Wednesday, November 25, 2009

First Time Home Buyer Tax Credit Extended for the St George Area!

The federal $8,000 tax credit has been extended, not just 'in time' for the first time home buyers, but also previous home owners now qualify for a tax credit of $6,500. So, prices are at an all time low and it is an excellent time to buy St George Real Estate. The details of the tax credit are as follows: The first time home buyer’s eligibility has been extended for income limits being up to $125,000 and for married couples up to $250,000. The first time home buyer definition extends to not having owned within the last three years. Previous home owners are defined as those who have owned 5 out of the last 8 years. Both groups must identify the property and sign a contract prior to April 30 and close on that purchase prior to June 30, 2010.

Economic Stimulus Package- Is it working?

Well proponents of the stimulus package point to rising housing prices as bringing stabilization to the previous tail spin of our economy. They say that the extension allows the second half of 2010 demand, to get a boost up front, with later payoffs in stabilization in 2010.

Nay say-ers of the stimulus package say that the stimulus package did not induce enough buyers who were not already going to buy anyway, to purchase. Further, the original intention was to have first time home buyers purchase regular re-sale homes or new construction where as many ended up purchasing foreclosures or short sales, often from home owners who intended not to repurchase. However, this may have minimized the cascading foreclosure affects segment of the market. So, further extending of the tax credit is hoped to shore up the existing normal resale and new construction segment of the market to offer the 'more balanced' approach toward stabilization.

Implications for the St George Real Estate Market

Implications for the St George real estate market could be positive toward the aim of necessitating more regular re-sales or new sales precisely because the notice of defaults, or pre-foreclosure or short sale types of scenarios are becoming less frequent in the midst of sustained sales. So, as the supply of the Foreclosures and Short Sale homes gets depleted, yet demand for buying sustains, then it follows that more purchases will be common among the new homes and regular re-sale market. This will tend to help a new scenario of regular resale homes to occupy the sold segment of homes. These in turn help represent the comparable sales used to represent new pricing on homes entering the active sales market, thus helping non-distressed sellers regain preeminence in setting price in the market place once again. The background for how this process has affected the St George area home sales is explained below.

Three Stages of the Foreclosure Market- St George Real Estate Affected

Some of these assumptions are based on a pattern that has shown some relevancy before- the three stages of the foreclosure market. First, let it be noted that a “Notice of Default” is the first signs of possible foreclosure where a buyer no longer can continue to make house payments. So, the very first stage of the foreclosure cycle has been that, resold St George Utah foreclosures set lower pricing and this helped create a “back draft” to push many more homes into foreclosure. This first part did show increasing numbers of Notice of Defaults that has been tracked by title companies here in St George. We, as Realtors, get these notice of defaults as public information, and thus for us, are as potential sellers.

Real Estate numbers and statistics in the St George area have already shown this first stage where in the number of defaults increased, with sales just being higher than notice of defaults. As these notice of defaults already took a plateau, stage two, virtually March through June of 2009, here in the St George area, the number of sales equated to be about the same as the number of defaults. Then the third stage seems to be evolutionarily showing itself currently, where in the number of defaults has started to go down with a significant jump down in August, while the number of sales have sustained or at least appears to be sustaining more proportionately higher. There seems to be a pattern set in the fall of 2009 here in the St George area, where in the first sign of Notice of Defaults are bumping lower, while sales are proportionately higher. This has the effect of also beginning to work on existing traditional sales and inventory in the market being sold. This presents a new spectrum of sold homes, thus comparable solds research helping to help set precedence for future pricing of active for sale homes.

St George Utah Home Values- 2010

How fast this product (new resale homes to sell) will dump onto the market could help influence St George house prices, how low prices will retain (with increased supply) or as in the tax credit giving buyers some bite onto sellers, the uptake of sellers (supply dumping onto the market) may lag behind demand brought on buyers taking advantage a tax credit. The net affect could make 2010 a moderately good year while influencing consumer confidence toward spending and some will then generalize it to the rest of the economy returning to some spending, thus normalcy toward increasing production jobs etc. This is the hope engendered by the Stimulus Package. Not all agree upon the methods as to the overall affect being a good one or not, or as to it being illusory, thus disagreeing to a 'bail out'.

The purpose of this article has been to discuss the intentions and affects of the stimulus package and the reality of some of the statistics for the St George area and not to argue for or against the stimulus package.

Bottom Line
One local title company statistician points towards the kind of opportunity this all provides for buying in the St George area. Some of these conclusions were alluded to as follows: that great deals will be gone in 4 months, but that good deals will continue for some time thereafter. Real estate activity will get considerably better over the next 18 months. Pricing is at its bottom with a few exceptions. REO or foreclosure companies are not pricing their properties as aggressively as they have been in the past. Finally, a good maxim for those who are thinking of investing into a piece of real estate, St George Utah, 'At the intersection of home prices and interest rates lies incredible opportunity'.

St George Utah

St George is situated along I-15 and is SW Utah's culture and business center. St George is a popular stop through tourist destination featuring red dirt and rock high desert landscape. It is also the gateway to Zion National Park where towering cliffs drop off exposing mother nature itself at work, with slot canyons with curvatures rolling forms of red and sandstone rock. The weather is partly why we have 'snow birds' and our St George Retirement Communities. This and other reasons, we think, positions St George as a premiere location for future demand and growth. We have the new St George regional airport coming on line real soon.