Cleveland Heights' Proactive Response to the Housing Crisis

Cleveland Heights has taken positive proactive steps to deal with the foreclosure problem. Read about the Neighborhood Stabilization Program and see what good things the city is doing!

http://blog.cleveland.com/sunpress/2011/05/cleveland_heights_sells_three.html

Encouraging Signs in Cleveland Heights Real Estate

After a very difficult period in the Cleveland Heights real estate market I see encouraging signs. According to Trendgraphix, which collates and measures MLS data, the following encouraging signs have been seen in the Heights market in the price range of $80,000 or higher. I have excluded less expensive home because these tend to be distressed home that distort the market picture. For the period February 2009-2010:



The number of homes for sale declined 8.1%, the sold price per square foot increased 11.7%, the average sold price increased 42%, and the months of inventory (meaning how many months would it take to sell everything on the market at the present rate of sales) dropped 40.9%. Days on market increased 10.2%, meaning it is taking a little longer to sell homes in this price range than a year ago. How could the average sold price rise 42% and the average per square foot price rise only 11.7%? That probably means that the larger homes are selling more as the economy recovers somewhat.



So, we have a decline in the number of homes for sale and rising prices. The two areas of concern are one, the fact that the federal government is ending its intervention in the housing market (by buying up mortgage-backed securities) at the end of this week and two, that the MIP (Mortgage Insurance Premium) for FHA loans will rise from 1.75% ot 2.25% on new loans on or after April 5th. This means mortgage rates will probably rise and FHA loans will become a bit more more expensive.

HOMEBUYERS TAX CREDIT- We still have five more weeks before the homebuyers tax credit program ends. That combined with the prospect of rising mortgage rates, upward price pressure, and the influx of new residents and doctors coming to the Cleveland Clinic and University Hospitals means we will probably see in increase of sales in April. What happens after that remains to be seen. Overall I would say that this is still a historically great time to buy or move up to a larger home.

I hope you are enjoying the milder weather and looking forward to spring!

GOOD NEWS FOR FIRST-TIME HOME BUYERS!!

On July 30, 2008, President Bush signed H.R. 3221, the Housing and Economic Recovery Act of 2008, a major housing bill providing a tax credit up to $7500 for first-time home buyers. This is for purchases between April 9, 2008 and July 1, 2009. Note that this is a tax CREDIT, not a deduction. Anyone who has who has not had an ownership interest in a principal residence in the previous three years is eligible, up to certain income limits. Those limits are $75,000 for single tax filers and $150,000 for joint filers. The credit is 10% of the purchase price of the home with a maximum credit of $7500. For example, if you purchased a home for $65,000 your tax credit would be $6500. This amount would apply both to single and married taxpayers. If your income exceeds the limits then your credit would be reduced by a formula set by statute. Call me for details. If income exceeds $95,000 (for singles) or $170,000 (for joint returns) then no credit will be allowed. Also, people who obtain financing through mortgage revenue bond (i.e. through a tax-exempt bond-related program offered by a state housing agency) are not eligible. Here’s the rub… this tax incentive must be paid back over 15 years. I.E. 6.67% of the credit must be paid back each year. For a taxpayer receiving the full $7500 credit the yearly payback amount would be $502.50.

If you receive the full $7500 credit and your tax bill is less than $7500, would receive a refund. For example, if your tax bill was $6000 and you purchased a home for $75,000 or more you would receive a refund of $1500.

The only down side of this legislation is that this credit will not be useable as part of a downpayment, since you cannot claim the credit until you file your 2008 taxes in 2009, and the credit is only available for purchases up to July 1, 2009 (That means title transfers before July 1, 2009. So as a practical matter unless you get a tax refund in time to apply it to a downpayment and close on a purchase before July 1st, you won’t be able to use the credit for a downpayment.)

On balance I think this is a wonderful help to first-time buyers and it should be taken advantage of. Ask your realtor about it!