A recent report from Deutsche Bank confirms what I have been seeing around my offices lately, while the impact of the first time buyer tax credit is up to debate, there is no doubt that the activity spurred by the credit to date has certainly elevated the mood of my agents, and spurs hope for the future of the market.

The Deutsche Bank report concludes “While the actual impact on sales numbers may be relatively light, the impact on consumer psychology, and that second-order impact on the housing market, could be meaningful, and should serve to take a worst-case scenario off the table, at least over the next several months”.

Economists at Goldman Sachs estimate that with the expanded income limits around 70% of all current homeowners will be eligible for the tax credit and that should actually help to raise home prices over the next few months.

In September, existing owners accounted for around 60% of sales, which means that around 42% of all sales last month would have been eligible for the new credit, following Goldman’s count, in addition to the 30% of sales that went to first-time buyers.

This Week’s Real Estate Insight:

The housing market is still constrained by unemployment, foreclosures and tighter credit. Serious sellers should grab this opportunity to really make their house shine; the $800,000 cap on homes eligible for the credit will exclude only around 3% of all homes. There are buyers out there, but they need to know that they are getting maximum value.

If home sellers are serious about selling, they can take advantage of the psychological impact of the new tax credit. Research the comps in your neighborhood and properly price your house to sell. Clean, de-clutter, and stage it to the max. Make sure you that you choose a Realtor that has a good web presence and that you have quality photographs.

Residential Properties is throwing a First-Time Home Buyer Open House Extravaganza this Sunday, June 14th.

We will be showcasing a home for every lifestyle. These homes include everything from new construction to meticulously maintained homes with unique details.  The event will showcase Cape Cod Style houses, ranches, and a variety of styles of Colonials, priced between $50,000 and $450,000.

The Extravaganza covers Cumberland, Lincoln, North Smithfield, Central Falls, and Woonsocket. Come experience Northern Rhode Island’s charm! Our open house will be stocked with materials that will help to answer questions about the $8,000 tax credit and provide further resources.

View a list of our participating Open Houses.

CommunityWalk Map – Condo Open House Extravaganza!

CommunityWalk Map – Open House Extravaganza!

Good news! There has been a recent increase in sales activity throughout RI of homes being purchased by first time buyers!  First Time Home Buyers are a driving force in the recovery of our housing market.

The American Recovery and Reinvestment Act of 2009 has made up to $8000 tax credits available to qualified first time home buyers for homes purchased between January 1 – November 30, 2009. As long as the home buyers stay in the home for at least three years, they do not have to repay this credit.

To fully understand this tax credit and other programs available, we invited Ann Palmisciano, a Mortgage Originator and Elaine Hebert, Assistant Director of Alternative Lending, both from Rhode Island Housing to speak to our Cumberland office.  Rhode Island Housing offers incredible programs including low interest loans, grants, education, advocacy and consumer counseling to help consumers to prepare for a purchase and retain their homes.

Who qualifies as a first time home buyer?
If you have not owned a principal residence in the past three years, you can qualify.

This tax credit is not the only assistance available to buyers.
The new Neighborhood Stabilization Program provides funding that can be used toward Homebuyer Assistance.  Homebuyer Assistance may provide up to 20% of the purchase price up to a maximum of $40,000 in down payment assistance to income eligible home buyers purchasing qualified foreclosed properties in foreclosure-impacted neighborhoods.

In conjunction with our efforts to understand what is available for first time home buyers, our office is throwing an Open House Event on Sunday, June 14, 2009. We will be opening many of our listings priced for First Time Buyers! Our open houses will be stocked with materials that will help to answer questions and provide further resources.

Visit our website next Thursday to view the addresses and times of First Time Homebuyer Open Houses!

Deep within the massive new stimulus plan are a few lines of text that could save American home buyers a pile of cash.  According to the new plan, first-time home buyers who buy a home this year will be eligible to receive an $8,000 tax credit.

This important change gives qualifying home buyers cash they do not have to pay back unlike the $7,500 tax credit already available to some home owners under last year’s Housing and Economic Recovery Act.

Under the previous plan, the $7,500 tax credit was a 15-year interest-free loan and was available to home buyers who purchased their homes after April 9, 2008, and before July 1, 2009.  The new tax credit offers a larger tax credit, but it also has very specific restrictions, from the date of purchase to the buyer’s income.

Some of the eligibility qualifications include:

• The buyer must be a first-time home buyer.
• The plan defines a “first-time home buyer” as “buyer who has not owned a principal residence during the three-year period prior to the purchase.
• “The house must be bought between Jan. 1, 2009 and Dec. 1, 2009.  For anyone who purchased a home before the New Year, it won’t qualify.
• The tax credit only counts if the home is bought after Jan. 1 and  the home cannot be purchased after Dec. 1 – meaning there are 30 days at the end of this year during which time anyone buying a home would not be eligible for the credit.  Why the cutoff doesn’t naturally fall at the end of the year is anyone’s guess.
• The buyer’s modified adjusted gross income (MAGI) must be less than $95,000 for an individual or $170,000 for a married couple filing a joint return. Up to a modified adjusted gross income of $75,000 for individuals and $150,000 for joint filers.
• As income rises from there, however, the amount of available credit declines until the buyer’s MAGI reaches $95,000, at which point the buyer is no longer eligible for credit.
• The house purchased must be the buyer’s  “primary” home.
• Eligible home types include single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
• The buyer must live in the home for at least three years after the purchase date.  Home purchasers cannot move, sell or otherwise leave the home they purchase for at least three years to retain eligibility to receive the tax credit.
• The cost of the home is $80,000 or more. According to the way the plan is written, the home buyer receives 10 percent of the home purchase price – meaning, to receive the maximum available $8,000 credit, the home must be bought for $80,000 or more.

Confused?  Click over to FederalHousingTaxCredit.com and clear your head.