Tax credit for 1st-time and experienced homeowners~

Today's Seattle Times' syndicated column by Kenneth Harney offers a clear, concise description of the $6,500 federal tax credit available to repeat home buyers. Lots of people have heard of and benefitted from the "First-time Homebuyer Credit" of $8,000 that Congress extended until June of this year. Column: $6,500 tax credit available.

But fewer people are aware that if you've lived in your home for a consecutive 5 of the last 8 years, you could qualify to receive up to $6,500 credit against your 2009 or 2010 taxes when you buy another principle residence. The paperwork required is fairly straightforward--a HUD-1 Settlement Statement from a closed transaction anywhere between November 7, 2009, and June 30, 2010 (in contract to purcase before April 30th,) and proof of your prior residence.

There are some income restrictions, but essentially this is easy money. If buying a new home is in your plans this year, it may make good sense to act sooner rather than later. Furthermore, interest rates are still low--below 5% again for conforming loans with 1 point. In this buyer's market, it's not uncommon to negotiate to have the Sellers pay down the loan rate.

Here's a gorgeous home I have listed that just had a $51,000 price drop to $799,000. It's beautifully located on Tiffany Meadows, a quiet street just off Ferncliff on Bainbridge Island. It's .5 miles to the ferry terminal, and under a mile to the center of Winslow village shops and restaurants. The home has a lovely view of the 10th green of Wing Point Country Club and the home and gardens are professionally designed with an artist's eye. Here's a link to a full preview: Tiffany Meadows home. This would be a great place to call home, and pocket $6,500 at the same time. For a link to all properties available on Bainbridge Island, please click here.

Bainbridge Island commute by ferry is gorgeous~

Because I work on the island, I'm not usually lucky enough to be out on the water as the sun is rising. Yesterday was a lucky exception, as I had to be on the 7:55 ferry for a continuing education class in South Lake Union. Here's the image I shot with my ever-present iPhone as the sun rose and a bicyclist sped by. I love the sunrise reflected in the car windows and on the waters of Eagle Harbor.

It was a day for rising! The tides have had record highs this week. The tide in Eagle Harbor was 3.7 meters at 8:05 a.m., just as the ferry pulled out of the bay and headed south parallel to Rockaway Beach. (My iPhone has an app for that--I can look up the tidal charts for our area for any given day.) Local artist Kathe Fraga said she chatted with a long-time Islander who said he hadn't seen such high tides since 1935. The weather warnings said we had "astronomically high tides" coupled with "low atmospheric pressures," which sent the waters lapping over the tops of seawalls and bulkheads.

Eagle Harbor looked like Safeco Field after the last out. I have never seen so much floating debris in the bay. Everywhere giant tree trunks and logs were bobbing in the surf. I would think small crafts would want to stay in the marina. Clearly the saturated soils and the high winds of last week brought down trees throughout the Puget Sound, and it looked like most of them washed in with the tide.

It was a morning to make me envy my neighbors who head to Seattle for work every morning while I sip a second cup of coffee at my kitchen table.

UPDATE:  01/23/10
This morning the front page of the Kitsap Sun had more information on our high tides this week. Quoting Andy Haner of the National Weather Service in Seattle, three forces account for higher tides--the sun, the moon, and low pressure. Although the tide for Thursday was only predicted to be 12 feet, in fact at 8:24 Thursday the tide was measured at 13.8 feet. He said the models that predict tides don't take air pressure into account very well, but the National Weather Service is working on models that within two years may be able to predict when super-high tides are likely. For photos of the effects of Thursday's "perfect storm," here's a link to the whole article: Kitsap Sun "Tides".

End of year market analysis of Bainbridge Island real estate~

It's been a year with lots of ups and downs for most people in most areas of their lives. That's certainly been true in the real estate world on Bainbridge Island. The good news is that we finished strong, with all the numbers going in the right direction.

The number of listed residential properties dropped to a low we haven't seen since 2006--only 174 home listed as of the end of the year. (January has not yet shown a surge of new listings.) That's down 14.3% from the 203 listed homes in December 2008 and down from the 193 listed in the prior month, November 2009.

That's significant, because supply and demand are always at play here. To search for all properties currently available on Bainbridge Island, click here.

We also saw the numbers of Pended Sales and Closed Sales increase over the end of 2008 by healthy margins. Twenty-two homes closed in Dec. 2009 compared to only 13 in 2008, for a strong increase of almost 70%. Pended sales (those listings in a transaction to sell) jumped from 13 in 2008 to 17 in 2009, another strong 30.8% increase.

However, a single month's activity is only a snapshot, and not a trend, certainly. The following graph from Trendgraphix shows the Listed, Pended and Sold numbers over the course of all 2009:


One interesting correlation that is apparent in this graph is the relationship between pended and sold properties. A 100% correlation would mean that every home with signed paperwork would close--and you can see that we're not there. However, the numbers are getting closer, and my personal observation is that more and more transactions are coming to a happy and successful closing, with fewer Buyer's backing out of their purchases. I was pleased this year to have every transaction I participated in ultimately reach a successful closing. Sometimes the lenders made us all hold our breaths (or our tongues,) but my clients have been able to complete their purchases and sales once we've begun.

There is no question that we are still strongly in a Buyer's Market, which is reflected in the prices properties are selling for. As much as we've gone up and down, we're also going around and around, back to the future. Prices have rolled back to about the 2005 level, in both average and the more reliable median prices. Home owners have watched their equity shrink, and that's a difficult ride to be on, especially since we have become accustomed to expecting prices to continue to rise year after year.

Certainly double-digit appreciation was not sustainable here or anywhere, especially without salaries increasing at the same rate. At the height of the real estate market, which in hindsight seems to have been mid-2006 to mid-2007, most people I knew could not afford to buy the homes they were living in. In that way, the adjustment has been healthy. Unfortunately, you can't take "healthy" to the bank, and it's heartbreaking to see people who need to sell, who can't clear enough at closing to cover their debt load.

I'm an optimistic person, and I believe in both the appeal of Bainbridge Island and the economic health of the Greater Seattle Area. I believe that to sell a home today, the price must be realistic and in line with the current market, it must be well prepared, and professionally represented. Buyers are negotiating from a position of strength, which can be a challenge--one that I welcome representing either side in a transaction. Banks are loaning and rates remain low.

One last item (lots to digest) that I'll write more on another day. The Federal Government has extended the tax credit for first-time home buyers, and for current home owners who meet certain criteria.

Will interest rates go up or down? Will prices stabilize here or take another drop? I'm reading the experts and buckling my seat belt for an interesting journey this year. One thing I know for sure--we'll have more perspective when we look back a year from now. Ironically, my best instinct tells me this is a good time both to buy and sell.