INHABIT AUSTIN: real estate

No matter which side of the political aisle you hang your hat on, the recent economic stimulus package has left many still wondering, ”How will this help me?”

If you plan to buy or sell your primary residence this year, then look no further than page 202 of the 407 page American Recovery and Reinvestment Act of 2009. In order to encourage consumer demand in the housing market, a small portion of the $787 billion total–approximately $6 billion–will make it’s way to the pockets of home buyers in the form of a tax credit. 

Among many other things,  Congress approved some key changes to the First-Time Home Buyer Credit, which was initially authorized under the Housing and Economic Recovery Act of 2008.  And in record fashion, the IRS has already updated the tax Form 5405for you to take full advantage by filing for 2008 or 2009. Please consult with your CPA, tax attorney or other financial advisor to discuss your specific qualifications.

Who May Be Eligible:

You purchased a primary residence (main home) after April 8, 2008 and did not own a home for three years prior.

You purchase a primary residence before December 1, 2009 and do not own for three years prior to the purchase date.

Your modified adjusted gross income is $75,000 or less ($150,000 if married, filing jointly).

One of the most notable changes to the initial tax credit passed in 2008 is the waiver of the repayment schedule for homes that were purchased in 2009. Many have concluded, the whole notion of repayment was counterproductive for a demand-side incentive to stimulate home sales. Unfortunately, Congress didn’t retroactively extend the perk to all of those who made a qualified purchase in 2008.

For those looking to buy in 2009, the tax credit no longer works like an interest free loan, but rather potentially as an outright refund. Of course, as is often the case with U.S. tax law, one caveat remains: You must retain the home as your primary residence for 3 years, otherwise you’ll be required to repay the credit.

So technically, the expanded provision does more to loosen the attached string, but doesn’t sever it entirely. Regardless, I expect this to help many renters who have been positioning themselves to enter the market and find a great deal on their first home. And assuming they keep the home for three years or more, they’ll receive a nice gift from their Uncle Sam.

Below is a comparison of the modifications made to the previous tax credit…

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On March 30th, the Red Line will open for business. The Capital MetroRail, which spans 32 miles of existing freight tracks, will operate between Leander and Downtown. According to their schedule, the trip will take 57 minutes. This month, Capmetro held a few open houses at the future stations and platforms. I paid a visit to Crestview Station and adjacent Midtown Commons, a transit-oriented-development.

The paint was fresh, the ticket machine was shiny and the cabin had that new train smell. If you didn’t make it out, here’s a few of the features you can expect to find aboard the Swiss-manufactured trains.

• 200 passenger capacity
• ADA accessible
• Free Wifi service
• Bicycle racks
• Pull-down trays and tables
• Max speed 75mph

Since the MetroRail utilizes the same tracks as an operational freight line, the service will only run weekdays during mornings and afternoons in peak rush-hours. Will it ease traffic congestion and the carbon footprint for those brutal commutes to and from North Austin? We’ll find out in a month. But even if it doesn’t shave off a lot of time for the trip, I’d much rather pay the $1.50 to spend 57 minutes or less enjoying my coffee and reading the paper on the way to work, as opposed to inching down Mopac and shaking my fist at the car that just cut me off.

This year started off a lot like 2008. Slow. Not a big surprise though, since many expect the recession to run its course through most of this year. Moreover, January and February are seasonally slower months. In Austin, the impact has left us with fewer homes selling and softening prices throughout the city. Here’s a quick look at how each sector fared this January compared to last: 

By most accounts, Austin remains a buyer’s market. But there are pockets where reality is a little different. These areas have remained affordable and are seeing healthy activity as a result. For example, just this week, a client I represent missed a house with multiple offers in Crestview. It wasn’t a short-sale or foreclosure. The home was priced at market, in fantastic condition and happened to be precisely in the client’s desired area–the necessary elements for any successful sale.

Now, I wouldn’t say my anecdote is sufficient evidence that we’ve reached the bottom. More than likely, it’s one of a few isolated cases happening in our market. The fact remains, current inventory continues to give buyers the advantage. And although it’s slowly leveling off, many sellers rather than significantly adjusting their price, are either letting the listing expire or withdrawing altogether.

Reasoned prudence is in every one’s interest right now, especially if there is any uncertainty with job security. That being said, renters, who have been working diligently to eliminate their revolving debt and save for a down paymenet should be rewarded nicely when they choose to purchase this spring and summer. They’ll also get a nice tax credit if they haven’t owned for three years prior.

Buyers and sellers who are preparing to make difficult real estate decisions, now more than ever, need a thorough market analysis before pulling the trigger. It’s never enough to rely on the headlines. Which is why we’re breaking the numbers down by MLS area to give clients a more informed view of local market conditions.

Find your area below…

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