Omaha Existing Residential Real Estate Market for October, 2009
The number of existing homes sold in Omaha in October, 2009 was higher than in October, 2008. The prices were largely unchanged. A lot of this is due to the First Time Home Buyer Tax Credit which brought many new buyers into the market resulting in stabilized prices. I anticipate that Omaha home prices will remain stable until the end April, 2010. At that time without a signed contract buyer are ineligible for the credit. As a result unless something fundamentally changes then prices will drop.
Omaha New Construction Real Estate Market for October, 2009
In October the number of new construction homes that were sold in Omaha was up slightly over this time last year. The prices, however, are down dramatically. This is due largely to builders trying to target the first time buyer and they are doing this for two reasons. One, first time buyers do not need to sell a home in order to buy so this eliminates the worry of home sale contingencies. And two and more importantly, the First Time Home Buyer Tax Credit drew more people into the market that were looking for starter homes.
Are you still convinced that you need to have open houses in order to sell your home? Set aside the fact that VERY few homes sell due to an open house and that real estate agents are not doing open houses in an attempt to sell your home (Why Agents REALLY do Open Houses) and never mind that the majority of people that come to an open house are not even buyers (How Serious are the Buyers?).
Now there is yet another reason to avoid doing open houses. THIEVES! With the economy down, robberies are up and open houses are an easy target. Take a look at these two articles:
In my last blog First-time Home Buyer Tax Credit Extended and Expanded I covered the nuts and bolts of how the First-Time Home Buyer Tax Credit has changed. Now it's time to dig a little deeper and examine if this tax credit is a good idea.
Cost
The first aspect to look at is cost. The previous tax credit cost the federal government approximately $10.8 billion in lost tax revenue through August 22, 2009. The final numbers for its cost through November 30, 2009 are not yet available. Because many people who got the credit were going to buy a home anyway and because of rampant fraud, this amounts to $43,000 for each home sale generated that wouldn't have occurred otherwise.
Fraud
This brings us to the fraud that has occurred. The initial credit had no means in place of verifying if someone legitimately qualified for the credit. As such there were many people obtaining the $8,000 credit who either had not bought a home or who were not actually first-time buyers. Investigations found that a number of people fraudulently claiming the credit were IRS employees and minors, one as young as four years old. An inspector general for the Treasury Department stated that hundreds of millions of dollars in fraudulent claims have been identified.
The new tax credit now requires that buyers submit a copy of their HUD settlement statement as proof of a home purchase. This flimsy requirement does not, however do anything to verify that the property is being purchased as a primary residence, as required, as opposed to being used as a rental or second home.
Benefit?
After looking at the downside of the First-Time Home Buyer Tax Credit, is there an upside? Will it spur more home sales in Omaha? Will it boost Omaha real estate values? Economists have weighed in on the national affect of the original First-Time Home Buyer Tax Credit and estimates of the number of home sales generated due to the credit range from 200,000 to 400,000.
Locally it seemed that during the initial tax credit typical starter homes were selling a little more briskly than I might have expected. I would assume this trend will continue now that the credit has been extended. How will the expansion of the tax credit to current homeowners affect the Omaha real estate market? The hope of course is that these buyers will help reduce the supply of higher priced homes and I anticipate that this will happen at least to some degree. On the other hand for each of these homeowners who purchases a new home, they will also be increasing inventory when they go to sell their current home.
My Take on it
What do I think? Obviously, as a Realtor®, I benefit if more sales are generated and I expect that to be the case. However I do not think it is the best use of our tax dollars. With the economy as bad as it is and the government spending money as fast as it can print it, I think this is a huge waste of money. Never the less, if you are in a position to take advantage of it, then more power to you.
First-time Home Buyer Tax Credit Extended and Expanded
Yesterday the president signed a billed that extended the First-time Home Buyer Tax Credit. This bill also expanded the credit beyond just first-time buyers.
The big differences between the original tax credit and the new and improved version are that now current homeowners are eligible for a $6,500 tax credit, the income limits to qualify have been raised, and the new expiration date is April 30, 2010 but if one has a binding contract by the deadline they can still get the credit if they close the sale before July 1, 2010.
Below is a chart provided by the National Association of Realtors® comparing the original and the new versions of the tax credit.
FEATURE
Jan 1 - November 30, 2009 Rules as enacted February 2009
November 7 - April 30, 2010 Rules as enacted November 2009
First-time Buyer Amount of Credit
$8000 ($4000 married filing separate)
$8000 ($4000 married filing separate)
First-time Buyer Definition for Eligibility
May not have had an interest in a principal residence for 3 years prior to purchase
Same
Current Homeowner Amount of Credit
No Provision
$6500 ($3250 married filing separate)
Effective Date Current Owner
No Provision
November 7, 2009
Current Homeowner Definition for Eligibility
No Provision
Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years
Termination of Credit
Purchases after November 30, 2009. (Becomes April 30, 2010 on Date of Enactment.)
Purchases after April 30, 2010
Binding Contract Rule
None
So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Income Limits (Note: Increased income limits are effective as of date of enactment of bill)
$75,000 - single, $150,000 - married, Additional $20,000 phase out
$125,000 - single, $225,000 - married, Additional $20,000 phase out
Limitation on Cost of Purchased Home
None
$800,000 November 7, 2009
Purchase by a Dependent
No Provision
Ineligible November 7, 2009
Anti-fraud Rule
None
Purchaser must attach documentation of purchase to tax return
How will this affect the Omaha real estate market? Was this tax credit a good idea? Stay tuned for my follow-up blog post.
Troy Trumm | Alliance Real Estate | troy@troytrumm.com | 402-676-6700
19826 Sycamore Dr, Gretna, NE
19826 Sycamore Dr in the Northridge Estates subdivision of Gretna
4BR/3BA Single Family House
offered at $195,000
Year Built
2002
Sq Footage
2,788
Bedrooms
4
Bathrooms
3 full, 0 partial
Floors
2
Parking
2 Car garage
Lot Size
Unspecified
HOA/Maint
$0 per month
DESCRIPTION
Enough room for any family; four bedrooms upstairs plus a main floor office. The kitchen has maple cabinets, a center island, and new stainless steel appliances. Double doors open to the huge master suite featuring plenty of windows, a walk-in closet, custom light fixtures, dual sinks, and a whirlpool tub. Second floor laundry room with a sink and high end front-load washer and dryer. The basement is nearly finished, it just needs carpet and a ceiling. Professional landscaping and many trees give this home curb appeal that others lack. Other amenities include upgraded flooring, new lighting, fresh paint, a water softener and purification system, sprinkler system and cedar deck.
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The numbers for the Omaha real estate market are in for the month of October and they are a little disappointing. Based on the rate of sales there is currently just over a six month supply of homes to sell. This is the largest supply of homes since February 2009.
Total Number For Sale
5276
Total Number of Accepted Offers
868
Total Number of Closed Sales
810
% of sellers that accepted an offer
16.45%
Absorption rate in months
6.08
Much of this is due to the looming expiration of the $8,000 First Time Home Buyers Tax Credit. If this were to be extending, as some in Congress are proposing, I expect that sales would pick up a bit.
HAPPY HALLOWEEN! With the end of the month here, it's time for my monthly blog summary of new homes for sale. If you or someone you know is looking for a home, check these out.
The sale of a property I was representing in the Southern Oaks subdivision of Bellevue at 2721 Coffey Ave closed and the buyer was represented by Lisa.
Working with a good agent makes my job much easier. Lisa did a great job and made the sale very smooth.
I hope we can do more business together in the future.
The sale of my listing at 10906 Black St in the Deerwood subdivision of Omaha closed and the buyer was represented by Ron.
Working with a good agent makes my job much easier. It is time consuming selling over 50 homes a year, but having a good agent on the other side of a sale makes closing a deal much easier.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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