HUD has released updated guidelines allowing for the use of the $8,000 tax credit for first time home buyers at the closing. Those guidelines are in Mortgagee Letter 2009-15 [which is as long and filled with governmentese as you expect]. Here is a brief summary.

FHA-approved organizations [which is just about all banks and mortgage lenders] are allowed to purchase your $8,000 tax credit. This will allow you to use the credit at closing to cover most of your closing costs. One major catch — you can not use the credit to cover a required downpayment So, if you have an FHA mortgage, you still have to bring 3.5% to the closing table, but you could use the credit for just about anything else — closing costs, prepaid taxes & insurance, and so on.

While this isn’t everything, it is still a great step forward. Knowing that the $8,000 will cover closing costs, buyers can be a bit more aggressive on the price they offer and get into their first home for a lot less.

If you are interested in looking for your first home, please email me and we’ll get started

Like most licensed professions, real estate licensees have to take continuing education courses every year. Some of those courses are mandatory — legal updates and such, and the rest are elective. This year I decided to take a course on 1031 Tax Free Exchanges

A 1031 Exchange [also called a Tax-Free Exchange, a Like-Kind Exchange, or a Starker Exchange] is a mechanism that allows investors to sell their investment property and reinvest the proceeds in another property without paying capital gains tax. You won’t avoid paying the tax entirely, but you can delay paying the taxman until much later. It’s somewhat like doing an IRA rollover — you sell all the assets in your old IRA/real estate and move the assets over to the new IRA/real estate without paying capital gains until you ultimately cash out.

There is an administrative burden. In particular, you need a “qualified intermediary” to manage the transaction [remember the IRA rollover example -- you can't touch the money]. A 1031 exchange, however, is still a great way to manage your investment property both now and in the future.

If you would like to know more about 1031 Exchanges, email me. I’d be happy to refer you to a Qualified Intermediary and help you with the sale/purchase of your investment property.

Every month I go into this data with a mixture of fear and excitement. Will the numbers look better this month or not? Let’s find out.

[data pulled from Triangle MLS at about 10pm last night]

In Durham County there were 2,196 available listings at the end of April. 189 sales were completed in April meaning the current home inventory would be sold in 11.6 months. This is an improvement of 1.7 months, which follows a 1.6 month improvement in March. It is still a buyer’s market in Durham County, but there is steady improvement.

For the 27713 zip code there were 500 homes available on April 30. 41 sales were completed in April leaving 12.2 months of inventory available, which is about the same as last month. This is also the first month where there was more inventory available in South Durham that in the County as a whole.

[As an aside, there are 2 listings which have been on the market since 2007 and another 6 that were listed prior to May 1, 2008. For comparison, 112 houses were listed in April 2009]

Now let’s take a look at some of our favorite communities;

• Hope Valley Farms was the big winner this month with 7 closings. There are currently 59 homes available, which is 8.4 months of inventory — almost exactly the same as last month.
• Close behind was Woodcroft with 6 closings in April. Woodcroft has 75 which translates into 12.5 months of inventory. That’s a big drop from the 16.2 months of inventory available at the end of March. almost a third of the homes available in Woodcroft were listed in April, and another third in March, so these numbers will improve as that inventory burns off.
• Woodlake was the third place finisher with 5 closed sales in April. 17 homes are currrently available, which would sell through in 3.4 months. I’m pretty sure the sales number is a spike — we’ll see in May
• Parkwood again only had one closing in April. The number of homes available increased to 24. This bears watching, as it is really unusual.

So, like most months, some good news and some bad news. It’s up to you to decide which side of the glass you want to look at. See you next month.