Living Colorado Springs » First Time Homebuyer Tax Credit

Home Sales in Colorado Springs up 4.7% in June

Rick Van Wieren — Thu, 01 Jul 2010 15:54:51 +0000

June Colorado Springs home sales were up 4.7%, compared with June of 2009. This was undoubtedly affected by deadline of the Home Buyers Tax Credit, with June 30 being the last day to close to still be eligible (before the last minute extension of the closing deadline passed by both the house and the senate). The average price was up 7.5% at $242,315, and median was up 5.3% at $205,000.

Less positive was the increase in homes for sale. The inventory of homes for sale in Colorado Springs rose 14.5%, to the highest level since October 2008. Also, the Selling Price to List Price ratio dropped to 96.7%, which is low by local standards.

With interest rates in the 4′s, the remaining summer months should be moderately healthy, and more ‘normal’, with tax credits and other government stimulus actions less of a factor. The things that will turn our market around more quickly than anything will be more jobs in Colorado Springs, and the return of the thousands of troops who are currently deployed to the Middle East, to Ft Carson.

For more details on current housing market conditions, please visit the Market Conditions section of www.LivingColoradoSprings.com

How Much Was That $8,000 Tax Credit Really Worth?

Rick Van Wieren — Mon, 24 May 2010 14:57:26 +0000

The most frequently asked question I hear these days is, ‘How’s the market now the tax credit program is over?’ This is a really good question. While I’ve been very busy, the fact is, showing traffic is down, and I’ve had fewer calls from first time home buyers. This will be a busy closing week, as many of the first time home buyers are going to be closing on the homes they contracted for in April. May will likely be one of the best closing months of the year.
Having said all that, lets look at what the long term benefits of the tax credit really add up to, compared to other factors at work in the market. The $8,000 credit, when used in conjunction with other programs, freed up cash for buyers who did not have adequate down payment resources otherwise. This of course adds buyers to the market. But it really only helped buyers in the lower portion of our market, since the credit only covered the down payment of an FHA loan on a $228,000 house.
Since most buyers, even 2nd and 3rd time buyers pay for most of their home with a loan, the bigger issue is payment size. $8,000 spread over 30 years at 5% interest is a payment of $42.95. To put that in perspective, interest rates have fluctuated in the 3 weeks since the tax credit ended from around 5.25%, to 4.75% (I actually received quotes of 4.5% on certain loans this weekend). On that $228,000 house, that is a swing in house payments of $69.66 per month. So how much was the tax credit really worth? If you didn’t have the cash, quite a bit. But for those with even $8,000 in cash of their own, they will save substantially more from lower interest rates than the credit was ever worth. How long will these nice rates last? Unlike tax credits, they don’t announce these in advance, so you just have to take advantage of them when they are there!

Tax Credit Almost Done – Now What?

Rick Van Wieren — Wed, 28 Apr 2010 01:38:33 +0000

Many in the real estate industry are holding their collective breath to see what comes next after this Friday’s expiration of the First Time Home Buyers Tax Credit. While some thought it would be extended, the reality is that the Federal government has got to back off from its assumed role as rescuer of the housing market, and let people get back to business.
So does this mean that sales will dry up? Probably not. While we may have borrowed a few transactions from the summer months into the spring, the housing market does not really ebb and flow that much around special incentives, and is driven more by jobs, and the need for housing. Young people are still graduating from college, getting married, having kids and buying their first homes (not necessarily in that order!), with or without tax credit help. People are still transfering to accept new jobs, or retiring, or divorcing, or whatever other ‘change of life’ event that happens that changes housing needs.
Interest rates are trickling up a little, but are basically still at incredibly low levels. Colorado Springs homes are a great value, and there are lots of nice homes for sale right now. The economy is not great, but getting better by the month, if not the week. And Colorado Springs is still a GREAT place to live. Will sales slow? Maybe a little. But my own perspective is that there will continue to be many reasons for people to buy a house in Colorado Springs. And I’ll be here to help them!

Back to Work – 2010 is Coming!

Rick Van Wieren — Mon, 28 Dec 2009 15:22:13 +0000

Christmas is over, the guests are gone, and it’s time to get back to work for me after several days of feasting (ok, the leftovers may be here for a bit!). I may also get a day of skiing in yet, but my focus for this week will be on getting 2010 off to a good start. With the Broncos teetering on the verge of eliminating themselves from the playoffs, it should actually get easier to focus, since I really don’t have a 2nd team I root for

I am not an economist, and don’t want to pretend to publish a true economic forecast for Colorado Springs, but for 2010, there are several things that are pointing to a better year for Colorado Springs real estate. Some of them are:

Unemployment looks like it has peaked, and at least locally has already improved (7.2%), with signs the Colorado Springs economy will be stronger in 2010.
The extension and expansion of the homebuyers tax credit ($8,000 for 1st timers, $6,500 for others who may qualify) should add a little ‘juice’ to the 1st quarter anyway. The program expires April 30, and hopefully by then we’ll be into a little stronger spring season to help continue momentum.
Interest rates, while they may not stay as low as they are currently (high 4′s, low 5′s), will probably not get out of the 5′s for a while yet.
We do not have a glut of homes for sale in Colorado Springs, which positions us well for recovery in terms of home prices. As home prices strengthen, the equity of local homeowners who have wanted to move up will rise, enabling them to move up and giving some badly needed help to the new home construction industry.

There are certainly still some clouds still on the horizon, so this New Year celebration may be a little subdued in the Colorado Springs real estate industry. Some of them are:

Many of our buyers come from outside the area, and continued problems around the country will ‘slow the flow’ as people either can’t get liquid from selling their existing homes, or can’t qualify to buy a home here while they wait for their current home to sell.
We have a fair number of people who have been credit damaged or equity depleted in leaving their current situations, further shrinking the pool of eligible buyers. This is exacerbated by the tighter lending rules we have been living with for a while.
There is a wave of adjustablerate mortgages scheduled to rest in the next 6 to 24 months, that will feed the foreclosure problem when people get the bill for their new, higher payments. I may devote a separate blog to this in the near future. We don’t expect this to be a huge problem locally (Option ARMs were not so popular here), but this will affect some of the areas that people come from that want to move here.
Continued deployments to Afghanastan by Fort Carson based troops may throw a wet towel on our on our hopes for a stronger year.

Here’s to 2010 – may it be a better year for you and yours as well!

New House Tax Credit Program Should Be Good for Colorado Springs

Rick Van Wieren — Sat, 07 Nov 2009 16:01:00 +0000

We’ve seen some nice activity in the Colorado Springs real estate market from the current First Time Home Buyer Tax Credit program, but the new tax credit program should be even better. Here is a link to the IRS writeup on the new program.

For starters, it isn’t JUST for first timers any more. We’ve needed a little extra incentives for some existing homeowners, to consider a buying move (as if 5% interest rates weren’t enough!). While the incentive is a little less ($6500 vs $8000), it is a good start. It also only will apply to primary residence moves, so this won’t be an investor or 2nd home purchase program. And it only applies if the prior home was your primary residence for 5 of the last 8 years, thereby excluding anyone who has bought in the last several years and is ready to move on. It will also likely require many to sell before they rebuy, putting some pressure on short term rentals. But all in all, it should help a little at the higher end, because more buyers in the qualifying categories are likely to buy in the higher price ranges than 1st timers.

Some unintended side effects of the program could be:

1. Downsizing sellers could end up putting more pressure on lower priced homes, as well as adding higher priced homes to an already glutted inventory of more expensive homes. The 90th percentile in our market was only $345,000 last month, indicating some of this was probably already happening.

2. The additional buyers this may generate will have houses to sell, adding to the inventory in all price ranges.

3. Builders will see additional activity from this, however more contingent contracts will likely appear, contributing to some increases in ‘spec’ homes, when move up buyers are unable to sell at terms they can afford. The program requires the contract to be agreed to by April 30,2010, but it can close as late as 6/30/2010, providing a little flexibility for builders, who often need 6 months to actually build a home from scratch.

It is a little cooler today, only 68 (ok, I’m bragging:), but probably the last day of the year that will be that warm. Pretty nice for November, that is for sure! Today’s photo is of Mt Sopris, taken from the hills above Basalt last month. Sopris is part of the Elk Mountains, and while not a 14er, presents a nice dramatic backdrop to the Roaring Fork Valley on the way to Aspen.

Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784! Visit me on Facebook to see even more photos!

Colorado Springs City Election Presents Hard Choices

Rick Van Wieren — Thu, 05 Nov 2009 16:20:00 +0000

The results are in, and Colorado Springs voters have taken a hard line against any kind of increase, or even maintenance of city tax revenue. We are a little famous for being very anti-tax here, so in some ways this should be no surprise. However, it does present some ‘interesting’ decisions for the city council, seeking to balance a budget that has been hit hard by decreasing sales tax revenue. Of course, all the fun stuff gets paraded out to the chopping block first (parks and bus service for instance). Police and fire salaries, whether by headcount, furlough, or layoff tend to be next. Street maintenance is never far behind, although since they are already doing so little in that area it isn’t that productive. Usually not mentioned are mayor and city council salaries (or size), wonder why? My personal hope is that the city will figure out some good creative ways to avoid cutting back things like park maintenance, we have some of THE best parks in the country!
I’m kind of glad Congress is getting serious about extending the 1st Time Homebuyer Tax Credit, both in time and scope. There is still some discussion going on, but I’ll cover this when the final version passes, maybe by tomorrow? The extension of the program to some existing homeowners is particularly exciting.
We may set warm weather records 3 days this week, with another day in the 70′s for today, pretty great for November! I’ll take it, we had snow last week to offset it!
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784! Visit me on Facebook to see even more photos!

Colorado Springs Home Sales Jump in August Over ’08

Rick Van Wieren — Tue, 01 Sep 2009 13:39:00 +0000

The preliminary sales data from the Pikes Peak Association of Realtors indicates home sales in Colorado Springs for August of ’09 to be up a whopping 14.5% over August of ’08, while the inventory of unsold homes dropped 20.3% from 1 year ago. Prices are still on the soft side, but down only 5.4% from 1 year for the average, and only 2.5% for the median. The average home sold for 97.5% of the asking price. This is the strongest year to year gain in sales we’ve seen since I started tracking it several years ago. It is due to several factors, including:
1. Stronger demand from returning GI’s to Ft Carson
2. The $8,000 first time Home Buyer Tax credit (which is due to expire in less than 3 months)
3. Low interest rates, still in the low 5′s.
A more sobering look indicates prices and sales dropped from July, indicating that we may have seen our best sales month already this year, which follows our normal seasonal pattern.
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784!

First Time Homebuyer Tax Credit Questions Still Coming Up

Rick Van Wieren — Thu, 16 Jul 2009 15:38:00 +0000

I’ve gotten a few questions just in the last week again about the 1st Time Home Buyer Tax Credit, and thought I’d address them here. Note: This post is corrected as of 8-26-09.
This program was put in place to stimulate the housing market by giving qualified 1st time home buyers a financial incentive to buy something now (as if incredible interest rates and low prices weren’t already reason enough!). The IRS has a pretty good web site information center on this at http://www.irs.gov/newsroom/article/0,,id=205416,00.html, but let me give you the ‘Readers Digest’ version.
1. The credit is 10% of the purchase, up to $8,000 ($4,000 for married filing separately). It is a credit, not a deduction, and it is refunded to you even if you did not owe any taxes.
2. It can be taken against your 2008 OR 2009 taxes, so if you already filed 2008, you can file an amended return to get it back.
3. To qualify, you can’t have owned a home in the prior 3 years, and it is phased out in the higher income brackets.
4. It is a GREAT deal. Since FHA financing only requires 3.5% down, it effectively means the IRS is making your down payment on an FHA deal all the way to a $228,000 purchase, which is right at the average sale price in Colorado Springs.
5. It only applies to purchases between April 8, 2008 and December 1 2009. This means that even if you bought your house last year, before the economy really tanked, you are still eligible, and if you have not bought yet, you have until 12/1 to close.
6. You have to file a tax return and complete a required tax form in order to get this, it is NOT an automatic. If you’ve previously filed your 2008 return, you can amend the return to receive this as refund.
Hope this helps! Not a first time home buyer? Not a problem, pass this information along to someone who might be! Questions? Call Rick Van Wieren at 888-568-6784 or 719-590-4768 or email rick@ricksellscolorado.com.
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