The following statistical information was compiled from the first quarter of this year to illustrate what is truly occurring within our local market.  As I have stated in a previous market newsletter, there is no such thing as a national real estate market.   Market conditions vary from state to state, city to city, and even neighborhood to neighborhood. The following is a chart that will illustrate the activity of home sales within Valparaiso – Center Township*: 

Valparaiso – Center Township SOLD Homes      

                                                          		      1st Qtr                                                                                   

                                                       2009                           2008  

Homes under $100,000                 12                                10                   

$100,000-$199,999                         35                                49                   

$200,000-$299,999                         21                                18                   

$300,000-$399,999                           3                                  9

$400,000-$499,999                           4                                 1

$500,000-$599,999                           1                                  0

$600,000-$699,999                         _1_                             _0_    

TOTAL                                               77                                87 

The AVG Days on Market in 2008* was 102 days.

The AVG Days on Market in 2009* is 107 days. 

The Sales Price to List Price Ratio in 2008* was 96.2%.

The Sales Price to List Price Ratio in 2009* is 95%. 

There are currently 417 residential units FOR SALE on the MLS. 

My purpose in distributing this information is to give you real data that reflects the health of your neighborhood market.  Clearly the market is down from last year.  However, the fact of the matter is…we still have a market.  Buyers are looking and are able to get mortgages.  Transactions are closing without sellers needing to give away their equity.  

I hope you found this data interesting.  If you would like statistical information on the health of real estate in your neighborhood, please give one of our qualified real estate professionals a call.

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

A sale can be made or lost as a direct result of your home's curb appeal. When it comes to selling your home, the first impression is probably the most important impression. If the outside of the property doesn’t create interest or appear well-maintained, a buyer may choose to not even come inside the home. Here are five ways to create curb appeal. 

Today’s media is filled with negative reporting on the nation’s real estate market.  There is no such thing as a “national real estate market”.  From state to state, city to city, neighborhood to neighborhood there are many variables that affect the local market. Local economic conditions, which include employment opportunities, labor force availability, jobless rates, local government initiatives, and interest rates, directly impact the value of real estate. The economic conditions within Porter County, and specifically the City of Valparaiso, continue to outpace the nation and the state.  Neighborhood specific variables that impact real estate include the number of homes on the market, the amenities within these homes, the square footage of the home, the number of new construction homes, and the number of available lots for future construction.  The following is a chart that will illustrate the activity of home sales within Valparaiso*: 

Valparaiso SOLD Homes                 2008               2007               2006           

Condominiums                                     91                  126                 137           

Single-family under $250,000          312                  387                388           

$250,000-299,999                                  43                     58                   61           

$300,000-$399,999                                50                     48                   53           

$400,000-$599,999                                  8                     24                   21           

$600,000-$799,999                                  1                       3                     2          

$800,000 and up                                      3                       1                     3           

TOTAL                                                     508                  647                665 

There are currently 408 single-family and condominiums FOR SALE. 

My purpose in distributing this information is to give you real data that reflects the health of your neighborhood market.  The year 2006 perhaps is the best illustration of a “normal market” in Valparaiso.   The next step in the analysis is overlaying the activity that is already being seen in 2009 due to the reduction in mortgage rates.  Record low mortgage interest rates have significantly increased showing activity over the same period in 2008.  In our office alone we are seeing a jump in buyers scheduling showings over the number of buyers active last year at this time.  This means there are more buyers in the market. 

This is a terrific time to sell and buy.  For example, if the market analysis shows that your $200,000 house is now selling for $180,000 (a 10% decrease) and you desire to upgrade to a $300,000 house, now selling for $270,000 (a 10% decrease) you have a net equity gain of $10,000 ($30,000-$20,000).  In addition, your new mortgage rate may be less than 5%!  Before you consider refinancing or remodeling you should explore the opportunities for buying a new home.

Down payment assistance or help with payment of closing cost still exists. 

The following information has been provided by Housing Opportunities, Inc.

Eligibility Requirements for Homebuyer Down Payment Assistance 
Qualifying individuals must meet all the following criteria to be considered:

• Household income cannot exceed 80% of the area median income **
• Completion of Homebuyer Education classes (provided by Housing Opportunities)
• Qualify for a mortgage of at least $100,000 with a Housing Opportunities' approved lender
• Must purchase in LaPorte, Porter or Starke County
• Must select a Housing Opportunities approved builder, if purchasing new construction

** For example, the annual income for a family of four cannot exceed:

• $46,650 for LaPorte County
• $49,100 for Porter County
• $42,800 for Starke County

Indiana Housing has down payment assistance available for families that meet these guidelines.  They will do a 3 to 1 match to the money tht the family puts in up to $4,500.

 For example, if a family pays:

• $500 with Real Estate Contract
• $200 for a home inspection
• $500 for a homeowners insurance
• $300 for appraisal
• $1500 TOTAL

Using the 3 to 1 match, Indiana Housing will contribute $4,500 for down payment assistance and closing costs.

The restrictions (guidelines) for the down payment assistance are the following:

• The purchase price of the home must not exceed FHA 203(b) mortgage limits for the area.
• Income must be at 80% of area median income or lower.
• A second mortgage is placed with no interest or monthly payments.  After 5 years, the loan is forgiven.
• Front-end ratio cannot be more than 29% and back end ratio cannot be more than 41% based on the income Housing Opportunities, Inc. has
• No money can be given back to the buyer at the time of closing.
• Housing Opportunities, Inc, funds must be listed on the HUD 1.
• At the day of closing, Housing Opportunities, Inc. will need a copy of the
  • HUD 1
  • Truth in Lending
  • Note and
  • page one of the mortgage
• Two weeks prior to closing, Housing Opportuniteis, Inc. will need a copy of the
  • appraisal
  • good faith estimate and
  • purchse agreement.

Contact Housing Opportunities at 219.548.2800 or www.portercohousing.org

Getting Your Home Ready for the Market

As a seller, your No. 1 goal is to sell your home as quickly as possible at or near the listing price. In today’s market, where there is much more competition for buyers, it is important to put your best foot, or in this case, home forward because first impressions are vital.

Many of today’s prospective homebuyers have busy lifestyles and are looking for properties that don’t require a lot of work. Therefore a home in move-in condition is much more attractive. Before placing your home on the market, you may want to invest in making needed repairs.

To get started, inspect both the inside and outside of the home. Take inventory of practical and aesthetic repairs. You may want to apply a fresh coat of paint on the walls, doors, and shutters. Clean the carpet and buff and polish wooden floors. Tighten and polish hardware. Repair cracks in sidewalks and driveways, and clean any stains on them. Replace missing or warped roofing. Clean or re-grout kitchen and bathrooms. Repair dripping faucets and drains or plumbing fixtures that aren’t operating.

Fix sticking doors and replace old locks and doorknobs. Replace old bulbs and broken electrical sockets. Replace cracked windows and torn screens. Repair broken fencing and reseal the deck. Clean up stains on the tiles and countertops.

Some experts also recommend hiring a certified home inspector to thoroughly and impartially evaluate the property. (For a list of inspectors in your area, visit the American Society of Home Inspectors website, www.ashi.com, or ask your real estate professional for recommendations.) A standard report will review the condition of the home’s heating system, central air conditioning, plumbing and electrical systems, the roof, attic, walls, ceilings, floors, windows and doors, the foundation, basement and visible structure.

If there are recommendations for improvement, consult with your real estate professional in prioritizing the list of repairs.

Depending on your goals and budget, you may want to repair only items that could cause significant deterioration to the home, such as a leak. In addition, your local market conditions may dictate how extensive your repairs need to be. Let your budget and your real estate professional guide you.

However, be careful about major repairs. Sellers rarely recoup money on major remodeling projects, and you may want to save funds for your new home.

A home in good condition demonstrates pride of ownership. Taking the time to make small repairs to your home can go a long way in making sure that your home is presented to potential buyers in its best possible light. They also just might make the sale.

First-time Homebuyer Tax Credit

As part of the Housing and Economic Recovery Act of 2008, a First-time Homebuyer Tax Credit is now available.  This special tax break ends in mid-2009. 

Eligiblitity: First-time homebuyers who purchase a principle residence on April 9, 2008 and before July 1, 2009 are eligible.  If you (and your spouse, if married) have not owned your principle residence for a 3-year period before your purchase, and you have never taken advantage of the first-time homebuyer credit, you qualify as a first-time homebuyer.

How it works: Like all tax credits, it will directly reduce the total amount of taxes you owe.  When you file your taxes, for the year you purchased your home (2008 or 2009), you will be able to subtract the amount of the credit from your Federal income tax liability, increasing the size of your refund or reducing the amount you owe.  For example, you file your 'normal' tax return and find that you owe $2000 in taxes.  With this credit, your tax liability could be lowered by $7500 - which means, you instead get a $5500 tax REFUND check from IRS.

To learn more about this tax credit, please download this file provided by the National Association of Realtors: h.pdf (118.80 kb)

 The Closing Process

Brochure_CL_ CTIC_Closing_16335595103210937501.pdf (982.66 kb)

How Does the Escrow Process Work?

One of the stages of the home buying process is escrow. This process begins when the offer is accepted and ends once the financing is approved and the buyer and seller have fulfilled their requirements. So how does it work?

A neutral third party agent of the principals—buyer, seller, lender and borrower—is designated the escrow holder. This agent assists with the transfer of ownership by ensuring that the terms of the transaction are completed including safeguarding all funds (including the buyer’s deposit) and documents.

The escrow holder keeps track of obligations of the seller or buyer. For example, if the seller is required to supply a termite inspection, the escrow holder will make sure it is fulfilled before any funds are transferred to the seller. Findings in the termite inspection report must be corrected on or before the close of escrow.

In addition, the escrow holder receives from the title company a complete ownership history of the property and any liens on record in the preliminary title report. Any discrepancies that affect the condition of the title, such as condo liens, judgments, etc., against the buyer and seller, must be addressed prior to close of escrow.

The escrow process can last any number of days depending on what is agreed upon between the buyer and the seller. To assure a timely closing, it is important that each party provide the escrow holder requested information as soon as possible. For example, a lender will not fund a new home without a homeowner’s insurance policy. Without the lender’s verification that there is insurance, the escrow process may be delayed. An unsecured source of funding, such as a personal check can also delay the process, because it takes longer for those types of funds to clear.

The escrow process is just one step towards fulfilling the dream of homeownership. Your real estate professional can provide more detail on the escrow process, as well as answer other questions you may have about home buying and selling.

Can You Afford That House?

Before you start searching for your dream home, you first need to determine a price range you can afford. According to the Federal Housing Administration (FHA), depending on the consumer’s current debt ratio, most people can typically afford to pay 31 percent of their gross monthly income for mortgage payments. For example, if you earn $50,000 annually, then your monthly income is about $4,167. Thirty-one percent of that is $1,292. To determine how much home you can afford you may utilize this easy to use calculator. 

There are several online tools to calculate a monthly mortgage you can afford using factors such as your current monthly expenses, down payment and the interest rate. To access a mortgage calculator go to Mortgage Calculator. You can also work with a lender to get pre-qualified for a loan. This estimate will help you gauge how much money you may be able to borrow and the monthly mortgage payments.

However, the amount you are able to afford for a home loan should not be your only consideration for determining your price range. With homeownership come other housing expenses.

The most obvious of additional housing expenses are utilities—gas, electricity and water. But don't forget about telephone, trash collection, and cable or satellite bills.

As a property owner, you are responsible for property taxes. The rate will vary from city to city. In our community, the tax rate is (insert %) percent. That means for a home with a market value of $200,000, yearly taxes will run (insert dollar amount). To get a general idea on how much the tax bill will be for a property, ask the seller for a copy of the previous year's tax assessment. Your real estate professional can help you refine these figures.

Another cost you may incur is homeowner association (HOA) dues. Most condominiums and some (residential developments/subdivisions/neighborhoods) have HOAs, which are legal entities, created to maintain common areas and enforce deed restrictions. As a property owner, you are required to pay the established monthly or annual homeowner association dues. Be sure you factor this cost into your budget.

You also need to consider the upkeep of your home. You should budget for seasonal maintenance such as lawn care, pest inspections and carpet cleaning, as well as unexpected repairs. The amount you budget will depend on the age of the home, as older homes tend to require more repairs such as installing a new roof, painting and replacing older appliances.

Depending on the type of coverage and your area, the costs for homeowners insurance each year can be anywhere from a few hundred to thousands of dollars.  And, if you live in an area that has high risks for flooding, earthquakes, hurricanes, etc., you may need supplemental insurance.

Unless the home you purchase is picture perfect, you’ll more than likely be adding your personal touch. Therefore, you need add to your housing budget the costs for remodeling and upgrades. According to “Remodeling Magazine’s” 2007 Cost vs. Value Report, the national average for a midrange minor kitchen remodel is $21,185; a bathroom remodel averages $15,789.

Even minor cosmetic fix-ups such as light fixtures, window treatments, carpeting and decorative cabinet knobs can begin to add up.

By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget. Use the Budget Basic Worksheet to help you with your calculations.