The tax credit expires April 30th!  First time homebuyers can receive an $8,000 tax credit  if you are in a contract by April 30th and close by June 30th.  The first time homebuyer market, under $150,000, is so hot right now you might actually pay more than $8,000 if you are in multiple offers.  So come May buyers will have a plethora of homes and good deals will start springing up.  Kare11 did a great story about the tax credit. 

Also there are still first time homebuyer programs out there:

If you buy in the city of Minneapolis or St Paul City Living Program or the Dakota County Bond Program for purchases in Dakota County. 
Great website for homeownership and first time homebuyers.  Home Ownership Center. 

If you have any questions about the tax credit or would like to get in contact with a lender who is able to do the first time homebuyer programs please give me a call. 

7 Tips for First-Time Home Buyers

A year after the financial collapse of 2008, the housing market is very different than it was before the foreclosure crisis.
Here are seven bits of wisdom from economists and financial planners for anyone contemplating a home purchase today:

• Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
• Don’t become overconfident about income growth. Even though buyers in their 20s and 30s will likely see their incomes grow more quickly than previous generations, it is important to act sensibly when borrowing.
• Anyone contemplating adding children to the family should calculate whether they could live on one income because having both halves of a couple work may turn out to be impractical.
• Include a maintenance budget. Even new homes need upkeep and repairs.
• Buyers who can’t afford their dream home now should opt for a starter home where they can save money each month for what they really want.
• Consider a property that can be expanded and improved down the road when money is available.
• No two buyers are the same, but they should all feel confident with the loan they enter into, no matter the size of the mortgage.

Source: The New York Times, Ron Lieber (09/12/2009)

December 1st the first time homebuyer tax credit is ready to expire.   To close by this date you will need to purchase in the next couple of weeks, contrary to the video, in our market closings take 30-45 days after all terms to a purchase have been agreed upon by the seller and buyer.  It is not too late.  Contact me if you would like to talk more about this free $8,000. 

For questions about the tax credit take a look at www.federalhousingtaxcredit.com.

Traditional Sellers: It’s "Go" Time

Or so says local REALTOR® and our data-friend (is that a word?), Aaron Dickinson in a recent blog post.

With foreclosure inventory dropping like a stone and often subject to multiple-offer price wars, and short sales still requiring a substantial amount of time and effort to close, Dickinson argues that traditional sellers have a unique window of opportunity in the fall market to nab a buyer. And that’s especially true for first-time buyers who need a quick close to get in before the November 30th tax credit deadline.

From the post:

• The first time home buyer $8000 tax credit expires on November 30, 2009 and most transactions take 3-5 weeks to close after an offer is made.
• Buyers will have to have chosen and negotiated on a house by the end of October to have a reasonable assurance of closing prior to the expiration of the credit.
• Banks do not have great concern over deadlines when dealing with REOs, so they are not likely to consider November 30th a “make or break” date even though the buyer will.
• Buyers making offers on short sales risk missing the tax credit if the answer from the seller’s lender takes to long or isn’t acceptable.
• In the coming weeks Buyers will find that the only option they have available to them has been the one who has been ready and waiting for this moment: the Traditional Seller.

If you are a Traditional Seller and your house is currently listed, keep it listed through Halloween if you can.  In past years the market quickly quiets after school starts but this year appears to be very different.  If you’ve been considering taking an additional price reduction, take it as soon as you can so you are priced correctly when the buyers’ interest swings your way… this will likely be you last-best-hope for selling till March 2010.

As we noted in our post from last week (see "Neighborhoods Where Traditional Homes are in Shortest Supply"), this has already started, to a degree. Sales of traditional, non-lender-mediated homes are up below $150,000 where first-time buyers can afford.

Sounds like "go" time for sellers.

Thanks to Minneapolis Area Association of Realtors

I would also like to insert my prediction of what might take place prior to the tax credit expiring.  With many single family homes selling in multiple offers, many buyers are going to take a second look at townhouses/condos.  This segment of the market has suffered immensely as many buyers want and demand single family homes in what used to be a buyers market.  With shortage of affordable single family homes more buyers will be buying townhouses.  So by looking in my crystal ball, my prediction is that we will see a rise in pending sales of townhouses and condos!!!

Reprinted from The Skinny Blog from the Minneapolis Area Association of Realtors:

Neighborhoods Where Traditional Homes Are In Shortest Supply

Last week we looked at which neighborhoods were seeing their inventory of available foreclosures and short sales dwindling. The general conclusion: lender-mediated properties are going fast and buyers have to be quick and aggressive to secure them.

This week we’re looking at the other side of the coin: homes listed by traditional sellers. In general, these properties are not selling quite as quickly than their cheaper lender-mediated cousins and are still facing challenging conditions. As of September 1 there was 10.1 months of traditional supply compared to 4.0 months of lender-mediated supply.

But there are some areas where traditional properties are moving relatively quickly. Let’s take a look at the Top 30 neighborhoods by Months Supply of Inventory. You’ll probably notice some patterns. Think urban and first-ring suburban, dudes:

Homes Listed by Traditional Sellers              Months Supply    Active Listings

1  303 - MPLS - Longfellow                               2.7                     55

2  744 - SP-Como                                              3.8                     51

3  361 - Crystal                                                 4.0                     62

4  304 - MPLS - Nokomis                                   4.3                     192

5  750 - SP-Mac/Groveland/River Road             4.4                    72

6  363 - Brooklyn Center                                   4.8                    73

7  378 - Richfield                                               4.9                    118

8  306 - MPLS - Northeast                                  5.1                    123

9  752 - SP-Highland Area                                   5.1                   82

10  308 - MPLS - Powderhorn                             5.7                   92

11  379 - Bloomington-East                                6.0                   93

12  362 - New Hope                                            6.1                   60

13  602 - South St. Paul                                      6.1                   67

14  360 - Robbinsdale                                         6.1                   72

15  746 - SP-St. Anthony/Midway                       6.2                  69

16  310 - MPLS - University                                 6.4                  42

17  309 - MPLS - Southwest                                6.4                  287

18  748 - SP-Town & Country                              6.5                  41

19  301 - MPLS - Camden                                     6.8                  150

20  742 - SP-Central                                             7.0                  70

21  738 - SP-Home Croft/W 7Th                           7.0                  30

22  768 - Fridley                                                   7.1                  85

23  770 - Hilltop/Columbia Heights                      7.2                  78

24  771 - Spring Lake Park                                   7.3                   22

25  766 - Moundsvw/New Brightn/St.Anthony   7.3                   150

26  391 - Saint Louis Park                                    7.4                   301

27  702 - Falcon Hghts/Lauderdale/Roseville      7.5                    159

28  716 - SP-Hillcrest/Hazel Park/Dayton’s Bluff 7.5                    191

29  720 - SP-Southeast St. Paul                          7.5                    39

30  714 - SP-Phalen                                             7.5                    113

There’s not a second- or third-ring suburb in the bunch. You’ll also notice that these neighborhoods tend not to contain too many expensive homes. The median prices in these neighborhoods tend to fall in the low-to-mid ranges that are affordable to a larger swath of home buyers. And when you think about perhaps the largest factor driving buyer demand right now, it makes a lot of sense: the first-time home buyer tax credit, dummy.

Let me show you what I mean:

I’d call that a pattern.

First-time home buyers are extremely active due to the tax credit and—unless mom and dad have chipped in a ridiculous amount of money to help—first-time home buyers don’t typically buy homes in the $500,000 and above price range.

What we’ve got is an extremely bottom-heavy market (insert inappropriate metaphor here) with robust activity in the price ranges typically populated by first-time buyers, and a declining market still searching for a bottom in the higher price ranges.

Takeaway: traditional home sellers in the mid-to-low price ranges have a serious window of opportunity for the next month to find a willing buyer, especially with foreclosure inventory becoming so scarce. When the tax credit expires in November, the landscape might look a little different.

The President just signed the new stimulus package, officially called the American Recovery and Reinvestment Act of 2009.  In addition to raising FHA loan limits the first time homebuyer credit changed for the better.  If you purchase a home between January 1, 2009 thru December 1, 2009 you will receive an $8,000 tax credit.  In contrast to the previous $7,500, this credit does not have to be paid back as long as you live in the home for 3 years.  An estimated 300,000 new homeowners will enter the market according to a CNNMoney.com article.  I honestly think this number will be much higher.  So what does this mean for sellers?  Buyers are flooding the market and have already started buying homes.  If your home is priced in the first time homebuyer price range (approximately $250,000) buyers will buy your home.  But remember our first time homebuyer’s are savvy and educated.  They have a lot to choose from and can be picky.  So get that home in move in condition, price it correctly and watch it move.