Homebuyer Tax Credit – Extended to June 2010.

As anticipated, President Obama signed the 8,000 first-time homebuyer tax credit extension into law.  The bill extends the current $8,000 first time homebuyer tax credit through April, 2010.  It also includes a tax credit of up to $6,500 for qualified move up buyers and increases the borrower income limits for both credits to $125,000 for individuals and $225,000 for couples.  
Homebuyers will qualify for the full credit as long as they have entered a binding contract by April 30, 2010 and they close the transaction by June 30, 2009.  The tax credit is limited to homes with a purchase price of $800,000 and below.  The bill also includes anti-fraud language that gives the IRS the authority to do greater oversight during the processing of the return.

Newly purchased home needs to be a primary residence.  There are other certain stipulations and conditions to qualify for the credit.  As always, we recommend that you read further into the extended bill.

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I find it fascinating from time to time to look at the real estate stats in the Phoenix Metro areas.  I don’t expect people buying or selling to know a lot of this information, however it is important for your real estate agent to have a good understand of the current condition of the real estate market.  I would like to share with you the stats on the Months Supply of Inventory (MSI).

What does Months Supply of Inventory or MSI mean?

MSI is simple math of how long it would take for all the homes that are on the market to be sold or absorbed, base on the amount of homes currently on the market and the rate that homes have been sold in the past.

The math is simple.  If there were 350 homes for sale in Phoenix and 50 homes were sold each month, how long would that take to sell all 350 homes?  Take 350 divided by 50 and your MSI equals 7 months.

MSI STATS:  Stats based off the ARMLS – Phoenix Metro areas.

Sept. 2008 = 10.3 Months

Nov. 2008 = 13.1 Months

Jan. 2009 = 9.5 Months

Mar. 2009 = 5.5 Months

Jul. 2009 = 4.5 Months

Sept. 2009 = 4.9 Months

Why is this important for you to know? 

MSI is an excellent indicator of how balanced the market is.  This is a good way to know if we are in a “Buyers Market” or “Sellers Market”. 

A general rule of thumb which not always is the case is noted as:

Sellers Market = Less than 5 months MSI

Buyers Market = More than 7 months MSI

Balanced = Around 5-7 months MSI

This may be argued a bit by most Sellers right now, saying that it is still a Buyer’s market even though we are at 4.9 months MSI.  This may be true because of the competition many sellers face against the banks/foreclosures. 

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As the Broker for Call Realty, many will ask me if we are finally on the rebound.  For a long time, I couldn't answer that question without taking an estimated guess.  It's exciting now to look back one year from now to compare numbers.  By comparing these numbers we can clearly see the real estate market rebounding.  Although home prices have dropped from September 2008 to September 2009, many positive changes have occurred.  Retrieved data is from the Arizona MLS.  (All figures are estimated and not guaranteed)

• September 2008 - 68,000 properties for sale, 5,358 under contract, and 6,071 sold.  
• September 2009 - 50,133 properties for sale, 7,841 under contract, and 7,965 sold.
• Properties for sale have dropped -27%, under contract rose +46%, and sold rose +31%. (Note: these percentages show the change between the month of September 2008 and the month of September 2009).

All of these numbers shown above represent positive movement in our real estate market.  So, is now a good time to buy?  I am confident in saying YES.

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