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Deadline Pushes Minneapolis Duplex Market
March 9th, 2010 categories: Twin Cities Real Est
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.
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The Question Most Often Asked On Duplex Chick Is…?
March 4th, 2010 categories: Tax Credits
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.
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Clock Ticking On Minneapolis Duplex Tax Credit
February 15th, 2010 categories: Tax Credits
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.
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Have Your Minneapolis Duplex Super Bowl Party – Now
January 8th, 2010 categories: Buying A Duplex
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.
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Read The Rest Of The Duplex Story: Earn $6500
November 9th, 2009 categories: Buying A Duplex
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.
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Another Lap Likely For Minneapolis Duplex Tax Credit
October 19th, 2009 categories: Tax Credits
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.
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Will There Be An Encore For The $8000 First Time Home Buyer Tax Credit?
October 12th, 2009 categories: Tax Credits
With just six weeks left in which to take advantage of the federal $8000 first time home buyer tax credit, overatures are coming from Washington that an encore may be in the works.
Last week the House quickly passed an extension of the credit for military, diplomatic and intelligence personnel serving overseas.
This action may well increase the odds that Congress will extend the program into next year.
Following a meeting with the president at the White House that was attended by Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, congressional aides said that by en large, Democrats support an extension of the credit. In fact, Reid is the co-sponsor of a Senate bill that would do just that for another six months.
According to Washington Post columnist Kenneth Harney, word of a possible expansion of the credit begin to travel through Washington following the White House session.
Harney’s sources said one of the options under consideration is an expansion of the $8,000 credit to people purchasing replacement homes, provided their incomes do not exceed a pre-determined income limit.
The present tax credit is limited to single taxpayers who earn less than $75,0000 and couples earning $150,000 and less.
While this would be welcome news, we’ll leave our cell phones and lighters in our pockets until the necessary players are gathered on stage, ready to make an announcement.
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Tax Credit Puts Squeeze On Minneapolis Duplex Sales
October 6th, 2009 categories: Tax Credits, Twin Cities Real Est
The federal $8000 first time home buyer tax credit has been a lot like brushing your teeth.
We all know it’s good for us and the economy. And we all know if we don’t rush to take advantage of it, it, like our teeth, may well be gone.
But like brushing, buyers haven’t taken as much advantage of the tax credit as they should until they absolutely had to.
Realtors have been warning them for months of the coming rush, just as dentists warn of decay. And now, the deadline is near.
This fact is clearly reflected in this week’s Weekly Activity Report from the Minneapolis Area Association of Realtors.
The association reports that pending home sales for the week ending September 26 were up 41 percent from the same week last year.
To make matters worse for procrastinators, there are 20 percent fewer homes on the market to choose from than there were one year ago.
Things are even tougher over in the small multi-family market, where there were 40 percent less new listings for the week.
Of those duplexes that came on the market, 84 percent were listed below $200,000. Meanwhile, traditional sellers contributed 29 percent of the new inventory. This is up slightly from the 21.7 percent share of traditional sellers in the market in 2008.
Pended duplex sales were up as well, with 40 percent more receiving purchase agreements in the week than they had in the same strecth one year ago. While the average off market price was down 9.7 percent from last year’s figure, the properties that left the market did so after just 64.6 days. This is 12.4 fewer days than for the week in 2008.
Both years saw banks involved in the negotiations for about 84-85 percent of the transactions.
As we near the end of the tax credit, it looks like we’re all going to be squeezing the tube of toothpaste from every angle.
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Minneapolis Duplex Market Race Heats Up
September 29th, 2009 categories: Twin Cities Real Est
On your mark. Get set. Go!
As the summer drew to an end, the race to qualify for the $8000 first time home buyer tax credit before the November 30 deadline started a mad dash toward the finish line.
The numbers are staggering.
Pending home sales for the week ending September 19 were up 33.5 percent over last year’s total for the same week.
New listings were up slightly too, with 3.2 percent more new inventory coming on the market than the same week in 2008.
Duplex and small multi-family sales in the Twin Cities were also up 35 percent from their 2008 mark.
But here’s the staggering part. The average number of days a duplex was on the market before selling last year was 89.9. This year? 41.5. In other words, the average market time for a duplex has dropped by more than half.
Of those properties that received purchase agreements for the week, 84.8 percent involve negotiations with a lender. This is up slightly from the 79.4 percent of the sales for the same week in 2008. Last year, 76.5 percent of the properties that sold were at prices under $200,000. For the same week this year, 66.7 percent fell below that mark.
The average off market price of a Minneapolis or St Paul duplex for the week was $128,780. This represents a drop of a mere one percent when compared with 2008.
The amount of new inventory also continues to drop; down 27.7 percent from the week in 2008.
Again, much of this activity may be the result of the approaching deadline for the tax credit. We’ll have to wait until December to analyze the results.
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Can Minneapolis Duplex Market Survive Without The Tax Credit?
September 18th, 2009 categories: Legislation
As the sand in the hourglass of the $8000 first time home buyer tax credit begins to run out, an article in the New York Times this week reported there are doubts that the housing market can function without it.
The Times article estimates that as many as 40 percent of all home buyers this year qualify for the credit. In fact, the National Association of Realtors estimates the credit is responsible for 350,000 in sales this year alone. Moody’s Economy.com, however, is still more optimistic, putting the figure at 400,000.
Evidence to support this may be found in the fact that mortgage applications for the week ending September 3, showed the largest gain since early April.
Home builders and the National Association of Realtors want Congress to extend the tax credit through at least next summer. The groups are suggesting the program be expanded to $15,000, and the credit granted to all buyers.
Republican Senator Johnny Isakson of Georgia, the sponsor of the original Senate bill, is working on just that. Isakson is submitting a new bill that would give a maximum $15,000 tax credit to any buyer who stays in the home for at least two years.
A former Realtor, Isakson accurately states that “The problem now is not first-time buyers, it’s the move-up market…”
Don’t hold out for the $15,000 credit, however. Washington, being the contentious place it is, is sure to hotly debate any additional stimulus package. If a new housing tax credit is passed at all, expect it to be a watered down version of Isakson’s original idea.
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