What really matters in the state of the market

We have a lot of good news right now.

Statistics tell us that 56% of New Jersey households can afford an entry-level home. This is an increase of 44% just a year ago. First-time home buyer credit is definitely a factor here. The NJ Housing and Mortgage Finance Agency offers a program that makes it easy for many residents to take advantage of this program. They will offer a $ 5,000 “pre-fund” that will allow first-time homebuyers making less than $ 120,000 to use the tax credit to cover closing costs, rather than having to wait to get the credit when they file their tax return. taxes. next year

Other good news is that there is a measure in Congress to raise this credit to $ 15,000 and extend it through mid-2010. At this time, the deadline is December 31, 2009. Also, there is a push for this to include EVERYONE home buyers and not just first time buyers. The importance of these government incentives cannot be understated.

Currently, there are 46 towns in New Jersey that have less than six months of inventory, which is the breakeven point below which home prices tend to stabilize or rise. The top 20 performing cities in New Jersey indicate that Maplewood is 16th with a 4.4-month supply of inventory. The only other Essex County cities are Glen Ridge at 2.5 months supply, Cedar Grove at 3.8 and Nutley at No. 15 with 4.3 months. As a matter of interest, Chatham in Morris County is ranked No. 10 with a 3.8 month supply of inventory.

Certainly, we will see continued economic challenges down the road, but one thing to remember is that the housing market drives the economy in and out of recession. There is a ray of light that is barely visible to all who observe closely. If government programs continue and perhaps improve, we will begin the recovery in earnest before the end of the year.

I often talk about the first time home buyer. My reasons for doing so are to remind everyone that all movement within our market begins with this group of consumers. When the first-time buyer makes a purchase, they allow the original first-time buyer to move into their next home, and so on. This is what creates the demand for the homes that many of you own right now. It is a massive chain that must be in place for the housing market to be healthy.

Many first-time buyers take advantage of first-time home buyer credit. This is an $ 8,000 credit on your tax return. In some cases, borrowers using an FHA loan can actually get advances from their lender that allow them to receive this credit up front.

FHA loans require only a 3.5% down payment. This credit cannot be used for the minimum down payment, but can be used as an additional down payment or for closing costs.

You must purchase your first home by December 1, 2009 to qualify.