The Basic Requirements

You qualify for the tax credit if the:

• Home you’re buying will be your primary residence
• Purchase price isn’t more than $800,000

This credit is not a loan; it’s yours, but keep in mind you have to live in your new home for three years. If you sell the home in less than three years, you’ll have to pay back the money.

What’s Changed?

With the new legislation, buyers have more time to find a home and more buyers are eligible for the tax credit:

• New deadline: To qualify, you need to be in contract with a seller by April 30th & close on the home by June 30th (The previous deadline was November 30, 2009).
• Not just for first-time buyers anymore: Home buyers who’ve owned and occupied a home for at least five consecutive years during the past eight years are eligible for a credit up to $6,500.
• Increased income limits: Individuals making less than $125,000 and couples making less than $225,000 are eligible (The limits used to be $75K & $150K).

First-time buyers are eligible for a credit up to $8,000 on homes purchased between January 1, 2009 and June 30, 2010. Qualified homeowners can a credit up to $6,500 on homes purchased between November 7, 2009 and June 30, 2010.

Bonus Link

You can check out the full text of the bill. Scroll about halfway down to sections 11 & 12:

• Sec. 11. Extension and Modification of First-Time Homebuyer Tax Credit.
• Sec. 12. Provisions to Enhance the Administration of the First-Time Homebuyer Tax Credit.

Suffolk County

• 12,822 homes were for sale, down from 14,413 in September 2008
• 883 homes sold, up from 816 in September 2008
• The median sold price was $338,000, down from $360,000 in September 2008

Nassau County

• 9,516 homes were for sale, down from 10,259 in September 2008
• 845 homes sold, up from 775 in September 2008
• The median sold price was $405,000, down from $446,000 in September 2008

Queens County

• 9,800 homes were for sale, down from 11,377 in September 2008
• 618 homes sold, down from 663 in September 2008
• The median sold price was $341,500, up from $400,000 in September 2008

These numbers come from MLSLI.

Dig Deeper Into the Trends

These numbers are for county-level trends. To see what’s happening in your neighborhood, check out our stats & trends pages.

Here are the basic Case-Shiller stats for the New York City area* as of August:

Sixteen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs between July and August. Only Cleveland, Las Vegas, Charlotte, and Seattle marked seasonally-adjusted drops month-to-month.

Here’s a look at New York’s latest tiered data, back through 2000:

From the looks of the Case-Shiller tiered data, I’d say that the low tier seems to be benefiting the most from the summer spike. Given that much of the bounce has been attributed to the $8,000 tax credit available only to first-time buyers, that is not surprising.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Here’s the flip side of the peak decline chart, here’s a chart of just this year, indexed to January = 100%:

According to a Reuters story from earlier today, Robert Shiller has described the sudden spike seen in many markets this summer as potential “bubble territory.” I agree. As I have discussed on these pages in recent months, the sudden and simultaneous nature of this price uptick does not bear any marks of a return to fundamentals, but instead seems to be driven almost entirely by a mad dash for cheap loans (interest rates in the 5s) and free money ($8k tax credit).

I’m a little bit concerned that by interrupting the natural correction of the housing market, recent government intervention is setting us up for even more pain down the road. I hope I am wrong.

*[Case-Shiller defines the New York City area as all of Fairfield, New Haven, Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester, and Pike counties.]

But many of the foreclosed properties, also known as “REO” and “Bank Owned”  are being bought by cash investors who fix them to re-sell or rent them out.

Photo by ELIYAHU GURFINKEL, THE ANN ARBOR NEWS

These homes are put on the market at 55-65% of surrounding property values.  That leaves the everyday home buyer, with 10%, 20% even 25% down, who wants to get a good deal on a home little chance of winning a bid on one of these properties here in Nassau and Suffolk Counties. If you are an FHA borrower, putting the required 3.5% down, there is little hope – in this current market, Fall 2009 – of getting one of these homes.  Perhaps that will change, but only time will tell. Even if you have a large cash down payment, say 50%, another requirement is a pre-approval for a 203K Rehab Loan offered through the FHA.  Often times, these homes have been left abandoned for a year or more as the banks trudge through the foreclosure process and the home has been damaged as a result from neglect, break-in’s, theft, kids using the home as a party-house, etc.

Many of these homes need bathrooms, kitchens, windows, not to mention mold remediation, roofs, carpet, flooring and paint.  An FHA 203K Loan will help insure that you have the funds put aside to make those repairs that will bring the house back to being liveable. Lenders want to know you have the necessary funds set aside to do this or the house might end up back in foreclosure again.

Lastly, may of these Bank Owned Properties that are listed require you to be pre-approved through one of their own mortgage specialists. There is usually no obligation or cost for this, but they want to make sure you are truly qualified, whether through income and assets or through a proof of funds letter. Yes – if you say you are a cash investor, you must provide the proof of fund available, either through a copy of t[you bank statement (with your account number whited out, of course). Sure, they hope you will use them to get the mortgage because then they have your business, but it is usually not required once you have been pre-approved.

So, if you’re going to play in the fast moving game of REO’s, have your current paystubs, credit reports and bank statements handy so you don’t miss out on these properties while scurrying to get them together.

Then after all that, get ready to give up all your rights to property disclosure and renegotiation due to condition regardless of what you find during your inspection. These properties are sold “AS IS” period.

So, think buying a REO is a good idea? Please read this story three time and repeat after me “I am a Warrior, I will not be defeated in the quest for a Bank Owned Property”.  Good luck.

See this WSJ story below for some more fun anecdotes:

Are Distressed Homes Worth It?

Here are the basic Case-Shiller stats for the New York City area* as of July:

Seventeen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs between June and July. Only Las Vegas, Seattle, and Detroit continued to mark seasonally-adjusted drops month-to-month.

New York’s summer bounce has so far been more mild than other markets, but then prices here hadn’t fallen as much as they had elsewhere either, so we wouldn’t expect them to bounce off as much.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

I suppose this summer could be called the summer of the sudden surge or the summer of the massive desperate government intervention. Either way, the result has been increasing prices in most markets over the past few months. Potentially good news if you’re trying to sell your house, but not especially encouraging if you’re hoping to buy, but prices had not yet come down quite into your reasonable range yet. Whether the $8,000 first-time homebuyer tax credit expires or not, I think this winter will be interesting.

Here’s the flip side of the peak decline chart, the Great Summer Bounce of Aught-Nine:

It’s the best recovery that $700 billion plus $787 billion can buy!

*[Case-Shiller defines the New York City area as all of Fairfield, New Haven, Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester, and Pike counties.]

The following charts show the percent of MLS, FSBO or REO listings that were price-reduced at some point before leaving the market (either sold or removed unsold from the market) in the past 90 days. Cities/towns or neighborhoods in which the number of homes taken off the market was too small to provide believable estimates are excluded from ranking.

For those that are interested, I have uploaded the full data set in Excel format here. The downloadable Excel file also includes charts showing the top ten cities/towns/neighborhoods with the least reduced-price listings.

First up are the top ten cities with the most price-reduced listings:

Of the 205 cities/towns we ranked in the Long Island / Westchester area this month, only 9 had price-reduced ratios of fifty percent or more. Of the cities/towns we ranked, the median price-reduced ratio was 38.4%.

Getting a little more granular, let’s look at the top ten neighborhoods for price reductions:

Of the 91 neighborhoods we ranked this month, only one had a price-reduced ratio of fifty percent or more. Of the neighborhoods we ranked, the median price-reduced ratio was 31.9%.

Download the full spreadsheet to check where your neighborhood came in.

Suffolk County

• 12,893 homes were for sale, down from 14,650 in August 2008
• 998 homes sold, up from 907 in August 2008
• The median sold price was $350,000, down from $370,000 in August 2008

Nassau County

• 9,702 homes were for sale, down from 10,435 in August 2008
• 907 homes sold, up from 900 in August 2008
• The median sold price was $420,000, down from $477,500 in August 2008

Queens County

• 9,905 homes were for sale, down from 11,171 in August 2008
• 638 homes sold, the same number as in August 2008
• The median sold price was $390,000, down from $410,000 in August 2008

These numbers come from MLSLI.

Dig Deeper Into the Trends

These numbers are for county-level trends. To see what’s happening in your neighborhood, check out our stats & trends pages.

What trends did you see in August?

If you’re a first-time buyer, you have a little over three weeks left to find a home, make an offer and negotiate terms if you hope to close in time to get the $8,000 tax credit.

Close By November 13th

In a normal month, about 20% of closings slip from the last week of a month to the next. This number will almost certainly be higher in November due to the expected rush of buyers trying to get the tax credit and because November 30th falls on the Monday after Thanksgiving.

If you’re hoping to get the tax credit, you want to make sure you’ve closed before the week of Thanksgiving because it’s not a full work week:

• Thursday, November 26th: Turkey day. A day to give thanks and watch the Detroit Lions go for six Thanksgiving Day losses in a row.
• Friday , November 27th: Nassau County offices are closed.
• Saturday & Sunday, November 28th & 29th: The banks aren’t open so you can’t close.
• Monday, November 30th: The last day to close and qualify for the first-time buyer tax credit. It’s going to be a goat rodeo.

To give yourself the best chance of getting the tax credit, plan on closing by November 13th. If you run into any problems during closing, you’ll have more than a week to work things out and still qualify for the tax credit.

Get An Offer Accepted By October 2nd

Right now, it’s taking our clients an average of 42 days to close once they reach initial agreement on terms. This means if you want to close by November 13th, you need to get an offer accepted by October 2nd. That’s a little over three weeks away.

For more information, check out the Home Buyer Tax Credit FAQ from the IRS and get all the details about the tax credit from the agency giving the credit. Also, check out the report that this program may be extended.

Find A Home You Like

Don’t rush into a purchase. Make sure you’re buying because you’ve found a home you want to live in, not because you want the $8,000. You don’t want to end up in the wrong house in the wrong neighborhood with the wrong commute just for a few thousand dollars.

Kevin & Winnie

Anyone looking to buy in the central part of Nassau County should read the profile of East Meadow in The New York Times. East Meadow is in a great spot: 40 minutes from the city and 20 minutes from the beach.

From the article:

The area is replete with expanded Capes, many with twin doghouse dormers; split levels; ranches; and a few colonials. The size range is 1,100 to 3,500 square feet; lots are mostly flat. The subdivision known as Barnum Woods is slightly tonier, with larger splits and ranches and more lavish landscaping.

My favorite quote comes from Rachel Minkowsky, who bought a home in East Meadow two years ago. She says living in East Meadow “…is like something out of ‘The Wonder Years.’”

On Redfin, you can look at what’s for sale in East Meadow right now or check out the market trends for what’s been selling.

Looking at homes in East Meadow? What are you seeing in the local real estate market?

Here are the basic Case-Shiller stats for the New York City area* as of June:

Sixteen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs in June. Only Las Vegas, Detroit, Seattle, and Charlotte still saw seasonally-adjusted drops month-to-month.

New York seems to be currently experiencing a bit of a price bounce, but the effect here definitely seems to be a bit more muted than it is elsewhere around the country.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

It’s quite noticeable in both of the above charts that almost every city we’re tracking seems to have taken a sudden upward turn with the most recent few months of data. Despite the fact that there was a nearly two year spread in when the various markets hit their peak (Boston in September 2005, Seattle in July 2007), nearly every market appears to have turned a sharp corner to the positive after “bottoming” in March or April.

A commenter on my Seattle site made an astute observation about this phenomenon this morning:

Since it is still essentially true that “real estate is local”, what could cause every city to suddenly and simultaneously reach an equilibrium point where prices reversed course?

Answer: it just so happens that the home buyers’ tax credit was enacted with the American Reinvestment act (stimulus package) effective February 17, 2009. March 2009 was the first full month that American home buyers had the tax credit as an incentive. It changed their behavior and made them buy homes. It also expires on December 1, 2009 unless it is extended.

Once again, government policy is impacting asset valuations. Either we’re seeing a lasting nationwide housing bottom marked by an extraordinarily well-timed tax incentive, or a new “bubblet.” Case Shiller won’t tell us which until 2010.

It remains to be seen whether the NAR’s lobbying efforts to get the $8,000 tax credit extended beyond November will be successful. And even if they do convince Congress to extend it, the effect may be largely diminished. The program may have already pulled forward as many sales as it can during its spring and summer run.

*[Case-Shiller defines the New York City area as all of Fairfield, New Haven, Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester, and Pike counties.]