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How much house can you get these days for $80,000?

I started thinking about this a few weeks ago, when Congress extended and expanded the refundable tax credit for homebuyers.

With the credit, buyers can get back 10% of the purchase cost on a home -- up to $6,500 for many who currently own a home, and $8,000 for qualifying first-time buyers. In the season of gift-giving, it's a wonderful present from taxpayers to home shoppers.

Do the math: The best return goes to the first-time buyer who spends 80 grand and gets 10% back. But if you spend, say, $300,000, you still only get the $8,000 – a measly 2%.

So what can you get for $80,000?

In the vast areas in the middle of the country, where space is not really a major constraint on housing, it can go a long way. Obvious point: Many of the cheapest places to buy are cheap for good reason. The neighborhoods may be depressed or worse. Good jobs—any job--may be hard to find.

The National Association of Realtors tags Saginaw, Mich., as the metropolitan statistical area with the cheapest real estate in the country. Median price of a single family home: $61,000. So in Saginaw the full $80,000 will take you upscale. Zillow features this three bedroom, two bath house (1,266 square feet) for $34,900.

At the other end of the range stands the San Francisco Bay Area, where median prices are more than half a million bucks. What does the $8,000 tax credit get you? "It doesn't do much for us here," admits James Caldwell, manager of Prudential California Realty on Union Street in San Francisco.

When I pressed him, Mr. Caldwell said you could get a one-bedroom condo in some cheap but OK areas just outside the city, like Pacifica, for maybe $200,000 or so. An $8,000 credit will at least cover 4% of the costs.

Over the bridge in Oakland you can get something even cheaper.

Real estate Web site Trulia illustrates the range of options in: Cleveland, Dallas, Detroit, Ft. Lauderdale, Fla., Las Vegas, Oakland, Calif., Oklahoma City, Ok., and Tulsa, Ok. See the photos at left for some details.

One obvious standout: Las Vegas, essentially ground zero for the real estate collapse. For $80,000, notes Trulia, you can get a four bedroom, two and a half bathroom house with 1,600 square feet. It is, of course, pure coincidence that Senate Majority Leader Harry Reid (D.-Nev), who faces a tough re-election battle in the state next year, championed the extension of the tax credits.

The other big beneficiary of tax credit stimulus, of course, is over the border in Arizona, where home prices have taken a major haircut since the bubble popped.

Real estate Web site Zillow reports about 450 homes in Phoenix's Maricopa County, Ariz., for sale between $75,000 and $80,000. Spokeswoman Katie Curnutte says "three quarters have at least three bedrooms, and one quarter has at least four."

The comparable figure for Las Vegas was still impressive: 237 homes between $75,000 and $80,000.

But in San Bernardino, Calif., the figure was just 34 and in New York City you'd be laughed out of town.

Looking to make the most of your tax credit? Go west, young man.

Write to Brett Arends at brett.arends@wsj.com

By Luke Mullins



While many Americans can't wait to cook their turkeys and decorate their Christmas trees, anyone trying to sell a home in the coming months will have an entirely different perspective of the holidays. More than three years after home prices peaked, sellers are still facing an unaccommodating market. On average, it takes between seven and eight weeks to sell a home these days. That's up sharply from four to five weeks back in September of 2005, according to the National Association of Realtors. But the real estate market's seasonal pattern will insert an additional hurdle in front of home sellers this winter. Since many home buyers with children plan their purchases around the scholastic calendar—starting their search in the spring, signing a contract in the summer, and moving in by late August—sales activity tends to erode as the days grow colder before bottoming out in January or February. That means anyone selling a home over the holiday season will have more than just long lines at the mall to contend with. Here are 10 tips to help sellers get the best deal they can during the sluggish, off-season housing market:


1. If you can, wait: With the dynamics of the national housing market heavily favoring buyers, those in a position to postpone their home sale—even for a few months, until the spring—should consider doing so, says Guy Cecala, the publisher of Inside Mortgage Finance. "If you are really looking for top dollar and what people got a couple years ago, don't even bother putting it on the market," Cecala says. "And there are a lot of people who are making that decision."

2. Know your local market: Nothing will affect the outcome of your home sale more directly than its price tag. But in order to determine an appropriate price, you've got to know the ins and outs of your local real estate market. Truth is, all those stories about the national housing slump aren't nearly as important as the developments going on right in your neighborhood. So sellers should do everything they can to take their local market's pulse: read the real estate section in the local newspaper, click through a good housing blog that covers the area, check out nearby homes that are for sale: How much are they selling for? How long are they staying on the market? Here is where a real estate agent with experience in that local market can be a big help. "You can't just look across an entire marketplace and say, "Here is my metro area, and here is what's happening,' " says Keith Gumbinger of HSH.com, a publisher of mortgage and consumer loan information. "You have to try to attenuate yourself with what is happening in your very individualized local market." In addition, take note of any nearby foreclosed properties, as well as changes to the local economy that could alter future housing demand.

[See 10 Secrets of Off-Season Home Buying.]

3. Price aggressively: Once you've got a handle on local market conditions, it's time to price the property. In so doing, be aware that today's buyers are demanding bargains. "The market is very impatient and unforgiving on high-priced houses," says Ron Phipps, a broker with Phipps Realty in Warwick, R.I. "If you are priced over the market, it is unlikely that anything will happen." That means you might have to list the property at 10 to 20 percent—depending on your local market, of course—below what you think it is worth, Cecala says. "Properly priced houses—i.e., discounted houses—are getting snapped up, and people will even bid on them," Cecala says. "If you are trying to capture what you saw [in home prices] two or three years ago, you may not be able to see that for five or 10 years. And people don't seem to accept that."

4. Negotiate your broker's commission: Since you may have to list your home for lower than you would like, it's worth asking if your broker is willing to accept a reduced cut as well. Broker's commissions averaged 5.20 percent in 2008, according to a March 2009 ForSaleByOwner.com analysis. And by handing a smaller cut to their agent, sellers can help soften the blow of the sluggish market. "You want to negotiate your commissions beforehand, especially if you are already pricing very aggressively," Gumbinger says.

5. Get preinspected: With the economy staggering under the weight of 10.2 percent unemployment, home buyers aren't walking around with a lot of cash for home repairs. That means homeowners need make all major repairs before putting the property on the market. To determine what repairs are needed, sellers should have a home inspector evaluate the house, says Judy Moore of Re/Max Landmark Realtors in Lexington, Mass. "In today's market . . . you can lose a sale over the silliest things after a home inspection," Moore says. "And it's not necessary if you get it taken care of beforehand."

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By: Marketwire

SAN DIEGO, CA -- (Marketwire) -- 11/13/09 -- Aided by the home buyer tax credit, the outlook for housing and the economy appears headed for a sustainable recovery, according to the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said the projections are enhanced by a tax credit expansion to more home buyers through the middle of 2010. "Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices," he said. "In fact, the credit is working better than first projected -- it now looks like we'll have 2.3 to 2.4 million first-time buyers this year."

A large consumer study being released later today, the 2009 National Association of Realtors® Profile of Home Buyers and Sellers shows first-time buyers accounted for a record 47 percent share of home sales over the past year, up from 41 percent in the 2008 survey. The share has risen steadily since a cyclical low of 36 percent in 2006.

Existing-home sales are expected to total 5.01 million in 2009, a gain of 2.0 percent over last year, and then are forecast to rise 13.6 percent to 5.69 million in 2010. "A steady draw down of inventory will help home values to turn positive in 2010, but risks such as unemployment remain in the economy," Yun said.

New-home sales are projected at 397,000 this year, recovering to 549,000 in 2010. Housing starts, including multifamily units, should total 564,000 units this year but grow to 752,000 in 2010.

The 30-year fixed-rate mortgage will probably average 5.3 percent in the fourth quarter, rising gradually to 5.8 percent by the end of next year. NAR's housing affordability index will set a record in 2009, averaging 30 percentage points higher than 2008. Affordability will decline from record highs next year but will remain at historically attractive levels for home buyers.

"We've seen a steady downtrend in housing inventory for well over a year and home prices appears to be in the early stages of stabilizing. With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3 and 5 percent in 2010, but with wide geographic differences," Yun said.

He expects growth in the U.S. gross domestic product to be at a pace of 2.5 percent in the current quarter, with GDP up 2.8 percent in 2010.

The unemployment rate is close to peaking and is projected to ease to 9.5 percent by the end of next year.

"The size of the U.S. budget deficit is a concern going forward, and carries the risk of higher inflation. At this point, that risk appears to be restrained," Yun said. Inflation, as measured by the Consumer Price Index, is seen contracting 0.4 percent this year, then rising 1.6 percent in 2010. Inflation-adjusted disposable personal income is estimated to grow 0.4 percent this year and 1.2 percent next year.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Existing-home sales for October will be released November 23; the next Pending Home Sales Index and forecast will be on December 1.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, tables and surveys also may be found by clicking on Research.

REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.


Walter Molony

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By Steve Cook Real Estate Economy Watch

Just a week after President Obama signed into law an expanded homebuyers' tax credit for existing owners and a continuation of the credit for first-time buyers, home sales activity across the country is picking up even though we are entering a period when sales usually slow down as the holidays approach.

Reports from markets around the nation suggest that the ink on the President signature barely dried before first-time buyers jumped back into the market. Move up buyers, who have been frustrated for years by falling values and soaring inventories that have made it hard to sell their existing homes, are calling their real estate agents to find out if the new credit would provide enough assistance to get them out of their old home and into a new one.

In Gold Beach, on the south Oregon coast, there are 18 pending sales this November compared to zero pending sales a year ago. "Since the middle of September the real estate market has just exploded," said a local Realtor. "Most of the summer the homes that were being looked at were the homes around $200,000 where first-time buyers finally felt that the prices were low enough that they could finally afford a home.

In Washington State, Realtors across the state credited the first-time buyer tax credit, originally set to expire at the end of November. At a time of year that traditionally sees a drop-off in activity, the number of pending and closed sales have rebounded to late 2007 levels as the local market was already declining on the eve of a national recession.

In Iowa, Des Moines-area home sales rose nearly 39 percent in October, and local real estate leaders hope an expanded federal tax credit will drive sales beyond the first-time homebuyer market.

The new credits should help Iowa's housing market through the winter, the slowest time of the year for the Iowa real estate industry, said Brennan Buckley, an Iowa Realty spokesman. "We hope by spring, the economy will have picked up. I think we'll get a lot of move-up buyers who had been on the fence, especially when they look at where interest rates are compared to five years ago," Buckley said.

Erika Hansen, a Coldwell Banker Mid-America Group real estate agent, said she already sees homeowners reconsidering taking their homes off the market for winter. It should bring some needed inventory to the market, she told the Des Moines Register. "There's really not as much out there as people think," Hansen said.

Trisha Peters said it was a mixture of reasons - from family to a desire to change home styles - that prompted her to put her Des Moines home on the market. The tax credits made the decision easier. Peters expects her home will appeal to first-time buyers, and her $6,500 credit will help if she's unable to get what she paid for her condo.

"My home is worth less than it was two or three years ago, but the homes I'm looking at are priced lower, too. So, things even out. "It's really a perfect storm for buyers," said Peters, who added that low interest rates - now below 5 percent - were key in her decision. "That kind of good fortune doesn't usually happen to me," she told the Register.

In the resort community of Cape May, New Jersey, the first-time buyer credit has resulted in a clear up tick in sales of low to moderately priced homes within Cape May County, according to local Realtors. Now the problem slowing sales is the backlog of applications overloading lenders.

In the resort community of Wildwood Crest, New Jersey, many of the buyers who can afford to purchase first homes in the Crest fall outside the income bracket guidelines for the program.

"Everyone who hears about it at first says 'oh, great,' but then they realize they don't qualify," Cabrera told the Shore News Daily.

In Bakersfield, Calif., where more than half of mortgages are upside down, there is a limit to what the new tax credit can do for existing homeowners who want to step up, said Raul Rodriguez, a mortgage broker for Mary Cruz Realty in Bakersfield.

"Obviously they'd have to sell their old house before they could buy a new one, and a lot of people can't sell their homes right now," Rodriguez told the Bakersfield Californian.

Real estate broker-owner Nance Fillmore said both tax credits are critical to the Bakersfield area because much of the inventory here is lender-owned and was vandalized or neglected by the previous owner.

"This tax credit gives buyers some money to make repairs, or it creates a buffer zone for them to replenish the savings they used to make a purchase," she said.

Buyers have until April 30 to find a home if they want to qualify for the credits, which don't actually expire until June 30, leaving two months to close. The program is expected to cost about the $16.7 billion.

How many sales the two new credits will generate is anybody's guess. The 2009 first-time buyers' credit will added between 200,000 and 400,000 new sales that would not have taken place without the credit. Only 70 percent of existing buyers qualify for the new credit because of residency restrictions, according to a Goldman Sachs study, and many believe the only change in the first-time buyer credit, raising income limits, affects only 14 percent of first-timers and the extension of the credit will not motivate many others if they have not acted by now.

The impact of the existing buyer credit is even more difficult to assess. In addition to the problems facing many move-up buyers such as negative equity in their existing home and low resale prices, the credit is comparatively worth less to them than to first-time buyers.

A survey released last week by Campbell Communications/Inside Mortgage Finance found that the credit gives existing homeowners only half as much incentive to buy a home as first-time buyers. Because of the lesser value of the credit and the higher median price of move-up homes, the credit only accounts for two percent of the cost of an average move-up home as opposed to four percent of a first-time buyer's starter home, according to the study.


From Real Estate Economy Watch

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Daily Real Estate News

Real estate investors are moving back into the market, according to a new survey from Move.com.

According to the Move.com survey, 12.1 percent of home buyers today plan to buy a home as an investment property, compared to 5.6 percent in March 2009. The survey found that 15.8 percent of those interested in investment property were men and 8.1 percent were women and 52.6 percent of the investment buyers were between ages 35 to 49.

Of the 25.3 percent of buyers who are focusing on foreclosure properties, 42 percent regard the purchase they are considering an investment and don’t plan to live in the property themselves; 13.2 percent plan to rent out the property; 11.3 percent are going to fix up the property and resell it; and 17.4 percent plan to house a family member until the property can be sold profitably.

Of the 9.8 percent of buyers who say that they plan to purchase and live in a property in the next two years, 5.4 percent plan to purchase in the next 12 months; 48.3 percent are first-time buyers; 52.8 percent are women, and 44.1 percent are men.

Buyers of investment and personal property say they are motivated by these factors:

* Prices are as low as they will go, 23.6 percent
* Foreclosure prices are a bargain, 18.7 percent
* Great selection of homes for sale in their target community, 21.2 percent
* Concerned interest rates will rise, 14.2 percent

Source:USA Today Sandra Block

Your real estate agent isn't returning your calls, your bank wants your income tax returns for the last 15 years, and you're getting some weird vibes from the people who live next door to the house you're trying to buy.

These home-buying potholes won't prevent you from taking advantage of the $8,000 first-time home-buyer's credit, so relax. A bill signed into law Friday by President Obama extends the credit, originally scheduled to expire Nov. 30, until next spring. That gives you plenty of time to Google the neighbors before closing the deal.

CALCULATOR: How much house can you afford?

And that's not all. The legislation also expands the credit, making it available to some home buyers who already own a home but would like to trade up to a nicer place.

The expanded tax credit was included in legislation that extends unemployment benefits by at least 14 weeks in all 50 states. Jobless workers in states with high unemployment rates are eligible for an extension of up to 20 weeks. On Friday, the government announced that the unemployment rate exceeded 10% for the first time since 1983.

Here's who stands to benefit from the expanded home-buyer's credit:

•First-time home buyers. The law defines "first-time home buyer" as someone who hasn't owned a home in the three years before the purchase. If your spouse owned a home in that time frame, you're not eligible. So, those eligible can claim a tax credit for 10% of the purchase price, up to a maximum credit of $8,000. The credit is refundable, which means that if you owe less than $8,000 in taxes, you'll receive a refund for the difference. The credit is not available for home purchases that exceed $800,000.

You can claim the credit if you sign a sales contract before May 1, 2010, and close before July 1. Members of the military who serve extended duty outside the USA have until July 1, 2011, to claim the credit, as long as they sign a contract before May 1, 2011.

The legislation also expands the income cutoffs for the credit. Single home buyers with modified adjusted gross incomes of up to $125,000 qualify for the full credit; those with MAGI of up to $145,000 can claim a reduced credit. For married couples who file joint tax returns, the credit phases out between $225,000 and $245,000. Previously, singles with MAGI of more than $95,000 and married couples with MAGI exceeding $170,000 were ineligible for the credit.

The credit doesn't have to be repaid unless you sell your home within three years.

•Existing homeowners. Home buyers who have lived in their current home for five out of the last eight years qualify for a tax credit of up to $6,500. The deadlines are the same as for first-time home buyers.

The income thresholds for existing homeowners are also the same as those for first-time home buyers. Likewise, existing homeowners can't claim the credit if they purchase a home for more than $800,000.

Your new home must be your principal residence. You can't use the credit to buy a vacation home, says Clint Stretch, managing principal of tax policy for Deloitte Tax.

However, there's nothing in the legislation that requires you to sell your existing home to qualify, says Mark Luscombe, senior tax analyst for tax publisher CCH. You could keep your first home as a vacation home or rental, he says, although that property would no longer qualify for tax breaks associated with a primary residence.

Anti-fraud measures

Last month, Treasury's inspector general for tax administration told Congress that thousands of taxpayers who weren't entitled to the home buyer's credit have claimed it. Some claimed the credit even though they hadn't purchased a home, and others weren't first-time home buyers, the inspector general said. The report also found that 582 taxpayers who were younger than 18 had claimed the credit, including one who was 4.

In response to those disclosures, the legislation contains provisions aimed at reducing fraud, Stretch says. The law prohibits anyone who is listed as a dependent on someone else's return from claiming the credit, and says taxpayers must be at least 18 on the date of the purchase to claim it. Taxpayers also will be required to attach a copy of their settlement agreement to the tax return.

If you fail to attach your settlement agreement to your tax return, Stretch says, the legislation gives the IRS the authority to adjust the amount of your credit without going through an audit.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock

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Sales of previously owned homes rose across the country during the third quarter, according to a report released Tuesday by the National Association of Realtors.

Nationally, sales were up 5.9 percent from the third quarter of last year. Previously owned homes changed hands at a seasonally adjusted annual rate of 5.3 million, according to the report. NAR attributed much of the jump to continued affordable prices and a federal income tax credit. Congress and President Obama legislated an extension and expansion of the tax credit program last week.

Home sales rose in 32 states and Washington, D.C., from the third quarter of 2008 to the third quarter this year. Sales jumped in 45 states, and in Washington, D.C., from the second to the third quarter.

There was no lack of media enthusiasm for the news on Tuesday as local media outlets across the country finally picked up on the good news...

1. Home sales up nearly 79.6% in October in Orlando

2. Pittsburgh home prices rise in third quarter

3. US Home Sales Rise to Two-Year High

4. Home prices seen stabilizing in North Jersey

5. NJ homes sales jump 11 percent in quarter

6. DC Area housing sales jump

7. Las Vegas Home Sales On The Rise

8. Florida home sales up for fifth straight quarter

9. Houston-area home prices rise in third quarter

10. Ohio home sales rose during the third quarter

11. Nashville home sales climb first time in three years

12. Lehigh Valley home sales rise 30 percent in October

13. Illinois Third Quarter Home Sales a Bright Spot in 2009

14. Home Prices Are Suddenly Hot in Some Areas...

Back in June we pointed out a dozen housing markets that were showing pricing improvement. August revealed a dozen more.

While some year over year comparisons continue to show price erosion recent jumps in the national S&P/Case-Shiller Home Price Index further clarifies that the price drops of the past few years are now over. The 20-city index is now consistently rising quarter-over-quarter.

Three independent sources, the National Association of Realtors, the Federal Housing Finance Agency and Case Shiller are now all showing housing price improvement.

Repeatedly we've said that the strength of this recovery will be measured in part by how well the housing industry fares. Tuesday was further strong evidence that this recovery continues unabated

Source:Seeking Alpha