First-Time Homebuyer Tax Credit

Great news for first time home buyers!

Congress has created a temporary federal income tax credit available to first time home buyers as a part of the “Housing and Economic Recovery Act of 2008”.

The amount of the federal tax credit is for 10% of the cost of the home, up to a maximum credit of $7,500. In essence, this is an interest-free loan that enables consumers to receive a tax credit on a dollar-for-dollar basis on their personal income tax return in the calendar year following the year of closing on their home. They begin paying the tax credit back the year after that and make equal installments during the next 15 years. If the homeowner sells the home at any point during the 15-year payback period, then the remaining amount is recaptured, unless they sell the home at a loss, at which point the balance is forgiven.

Now is the time for a first time home buyer to make their purchase! For more details please visit The National Association of REALTORS(R).

Fairfield County Market Update

Single family homes on the Greater Fairfield County Consolidated multiple listing service, during the first ten months of 2008 continue to sell but lag behind last year’s pace. To date, we have 4,579 closed sales and an active inventory of 5,094 homes. That represents a unit sales decrease of 28% vs. 2007 resulting - in 11 month supply of homes on the market, currently. Inventory is down from a 13 month supply earlier during September of this year. As we move into the first of the year, we expect inventory to begin its normal seasonal increase. Some sellers will begin to list after the holidays with the number increasing as we move into the spring season when our beautiful perennial plants and trees begin to bloom. The median selling price county-wide on the Greater Fairfield County Consolidated mls is $515,000 down 8.8% across the total number of houses sold in all Fairfield County towns, on the Greater Fairfield County MLS. Of course the difference varies by town and by property price range. So it is important that our listeners ask their REALTOR the specifics about the town and price range in which they are interested.

Sales, among the upper price tier has slowed significantly more than other price ranges. Sales over $2MM represent just 5.4% of homes that have sold but 12.3% of homes on the market waiting to sell. Sales over $3MM represent 2.2% of the total homes sold but 6.1% of homes currently listed for sale.

It is also interesting to note that the median list price of the active single family homes is 36.2% higher than the median list price of the homes that are under contract and 34.7% higher than the median list price of those homes which currently have accepted offer. This would seem to indicate that unless there is a sudden change in market performance, the upper end has slowed substantially more than the average and lower price ranges and also that sellers who are realistic about market conditions are being successful at reaching agreement with buyers.

There are 347 properties with fully executed contracts waiting to close. The median price of those homes is 30% lower than the median price of closed homes so far this year vs only 15% lower through 9 months year to date.

There are 220 properties with accepted offers. The median list price of those with accepted offers is $404,499, 27.3% lower than the median selling price for the properties that have closed so far this year.

Interest rates have decreased due to government support of loans and lenders’ insurance against losses. This a great time to purchase a home. Buyers who wait might find slightly lower prices but an increase in interest rates could result in the same payments or higher for a lower priced house.

Sellers should talk to their REALTORS about ways to make their homes stand out above their competition and if they really want to sell they must price realistically! Buyers should be cautious in their selection of lenders. It is critical that they find a reliable lender who will still be in existence, with the funds for their closing.