This tax credit primarily applies to "first time buyers", or home buyers who have not owned a home in the past three years. The legislative changes made in November 2009 extend a similar tax credit to "long-time repeat buyers", or homeowners who have lived in their primary residence for a consecutive five years out of the last eight-year period.

Now how much is this credit for? It covers either 10% of the home's purchase price or $8,000—whichever is less. This figure is for first time homebuyers; for longtime buyers the maximum tax credit is $6,500. This tax credit does not need to be repaid as long as it remains your primary residence for at least three years. For more information, see: http://www.federalhousingtaxcredit.com/

There are more reasons to buy a home in the Dallas-Fort Worth area. Mortgage rates are at all time lows, according to Freddie Mac, but they are poised to rise; predictions range from below 5% to up to 6% by the end of the year. The factors involved in this change are many: a climate of rising interest rates in general, the Fed backing off its securities manipulations that have been keeping mortgage rates low. 

Housing prices in Texas are up as well: according to a December S&P/Case-Shiller report, Dallas home prices have appreciated 3% over the past year. This compares favorably to most other housing markets in the United States, many of which have seen more modest gains or even losses. These marked differences in price gains make it appear as if the national housing market is still struggling, if one relies on the law of averages. Still, housing prices are driven by many factors, including local effects such as the strength of the local economy and unemployment rates. With Dallas unemployment 1.5% below the national average, its housing market is likely to rebound as well, resulting in a price spike and an additional increase in mortgage rates due to greater demand.

Between these factors and the last-minute rush on purchasing under the tax credit, now is the time for first time homebuyers to act.

On the other hand, delinquency rates remain high, even in Texas. One in every ten Texan homeowners is behind in their payments, and the rate of homeowners who are "seriously behind" (90 days or more) is 6.14%. Both rates trail the national average, which has fallen during the last few months of 2009 according to the seasonally-adjusted delinquency rates. The overall high rate of delinquency is still likely to lead to an increase of the foreclosure rate. Experts are predicting 3 million foreclosures this year, up from 2.82 million last year.

However, there is some good news. The Obama administration has extended the deadline for their refinancing program, known as the Home Affordable Refinance Program. Originally scheduled to run out by June 10, 2010, it will now expire on June 30, 2011, to help more homeowners make their payments. In addition, not all delinquencies—or even foreclosure filings, which are also up over the last year—lead to foreclosures.

Overall, signs in the Dallas-Fort Worth area are positive. According to a Federal Housing Finance agency report, Dallas was one of three of the Top 10 cities that showed housing price gains. And the overall foreclosure rate in Texas is only 2%, less than half of the national average. 

In addition, while foreclosures tend to sell for lower prices than non-foreclosed homes (or equity sales), the low number of equity offerings lets them compete with foreclosures, especially given the difficulty for the average buyer of seizing a particular foreclosed home. This means that the increase of foreclosures may not offset other factors in the housing market, such as low-but-rising mortgage rates and improving unemployment. 

This increase in construction is expected to have a significant impact on the housing market. As homebuyers tend to prefer new homes over refurbished homes, an increase of housing units will increase competition between these two markets and drive up prices.  Lumber prices are increasing due to one of the major lumber mill suppliers that shut down a facility in Canada, and this cost is estimated to increase new construction prices an estimated $1800 per home.   Already in several markets the housing prices on existing homes are increasing. Housing construction forerunner D.R. Horton is raising prices $5,000 across the board in the Dallas Fort Worth metroplex..

With these positive if tentative signs of recovery, buyers and sellers alike may begin to wonder: is now the time for trade? We are not quite out of the memory of the recession yet; consumer preferences for new housing are trending towards multi-family units that save money, if the rates are any indication: the number of housing construction has increased by 9% for multi-unit buildings and only 1.5% for single-family units.

In addition, there are a lot of factors in assessing the state of the housing market: the number and rate of foreclosures, the mortgage rate, and even the state of the local economy and the unemployment rate. Most signs, however, are positive. The S&P Case-Shiller reports that while housing prices are down 3% around the country this year, the Dallas-Fort Worth housing market has showed moderate gains, in part due to a strong economy driven by the energy market. Mortgage rates are expected to rise this year too, up a full percentage point by some estimations. This will surely slow the growth of the housing market—however, it also makes this early 2010 period a good time to buy a house, especially with the $8,000 federal tax credit extension expiring at the end of April.

With concerns about the state of the economy still floating around in the national news, it can be difficult to say just what all the hullabaloo has to do with the local housing market. 　

There is good news and bad news. The good news is that Dallas has fared better than most of the rest of the country, as one of three of the top 10 cities to show gains in the federal pricing index. So the state of the market is better than the dismal national reports suggest. This is largely because Dallas's housing bubble was not as bad as those in other cities, such as Las Vegas and Detroit. The current foreclosure rate is half the national average.　

On the other hand, some national trends apply to as much to Dallas as they do to the rest of the nation. The percentage of mortgage delinquency, often used to help predict the number of ensuing foreclosures, is at a record level: over 10% both locally and nationally. More than half of those are in "serious delinquency", or over 90 days behind on payments. 　

Mortgage rates have remained low in part due to effort on the part of the Fed to keep them down. But the Fed's have been a dominant buyer in the mortgage securities market and they are pulling out March 31st, which could result in spike in mortgage rates according to Freddie Mac. If there is a spike in the rates and the economy weekens the Fed's have stated that they are leaving the door open to extend the program. For the thousands of new first time homebuyers rushing to find a home prior to the end of the first time home buyer rebate program, they could see a window of higher rates in the first few weeks of April due to the bond market reaction. If buyer interest is sparked by recent developments, this may also trigger a surge in the mortgage rates as demand for credit rises. 　

The other sign to watch is how will the housing market react to the end of the first time home buyer program. Will we see a slow down in May? Will we see the market return in the summer buying months for families relocating, buying up or sizing down during the crucial "let's get moved so the kids can be in ready for the new school? Will the national home builders, who are building now in the affordable priced homes, slow down due to expectations of market slow down from first time home buyers? All I can say is wait and let's wait and see.

We are recommending our investors to hold up if they are looking at housing under $250,000 price point due to all the heavy competition that is out there from the first time home buyers. There will be a slow down and banks will be more motivated to look at the lower offers after April 30th. So investors, be patient and get ready for let's make a deal.

Let's wait and see what happens to interest rates and look back at this blog during the first few weeks of April. Let's wait and see what happens to the market reaction for home sales in May. I know in the Dallas market many of the foreclosure hitting the market in the under $250,000 price point have been hitting closer and closer to market price -vs.- the market entry price that were hitting early to mid 2009. We might see a change and we need to get the crystal ball ready because we are all waiting to see.

Government efforts to stem the tide have been mixed in effectiveness. The Federal Housing Tax Credit, designed to encourage first home buyers to take the plunge and keep the housing market afloat, is set to expire at the end of this month. To help "underwater" homeowners with their mortgages, a refinancing program was developed in November, but as of yet it has helped only a small fraction of eligible homeowners. The program was recently expanded, but the effects will not be felt for months at the minimum. And further government interference may be interpreted by skittish buyers and home builders as a sign of no confidence—potentially destabilizing the market even further.

Even with these ominous signs in the national market, not every indicator is bad—at least, for some parts of the country. With regards to both rises and falls, changes are often first precipitated in the local markets before spreading nationally. And housing prices in Dallas Fort Worth metroplex, while still 11% behind its peak for 2007 averages, are a far cry from the 30% or greater seen in other areas of the country. Last year housing prices even rose: 4% from January 2009 to 2010 in DFW. This means that overall economic recovery might just start in the stronger metroplex areas. When buying real estate it is important to understand the market you are in and knowledgeable real estate agents who understand your market can help you with timing to capture the opportunities out there. For investors purchasing rental properties in an improving geographic area, they can still catch the buys that are 10% below the current market combined with a market that may be 10% below its peak, which combines for a total of 20% below the market peak. For a real estate investor looking to purchase below market and resell at a future date it could be a good time. For a real estate investor in a market area that is continuing to decline they need to do their homework and check their pockets when evaluating their exit strategy. To answer the million dollar question of recession recovery that is going to depend on which channel you are watching, what analyst you are listening to, or what neighbor you are having conversation with,... if its a neighbor that is one of the ones that is out of work and looking for a job you might tend to believe that the recovery still has a ways to go. The question for the housing market is will depend on where you live, is your housing market rising or falling?

NoForeclosure as a company supports energy savings and hopes our foreclosure specialists in each city representing prospective buyers and sellers also support this cause.

Most homes can achieve cost effective solution to save energy by checking the insulation in the attic and adding insulation if there is less than an R38. Check windows and doors for air opening and re-caulk when needed. Always add as many compact florescent bulbs as possible and you can reduce a 60 watt by over 75% in savings down to a 14 watt with the same brightness -vs- the typical light bulb. One, two, three easy cost effective solutions when buying any home.

ENERGY FACTs:

From 1970 to 1989, residential buildings accounted for 33% of energy consumption in the U.S. According to the most recent figures, residential buildings accounted for 22% of energy consumption in the U.S. This is largely due to better insulation, and energy-efficient windows and appliances. If every American home replaced just one light bulb with a compact fluorescent light bulb, we would provide enough energy to light more than 3 million homes for a year, save more than $600 million in annual energy costs, and prevent greenhouse gases equivalent to the emissions of more than 800,000 cars. It pays to go green at home. According to a study by the Joint Center for Housing Studies at Harvard University, for every dollar decrease in annual home energy expenditures, house values increase between $11.63 and $20.73.