word came from the Minneapolis Area Association of Realtors  that new listings may be the fastest horses racing, not pending sales.

For the week ending April 17, new listings finished 21.9 percent ahead of the same week last year.

Pending sales, on the other hand, also grew but at a pace neck and neck with the 2009 statistics. In the end, however, 2010 nosed out 2009 by just 1.8 percent.

Duplex sales had a close year-over-year finish as well, with pending sales for the week finishing 11.5 percent ahead of last year’s.

The average off-market price for the week was also a nose ahead, crossing the wire at $124,789 compared to $121,742 for the same week last year. Of those listings that left the market, just 23 percent were offered by traditional sellers.

New listings for the week were the real winners; leading last year by 40.5 percent. Of that new inventory, 52.54 percent were offered by traditional sellers compared to last year’s 45.2 percent.

After the tax credit race ends on Friday, let’s hope the real estate market doesn’t come up lame.

Comment

With just 8 days left to qualify for both the $8000 first time home buyer’s and $6500 repeat buyer’s tax credit, it’s important to remember that a duplex qualifies for both.

Remember, the credits are for up to 10 percent of the purchase price of the property, with the total benefit not to exceed $8000 for  a first time home buyer, or $6500 for a move-up or repeat buyer.

For a duplex, qualification is based on the percentage of the property the buyer intends to owner occupy. For example, if the purchase price for a duplex was $200,000, and the buyer lived in half, her tax credit would be based on a purchase price of $100,000, with the total not to exceed the caps set by the federal government.

To be eligible for the first time credit, a person may not have owned a home in the last three years. Repeat buyers must have lived in their home for five consecutive years of the last eight years.

Both tax credits require that buyers have a binding purchase agreement in place no later than April 20,2010. However, these purchases have until June 30, 2010 to close.

Remember, FHA financing may be used for most duplexes, triplexes and fouplexes; meaning an owner occupant need only have 3.5 percent saved for a down payment.

Investors, on the other hand, are still restricted to conventional loans requiring 20 to 25 percent down as minimums.

Comment

As the $8000 first time home buyer and $6500 repeat buyer tax credits round the bases for home,  the Twin Cities housing market appears to be staging a late inning rally.

For the week ending April 10, 2010, the number of new listings to hit the market was up 47.9 percent over the same week last year. In spite of this leap, there is still just 6.5 months of housing inventory in the marketplace; the lowest supply in years.

Pending sales were also ahead of last year, though the 3.6 percent jump wasn’t enough to seal a victory.

Meanwhile, the Twin Cities duplex market seems to need a seventh inning stretch.  The number of properties to receive purchase agreements for the week was down 39 percent from last year. Of those transactions, 32 percent belonged to traditional sellers, with the balance involving some sort of negotiations with a lender.

This slow re-emergence of the traditional seller has served to boost the average price a property leaves active status on the MLS at. For the week, this figure was $106,489; a grand slam when compared with last year’s $80,873.

While excess supply can often lead to falling prices, the week’s  23 percent year-over-year gain was as welcome as a seventh inning stretch. Much of the existing inventory had been sitting for a while, and the appearance of great new listings gave duplex buyers in search of a tax credit something to cheer.

Remember, the deadline for both tax credits is April 30. By then, buyers must have a signed purchase agreement in place, with closing on the property occuring no later than the end of June.

Comment

If you’re not already out shopping for a duplex or single family home to purchase before the April 30 tax credit deadline, you’d better grab a caffeinated venti, a Realtor, and start doing some serious shopping.

There are less than six weeks left in both the $8000 first time home and $6500 repeat home buyer tax credits. To qualify for the former, you may not have owned a home in the last three years. For the latter, you must have lived in your present home for at least five years.

There are income limits, and, of course, both credits are capped at 10 percent of the purchase price, not to exceed $8000 or $6500 respectively.

It’s also important to remember that if you’re buying a duplex, triplex or fourplex, only the portion of the property you live in may be used to qualify. In other words, if you buy a duplex for $150,000 and move in to one half, you would divide $150,000 by half to get a value of $75,000. Your credit would be worth 10 percent of that figure, or $7500.

So you’ve got six weeks, right? What’s the big deal? Well, most first time home buyers I work with take longer than that to select their first home. And this year, they’re going to be competing against gallons of other first time home buyers for the “good” properties.

But won’t the tax credit be extended again? After all, not a single national media source is reporting a m

resurgence of the housing market, right?

Don’t count on it. With six weeks to go in last fall’s tax credit deadline, media and lobbyists alike were clamoring Congress to consider an extension.

To date, I’ve only seen one media story suggesting the National Association of Realtors may have begun lobbying Congress for an extension.

But largely, there appears to be no broad push for an extension.

Time to get shopping.

Comment

There are less than 60 days left to qualify for either the first time home buyer or repeat buyer tax credit.

That looming deadline may well have inspired the Twin Cities housing market’s 13.9 percent year-over-year jump in accepted offers for the week ending February 27.

While not as dramatic, the duplex and small multifamily property market also saw an increase in pended transactions; up 4.4 percent year-over-year.

Of the properties that pended, 19.46 percent were offered by traditional sellers; up from 11.6 percent for the same week in 2009.

While neither year posted particularly inspiring average off-market prices, the figure for the week in 2010 of $83,746, did nonetheless represent an increase of $805 over the year before.

The amount of new duplex inventory continued to trail last year’s mark, with just 45 properties coming on the market for the week. This represents a 30.7 percent drop from last year.

Of these new listings, 28.9 percent were offered by traditional sellers. While that’s a figure that appears thin, it is still more than twice as many as last year.

As the tax credit deadlines loom, let’s hope for continued good news.

Comment

As a Realtor, I get asked a lot of questions.

They range from, “What were they thinking when they installed the bathroom here?” to “Won’t people just make us an offer, even if we list our duplex at a higher price?”

I don’t know the answer to the first question. And the answer to the second is usally no.

But these days, the question I get asked most often is “Does a duplex qualify for the $8000 first time home buyer tax credit?”

And while I’ve discussed it here before, then answer was and is yes.

For the record, multifamily homes like triplexes, four-plexes and apartment buildings qualify too. However, the property must be used as your principal residence. It’s also important to note you can only get credit for the part you live in.

The credit has been structured so that any first time home buyer who has a binding purchase agreement in place by April 30, 2010, can receive up to 10 percent of the property’s purchase price, not to exceed a total of $8000 in the form of a tax credit.

Since only one half of the duplex would be used as your principal residence, you can only use the value of one half of the property to qualify.

For example, if you pay $160,000, your half would be worth $80,000.  If you buy a duplex for $100,000, however, your half is worth $50,000. Your tax credit would then be 10 percent of your half , or $5000.

The same would be true if you bought a four-plex for $200,000 and lived in one of the units. The value would again be $50,000, giving you a credit of $5000.

Of course, to receive this credit, you must not have owned a home in the past three years. If you’re single, you can’t earn more than $125,000 a year and if you’re married, the two of you can’t earn more than $225,000.

Purchase agreements must be signed no later than April 30, and the transaction must close no later than 60 days after that.

Call me if you want to beat the deadline.

Comment

With all the snow on the ground, April 30 seems ages away.

But really, it’s only 74 days away.

Less than three months to find your first duplex or house before the $8000 first time home buyer tax credit expires. Less than three months for repeat buyers to qualify for the $6500 credit.

Yes, it still sounds like a lot of time. Except for the fact that many of the first time buyers I’ve worked with have taken four to six months to define exactly what it is they’re looking for in a property and then find one that matches both their budgets and criteria.

Remember, purchase agreements must be signed no later than April 30, 2010, to qualify for the credit. New owners must take title no later than June 30.

If you’re wondering whether you qualify, just remember; a first time home buyer is defined as anyone who has not owned a home in the last three years.

A repeat buyer must have lived in their homes consecutively for five of the previous eight years.

For either, income limits are $125,000 for single buyers and $225,000 on a joint tax return.

Of course, in either instance, the maximum home price is $800,000.

Comment

If you’re thinking of waiting until after the Vikings win the Super Bowl to start shopping for a Minneapolis duplex, don’t.

While most Minnesotans tend to think of spring as coinciding with the Twins‘ home opener the first week of April, and the spring housing market commencing with the opening pitch, Realtors know otherwise.

The spring housing market starts February 8; the Monday after the Super Bowl.

With the $8000 first time home buyer and $6500 move-up buyer tax credits set to expire on April 30, not only will there not be a lot of time to find a property, you’re also going to face a lot more competition.

Some of it is already out there. And increased demand always leads to increases in prices.

I can’t think of any other time in the years I’ve been a Realtor when my business has experienced this much activity during the holidays and -22 degree wind chills.

Imagine what the market will be like when you don’t have to wear Carhartts to look at duplexes. Or, heaven forbid, the Vikings play like, well…the Vikings.

Comment

Sometimes, it pays to read more than just the headline in the newspaper.

The biggest real estate headline last week announced the extension of the $8000 first time home buyer tax credit through April 30, 2010.

But if you stopped reading there, you probably don’t know there’s more to the story.

Now there’s a tax credit for existing homeowners too.

If you’ve owned a home or owner occupied a duplex for the last five years, you are now eligible to earn up to a  $6500 tax credit if you sign a purchase agreement before April 30.

The credit may be applied for purchases of up to $800,000 for single family homes.

While I have not seen a cap on the purchase price of a duplex, only the portion of the property you intend to owner occupy is eligible to earn either tax credit anyway. For example, if you purchased a duplex for $200,000, you would count the value of your half, or $100,000, toward qualifying for the credit.

As always, any type of property you use as your principal residence may qualify for the credit. Vacation homes, however, do not count.

There is some debate among those who have the time to argue such issues as to whether or not the tax credit for existing property owners will help stimulate sales. The naysayers argue as these people have property to sell before they can buy, more inventory will hit the market, therefore further supressing prices.

In my opinion, if those people have duplexes or single family homes appropriate for first time home buyers, the additional inventory would be welcome. There just aren’t that many good lower end properties out there to choose from.

According to the Wall Street Journal,  Mark Zandi, the chief economist at Moody’s Economy.com, agrees with me. He thinks the expansion of the credit will result in 500,000 more home sales by the end of April.

That’s 10,000 more sold properties per state.

There’’s news worth reading.

1 Comment »

For those hoping for more time to get around the track in order to take advantage of the $8000 first time home buyer tax credit , it looked like Congress was poised to keep their hands off the stop watch last week.

Both CNBC reporter Diana Olick and Realty Times columnist Kenneth Harney reported last week that sources indicate to them that the credit will be extended for several months past its November 30 deadline.

Chairman of the House Ways and Means committee, Congressman Charles Rangel (N.Y. -Dem.) also stated to Dow Jones Newswires, “There’s no question I think it should be extended. How long, I haven’t discussed.” When it comes to expansion to all home buyers, however, Rangel expressed his opposition.

Both the National Association of Realtors and the National Association of Home Builders have been advocating for a one year extension of the credit, expanding it to all home buyers and capping it at a maximum of $15,000.

Of course, Congress is rightly concerned about how to pay for it. The original tax credit was included as part of the governments stimulus package. To date, this component alone has cost the government an estimated $15 billion.

Having said that, it has repeatedly been credited as being responsible for the uptick in activity in the housing market, and, as a result, one of the most successful pieces of the stimulus package.

Some estimates for the cost of an extension range as high as an additional $15 billion. One solution for covering the additional cost has been offered by the Republican Senator from Georgia, Johnny Isakson, who suggests the extension be funded with some of the unspent money from the original $800 billion economic stimulus bill.

Of course, until legislation is passed, the deadline to qualify for the credit remains November 30. We’ll watch for news out of Washington in coming weeks for further evidence of change.