Use Your $8000 Tax Credit at Closing!

About a week and a half ago, there was a ruling allowing home buyers to use their First Time Home Buyer Credit (a max of $8000) toward closing costs. Today, VHDA (the Virginia Housing Development Authority) rolled out their plans implementing this program, and here are the highlights:

* The buyer's primary loan must be a VHDA FHA loan. There are income limits associated with obtaining VHDA loans, but the loans are generally below market rate. The income limits are adjusted based on family size, but for a 3 person household, the maximum income is $100,000.

* VHDA will basically "front" the buyer the tax credit - up to $8000 - to be used toward closing costs. (Note: Buyers must still invest 3.5% of the sales price as a down payment, and the tax credit can NOT be used to cover that minimum investment.)

The "fronting" of this money will be in the form of a second trust (aka a mortgage) which will be interest free for the first 12 months, allowing the buyer plenty of time to file for and receive their tax credit check, which should then be applied to pay off this loan.

* To claim the tax credit, buyers must CLOSE on their home no later than November 30th... so time is wasting! Take advantage of this loan program today.

It's a great new option for FHA buyers that qualify for a VHDA mortgage. For more information on this or other loan programs, call or email me. I am not a lender, but have alliances with several different lenders that offer different programs; and happily will refer you to the right loan counselor.

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Cindy Fox with SunTrust Mortgage provided this "Breaking News" to me this evening, allowing me to pass it on to you. She's a fabulous loan counselor familiar with all the government loan programs and options available to first time home buyers.

First Time Home Buyers

First time home buyers are starting to learn about the new tax credit of up to $8,000, and it is exciting them! It's evident in the online chats and at the water coolers across the nation. Combining that incentive with the incredible interest rates available today (many are under 5%), and the supply of available homes, it's a combination difficult to resist. Homes are more affordable today than they have been in a very, very long time.

And, first time home buyers are doing more than just chat. Here in Loudoun, they are taking action. In March, approximately 45% of the home purchases in the market were done with FHA and VA loans, most of which are first time home buyers.

Sales activity is up, again, in the region. In a year over year comparison, Loudoun's activity level has exceeded the prior year's activity for 10 straight months.

The result is that in the lower price points, inventory is declining. Buyers are finding that there are far less homes available than they anticipate, and the purchasing process can be very competitive, with contract prices often exceeding the list price.

Once they enter the market, first time home buyers are sometimes surprised at the amount of time it can take to find the right home and then successfully negotiate a deal. Short sales and REOs make for a complicated and turbulent process, and competent representation from a strong knowledgeable real estate consultant is required. With the tax credit set to expire December 1^st, home buyers interested in taking advantage of this credit should start talking to real estate professionals and lenders very soon.

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Buyers interested in learning more about the local real estate market in Loudoun and the Dulles area can contact me at vchrisner@kw.com.

August Market Update for Loudoun

Reports continue to show stabilization within Loudoun County. Since prices adjusted (down about 25% from last year as of the end of August), activity levels continue to be on the rise.

MRIS reports a 28.47% increase in the number of closed sales in August 2008 compared to August 2007. This has been a trend for several months (up 8% in July, 19% in June, 12% in May, when compared to the same months in 2007), and is a very positive indicator that Loudoun, at least for now, seems to have reached the "bottom" of the market and is improving. I have even seen recent transactions where an investor purchased a home from a bank a few months ago, and has flipped the property, quickly, making no improvements and raking in a handsome profit. Although I do NOT recommend this investment strategy in a volital market, it is very nice to see that we may be experiencing not just stabilization, but perhaps some recovery in limited areas.

The 37 cash purchases in August (about 7% of the closed transactions) indicate investors support the theory that Loudoun's market in strengthening.

And, with 37% of the transactions being financed with FHA and VA loans, we know that first time home buyers are seeing opportunities in the market of newly affordable homes available, coupled with historically low interest rates. I anticipate September will show further increase in FHA loans as those using the seller funded down payment assistance programs will rush to complete their transactions before the program disappears (CLICK HERE TO LEARN ABOUT THIS CHANGE). We may see a "lull" in October as first time home buyers, real estate agents and loan officers scramble to learn about other low/no money down options to keep a steady flow of these buyers entering our market.

Currently, Loudoun has a little less than a 5 month inventory of homes on the market. The National Association of REALTORS suggests that a 6 month inventory is indicative of a "balanced" market, with higher inventory levels being a "buyers market" and lower inventory levels indicating a "sellers market". I am not certain I would call this a "seller's market" considering how far prices have dropped compared to previous years. However, sellers who are pricing RIGHT when their listings enter the market place ARE seeing multiple offers and quick sales. The MRIS report shows that 30% of the homes that went under contract did so in the first 30 days on the market, and another 18% got a contract within the first 60 days. What happens to sellers "testing" the market with unrealistic pricing expectations? Those would be the listings that remain on the market well beyond the "average" of 103 days of marketing time.

So, what's next? With the Fed taking control of Freddie and Fannie, Lehman Bros filing for bankrupsty, Merill Lynch being purchased by Bank of America, and the seller funded DPA's disappearing, what's to come over the next few months? Stay tuned as I work to provide you with insights on this ever changing market.

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MRIS publishes new statistics monthly, around the second week of the month. The public can access these reports from MRIS.com. They are published by region, county, city, and even zip code. A qualified agent can help you understand the information contained in these reports.For an even closer look at market conditions, order a personalized Market Snapshot by clicking HERE. Type in the information about your home, and your email address... a personalized report will be sent to you in a few minutes, detailing information about the geographically closest homes which are for sale and have recently sold.