The effects of Hurricane Ike and simultaneous economic downturn affecting Houston's real estate market in November 2008 continue to distort year-over-year comparisons which reflect yet another month of double-digit increases. However, longer-term analysis aimed at gleaning a more realistic view of market conditions shows November 2009 real estate activity to be comparable to that seen at the cusp of the recession, in the fall of 2007.

November marked the third straight month in which property sales volume and pricing recorded gains. According to the monthly data released mid-December by the Houston Association of Realtors (HAR), November volume of single-family home sales across the greater Houston area rose 32.8 percent compared to November 2008. Total property sales climbed 37.1 percent in November on a year-over-year basis.

In addition to the comparative affects on sales data from last year's natural disaster and economic recession, HAR member Realtors report that at least some of the month's home-buying activity can be attributed to consumers scurrying to beat the original November 30 homebuyer tax credit deadline before Congress voted to extend and expand the program.

At $150,000, the November single-family home median price—the figure at which half of the homes sold for more and half sold for less—rose 8.7 percent from one year earlier, representing the seventh straight monthly increase in median price. The average price of a single-family home in Houston was $198,948, up 6.7 percent last month versus November 2008. The median price reached the highest level ever for a month of November in Houston.

Foreclosure property sales continued to decline in November, making up 15.8 percent of all single-family home sales in the Houston area compared to 27.4 percent in November 2008 and the 12-month peak of 34.0 percent in January of this year. The median price of November foreclosure sales reported in the Multiple Listing Service (MLS) rose 9.5 percent to $93,000 on a year-over-year basis.

Sales of all property types in Houston for November totaled 5,353, up 37.1 percent compared to November 2008. Total dollar volume for properties sold during the month was $1.0 billion versus $714 million one year earlier, representing an increase of 44.5 percent.

"This is the third month in a row in which a year-over-year comparison exaggerates the local housing landscape because Hurricane Ike continued to hurt the Houston real estate market last November," said Vicki Fullerton, HAR chairwoman. "We are very encouraged that property sales activity appears to be close to levels reached right before the recession took hold, and expect more realistic year-over-year data in the months ahead so we can again compare apples to apples."

Source: Houston Association of Realtors

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According to the Greater Houston Builders' Association, six specific trends are emerging in the latest new homes:

1. Stylish outdoor living spaces

As homeowners focus their living and entertaining on the outdoors they are deciding to do it in style. Outdoor fireplaces are sought-after amenities along with sleeping porches, and dining areas with kitchens. The outdoors is also being welcomed on all sides of homes as people add front and side porches. People want to have their indoor amenities with them so there is increased interest in having telephone and music speaker systems, and "smart home" control systems at their fingertips in outdoor spaces.

2. A "Me" space for everyone

"Me" space is the new term for those areas in the home that are personalized for particular people. Open floor plans have increased the need for people to have intimate places as getaways. Her place may be near the kitchen with internet access for things like locating recipes and paying bills. He may have a traditional den or a game-room and den combination. People also find they enjoy complete hobby/interest rooms for themselves that are specifically designed around their "other-than-work" interests.

3. Say "aaaah" as in "spa"

Master bathrooms remain luxurious places of regeneration. Large showers with seats and multi-spray options serve daily bathing while jetted tubs hold the promise of relaxation. Bathrooms are being outfitted with televisions and "usability" options like laundry chutes and adjacent dressing areas. Lighting dominates both in terms of utility as well as for mood enhancement.

4. The high-tech touch

Technology advances into the home with high-speed internet, music and video, and special controls like lighting coming on when the owner pulls into the driveway. There is a strong trend toward lighting controls that operate automatically to save on energy. The newest technologies take advantage of networking capabilities being built into appliances so everything in the home can be networked for detailed control and use.

5. Keeping cool on the inside

Spray foam insulation that is water-based and doesn't contain CFCs or HCFCs is offering new levels of thermal control without posing air quality issues. These polyisonene insulations fill framing cavities much more completely and offer a per-inch R-value of 3.6. The insulation also acts as a sound barrier making homes quieter inside.

6. No fighting over hot showers

The onward march toward energy efficient homes is highlighted by the growing availability of tankless water heaters. Some manufacturers are claiming their models are 50 percent more efficient than typical gas water heaters and 75 percent more efficient that traditional electric water heaters.

Source: Greater Houston Association of Builders

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As part of its plan to stimulate the US housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

• Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
• Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Details about the Extended Home Buyer Tax Credit are listed below. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
To qualify as a "first-time home buyer" the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer's tax credit is determined by two additional factors:
1. The price of the home.
2. The buyer's income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)' Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

Source: National Association of Realtors

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All Texas homeowners qualify for a homestead exemption on their principal residence. This exemption reduces the taxable value of a home—meaning a lower annual bill to local taxing entities.

You must apply for the exemption, but there is no fee associated with applying for a homestead exemption.

Scammers send official-looking stationery to suggest that a fee (usually $50 or more) must be paid for a homeowner to get the exemption. They may also imply that their company is an official taxing authority or a "tax processing center." These claims are false and deceptive.

Texas state law requires these companies to make it clear that they are not a governmental agency. Yet, many people are confused by these solicitations and send in the fees. These letters usually start appearing in mailboxes during the first few weeks of the new year, so be on your toes.

You can download the application for residential homestead exemption from the state comptroller's Web site at:

http://window.state.tx.us/taxinfo/taxforms/50-114.pdf

and send it in to your appraisal district. If you have any questions, contact me, your local real estate expert for details.

Source: Texas Association of Realtors

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