Will I get my $ Back?

Quite often, we are asked about the rate of return on home remodeling projects. One great source to see how much money you will recoup by redoing your Master Bathroom is Remodeling Magazine annual Cost vs Value Report. What you will notice is that no project has a 100% rate of return. Leading the way for Return on Investment, again, is exterior remodeling projects. Boosting curb appeal through replacing windows, siding, and deck additions recoups your investment dollars the best both Nationally and Regionally. The only interior remodeling project making the Top 10 are Kitchen Projects.

Below are the Top 10 Projects and their Cost Recouped:

1. Upscale fiber cement siding replacement (86.7%)
2. Midrange wood deck addition (81.8%)
3. Midrange vinyl siding replacement (80.7%)
4. Upscale foam-backed vinyl siding replacement (80.4%)
5. Midrange minor kitchen remodel (79.5%)
6. Upscale vinyl window replacement (79.2%)
7. Midrange wood window replacement (77.7%)
8. Midrange vinyl window replacement (77.2%)
9. Upscale wood window replacement (76.5%
10. Midrange major kitchen remodel (76.0%)

Existing-Home Sales Hurt by Economic Turmoil

With Consumer Confidence falling amid Economic uncertainty, Existing-Home Sales fell again Nationwide in November, according to the National Association of Realtors. Existing-Home Sales fell 8.6% to a seasonally adjusted annual rate of 4.49 million units in November, which puts us 10.6 % below the 5.02 million-unit pace in November 2007. Regionally, in the Northeast Existing-Home Sales declined by 12% to an annual pace of 730,000 in November; putting the region 18% below last years numbers.

The silver lining in the numbers may be that Existing-Home Sales are rising in hard hit areas of California, Nevada, Arizona and Florida. According to Lawrence Yun, NAR chief economist, “Sales are rising only in areas with large numbers of distressed properties as bargain hunters take advantage of discounted home prices." While this is a positive sign, Mr. Yun cautions that “It is, therefore, imperative to provide incentives for homebuyers to get back into the market. It also depends on how effectively Congress and the new administration can help facilitate the short sales process and unclog the mortgage pipeline – impediments remain for some buyers with good credit,” to help the housing market recover.

Good News on Mortgage Loan Limits

Great news concerning conforming mortgage loan limits for our immediate area. Effective January 1, 2009, Fannie Mae, Freddie Mac and FHA loan limits will be set at $625,500 for Somerset County and other "high cost" counties in the area. Also of note, FHA is going to increase it's down payment requirement to 3.5% from 2.25% effective Jan. 1st.

School Days!

September is here, and our children have returned to school. Quite often, we work with clients who are looking to relocate to Basking Ridge solely for the Bernards Township School System (and many local residents will only move within the community if they can remain in their current school). This is a great testament to our school system and community. While locals see first hand how our children's lives are enriched through their education, families moving to the area have to look at rankings and scores to see the benefits the schools will give their children. Two great sources we give out are the New Jersey School Report Card and Newsweek's America's Top Public High Schools. In Newsweek, Ridge is currently the second highest ranked school in all of New Jersey with a national ranking of 136. It has been ranked as high as 91 of the top 1300 Public Schools in America only two year ago. "The Norrod Team" would like to wish both students and faculty the best as the new school year get underway!

First Time Home Buyer Tax Credit.

The Housing and Economic Recovery Act of 2008, H.R.3221, that President Bush and Congress just enacted a couple of weeks ago can be a bit confusing. One of the most significant and timely part of the Act is the First Time Home Buyer Tax Credit. In going over the document, our Broker/Owner John Bendall has shared with us a nice neat outline, as follows:

First-Time Home Buyer Tax Credit Fact Sheet

Who is Eligible

• The $7,500 tax credit is available for first-time home buyers only.
• The law defines a first-time home buyer as a buyer who has not owned a home during the past three years.
• All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits

• Home buyers who file as single or head-of-household taxpayers can claim the full $7,500 credit if their modified adjusted gross income (MAGI) is less than $75,000.
• For married couples filing a joint return, the income limit doubles to $150,000.
• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.
• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
• The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with an MAGI that exceeds $170,000.

Effective Dates for the Tax Credit

• First-time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009. To qualify, you must actually close on the sale of the home during this period.

Tax Credit is Refundable

• A refundable credit means that if you pay less than $7,500 in federal income taxes, then the government will write you a check for the difference.
• For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $2,500 payment from the government.
• If you are due to receive a $1,000 tax refund from the government, your refund would grow to $8,500 ($1,000 plus $7,500 from the home buyer tax credit).
• Buyers can take the tax credit in their 2008 or 2009 tax return.
• If you purchased the home in 2008, the tax credit is taken on your 2008 tax return. If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax returns.

Types of Homes that Qualify for the Tax Credit

• All homes, whether single-family, townhouses or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a home in the prior three years. This also includes newly-constructed homes.

Payback Provisions

• The tax credit essentially serves as an interest-free loan to be repaid over 15 years.
• For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. However, the buyer doesn’t have to start repaying the credit until two years after the tax year in which the credit is claimed.
• If the home owner sold the home, then the remaining credit would be due from the profit of the home sale.
• If there was insufficient profit, then the remaining credit payback would be forgiven.

For more details on the tax credit, go to: www.federalhousingtaxcredit.com

Basking Ridge Real Estate Market Update: Market Bottom?

More good signs that the Basking Ridge Real Estate Market may be forming a bottom. Not only were Pending Homes Sales up for June in Basking Ridge (and nationally), July's Pendings had an even better showing. While pending home sales this year are behind the last few years' pace in a month to month comparison, the last couple of months have posted more comparable numbers; click the chart to get a better view. As consumption has improved throughout the year, the market absorption rates have continued to improve. Houses priced between $600K-$1.5M currently have between a 3-4 month absorption rate. While housing prices are by no means rising, the rate of depreciation has decreased. New Inventory has slowed, further easing the downward pressure on prices. Again, this could be the early signs of the market bottoming; what unfolds over the next couple of months will shed more light on the situation. We will continue to monitor the local market and keep you posted.

Pending Home Sales Up!

The National Association of Realtors reported The Pending Home Sale Index rose 5.3% for the month of June to a reading of 89.0. The index is a forward looking indicator based on contracts signed during the month. While still lagging 12.3% behind last June number of 101.4, it is the highest reading for the index since October of '07, of 89.8. According to Lawrence Yun, NAR chief economist, “The rise in pending home sales was broad-based with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”

Crammer Says "Buy a House!"

Jim Cramer of CNBC's Mad Money a few month ago urged home owners to torch their house for the insurance money. Now that the banking crisis is being averted, he is imploring everyone "that between now and the next six months you have to buy a house.” Why, he believes that the banks are sensing a bottom in the housing market. Check out his rants at CNBC.

Go Green and Save!

Reducing your impact on the environment can be easy and and save you money in the process. Here are four simple changes you can make to alter the footprint you and your home leave on the environment and put money back in your pocket.

Change your light bulbs. Energy saving Compact Florescent Light Bulbs can last 10 times longer and use 60% less energy than an incandescent bulb, which in turn can save 75% of lighting costs.

Install a programmable thermostat. If every household in America turned down the furnace and air conditioning when they are not home, we could decrease greenhouse gas production by about 35 million tons of CO2 and individually save about 10% a year on energy costs. In the summer, set your AC to 78 degrees while your home and give it a break while you are away. While in the winter, set the furnace at 68 degrees while your home and back it off to 60 degrees while your away. Program the thermostat to adjust the temperature shortly before you are due home.

Washing your clothes in warm or cold water can greatly reduce your energy consumption compared to washing with hot water. Warm water reduces your energy consumption by half while cold water can reduce it up to 90%.

Pump up your tires. Under inflated car tires can hurt your gas mileage by 3%. Check the inside of the driver's side door or car manual for your tire's proper PSI.

Going green doesn't have to be hard or costly. These four easy tips can decrease your effects on the environment and keep money in your bank account!

Basking Ridge Real Estate Market Update: Absorption Rates

Basking Ridge's Absorption Rates continue to show positive signs for the local market. Currently, if your home is valued under $1 Million, there is between 4-6 months of supply on the market giving current consumption rates - not bad compared to other areas in the country. Analysts target this range as an indicator of a healthy stable market.

Does this mean the prices are going to stop declining? No, probably not. We have to look at the underlying market statistics to see why. While pending sales were up for April, both locally and nationally, local market stats show them retreating in May - we will see how the national numbers look in a few weeks. Further, Closed Sales continue to lag behind the pace set over the last couple of years. Through May of this year, 90 houses have sold compared to 167 a year ago and 171 homes in '06 during the same time frame. What has been the greatest stabilizing factor in Basking Ridge's Real Estate Market has been the slow down of houses coming on the market. By this time last year, 395 new listings had come on the market - 449 in '06; compared to 328 new listings this year. Having less houses enter the market helps greatly; but prices won't stop declining until consumption increases. But overall, the health of the market appears to be improving!

Where's the Living Room?

Say good bye to the room with all of the nice furniture that rarely gets use. You know, the room with the plastic slipcovers on the sofa; OK, no one uses those anymore, but you understand the point. According to a National Association of Home Builders (NAHB) survey, over half of the respondents believe that by the year 2015, average size homes (2,300 sq ft) will be constructed sans living room. Further, upscale homes, 4,000 sq ft, will have a smaller space than the current living room functioning as a parlor or music room instead.

So, what do you do if you currently own a four bedroom center hall colonial and are not utilizing the living room. Change it. We are starting to see individuals use the space as a library or music room as a way to enjoy their hobbies and interests. Don't be afraid to experiment with the space; it doesn't have to store the nice furniture in plastic casing.

Why Now is the Time to Buy a House!

Buy a house now, you must be crazy. Don't you know that home prices are going to keep falling, I wouldn't buy now. Many people would respond to you that way if you told them "Now is a great time to buy a house."

As Realtors, Chantal & I get strange looks all the time when we are talking to people about how now is a great buying opportunity. Plenty of supply, lower prices, and low mortgage rates create what could be one of the best buying opportunities to present itself in the last decade. Gone are the days where you better have pen in hand when you saw a house you liked, because... there is another showing later in the day. Current supply allows buyers an opportunity to view many homes and weigh their options; making the best choice for them. Currently, home prices in Basking Ridge are off about 12%-15% from their peak levels. Mortgage Rates, while not at their lowest levels, are at historically low levels. This adds up to a tremendous opportunity!

But aren't Home prices forecasted to continue to fall? Yes, they are. But, it might not be in your best interest to wait. While home prices should continue to decline, mortgage rates are forecasted to increase at a rate that will negate, the forecasted price declines. In fact, by waiting for those lower home prices, higher mortgage rates may cause you to pay more for your house in the long run than buying in today's market environment.

Basking Ridge Real Estate Market Update: May Home Sales

Home Sales in Basking Ridge improved in May. 23 units closed during May, up from 21 units in April. The Basking Ridge Market though, continues to lag behind the previous year's paces. Sales totals from the previous 3 years for the month of May all were greater; 37 in '05, 44 in '06, and 49 in '07.