The following is an article that was just published in the New Mexican. It outlines sales numbers and prices, and provides good information on where/why the market is moving.

Article:

Santa Fe home sales sputtering back in 2010

By: Bruce Krasnow; The New Mexican

Home sales bounced a bit in the first quarter of 2010, with sale volumes increasing across all sectors of the Santa Fe market, according to several measures.

The Santa Fe Association of Realtors reported Wednesday that the total volume of city-county detached home sales increased 16 percent from a year ago to 205. While the median sales price in the unincorporated area fell, prices of homes sold inside the city were up some 50 percent to $464,000.

The numbers are year-over-year comparisons, and 2009 was the worst year for home sales in at least a decade. The number of sales in the first quarter is still down more than half from its peak in 2006.

But considering Santa Fe’s cold, snowy weather in January, February and March and that overall prices lifted, the statistics show the market has come off the 2009 bottom.

“All segments of the market at moving,” association president Lois Sury said. “It seems to be across the board.”

Like elsewhere in the United States, the federal government’s homebuyer tax credit — up to $8,000 for new buyers and $6,500 for current owners buying again — helped first-quarter sales, though it will be months before anyone knows the number of buyers in each state who have claimed the money.

Homes must be under contract by April 30 to qualify for the tax break — and that sent March sales up 34 percent in Albuquerque and 54 percent in Rio Rancho, according to the New Mexico Business Weekly. In Santa Fe, the quarter was more even, with volume increases all three months.

In Santa Fe, the incentive has helped many empty-nest couples who may have wanted to sell a larger home and move into a smaller house, condo or townhome, said Sury, as sales of those units more than doubled from a year ago.

“I’ve helped families like that,” said Sury. “They want something small here. We’ve seen those buyers come back into the market.”

Alan Ball said the March sales numbers in Santa Fe are “kind of a big deal” because the 2010 number beat both the 2009 and 2008 sales numbers. He also said the high-end market showed momentum for the first time in two years, with 18 sales over $1 million.

Some of it is the homebuyer tax credit, said Ball, who publishes a monthly newsletter on the Santa Fe real estate market, but it’s also a sign the market is righting itself.

“What some people wanted last summer (in asking price) is now even lower,” Ball said. “That’s what buyers are seeing and acting on.”

There were some wide fluctuations in the county’s median prices. Some of that is because the new homes in Rancho Viejo are being targeted to first-time buyers, with some selling for under $200,000, to take advantage of the tax credit.

The other big decline is Las Campanas, where luxury home prices have reset.

Sellers are more realistic, said Kay Sutt, a real estate appraiser. “The closer to balance our market comes, the quicker we’ll recover,” she said.

The fact that sales volume was strong despite terrible weather is another plus, Sutt said about the first quarter.

She is not seeing a “a magical healing” of Santa Fe’s market from the federal tax credit, but a lot of things going on are positive, including low interest rates, cheaper land and labor costs.

On that point, Donna Reynolds, chief executive of the Realtors Association, said the number of inquiries coming into the association office were the highest they’d ever been after The New York Times published a travel story about Santa Fe style reinventing itself and a large image of the new Railyard Park.

Sill, longer-term numbers compiled by the Realtors indicate how far sales tumbled from earlier years.

The number of single-family homes sold countywide in 2009, for instance, was 966, which was less than the 1,437 sold in the year 2000 and half the 1,996 sold at the 2005 market peak.

Likewise, the total sales volume in 2009 was $540 million, slightly higher than the start of the decade, but a huge decline from the $1.2 billion in 2006.

Median sales prices started the decade at $235,000, peaked at $425,000 in 2007 and stood at $356,000 at the end of 2009.

New single-family home permits in the city of Santa Fe were flat in the first quarter, 48 in the period, up from 44 a year ago, said city planner Reed Liming. Eighteen of the 2010 permits were for multifamily attached homes, he added, with six of those going to a new complex at Paseo de Peralta near Washington Avenue.

 BY THE NUMBERS

• City of Santa Fe: Sales totaled 110 single-family homes in first quarter, up from 95 a year ago. Median sold price $464,000, up from $308,000.

• Unincorporated area: Sales of 95 single-family homes in first quarter, up from 82. Median sold price $318,224, down from $440,000.

• Condo/townhome sales: 62 in first quarter, up from 27. Median price $286,500, up from $248,000 a year ago.

• Total sales volume for homes stood at $92.1 million in the first quarter of 2010, up from $81.6 million last year.

Link to Original Article

Contact Matt Desmond and Ryan Bolton

New Mexico has two of the top retirement spots in the US- Santa Fe and Las Cruces. Perhaps this is helping to stabilize our Real Estate Market.

 Boomers are willing to move farther than previous generations when they retire, and they are choosing places unlike stereotypical retirement hotspots, says Tom Brokaw in his report on Boomer retirement, airing on CNBC, Thursday, March 4 at 9 p.m. ET

The top places listed by AARP and explored on the show are:

1. Loveland/Fort Collins, Colo.
2. Las Cruces, N.M
3. Rehoboth Beach, Del.
4. Portland, Ore.
5. Greenville, S.C.
6. Sarasota, Fla.
7. Ann Arbor, Mich.
8. Tucson, Ariz.
9. Montpelier, Vt.
10. Honolulu
11. Santa Fe, N.M
12. Atlanta
13. Charleston, S.C
14. Northampton, Mass.
15. San Diego, Calif.

Source: CNBC, Paul Toscano (02/05/2010)

Foreclosures hit hard but less so in N.M.
By | The Associated Press

2/11/2010

The number of U.S. households facing foreclosure in January increased 15 percent from the same month last year, and a surge in cash-strapped homeowners who’ve fallen behind on mortgages could be on the way.

More than 315,000 households received a foreclosure-related notice in January, RealtyTrac Inc. reported Thursday. That number is down nearly 10 percent from 349,000 in December, which saw the third highest total since the company began tracking foreclosure data in 2005.

There were 107 foreclosures in Santa Fe County in January, according to RealtyTrac, most of them (33) in the 87507 Zip Code. That was followed by the 87505 Zip Code, where there were 22.

Santa Fe’s foreclosure rates for January 2009 were not included in RealtyTrac’s report, precluding a comparison with 2010′s rates. RealtyTrac’s data specialist could not be reached.

In New Mexico there were 1,281 new foreclosure filings and nine foreclosure sales, according to RealtyTrac. The average sales price of foreclosed homes in January was $208,841.

The rate of foreclosures in New Mexico remains low. In his most recent newsletter, Santa Fe title company executive Alan Ball said foreclosures in states such as California and Florida exceeded 400,000 last year.

In New Mexico, by contrast, there were just over 7,000 foreclosures.

Ball also said that Santa Fe real estate sales in January were up 58 percent from the same month last year.

“We have already thanked the first-time homebuyer tax credit law and can certainly do so again” for the increase in home sales, Ball said. “Does that account for the increase? That is difficult to say.”

In January, one in 409 homes across the country were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions. Banks repossessed more than 87,000 homes last month, down 5 percent from December but still up 31 percent from January 2009.

January marked the 11th straight month with more than 300,000 properties receiving a foreclosure filing. The numbers could stay above that level as unemployed homeowners who have tried to keep up with their mortgages finally start missing monthly payments.

Mortgage financier Fannie Mae reported in late January that the rate of borrowers who have a conventional loan on a house and are seriously delinquent was 5.29 percent in November, more than doubling the rate of 2.13 percent in November 2008. Borrowers are considered seriously delinquent if they are past due by three months or more, or are in foreclosure.

“There’s a lot of foreclosures in the pipeline, and the number is going to continue to get bigger,” said Patrick Newport, an economist with IHS Global Insight.

Last month’s foreclosure activity followed a pattern similar to that of a year ago, when a double-digit percentage increase in December was followed by a 10 percent drop in January.

The dip in January’s numbers may be due to processing delays by lenders during the end-of-year holidays, said Rick Sharga, senior vice president of RealtyTrac, which is based in Irvine, Calif.

“I don’t think it’s an early sign of the coming of the end of the foreclosure crisis,” Sharga said.

A record 2.8 million households were threatened with foreclosure last year, and the numbers are expected to rise to between 3 and 3.5 million homes this year, RealtyTrac said.

Slowing the foreclosure rate is a key step in the recovery of the real estate market and the overall economy. The foreclosure crisis forced the federal government and several states to come up with plans to prevent or delay the process to help delinquent borrowers.

Foreclosed homes are usually sold at steep discounts, so they often lower the value of surrounding properties. Cities lose property tax dollars from foreclosure homes that sit empty and from declining home values, straining local economies. Home prices have stabilized in some cities, but are still down 30 percent nationally from mid-2006.

Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Initially, subprime mortgages were mostly the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

Among states, Nevada posted the nation’s highest foreclosure rate, followed by Arizona, California, Florida and Utah. Rounding out the top 10 were Idaho, Michigan, Illinois, Oregon and Georgia.

The metro area with the highest foreclosure rate in January was Las Vegas, with one in every 82 homes receiving a foreclosure filing. It was followed by Phoenix and the California cities of Modesto, Stockton, and Riverside-San Bernardino-Ontario.

The New Mexican contributed to this story.

Here is a link to the Original Story

This article was just posted on the New mexican website. Though none of us have a crystal ball, the statistics certainly give us some good insight.  We can say with certainity that Sales are picking up, and prices have gone down. For more details please contact us

Santa Fe real-estate market may stabilize as 4th quarter prices declined

Bruce Krasnow | The New Mexican
 The best news Santa Fe Realtors have about 2009 is that it’s over.

The 4th quarter median price for homes sold in the city and county declined 9 percent to $335,000. But, buoyed by a federal tax credit, the number of homes sold increased from a year ago by 16 percent to 274 in October, November and December. Still, the sales were less than half what they were in 2005, the peak sales year of the past decade.

In addition, the number of housing starts in the city of Santa Fe hit a 40 year low with 180 permits in 2009. Reed Liming, a planner with the city, said one has to go back to 1969 before new home construction starts were at that level.

Finally, the number of agents who renewed their membership to the Santa Fe Association of Realtors declined 15 percent to 795 as of this month, said Lois Sury, the new association president, and the group has trimmed its budget to adjust.

Sury said the nation has gone through a historic economic downturn, “One I’d rather read about in history books than live through again. ” The housing market in Santa Fe has adjusted, she said at the quarterly breakfast meeting Wednesday where the statistics were released.’

She said the final sales price of a home was at 93 percent of the listing at the end of 2009, up from 80 percent a year ago — and that shows sellers have adjusted their expectations.

“Affordability continues to improve, with more sales at the lower end of the market affecting the overall median price of homes,” she said.

Jane Trusty, an appraiser at the breakfast, called the first half of 2009 difficult, and with sluggish sales it was often hard to find comparable homes for valuation.

“We’re breathing quite a sigh of relief,” she said. “What we found in the last two quarters is that things have stabilized quite a bit,” Trusty said.

The first half of 2009 saw stability in median sales prices — but agents say many homes were not being sold because sellers were not prepared for lower offers.

That was not the case in the third quarter, which saw a 20 percent decline in the median sold price. The just-ended quarter saw the median sold price in the unincorporated area drop 18 percent to $350,000. Prices of sold homes in the city of Santa Fe fell 6 percent to $329,500.

“Prices have reset,” said Sury

Many sales under $500,000 are a result of the federal tax credit that has been expended under the economic stimulus plan. The credit is now open to existing homeowners who want to move up or downsize — but homes must be under contract by April 30 to receive the credit, $8,000 for new buyers and $6,500 for repeat buyers.

And it’s not just for move-up buyers. Sury is seeing long-time homeowners who want to downsize take advantage of the program to purchase something smaller, she said.

“It’s your tax money,” she said. “You might as well use it.”

Gary Miller a mortgage specialist with Century Bank, said there is an upward trend in mortgage interest rates from Wednesday’s average of 5.2 percent on a 30-year fixed rate loan. That means the first three months of 2010 brings a convergence of low prices, low borrowing costs and the tax credit. He tells potential buyers that it won’t last.

“It’s important to take action now,” he said.

 The Treasury department said it is now committed to support Fannie Mae and Freddie Mac with as many billions of dollars as is necessary to get them through the next three years. There’ll be no limit whatsoever anymore. Previously the Treasury had limited its support to $200 billion apiece for the two formerly-private, now government-controlled, mortgage finance giants. From here on, the Treasury said in its policy announcement, there will no “uncertainty about the (government’s) commitment to support the firms as they continue to play a vital role in the housing market during the current crisis.”

Though some critics howled that the Obama administration is writing a blank check, the significance of the move for real estate is potentially huge, for several reasons.

Number one: Fannie and Freddie provide funding for well over half the U.S. mortgage market — making home sales and purchases possible for hundreds of thousands of consumers.

Number two: The fact that the two companies have an explicit, full faith and credit backstop from the U.S. Treasury means that Fannie and Freddie can borrow in the capital markets at more favorable rates. Those lower costs of capital can then be passed along – at least in part – to home loan borrowers in the form of lower interest rates.

Finally, a key reason for the policy change – which also included permission for the firms to retain larger mortgage-asset portfolios – is to help Fannie and Freddie provide deeper loan modification assistance to greater numbers of seriously troubled borrowers.

Both companies are now expected to reach out and offer loan principal forgiveness to delinquent and underwater home owners – something that the current Obama loan modification program does not permit. Partly as a result, Obama’s “Home Affordable Modification Program,” or “HAMP,” has been only minimally successful in attracting the participation of borrowers in the deepest trouble – especially those so far behind and underwater that they are walking away from their houses, sending back the keys to their lenders – and ultimately losses to Fannie and Freddie.

If the revised policy helps keep larger numbers of home owners out of foreclosure and out of walkaway mode, the impact on local real estate markets and home values could be significant over the coming couple of years.

by Kenneth R. Harney

Contact Ryan and Matt

Most of Santa Fe’s Realtors will tell you that historically January and February have been the quietest months of the year. However, 2010 has started out well for us. 

I also remember that in 2006 that we started the year off with about 12 million worth of property under contract in January.

With interest rates at historic lows, the homes buyer tax credits, and prices at or near the bottom, we choose to be optimistic about 2010.

Bruce Krasnow | The New Mexican

 When Realtor Lois Sury went to buy her first home in Santa Fe some time ago, there were about five houses in her price range and she was competing against other buyers. That “hyper market,” as she called it, was not good for consumers, who had few choices to consider and a heavy burden to overcome to get into a first home.

Those days are gone in Santa Fe, perhaps for a long time. Market data indicate that the number of residential home sales in 2009 was at the lowest point in decades, in terms of the number of transactions and the price volume of those sales.

The statistics have been compiled by Alan Ball, a title agent who publishes a monthly newsletter on the Santa Fe real estate market. They show that the real estate meltdown is more about the industry and Santa Fe’s economy than the habits or wishes of individual homeowners.

Median prices for instance, have held up considerably well in Santa Fe, starting in 2001 at $296,000 and ending in 2009 at $447,000. That’s a more than 50 percent jump.

But the total dollar amount of residential sales shows that volume peaked at $1.2 billion in 2004-05, then tumbled to $540 million in the year just ended, a decline of 56 percent. The dollar volume of all sales in 2009 was even less than the $578 million generated nine years ago.

“That’s money not circulating in the community,” Ball said. “If you look at local Realtors, lenders, surveyors, appraisers, insurance agents — if you just start piling up all the things that directly relate to the sale of a home — it’s money not changing hands. And that affects anybody that sells goods or services. There’s less discretionary income.”

In terms of charting sales numbers, the last nine years shape a modified bell curve. Total residential sales in 2001 ended at 1,955. They climbed to 2,800 in 2005, but by 2009 had tumbled to 1,200 — significantly less than the number at the start of the decade, Ball said.

But turn over a troubling bell curve, and you get a smiley face. Ball and others see opportunity in that option.

Michael Halsey, an economic consultant and owner of Business Futures, said Santa Fe’s housing market has always been unsustainable, like an upside-down pyramid, and now there is a chance to right the foundation.

Everywhere else, communities build housing from the bottom up, with young or first-time buyers getting into less expensive homes and trading up as needed for more amenities or space. And there should be more less expensive homes being built than luxury properties.

Not so in Santa Fe, Halsey said, where the market for luxuries and second homes had long been driving the construction market. Craftsmen, builders, architects — and the labor they hired — were so busy with new high-end products, there was nothing else being built. The result was a small selection of homes for people living and working in Santa Fe who could not afford million-dollar and up houses.

“The community was supporting an industry that I felt was top-heavy as far as top-end products,” he said. “We are just now starting to fulfill the demand for entry-level housing, that hasn’t been met in past years.”

Halsey cited the more affordable new homes in Rancho Viejo as an example of how the market has adjusted. The houses are being constructed with basic finishes, but leave room for expansion and upgrades as families need them. The cost of new construction, Halsey said, has dropped in Santa Fe about 20 percent.

Sury, president of the Santa Fe Association of Realtors, said the homebuyer tax credit is already helping to expand the pyramid and is bringing out new buyers who, in the future, can trade up as their homes increase in value. A whole new generation of Santa Fe residents have a chance to get on the escalator of home appreciation, she said.

And though it’s been a slow year for sales, Sury said consumers are far more confident now than a year ago, when the stock market crashed and financial institutions were failing.

“At this time last year we were in a much worse situation than we are now. It was much bleaker. Consumers seem to have more confidence now,” she said.

Adding to the confidence is the fact that the federal tax credit for home purchases has been extended until mid-2010 and is also available to repeat buyers who want to move. In Santa Fe there are now plenty of affordable homes all over the city and not just in certain neighborhoods.

“Five years ago, we were seeing multiple offers and homes under contract in two or three days. Buyers had little or no power,” Ball said. “Now we’re seeing more balance on the lower end.”

There needs to be a solid year of sales and price gains before anyone can call an end to the housing recession. But people still want to move to Santa Fe, and many people already here want to move to a different house or change neighborhoods, he added.

“I cannot escape the attraction Santa Fe has for so many people, Ball said. “We’re going to warm up faster than other markets. I don’t know if we’re out of this thing or not, but there are promising signs.”

The National Association of Home Builders has information about the homebuyers tax credit at federalhousingtaxcredit.com.

Lawrence Yun, chief economist for the National Association of Realtors, said a last-minute rush by buyers hoping to close on properties before the scheduled November 30 deadline for the $8,000 first time buyer credit added a lot of sales to the impressive November total. Congress extended the November 30th closing deadline for the first-time buyer credit until June 30th of next year — and added a new $6,500 credit for repeat purchasers to the mix.

Vicki Cox Golder, president of the National Association of Realtors, said the current combination of low prices, low mortgage rates and the tax credits has created an exceptionally attractive environment for buyers around the country. “It really doesn’t get any better for buyers,” she said, provided of course that they have “secure jobs and long-term ownership plans.”

Meanwhile, Fannie Mae’s year-end forecast for 2010 suggests that sales of existing homes next year should jump by another 10 percent over this year, and new home sales should be 26 percent higher. Like other forecasters, Fannie Mae sees rising mortgage rates hovering on the horizon, but not so high that they will scare away serious purchasers.

The Mortgage Bankers Association expects 30-year fixed rates to exceed 5.2 percent in the months ahead, up from about 5 percent in the latest week.

Even Federal Reserve chairman Ben Bernanke apparently is banking on higher mortgage rates as the economy warms up next year. The Wall Street Journal reports that Bernanke has refinanced out of an adjustable-rate loan on his Washington D.C. home and into a more secure 30 year fixed rate around 5 percent.

Kenneth R. Harney

“We’re going to see far more interest in the fourth quarter than we generally do because of the tax credit,” said Heather Fernandez, vice president of Trulia.com, a real estate search engine. Traffic surged on the site on Nov. 5, the day Congress approved the credit extension, she said.

The new law extends the tax credit for first-time home buyers and opens it up to some existing homeowners as well: The credit is now 10% of the home price, up to $8,000 for first-time buyers and up to $6,500 for repeat buyers. All buyers must have a binding contract on a house in place on or before April 30, 2010. The sale must close on or before June 30. 2010.

To be considered a first-time home buyer, an individual must not have owned a home in the past three years. And to be eligible, existing homeowners need to have lived in the same principal residence for five consecutive years during the eight-year period that ends when the new home is purchased. The credit is only for principal residences.

Income limits have risen as well. According to the IRS, the home buyer tax credit now phases out for individuals with modified adjusted gross incomes between $125,000 and $145,000, and between $225,000 and $245,000 for people filing joint returns.

The inclusion of move-up buyers might inspire homeowners to take action and list their house if they’ve been putting it off, said Carolyn Warren, a Seattle, Wash.-based mortgage broker and banker and author of the book Homebuyers Beware. “If somebody loves their home, it’s not going to entice them to sell. If they’ve had it on the back of their minds and really would like to move up, it might push them into doing it sooner than later,” Warren said.

The credit isn’t expected to have as large of an effect on move-up buyers as it has on first-time buyers, according to the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. The maximum tax credit is about 4% of the average purchase price for first-time buyers, but about 2% of the average purchase price for move-up buyers.

“We estimate that the first-time home buyer tax credit will result in a 10% increase in home sales from March through November of 2009,” said Thomas Popik, research director for Campbell Surveys, in a news release. “We’d expect the effect of the proposed tax credit for current homeowners to be about half as large—from December until the tax credit expiration in the spring of next year, it might be 5% of 3 million transactions, or about 150,000 incremental home sales. Incremental sales to first-time home buyers could be an additional 300,000, for a total of 450,000 incremental sales due to the tax credit extension.”

Tips for buyers
Interested in buying a home and claiming the home-buyer tax credit? Below are five tips:

1. Don’t procrastinate. Start searching for a home now. Getting an early start will give you a better chance of finding the right house before the credit deadline. Before you start house hunting, get preapproved for a mortgage, said Eddie Fadel, a Miami-based mortgage banker, and do a realistic assessment of what you can afford. Buyers who have to sell an existing home should price it aggressively from the beginning to drum up interest and get a buyer as soon as possible.

2. Don’t count on another extension. The credit won’t be available forever, Fadel said. If you want to take advantage, be sure to make that spring deadline.

“This is a medication for the housing crisis. Once the patient—which is the housing market—cures, there will be no medication needed,” he said.

3. Mind the interest rates. Mortgage interest rates are low right now, but will likely rise next year. Higher rates will affect your monthly mortgage payments, thus the affordability of the house you are buying. Average rates on the 30-year fixed-rate mortgage have been hovering around 5%, but when the government stops buying large amounts of mortgage-backed securities, rates could rise.

4. Communicate with your lender. Throughout the process, make sure you’re communicating with your lender regularly; if there’s a piece of documentation you’re asked for, get it turned in as soon as possible, said Doug Heddings, a New York-based real estate agent with Charles Rutenberg Realty. Good communication is important in making sure the loan closes on time. And think twice before pursuing a short sale if you want to make the credit deadline. That’s where someone sells a home for less than what he or she owes on a mortgage, with permission of the lender. The process can be lengthy and unpredictable because the homeowner’s lender has to approve any deal, and can be complicated when there is a second mortgage associated with the property.

5. Don’t take shortcuts. Don’t forgo any of the steps you would normally take just to make the tax credit deadline. Make sure the house is a good fit for your needs and get a home inspection. Skipping steps could cost you in the long run.

By Amy Hoak

Originally scheduled to expire Nov. 30, the first-time homebuyer tax credit has been extended until April 2010 and homebuyers will have until July 1 to close as long as the purchase contract is in effect on April 30. A new $6,500 tax credit is now available to existing homeowners wanting to buy.

Eligible homeowners must have used the home being sold as a principal resident consecutively for five of the previous eight years with a price limitation on the new purchase of $800,000. Income limits have also been increased to $225,000 for married homebuyers and $125,000 for individual (single) buyers. Buyers in Santa Fe can take advantage of this opportunity to purchase a larger home for their growing families, other desired home amenities, or simply downsize.

On the home front, Santa Fe home sales are trending up throughout 2010 and October single-family home sales topped over 100 for this first time this year. Condo and townhome sales remained flat in September and October, likely due to the fact that affordability continues to improve for single-family homes. Lower prices may also bring some international buyers wanting to scoop up Santa Fe homes while the value of the dollar is still hitting record lows. This may explain why France was listed as one of the top 10 states/countries searching for homes online here in Santa Fe. With the help of a new service to the Association of Realtors, participating brokerages can track the top 10 states/countries for online visits to Santa Fe area listings. Realtors, Sellers … parlez-vous français?

To help get more Santa Feans in homes, the County of Santa Fe has recently established several pilot programs designed to increase work force housing and help county workers purchase a home. On Nov. 17, the County Commission voted unanimously to earmark $500,000 to support three affordable-housing programs.

The most unique of the three will initiate a developer subsidy of up to $10,000 per unit to defray the cost of infrastructure when building affordable housing. A down-payment assistance program for county employees will be created and the ordinance will permit the county to donate land or buildings for conversion to affordable housing. Administrative policies are being crafted by county staff to support these new affordable housing initiatives.

Donna Reynolds For The New Mexican

Information provided by the
Santa Fe Association of Realtors®, www.sfar.com.

By LAURA SAUNDERS

Last week, President Barack Obama signed a law that extends through next spring a temporary tax credit of up to $8,000 for some first-time home buyers, which was due to expire Nov. 30. The law also adds a new tax credit of up to $6,500 for certain repeat home buyers. The package, which the government estimates will cost a total of $11 billion, is intended to help spur housing sales, a critical part of the economy.

Here are some answers to common questions about the new rules.

Q: What has stayed the same in the new law?

1) First-time home buyers still get a credit of as much as 10% of the purchase price, up to a maximum $8,000. “First-time” means people, including both partners of a married couple, who haven’t owned a principal residence for three years before the purchase.

2) All taxpayers who claim a credit must use the home as a principal residence for the next three consecutive years.

3) The credits offer dollar-for-dollar reductions of tax and are refundable. This means that a taxpayer who doesn’t pay enough tax to offset the credit can get a refund. For example, if you qualify for an $8,000 credit but only owe $5,000 in tax, you could receive a $3,000 check from the Internal Revenue Service.

4) Under the new law, as under the old, 2009 home buyers may claim the credit on either their 2008 or 2009 returns, and 2010 buyers may claim the credit on either their 2009 or 2010 returns.

5) Taxpayers do not qualify for a credit if they buy from a lineal ancestor or descendent, including parents or grandparents and children or grandchildren.

Q: What has changed?

Several important features took effect as of Nov. 6:

1) To take advantage of the tax credits, a buyer must have a contract in place before May 1, 2010, and the deal must close before July 1, 2010. No further extension is expected.

2) The price of the house is now capped. For purchases made after Nov. 6, no credit is available for any home costing more than $800,000.

3) There is now a tax credit for repeat buyers as well as for first-time buyers. Taxpayers who have lived in one residence for five consecutive years of the past eight can now qualify for a tax credit of as much as 10% of the purchase price, up to a maximum $6,500, of a new principal residence. The new home does not have to cost more than the old one.

4) Income limits for people who qualify for a tax credit are far more generous than under the previous law. For single filers, the credits now phase out between $125,000 and $145,000 of modified adjusted gross income; for married couples, the range is $225,000 to $245,000. For most people, modified adjusted gross income will be the same as adjusted gross income.

5) The new law contains anti-abuse measures designed to stem fraud, which became a problem with the previous home-buyer tax credit. Most buyers must be 18 or older, and no taxpayer may take a credit if he or she is claimed as a dependent on someone else’s return. Taxpayers taking the credit will also have to furnish proof of purchase. According to Robert Dietz of the National Association of Home Builders, this will usually be a HUD-1 form.

6) People taking the tax credit, as under the old law, aren’t allowed to buy a home from a lineal ancestor or descendent. The new law, applying to purchases made after Nov. 6, also says a person may not take a credit if the home is purchased from a spouse or the spouse’s lineal relatives.

Q: If I bought a house last spring or summer, can I get a tax credit?

You qualify if you are a first-time buyer and meet the other requirements, but not if you are a repeat buyer. The new credit for repeat buyers applies only to purchases made after Nov. 6.

Q: What is the definition of “principal residence”?

If you own more than one home, your principal residence is usually the one where you spend most of your time. In determining residence the IRS may also consider where your family lives and your mailing address for bills and correspondence, among other factors.

Q: Can a principal residence be something besides a conventional house?

Yes. A principal residence may also be a condominium, co-op apartment, attached or semi-attached townhouse, or even—if it has eating, sleeping and toilet facilities—a boat, motor home or trailer. Manufactured homes qualify in some states.

Q: Does the person who claims the credit have to use the home as a principal residence?

Yes.

Q: If I buy a new home and live in it, do I also have to sell my old one in order to take advantage of the credit?

This is unclear. The law appears to allow repeat buyers to retain their old home, for which no tax credit was given, while claiming a credit for the new one. What is clear is that if you buy a new home using the credit, you must use it as your principal residence.

Q: How may the credits be allocated among two or more unmarried buyers?

This also is unclear. But if the IRS adopts the rules that applied to the previous tax credit, which are detailed in IRS Notice 2009-12, there is room for planning. The notice says that taxpayers may use “any reasonable manner” to allocate the credit. It even provides an example in which two unmarried buyers allocate the credit to the lower earner in order to qualify for it.

Q: I need the credit refund to help make the down payment. What can I do?

There’s no rushing the IRS. But one option is to adjust your current withholding from your paychecks to reflect the fact that you will be taking the credit later. But be careful: If you don’t make the purchase, then you may owe interest and penalties. Consult a tax adviser.

Q: Is it possible to qualify for a credit if I am building a home on a lot I already own?

Yes, according to the National Association of Home Builders. The purchase date is usually considered to be the date of first occupancy, so you would need to move in before July 1, 2010.

Q: May I take a credit if I am building a large addition to my home?

No; these credits apply only to the purchase of a home.

Q: Are there special rules for the military?

Yes. In general, members of the military and foreignservice and intelligence communities who are serving overseas on “official extended duty” for at least 90 days during 2009 and the first four months of 2010 have an extra year to take advantage of these credits. Consult a tax adviser who specializes in this area.

Q: Where can I get more information?

Go to federalhousingtaxcredit.com, a Web site sponsored by the National Association of Home Builders. You can also look for links from the IRS’s home page, www.irs.gov, or search for Homebuyer Credit. Another option is to consult a professional tax adviser.