With all the first time buyers realizing the opportunity that exists if they buy a home this year in time for the $8,000 tax credit I am frequently asked questions about who qualifies as a first time buyer. I thought this bit from the Q & A section of the National Association of Home Builders website was worth sharing.
What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer. (my emphasis)
Now is a great time to be a first time buyer. If you know of anyone who should be taking advantage of the opportunity let me know.
- Are We at the Bottom Yet? Why Timing Doesn’t Work
It happened again today…and yesterday for that matter. I inevibility get the question, ”What is the Phoenix market going to do?” and that is usually coupled by “Are prices going to continue to go down?” What they REALLY mean is, “I want you to tell me the exact moment that the prices are at their lowest and then I want to buy my dream home.” This way of thinking is flawed for a couple of different reasons:
- You know the saying “Hindsight is 20/20?” It is a common saying for a reason and it pertains to real estate markets, too. It takes three months of “different” activity to create a trend. The problems is that we won’t know that we’ve hit bottom until we are already three months past the bottom. Look at this diagram:
- Different areas and communities bottom out and trend a little differently. Did you know that houses are flying, FLYING off the market in Queen Creek? They are cheap but it’ll take some doing to get one that you want. Multiple offers, over asking price, cash buyers. Sound familiar? My experience recently with a couple of clients out there…20 houses, 4 offers, 1 house (as a back-up offer when the first buyer couldn’t get it done).
- Interest rates play a role, too. Would you rather have a payment on a house that: a). you got for $10,000 less or b). the interest rate was 1% less? HMMM??? Not sure? Food for thought…
- Will you be emotionally invested in your home or is it an investment that you have no real ties to? Even with the quantity of homes on the market right now finding that perfect one is still challenging for some. And what if you lose it by waiting for the price to come down an extra couple of thousand dollars? It’s never fun for anyone (least of all your Realtor) when we have to live with “the one that got away”.
Here’s another diagram for you that depicts the cyclical nature of markets.
My wish for my clients and all the rest of you out there is that we would focus on the safe zones. Is it a safe time to buy? YES!!! Might the market decline a little still? Sure.
Might we be in the Lucky Zone?
