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April 15 is the traditional due date for federal income taxes. It’s a deadline so ingrained in the American psyche that the April 15 calendar date is often called, simply, “Tax Day”.
In 2011, however, federal taxes aren’t due April 15. They’re due April 18. It’s because of a combination of holiday, calendars, and tax law.
The change centers on Emancipation Day.
Emancipation Day is a public celebration in the District of Columbia. Named a holiday in 2005, Emancipation Day honors President Abraham Lincoln’s April 16, 1862 signing of the Compensation Emancipation Act.
Emancipation Day is a non-working day in the nation’s capitol but, this year, Emancipation Day falls on a Saturday. The municipality will observe the holiday Friday instead. This means that all of Washington, D.C. will be “closed” Friday, April 15 — the usual tax filing deadline date.
This includes the IRS.
Therefore, to accommodate Emancipation Day, the government is extending this year’s federal tax filing deadline to April 18, 2011. This year marks the second time Emancipation Day has forced the change of federal tax filing deadlines.
Also, as a non-related coincidence, tax filers in Georgia taking extensions to October 15 will also get a few extra days. October 15 is a Saturday so the extended tax deadline rolls over to the following Monday — October 17, 2011.
Tags: IRS,Taxes
Home affordability reached an all-time high in 2010′s last quarter. Unfortunately for home buyers in Georgia , it’s been a different story since, however.
As mortgage rates cratered, and with home values soft, the Home Opportunity Index reached its highest level in 20 years. The index is published by the National Association of Home Builders.
Close to 74 percent of the new and existing homes sold between October-December 2010 were affordable to families earning the national median income of $64,400. It’s the 8th straight quarter in which the Home Affordability Index surpassed 70 percent.
Prior to 2009, the HOI rarely topped 65 percent.
That said, though, as with everything in real estate, home affordability is a local event. For example, take the Elkhart/Goshen area of northern Indiana. 97 percent of homes sold there last quarter were affordable to families making the area’s median income.
This level of affordability is likely related to state capital Indianapolis, a perennial top-scorer itself.
For the second straight quarter — and the 22nd time dating back to 2006 — Indianapolis led all major metropolitan areas with a 93.5 affordability rating.
Meanwhile, on the opposite end of the home affordability spectrum, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 11th consecutive quarter. Just 25.5 percent of homes were affordable to households earning the area median income.
It’s a a 6-point improvement from Q2 2010, however.
The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, it’s important to remember that rising mortgage rates this year have made homes less affordable in all markets across the United States. We won’t see a repeat record in this quarter’s HOI once it’s calculated and published.
Home buyers in Atlanta have lost 10% of their purchasing power since November, and mortgage rates look poised to rise even more.
If your plans call for buying a home later this year, consider moving up your time frame. The long-term costs of homeownership are rising, and affordability, therefore, is falling.
Tags: Home Affordability,Home Opportunity Index,NAHB
 For certain members of the military, and for certain federal employees, there’s just 2 months remaining to get use the federal home buyer tax credit.
Eligible persons include members of the uniformed services, members of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010.
Spouses of persons meeting the above criteria are eligible as well.
The federal home buyer tax credit ranges up to $8,000 for first-time home buyers, and up to $6,500 for existing homeowners. Existing homeowners must have lived in their “main home” through 5 of the last 8 years to be eligible.
Claiming the federal tax credit is a two-step process. First, eligible persons must be under contract for a new home on or before April 30, 2011. The home’s closing must then occur on or before June 30, 2011.
The IRS does not make date exceptions.
Furthermore, both the buyer(s) and the subject property must meet certain minimum eligibility requirements:
- The home may not be purchased from a parent, spouse, or child
- The home may not be purchased from an entity in which the seller is a majority owner
- The home may not be acquired by gift or inheritance
- Each buyer must meet tax credit eligibility standards
- The home sale price may not exceed $800,000
- Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers
The complete program description is published on the IRS website.
Another important note is that the IRS is giving eligible buyers a tax credit as opposed to a deduction. This means that a taxpayer qualifying for the full $8,000, and for whom the “normal” 2011 federal tax liability is $8,000, will have zero federal tax liability in 2011.
For additional information regarding your tax credit eligibility, call an accountant. Speaking with a tax professional is often worth the cost.
Tags: Tax Credit,IRS
 For the third time in 12 months, the FHA is changing its mortgage insurance costs.
Effective for all FHA case numbers assigned on, or after, April 18, 2011, annual mortgage insurance premiums (MIP) will increase 25 basis points.
The change will add $250 to an FHA-insured homeowner’s annual loan costs per $100,000 borrowed, and applies to all borrower’s equally. Current FHA borrowers are unaffected.
To understand the FHA is to understand why premiums are rising.
As an institution, the Federal Housing Administration plays a much larger role in the U.S. housing market today than it did just 5 years ago. According to its own records, the FHA’s percentage of purchase money business in Georgia and nationwide expanded from 4 percent in FY 2006 to 19 percent in FY 2010.
Rapid growth like this has strained the FHA’s capital and, indeed, in its official statement, the FHA alludes to this, stating that the MIP increase will “significantly strengthen” its reserves. By law, the FHA must maintain a certain minimum level of reserves.
FHA mortgage insurance varies by loan term, and by loan-to-value and, beginning April 18, 2011, the new insurance premiums are as follows:
- 15-year loan term, loan-to-value > 90% : 0.50% per year
- 15-year loan term, loan-to-value <= 90% : 0.25% per year
- 30-year loan term, loan-to-value > 95% : 1.15% per year
- 30-year loan term, loan-to-value <= 95% : 1.10% per year
To calculate your monthly mortgage insurance premium, multiply your starting loan size by your insurance premium, and divide by 12.
There is no change planned to the 1 percent upfront mortgage insurance premium charged by the FHA.
Tags: FHA,MIP,Mortgage Insurance
 Mortgage rates could move higher beginning tomorrow morning. The Bureau of Labor Statistics releases its February jobs report at 8:30 AM ET.
Home buyers and rate shoppers in Atlanta would be wise to take note. The jobs report is almost always a market-mover.
Consider last month.
Although net job creation fell well-short of expectations in January — just 36,000 jobs were added — the national Unemployment Rate dropped to 9.0%, its lowest level in 2 years. The marked improvement surprised economists and sparked inflationary concerns within the investor community.
This, in turn, caused mortgage rates to rise.
In the days immediately following the jobs report’s release, conforming rates across Georgia jumped 0.375 percent. That’s equivalent to a mortgage payment increase of $22 per month per $100,000 borrowed.
A similar spike could occur tomorrow.
Wall Street scrutinizes job growth because with more working Americans, there’s more consumer spending, and consumer spending accounts for 70% of the U.S. economy. A blow-out number tomorrow would change expectations for the future, and lead rates higher again.
The economy shed 7 million jobs between 2008 and 2009 and has barely made 1 million of them back. Tomorrow, analysts expect to see 183,000 jobs created. If the actual reading is lower-than-expected, mortgage rates should fall and home affordability will improve.
Anything else and mortgage rates should rise. Likely by a lot.
Therefore, if you’re shopping for a mortgage right now, consider your risk tolerance. Once markets open tomorrow, you can’t get today’s rates.
Tags: Non-Farm Payrolls,Unemployment
Last week, Standard & Poor’s released its Case-Shiller Index for December 2010. The index is a home valuation tracker, meant to meausure the change in home prices from one period to the next.
December’s Case-Shiller Index showed major devaluations nationwide. As compared to December 2009, on a year-over-year basis, home values fell in 18 of the Case Shiller Index’s 20 tracked markets, and the U.S. National Index dropped 4 percent overall.
The retreat puts December’s home values at similar levels as compared to early-2003.
That said, buyers and sellers in the Midtown Atlanta area would be wise to take the findings lightly. The Case-Shiller Index is inherently flawed. As such, its results are neither practical — nor relevant — to everyday Americans.
There are 3 Case-Shiller flaws, in fact.
The first flaw is the index’s limited sample set. Wikipedia lists 3,100+ municipalities nationwide and we can be certain that real estate is bought and sold in all of them. The Case-Shiller Index, however, measures just 20 of them. That’s less than 1% of all U.S. cities. And then, within those tracked cities, Case-Shiller reports an average, lumping disparate neighborhoods and streets into one big number.
The “national figures” aren’t really national, and the “city data” doesn’t apply to your home, specifically.
The second Case-Shiller Index flaw is how it measures home value changes. The index only consider at “repeat sales” of the same home, so long as that home is a single-family, detached property. Condominiums, multi-family homes, and new construction are ignored in the Case-Shiller Index.
Because distressed properties account for such a high percentage of resales lately — 36% in December –foreclosures and short sales skew Case-Shiller Index worse.
And, lastly, the Case-Shiller Index is flawed by “age”. Because it reports closed sales a 60-day delay, December’s Case-Shiller Index is measuring the values of home sales contracts from September and October. The Case-Shiller Index, therefore, is a snapshot of the not-so-recent past, and does little to tell us about the next 60 days.
Overall, the Case-Shiller Index is helpful tool for economists and policy-makers, but it doesn’t do much good for individual homeowners across the city of Atlanta or anywhere else. For accurate, real-time housing data in your local market, talk to a real estate professional instead.
Tags: Home Prices,Housing
 After a strong run to close out 2010, the market for home resales softened a bit in January.
On a seasonally-adjusted basis, the Pending Home Sales Index dropped 3 percent last month, and December’s figures were revised downward for a loss, too, according to the National Association of REALTORS®.
A “pending home sale” is defined as a home under contract to sell, but not yet closed.
The forward-looking index is now at a 3-month low on a national level, but still well ahead of its rolling 6-month average.
Unfortunately, national data isn’t overly helpful for buyers and sellers of real estate. The National Association of REALTORS® knows this, of course, and makes an effort to get more granular, supplementing the Pending Home Sales Index report with a region-by-region breakdown.
Between December and January, only the South Region increased in sales volume. The Midwest led the losers:
- Northeast Region: -2.4%
- Midwest Region : -7.3%
- South Region : +1.4%
- West Region : -5.2%
Even still, however, regional data remains too broad to be practical. The South Region, for example, is comprised of multiple states with thousands of cities and town. The housing market dynamics of a specific neighborhood in a specific regional city will differ from that of another neighborhood in another regional city.
Real estate data must be local to be relevant.
Overall, then, what may be most telling from January’s Pending Home Sales Index is how weather can influence results.
Most of the country faced drastic weather conditions in January, ranging from raging snowstorms to bitter cold. Events like that tend to put a damper on home sales, a contributing factor in why the number of new contracts fell.
Another reason is rising mortgage rates. Conforming and FHA rates rose week-by-week in January, robbing home buyers of 10% of their purchasing power. This, too, can slow down purchase activity as buyers adjust their expectations.
Looking forward, we should expect the Pending Home Sales Index to resume rising. Inclement weather doesn’t kill demand; it just delays it. And mortgage rates have settled somewhat. These two factors should help release pent-up demand just as the Spring Homebuying Season gets underway.
As more buyers enter the market, negotiation leverage will shift to home sellers, pressuring Atlanta home prices higher. The lowest prices of the year — and the cheapest financing — could be what you see today.
Tags: NAR,PHSI
 Mortgage markets improved last week as Wall Street’s concerns about the Middle East trumped its fears of inflation. Conforming and FHA mortgage rates in Georgia fell to a 3-week low.
Last week marked the second straight week in which mortgage rates fell, a streak that follows four straight weeks of climbing mortgage rates.
It’s been a bout of good fortune for rate shoppers and home buyers.
In addition, according to Freddie Mac’s weekly mortgage rate survey, the average spread between conforming 30-year fixed rate mortgages and 5-year ARMs has widened further.
The two benchmark products are now separated by 1.15%. It’s the largest interest rate gap in recent history; one that yields a monthly payment difference of $68 per $100,000 borrowed.
This week, it’s unclear in what direction mortgage rates will go.
On one side, there’s ongoing unease related to protests in Libya and its neighbors, and that’s driving safe haven buying.
“Safe haven buying” describes when investors flee risky situations and put their money in the safest places possible. Mortgage bonds are one such place, so when safe haven buying is in effect, bond demand is high so bond yields (i.e. mortgage rates) fall.
On the other side, inflation is ramping up.
Recent economic data shows that the economy is expanding, and the Federal Reserve is maintaining its accommodative growth policies. Therefore, this week, the key economic event will be Friday’s jobs report. if job creation is high, expect inflation fear to re-ignite, and mortgage rates to rise.
Another risk factor for this week’s rate shoppers is that tensions begin to settle in the Middle East, or that Wall Street gets more comfortable with rising oil prices. If that happens, safe haven buying will subside and mortgage rates will resume rising.
There appears to be more reasons for mortgage rates to rise this week than for them to fall. Plan accordingly.
If you have not locked a mortgage rate yet, this week may represent your last chance to get a low one. Talk to your loan officer and make a plan.
Tags: Mortgage Rates,Middle East,Jobs
Not all housing reports are sunny, it seems.
In its monthly New Home Sales release, the U.S. Department of Commerce showed a 13 percent drop-off in annualized new construction sales between the months of December and January.
It’s the biggest one-month drop in New Home Sales since May 2010.
In addition, the supply of new homes for sale spiked higher to 7.9 months last month. ”Home supply” is defined as the amount of time it would take to sell the complete “for sale” inventory at the current pace of sales.
In December, the supply measured just 7.0 months,
Don’t fret the news, however. For buyers of new construction in Atlanta , falling New Home Sales figures can be terrific. Weaker markets put pressure on the nation’s home builders to sell their respective homes more quickly. To reach that goal, builders often discount prices and/or offer free upgrades to buyers.
Some of that action may already be in effect.
Despite falling volume, the New Home Sales report showed that new homes are selling faster than in recent months. The median time required to sell a newly-built home dropped to 7.8 months in January – a figure well below January 2010′s reading of 13.9 months.
It suggests that builders are getting better at locating buyers, and moving property.
Therefore, if you’re shopping for a new construction and see one worth buying, get to it. Not only will the home likely sell soon if it’s priced right, but an increase in mortgage rates will make the home more expensive to finance.
Every 0.250% increase to rates adds $15 monthly per $100,000 borrowed.
Tags: Department of Commerce,Home Supplies,Home Sales
 Home resales rose another 2.7 percent last month, according to the National Association of REALTORS® monthly Existing Home Sales report.
An “existing home” is a home that’s been previously occupied and is not considered new construction.
The number of existing homes sold on a rolling 12-month basis is now at its highest point since May 2010, the month before the federal homebuyer tax credit ended. It’s also up some 40% since July 2010, the month after the tax credit ended.
But that’s not the biggest story in the Existing Home Sales report. The precipitous decline in home inventory deserves more attention.
At the current pace of sales, the complete, national home resale inventory will be sold in 7.6 months. This is close to 5 months faster as compared to last year’s peak, and well below the 2-year home supply average of 9.0 months. There more buyers in the market, it seems, and fewer homes from which they can choose.
Total home resale inventory is down to just 3.38 million homes nationwide — the fewest in 12 months.
There were other interesting statistics in the official Existing Home Sales report, including a break-down of purchases by buyer-type.
- First-time buyers accounted for 29% of purchases, down from 33% in January
- Repeat homebuyers accounted for 48% of purchases, up from 47% in January
- Investors accounted for 23% of of purchases, up from 20% in January
In addition, distressed sales — foreclosures and short sales — made up 37 percent of the market.
Over the next few days, more housing data will hit the wires and it’s expected to show similar strength to January’s Existing Home Sales report. With falling supplies and a growing base of move-up buyers, home prices in Atlanta and around the country are expected to rise in the coming months ahead.
Tags: Home Supplies,Housing Data,Distressed Sales
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