Over the past few months in the Week in Review e-newsletter, the New Jersey Association of REALTORS® (NJAR®) has discussed the possibility of the New Jersey Legislature passing a bill that creates a state tax credit program for home purchases. Recently legislation, A-1678/S-692, was approved by the General Assembly establishing a New Jersey Home Buyer Tax Credit Program under the state gross income tax for home purchases made within a one year period following enactment of the law.  As a means of bolstering the Garden State’s faltering economy, the bill creates a refundable tax credit of up to $15,000, or 5 percent of a home purchase price (whichever is less) for qualified home buyers. If eligible for the credit, home purchasers will receive the credit over three years, during which time the home purchased must be used as a primary residence.

Under the current bill, $75 million in funding is set aside for the purchase of newly constructed homes and $25 million will go towards purchase of previously occupied homes. While NJAR® is working to have more money dedicated to the purchase of existing homes, the main focus of the bill is to put people in the building trades to work and stimulate the economy through income and sales tax revenue created by the new construction. NJAR® submitted a memo explaining the economic benefits associated with enacting a state home buyer tax credit and expanding it to include more existing homes.

Before this legislation can become law, it must be approved by the full state Senate and be signed by Governor Chris Christie. The full Senate may vote on the bill as early as its next scheduled meeting on June 10, 2010. To date, we have not received confirmation as to whether Governor Christie is inclined to support the legislation. Please stay tuned to www.njar.com and the Week in Review for any updates on this critical measure.

Happy Spring ; the weather is surely making everyone feel cheery.

The market demand is showing its face. A new listing in Bridgewater last
week saw 16 showings in the first 5 days that produced 4 offers and a result
in an accepted offer “over-asking”.

Proof of homes in good condition/updated that is priced fairly will produce
top dollar for the seller.

This month I have a few new listings that I would like to give you a “head’s
up” on.

14 Hickory Rd, Greenbrook.$850,000. 5 BRs. 3.1 bath finished basement.

This home will hit the MLS around 4/15/10.

Beautiful raised patio and landscaping!

21 Briarwood Drive E., Warren

$985,000

5BR, 3 full baths, finished basement, fabulous backyard, nicely decorated.
Truly move in condition.

In the Warren market, there is an obvious void of good valued homes, in
general.  But more evident, is the $1MM-$1.4MM price range and the
$700K-$1MM price point.

Even with the news stating the market prices are down, I see LOW INVENTORY
which translates to higher pricing.

February 2010 SOLD data is now posted

Click on the “How’s the Market” tab on the website to review this town market information.

The federal tax credits for first time home buyers and buyers “moving up” are set to expire in less then 60 days.
 
Last time this program expired in 2009, there was a fair bit of lobbying, and buzz to get Washington to extend and expand the credit.  The result then was that the credit was extended for first time home buyers and expanded to folks that were not first time home buyers, so-called “move-up” buyers.
 
This time around the effort to expand/extend these tax credits does not appear to have gained much traction. 
 
We anticipate that if buyers are not under contract to purchase a home by April 30, 2010, and the credits are not extended, that they will no longer be available.
 
Tax credits reduce (dollar for dollar) the actual taxes due to the IRS, and are much more valuable than deductions or write-offs.
 
Also noteworthy to report, is that the Federal Reserve has announced they will curtail their highly unusual practice of purchasing mortgage securities, and may in fact become a seller of these same securities.  This measure is slated to occur in March (this month).  In many cases, the Federal Reserve has been the only, or nearly the only buyer, for certain new mortgage securities.  Economists disagree about the exact impact on mortgage interest rates, but most agree that removing a large buyer of these securities will cause a rise in mortgage rates.  Now the debate appears to be about how much of an increase is likely, not whether rates will rise.
 
Therefore, we think the timing is excellent to buy a home, and we are strongly recommending to all that they evaluate for themselves and others, the ability to act now to benefit from both the tax credit and low mortgage rates.
 
Information in the blog was written and provided by:
Matthew J Northup
Private Mortgage Banker
Arlington Capital Mortgage
O-(609) 921-3131ext 1334
C-(908) 507-1642
Email-mnorthup@arlingtoncapital.com

I just attended a seminar sponsored by KHOV at the Warren 55+ community. The speaker was Jeffrey Otteau of the Otteau Valuation Group, the leading analyst that looks at the NJ real estate market. I have talked about him before, as he has a huge following as he examines SOLD data and UNSOLD inventory.

He began by saying that this is a “window of opportunity” for buyers and sellers. There are 10,000 fewer homes on the market than last year, the lowest since the high inventories of ’07,’08 & ’09.
There is pent up buyer demand, homes are now more affordable with lower price AND lower interest rates and the incentives of the federal tax credits as I mentioned before in my previous blogs.
This is the time for sellers to get the best prices and buyers the best “payment”. Just FYI, for every 1% increase in interest rate, a buyer will lose 9% of purchasing power (or another way to say it is, it will now cost that buyer 9% more for the SAME house. Mortgage experts say that in preparation for the government ending their support of keeping interest rates artificially low at the end of March 2010, bond prices have already started to edge up. Many believe we will be at 6.5% interest rates in no time. It is/was foolish for buyers to wait until the last minute to capitalize on the federal tax credit deadline of going under contract BEFORE April 30, 2010, before the making their home purchase, as you will now have to pay more.

He reiterated that the recession most likely ended in Oct 2009, but we won’t see confirmation on that until this summer 2010. We are in a housing recovery and prices have stabilized! In NJ, the 1st quarter of 2009, prices went down 12%, 2nd quarter – down 10.4%, 3rd quarter – down 7.4% and 4th quarter – down 6 % compared to the 12 months prior.

More good news…In 2009, no increases in foreclosures in NJ.

We are now back to end of 2004 housing prices. Last year, pricing was down a gentle 4-5%.
When comparing to other states in the US, NJ has outperformed US average, up 129% since 1991. A very nice investment. NY has increased 105% and CA only 66% over the same time period.

Mr. Otteau admits that the future of the housing market in the 2nd half of 2010 is still questionable. The tax credit will now be gone, interest rates will be higher, prices have edged up a little higher—about 2% this year. The job market is still not clear. Thus a “slump” could begin in July 2010.

Regarding commercial real estate, NJ has suffered about a 5% loss as compared to Atlanta GA suffered a 50% loss of value.

UPDATE: Regarding this lovely home in Warren, it is now in attorney review after multiple offers!

I wanted to inform you of a brand NEW listing in Warren that just hit the market today. 40 Casale Drive So., Warren.

Great price of $799,900!

This home is meticulously maintained on a great, quiet cul de sac street!

Call me today!

This one won’t last.

I wish we were watching the NY Jets tonight in the Super Bowl. Oh well, at least the music at halftime was entertaining with The Who. Actually the onside kick was pretty aggressive of a tactic. Well speaking of aggressive…with regard to the real estate market, those homeowners pricing aggressively are seeing positive results, in my opinion. A client of mine put an offer on a home in Westfield. Great house in nice neighborhood, kind of small, but totally redone and updated. This home got 7 offers after being on the market 5 days. I am certain it sold WAY over asking price. That leave 6 other real buyers out there still desiring to purchase a home. The demand is out there for sure. In Warren as well. A couple of homes came on the market in nice locations with an appealing price and both under contract in days! As agents we see the market activity way before it is reported. Sales and prices will be up in the first quarter of 2010, at least in our market area of Somerset & Union Counties. Homes in updated condition and priced fairly are the ones flying off the market.

I have a great home listing in Warren that will be coming on the market in Warren. Here is a head’s up… 40 Casale Drive So., Warren will go on the market at $799,900. I believe there is a strong demand in this price point with available inventory being limited. This home is just lovely…updated, gorgeous kitchen with vaulted ceiling, Skylights, granite counters, Maple cabinets, professional grade stove and hood, sub zero refrigerator. My homeowner was very savvy to listen to advice and price it every aggressively. I hope and expect the result will by multiple interest.

More new listings coming on…watch my blog to see the listings before they hit the MLS.

January 2010 SOLD data is now posted.
Click on the “How’s the Market” tab on the website to review this town market information.

I am finding that many people still are either unsure about the new tax credit information or don’t even know about it…especially that it isn’t just for 1st time buyers anymore.

Since 11/09 when the government extended the 1st time buyer tax credit AND expanded the program to include other buyers as well, for up to $6,500, I wanted to educate my clients to help  determine if going under contract before the 4/30/10 deadline is the right decision for you.

Just a basic definition of a tax credit…this is a figure that directly comes off the bottom line of your tax return, off the amount you owe the government. This is after tax dollars.

There are many details of the program, so if you believe you would like to purchase at this time and benefit from this tax credit, please consult a tax attorney or your accounting professional. The summary I am providing you on this website is just that…a concise summary of the guidelines.

Tax Credit Information

Basics of the Program
The American Recovery and Reinvestment Act of 2009 includes a provision for qualified first-time U.S. homebuyers to receive a tax credit of up to $8,000.

In November 2009, the provision’s deadline was extended and the credit was expanded to give most other homebuyers a tax credit of up to $6,500.

The credit amounts to 10 percent of the purchase price up to the credit limit. So a home purchase of $80,000 or more would be good for the full $8,000 credit for “first-time” buyers; and a home purchase of $65,000 or more would be good for the full $6,500 credit for qualifying “repeat” buyers.

No credit is available for home purchases that exceed $800,000. The credit never has to be repaid, provided that the buyer continues to own and live in the home as a principal residence for a minimum of three years straight.

Under the deadlines revised in November, buyers must have a written, binding contract in place before May 1, 2010 and close before July 1, 2010.

Note: As with any tax legislation, the details can quickly become complex with individual filers’ unique situations. I cannot provide tax or legal advice. Please confirm eligibility and pursue filing questions directly with the IRS or their own tax professional.
Program Details

• An individual qualifies as a first-time buyer if neither he nor she, nor their spouse, owned a principal residence in the United States in the three years prior to closing. 
• An individual qualifies as a repeat buyer if he or she, or their spouse, owned and lived in a principal residence in the United States for five consecutive years within the eight years prior to the closing date. 
• Even if a co-borrower (or someone providing help with the down payment) is ineligible for the credit, the otherwise qualified buyer remains eligible – meaning a parent can help a child (nondependent and at least age 18) buy a home – and the child can receive the credit.
• Buyers can receive the full credit even if they don’t owe any taxes for the year in which they file for the credit.
• There are income restrictions, which were revised upward with the November modification. The full credit can be taken by individual filers with Modified Adjusted Gross Incomes up to $125,000 and joint filers up to $225,000. The credit phases out after that and is eliminated at $145,000 for individuals ($245,000 for joint filing). Be aware of the distinctions between Adjusted Gross Income, Modified Adjusted Gross Income and Taxable Income. This IRS Web page has details on calculating Modified Adjusted Gross Income.

I encourage clients to consult the IRS, IRS Web site or a tax professional.

With the turn of the monthly calendar to January 2010, I believe all typical cycles of real estate markets have been thrown out the window, this year.

Usual holiday downturn in sales did not happen this year. On the contrary….I believe we saw record sales. Of my own listings, we saw 3 go under contract in December, some that have been on the market for 4-6 months. Focusing on the new year, buyers are coming out of the woodwork to ask, “will there be more choices coming on in January?”. What a change of pace! With low inventory continuing, I am really seeing a shortage of properties for my buyers to purchase. I have numerous buyers just waiting for the right one to come on the market for them to jump at. I continue to tell my buyers, buy now…don’t wait. The closer you get to April, the more demand that will occur. Sellers continue to get more and more realistic and I am trying to show them that this increase in buyer demand over the next few months is a great opportunity to get their home sold.

What will happen to the typical “spring market”? I think it will be VERY early this year, as buyers need to be under contract by 4/30/10. Come April and May, we will be left with the buyers that weren’t able to take advantage of the government tax credits. Hopefully, they will be just as eager to finally purchase. Maybe they will have just SOLD their home during the “tax credit” months of Jan-April.

 Happy New Year to all. 2010 is starting off with a refreshing uptick. I look forward to making a lot of deals together.