The November 30th deadline for the conclusion of the First Time Homebuyer Credit Program is quickly approaching.  Be sure to keep in mind that it can take 45 to 60 days to close on a home. So working backwards from the November 30 deadline, you’ll want to have an accepted offer no later than mid-October. That leaves only two or thee weeks to get you preapproved by a mortgage lender and identify the right first home for you.  You see we need to get started today to take advantage of this opportunity.  Remember, you have 8,000 reasons to get moving.   Watch this Month in Real Estate  to learn more about the credit.

  I like to make certain folks fully understand that an $8,000 credit does not mean taking $8K off the price, but rather it means being able to increase your home purchase by as much as $50,000 without it costing you any additional money in payments for the next five years!!  (Based on a 50% tax bracket).  Even if you pay absolutely no Federal or State income taxes, this means you can increase your home purchase by the same $50K without an increase in payments for nearly two and a half years. 

  If you know anyone considering a first home purchase or someone who hasn’t owned a home in over three years, please be sure to have them give me a call.  They really should not miss out on this once in a lifetime opportunity!!

The following is the same advice I gave my son four years ago when he purchased his first home and the same my dad gave me over 30 years ago when I purchased my first home. I still thank my dad for having done this and Bob still thanks me as well.  I am fairly certain you would do the same in four and in 30 years. 

You really want to stretch yourself a bit when you purchase your first, second, or third home.  It requires some minor sacrifices from a personal lifestyle perspective, but will pay huge dividends in the long run.  On average, home prices increase by about 10 percent per year.  Since the end of WWII, we have repeatedly seen peaks and valleys in the housing market.  We have also seen that, on average, home prices have doubled every ten years.  The recent downturn really was not much worse than some of the previoues drops.  In fact, there have been worse, particularly following the Savings and Loan crisis of the late 1980’s.  More importantly, right now we are in the midst of the most affordable home market in almost 30 years.  I would venture say that we are likely to see gains in home values (in our region) more to the tune of about 15 percent per year for the next few years.  Even using the more conservative 10 percent average, if you purchase a $250,000 home, you will see a gain of more than $25,000 per year.  A home purchased for $450,000 will see a gain of $45,000 per year, etc.

 Using current mortgage interest rates of about 5 percent, your mortgage payments plus taxes and insurance (referred to at PITI) will cost about $55 per month per $10,000. (This factors in the savings that you will have on your state and federal taxes based on a 25 percent tax bracket.)  Your annual in costs will be roughly $625 per year for every $10,000 increase in price.  If historical trends continue to play out, your increased costs of $625 per $10,000 will result in an increase in equity of $1,000.  A $50,000 increase in mortgage would cost about $3125 per year with a $5000 potential increase in equity. At the same time, you will be living in a considerably more comfortable home than your current home.

I don’t know nor need to know your income level, but an average couple in this region earns a minimum of somewhere around $100,000+ per year. Assuming an annual cost of living increase of about two percent, this income increase by about $2,000 per year.  It might be worth thinking about cutting back on some of your entertainment expenses for a year or two to broaden the selection of homes available and imrpove your ability to see increased gains in the long run.

 Of course, this is simply a suggestion. I am certainly happy to show you homes in the whatever price range you’d like, but am certain you will thank me profusely in three to five years if you decide to look at the next higher tier of homes.

  A recent Wall Street Journal article, entitled “A Toe in the Water” written by Dave Kansas gives a very good perspective on what it happening in the marketplace.  Dave is located in London and would presumably suggest diving into the local Northern Virginia market based on our current trends.

  Last week I sent a total of 22 listings in Arlington for one of my clients to review.  When we got together yesterday to look at these homes, 10 were already off the market. They are looking in the $650,000 to $750,000 price range.  This is probably above the typical first time homebuyer range and is not likely affected by the $8,000 tax credit.  I also went out with another couple on Saturday looking in the $200,000 range.  We had a list of about ten homes to see which I had check for availability Friday night.  From this list, only two were available by Saturday afternoon and they were complete wrecks. 

  To learn more about your home as an investment, I suggest reading “The Automatic Millionaire Homeowner” by David Bach.

  Let me know when you are ready to take advantage of this incredible market.

Please be sure to mark your calendars and invite friends to this month’s Charity Tuesday event, which will be held on September 29th at the Old Brogue in Great Falls.  This month, all proceeds will benefit the grass roots organization Operation Second Chance. The group provides assistance to our wounded service men and women.  

The pictures below show a few of the outings provided by OSC to our vets.

Last month we had over 100 people come out to support Our Military Kids.  Regretably we had to turn several folks away.  To accommodate what I hope will be an even larger turnout, we are planning on doing two seatings.  Please be sure to call the Old Brogue (703-759-3309) and let them know if you would prefer a 5:30 or 7:30 seating.  When making your reservation be sure to mention either  Bob Nelson or Charity Tuesday.

To show our sincere gratitude towards America’s men and women in the Armed Forces, I am adding a new feature this month.  We have invited several active duty service men and women and veterans to join us for dinner.  If you would like to have one of these TRUE HEROS sit at your table, you can do so by committing to donate $25-50 to Operation Second Chance.  (You will also be asked to buy them dinner.)  You can either donate cash or make out a tax deductible check to Operation Second Chance.  Please send me an e-mail or call to let me know if you wish to sponsor a soldier.  You are also encouraged to send on donations to OSC by going to their website.

For those of you who have het to attend an event, you simply come enjoy dinner at the Old Brogue in Great Falls.  The Bob Nelson Team and our co-sponsors make a contribution to OSC in the form of a 70 percent match of you dinner tab.  So Please come and eat hardy.  In addition to enjoying the food and great company, we also have door prize drawings.  Since we nearly filled the restaurant last month, I ask that you be sure to make reservations early.

Thanks so much to our co-sponsors:

The Old Brogue
Danny Ott – Wells Fargo Home Mortgage
James Gaudiosi – Wells Fargo Home Mortgage
Chris Melnick – LSA Title Services
Mike Muehr – Merrill Lynch
Gary Kaihara, DDS

And to those who have agreed to donate door prizes.

PF Changs Restaurant

Elite Fitness

Golds Gym (Tysons Corner)

Dominion Title

(Door prizes will be update as new ones keep coming in.)

 As you have likely been reading, the First-time Homebuyer Credit program will expire on November 30′th.  What many people have not understood, this means you must settle on your new home by that date.  Having just purchased a new car, I encountered the flurry of activity that occurred on the last few days of the Cash for Clunkers program.  For those who purchased a new car, it was feasible (although not advisable) to wait to the last minute.    WARNING:  This is not the way the homebuying process works.  We are quickly approaching what is the last minute for you to make your purchase.  Unlike picking out a new car, finding the right home can take a week, two weeks or in some cases several months.  Even once you have found the perfect place to call home, you will then need to start the actual buying process.  This has quickly become challenging in our local market since the more affordable homes are disappearing from the inventory.  A simple understanding of the law of supply and demand will tell you that this will create upward pressure on prices and competition for the same properties.  Remember that what you find appealing will also appeal to a great many others.  I just sold my used car to “Joe C.” who has been trying to buy a home in Woodbridge.  He said that he and his fiance have made offers on three homes, only to be out bid either by higher offers or all cash offers.  There are several things that Joe and his Realtor can do to insure that this doesn’t happen which we can easily cover in person. 

Once a contract is ratified, the process will then take a minimum of three weeks to four weeks to get to the settlement table.  And this only if everything lines up perfectly.  With that said, you will need between six and eight weeks to find the right home and settle on it.  We have only 11 weeks until the program expires.  The reality is that three weeks to spare in the homebuying process is equivalent to three hours in the auto purchase world.

If you are reading this post, you probably already decided to purchase a home, but I would suggest reading the about the Proven Path to Home Ownership since it provides a very succint discussion o fthe home buying process.  We can always discuss this in more detail once we get together. 

At the risk of sounding like a high pressure sales person, you really can’t wait much longer to take advantage of the First Time Homebuyer Credit.  Depending on you income, this credit can mean an actual dollar savings of anywhere from $10,000 – 16,000 in pre-income tax money. 

The real estate market continues to heat back up again both locally and nationwide. 

 The total sales volume for Great Falls, Va. saw a dramatic increase in total dollar volume of almost 50 percent.  July 2008 sales totaled $19,589,000 compared to $29,168,000 this year.  Twenty-five homes sold in the 22066 zip code this year while only 20 sold during the same period last year.  Inventory numbers are still high in Great Falls at a level of about 8.5 months.  A four month inventory is considered a balanced market.  Anything more than five months is a buyers market and less than three is a sellers market.

The three Reston zip codes saw an increase in sales from 93 last year to 130 this year.  Inventory levels for the three area stand at just over 2.5 months. 

The three Vienna zip codes experienced an increase from 87-101 sales.  Current inventory levels stand at approximately three months with a total of 316 homes on the market at this time.

Mclean actually saw a slight dip in sales from 81 in July 07 to 77 this July.  Inventory levels are at slight over four months.

Please feel free to drop a quick e-mail if you would like to know the numbers for your area or would like more detailed info on any of the above statistics.

Last month’s Charity Tuesdays topped its previous mark for both attendance and contributions raised.  The August event was held to sponsor the group Our Military Kids and drew more than 100 attendenees.  We also raised over $2500 for the charity group.  Seating in the Snuggery side of the Old Brogue was completely booked by 11:00 am.  In an effort to accommodate everyone, we will be trying a new approach for the September event.  I would like to offer a special thanks to Linda Davidson and her staff for all the great work they do to help the children of servicemen and women.