This is a great article written by a good friend of mine Josh Mettle. He is one of the top producing Loan offiers in Salt Lake.. Great info..

Existing Home Sales dropped in May for the first time in 3 months but still managed to post its second-highest since November 2009, buoyed by the expiring federal tax credit program.

An “existing home” is a home that cannot be considered new construction; a resale of an existing home.  Existing Home Sales fell 2.2 percent in May.

The press is calling the drop in sales “unexpected” anddisappointing, but a deeper look at the data shows the news isn’t as bad as it first appears.

First, on a regional basis, sales were mostly solid. Only the Northeast region posted a loss. The West even managed a gain.

• Northeast : -18.3 percent
• Midwest : 0.0 percent
• South : +0.5 percent
• West : +4.9 percent

Second, the supply of homes for sale dropped to 8.3 in May and, because home prices are based on supply and demand, this is a positive for pricing.

By comparison, in 2008, the average existing home inventory was 10.4 months.

And, lastly, in May, first-time home buyers represented 46 percent of all buyers. The number was likely buoyed by the tax credit program but that doesn’t damper the fact that first-time buyers provide a support floor for the housing market.

First-time buyers in Salt Lake enable “existing owners” to move-up to bigger homes, which, in turn, trickles up to the mid-size and jumbo markets.

Analysts expected more from May’s numbers and that may explain why the reaction to the data is generally negative.  However, in many cities, home resales did just fine.

Tags: Existing Home Sales, Home Supply

• An article from CBS Money Watch is attached. I have highlighted the critical section. The $6,500 they are referring to is the so called ”Move Up” credit. More details about that credit can be found herehttp://www.federalhousingtaxcredit.com/faq2.php#1. I am not sure but don’t think you would qualify for this credit. Let me know your thoughts. I don’t think you have both lived in the old house for five years.
• IRS Instructions to Form 5405, which is the form to claim the credit. I have highlighted the critical section.
• The actual Internal Revenue Code Section 36(c)(1) (the law) shown below.
• Scenario 4 from the IRS Websitehttp://www.irs.gov/newsroom/article/0,,id=206294,00.html shown below. Other scenarios make the same point on that page.

I hope this information is helpful. Again, I am not trying to keep you from receiving any benefits. It is my job to get you all the benefits you are entitled to. At the same time it is my job to properly inform you of my understanding and knowledge to keep you from being audited by the IRS. They are watching this credit very close and auditing it very frequently. Please let me know if you have further questions and I will be happy to answer them for you.

Section 36(c) Definitions. For purposes of this section–
(1) First-time homebuyer. The term “first-time homebuyer” means any individual if such individual (and if married, such individual’s spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.

S4. If husband and wife wanted to sell the home that the wife owned when they got married, and the husband had not owned a home within the past three years, could he qualify as a first-time homebuyer for the credit even though the wife would not qualify?

A.    No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the wife had ownership interest in a principal residence within the prior three years, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) of the Internal Revenue Code requires that the taxpayer and the taxpayer’s spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. The husband may not take the credit even if he filed on a separate return.

Some interesting articles have been coming out about an increase in home sales.. You know many people in the industry are having mixed feelings about what is to come in the coming months? I have heard in Salt Lake City UTAH, some people are talking about another 10 percent drop in Real Estate prices. Now that is in the upper priced properties, but wow that will be a shock if that happens..

Thoughts

Bank REPO’s in UTAH

Now, that is just my opinion.. Love to hear your thoughts.

Will they extend the first time home buyer tax credit?