Rochester, MN Market Conditons Week 11/3-11/9/08

The homes for sale in Rochester, Minnesota continued to drop last week. There are currently 905 residential properties actively for sale in Rochester, with an average list price of $227,140 (median $176,500) and an average of 164 days on the market. Last week there were 42 new listings (avg. list price $198,066, median $159,900) and 16 that came back on the market (avg. list price $197,593, median $155,900).

Thirty-one residential properties went to pending (under contract) last week. Average asking price for these properties was $191,293, with a median asking price of $174,900. It took an average of 110 days on the market for these homes to go under contract.

Last week 16 residential listings cancelled, 10 expired, and 13 were extended.

The 17 homes that sold (closed) last week had an average sold price of $205,500 (median $182,900), an average of 97.76% of the asking price and 93.26% of the original list price. This close margin of sold price to list price at time of sale illustrates the extreme importance of accurate pricing.

Tax Credit For First Time Home Buyers

Amid the economic upheaval, there is good news for first-time home buyers – a tax credit of up to $7,500. Even better – the definition of first-time home buyers includes those who have not owned a principal residence in the three year period prior to purchasing a qualifying home.

The tax credit, established through the Housing and Economic Recovery Act of 2008, is available only to first-time home buyers and only for homes purchased on or before April 9, 2008 and before July 1, 2009. Any home that will be used as a principal residence qualifies, including single family detached homes, townhomes, condominiums, mobile homes, and houseboats. New construction is also eligible, as long as possession or occupancy occurs within the parameters defined by the law.

For the purposes of this law, a first-time home buyer is defined as someone who has not owned a principal residence during the three years prior to the purchase of the qualified property. For married taxpayers, neither individual may have owned a principal residence in the previous years. A buyer will not be disqualified from the tax credit if they own a vacation home or rental property not used as their principal residence.

Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Eligibility is determined based on modified adjusted gross income. Partial credit may be available for those with higher incomes; however, individuals with a modified adjusted gross income exceeding $95,000, (or $170,000 for married couples filing jointly), will be ineligible for the tax credit.

The tax credit is equal to 10% of the qualified home purchase price, but is capped at $7,500; for homes purchased for less than $75,000, the credit will be 10% of the purchase price.

There are no special forms to fill out and no pre-approval necessary. The credit is easily claimed on the federal income tax return. Plus, the credit can be claimed on the 2008 return for a home purchased in 2009. If the tax credit exceeds the taxpayer’s outstanding liability for the year, the taxpayer will receive a check from the government.

The credit is like an interest-free loan, and it must be repaid to the government over a 15-year period. Payments do not have to begin until two years after the credit is claimed. If the home is sold before the credit is repaid, the outstanding amount will be paid from profits on the sale. If there is insufficient profit to repay the credit, the remaining amount will be forgiven.

For first-time home buyers (those who are truly new to the market and those who have not owned a principal residence in at least three years), this tax credit can make it easier to transition into home ownership. Combined with housing inventories increasing, prices decreasing, and mortgage rates dropping even lower, this tax credit may just make the difference in making home ownership a reality.

Source: federalhousingtaxcredit.com

This article is informative only, based on information available at time of publication, and is not intended to provide tax or legal advice. Please be sure to consult with a tax advisor or legal professional about your particular situation prior to making any decisions or taking any action

Scott Finley