WASHINGTON — Boosted by low interest rates and bargain home prices, pending sales of existing homes rose in June for the fifth straight month, the longest streak of gains since 2003, a real estate trade group reported Tuesday.

The pending home sales index rose 3.6 percent in June after an upwardly revised gain of 0.8 percent in May, the National Association of Realtors said. The overall index is 6.7 percent above June 2008′s level.

“Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines,” said Lawrence Yun, NAR’s chief economist, in a statement. “Activity has been consistently much stronger for lower-priced homes.”

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June pending homes sales increased for the fifth straight month, adding to the list of positive reports recently released.

NEW YORK (CNNMoney.com) — More Americans signed sales contracts to buy homes in June than in May, the fifth consecutive month of increases, according to a report released Tuesday.

The National Association of Realtors said its Pending Home Sales Index rose 3.6% during the month. That was 6.7% higher than June 2008. It was the fifth straight month of increases, the first time that has happened since July 2003..

The report followed several other recent pieces of good news for the housing industry, including a substantial rise in new home sales, a jump in existing home sales and the first home price increase in nearly three years.

The jump was also much higher than expected. A consensus of industry experts put together by Briefing.com had forecast an increase of just 0.7%

“Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines,” said NAR chief economist Lawrence Yun.

“It’s not unlike the Cash for Clunkers program,” added David Crowe, chief economist for the National Association of Home Builders. “It’s pushing people off the fence.”

Low-end sales have been the strongest segment of the market, an indication that the first-time homebuyers tax credit, worth up to $8,000, is contributing to the rise. The clock, however, is quickly running out on this offer and may have buyers stepping up their shopping to get their purchases in under the wire.

“Because it may take as long as two months to close on a home after signing a contract,” Yun said, “first-time buyers must act fairly soon to take advantage of the $8,000 tax credit because they must close on the sale by Nov. 30.”

Crowe also acknowledged that the tax credit could be pushing home sales forward, leading to a later downturn. But he does not forecast a significant drop in housing activity, just a “stickiness” in buyers who won’t feel as much urgency to “get off the fence” as they do with the credit in effect.

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NGC has studied the residential and relocation patterns of 20-40 years olds since 1998, and has developed a one-of-a-kind indexing system that evaluates a city based on the assets that are important to next gen workers. According to NGC, the seven indexes of a “Next City” are:  Earning, Learning, Vitality, Around Town, After Hours, Cost of Lifestyle, and Social Capital. The rankings announced today are based on a city’s total score in all seven indexes.

“Simply being the cheapest place to live, or the city with the most jobs is not a long-term workforce strategy,” says NGCs founder, Rebecca Ryan. Although jobs are important, Ryan says, “The next generation is very savvy about choosing where they’ll live. They look carefully at quality of life factors like how much time they’re going to spend in traffic commuting, if they can live near a park or hike-and-bike trail, and whether a city’s downtown stays awake after five.” The Next Cities list ranks cities that are – or have the capacity to be – great places to live and work for the next generation, because they have the best overall score in the seven indexes the next gen values.

Noted economist Richard Florida underscores the large economic dividend paid to cities and regions that are talent magnets, noting in the April 2009 issue of The Atlantic that “The world’s 40 largest mega-regions, which are home to some 18% of the world’s population, produce two-thirds of global economic output and nearly nine in ten new patented innovations.”

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Metro Denver’s resale housing market appeared to start returning to normalcy in June, according to sales data Tuesday from Metrolist Inc.

Single-family home sales in June, for example, were equally split between the lower price ranges that appeal to first-time homebuyers and pricier houses that attract homebuyers moving up to larger and/or more expensive homes.

“Earlier this year, the majority of resale home activity was first-time homebuyers, distressed properties and investor activity,” independent Littleton broker Gary Bauer said in a statement. “June appears to be the transition to a normal Denver market — a market with both first-time homebuyer activity as well as ‘move-up’ activity.”

Resale homes are those that have sold at least once before.

Combined sales of single-family houses and condominiums increased 15.4 percent to 4,186 in June from 3,628 in May. Late spring and summer traditionally are this country’s prime home-selling season, because families buying and selling homes try to complete deals and move when children are out of school.

But June home sales this year were down 13.6 percent from 4,845 for the same month of 2008.

In June, 3,328 single-family homes were sold, up from 2,857 sales in May, but down from 3,847 for the year-prior June.

Last month, condo sales rose to 858 from 771 in April, but were down from 998 year over year.

Average sold price for both types of home rose 6.34 percent to $258,434 in June from $243,022 in May. That price was down 3.21 percent from June 2008′s average selling price of $267,005.

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Denver is America’s best city to buy a home, Forbes magazine says in a new ranking of U.S. metro areas.

“While the majority of the nation’s housing markets are still working toward a bottom, some cities are boasting fundamentals that make them good places to buy a home now,” Forbes reported this week.

Phoenix was ranked No. 2 on the Forbes list, followed by Boston, San Diego and Los Angeles.

The Forbes rankings seem geared more toward each market’s current and future potential as a place to buy a home, since some of the cities at or near the top of the list are among those hardest hit by the recession.

The report ranked the 25 largest U.S. metro areas on the basis of change in price per square foot, frequency of real-estate transactions, and how evenly distributed home-sales activity is in a metro area.

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Click here for the full Forbes report.

Foreclosure filings in the Denver metro area declined nearly 46 percent in the first three months of 2009 from the same period a year ago, according to data from RealtyTrac Inc.

The Denver-Aurora area had the 60th-highest foreclosure-filing rate among 203 large U.S. urban areas in the first quarter of the year, according to figures released late Tuesday by RealtyTrac, an Irvine, Calif.-based marketer of foreclosure properties, in its “Metropolitan Foreclosure Market Report.”

A total of 7,250 properties in the area were in some stage of the foreclosure process in the first three months of the year, or one per every 144 households, RealtyTrac said. That was down 22.28 percent from the fourth quarter of 2008 and down 45.77 percent from the first quarter of 2008, it said.

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Colorado’s economic future:  CHANGE ON THE HORIZON

Compared to the country as a whole, Colorado didn’t fare too badly in 2008. Not to say that everything is great; retail, hospitality and real estate took especially hard hits. But there are some bright spots beginning to poke through the economic clouds for the year ahead. Here are a few we found that might add hope, economic stimulus, and even JOBS.

Growing industries = more jobs

Don’t laugh, but the financial industry seems to look very hopeful in the Front Range. KeyBank is opening eight new branches in the Denver area in 2009 (a second downtown Denver location, Denver Tech Center, Littleton, Thornton, Englewood, Louisville, and two in Aurora) and expects to add 50 new jobs in Colorado. Although the additions seem contrary to the statistics showing people are banking online more than ever, KeyBank’s Colorado District President Stuart Pattison says their clients still prefer a mix of ways to do their banking. (Three cheers for human interaction!)

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• The tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.

• The tax credit does not have to be repaid.

• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

• The credit is available for homes purchased on or after January 1, 2009, and before December 1, 2009.

• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

The following information has been edited for length and is used with permission from the National Association of Home Builders’ website, www.FederalHousingTaxCredit.com.

Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009, and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the homeowner.

What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his or her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter.  Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phase-out range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI.  AGI is total income for a year minus certain deductions (known as “adjustments” or “above the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007).  Note that AGI includes all forms of income including wages, salaries, interest income, dividends, and capital gains. To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions, and deductions for higher-education costs.

If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phase-out limits. 

How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous “credit” was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply. 

How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy.  You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.

What home types qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes), and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

I read that the tax credit is “refundable.”  What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit. For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS. A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

Do I qualify if I bought a home in 2008?
No, but if you purchased your first home between April 9, 2008, and January 1, 2009, you may qualify for a different tax credit.

For more information, visit FederalHousingTaxCredit.com.

Disclaimer: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal or accounting advice or other expert assistance is required, the services of a competent professional should be sought.

© Copyright, 2009, by Land Title Guarantee Company

The Federal Trade Commission (http://www.ftc.gov/bcp/menus/consumer/credit/mortgage.shtm) outlines the following alternatives to foreclosure, depending on a homeowner’s financial situation and existing type of loan:

Reinstatement:
The borrower pays the lender the entire past due amount, plus late fees and penalties, by an agreed-upon date.  Works best for: Solvent borrowers whose payment problems are temporary.

Repayment Plan:
The lender gives the borrower a fixed amount of time to repay past-due payments by adding a portion of them to the regular payment.  Works best for: Solvent borrowers who have missed a small number of payments.

Forbearance:
Mortgage payments are reduced or suspended for an agreed-upon period of time. At the end of that time, the borrower resumes regular payments plus a lump sum or additional partial payments for a number of months to bring the loan current.  Works best for: Solvent borrowers who are facing a temporary income reduction (for example, are on disability but will resume full time work shortly).

Loan Modification:
The borrower and lender agree to permanently change one or more terms of the mortgage contract to make payments more manageable. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments into the loan amount.  Some lenders may forgive or cancel a portion of the debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating federal taxes owed, but it still must be reported on the federal tax return.  Works best for: Solvent or insolvent borrowers who are facing long-term income reduction or increased ARM payments.

Sale:
The homeowner sells the property and pays the lender the full amount due on the note.  Some lenders may postpone foreclosure proceedings if there is a pending sales contract or if a borrower lets them  now they are putting the home on the market.  Works best for: Solvent borrowers whose homes are worth as much as loan balance plus any expenses related to selling the home (real estate agent fees, for example).

Short Sale: 
The lender allows the property securing a mortgage or deed of trust to be sold for less than the existing loan balance. A short sale is really a form of pre-foreclosure and occurs when the lien holder agrees to accept less than the loan amount to avoid the foreclosure process.  Works best for: Insolvent borrowers and those whose homes are worth less than the amount of the mortgage.

Deed-in-Lieu:
With the lender’s agreement, the homeowner voluntarily transfers property title to the lender in exchange for cancellation of the remainder of debt. Although the homeowner loses his home and his equity, a deed-in-lieu is less damaging to the borrower’s credit than a foreclosure.  Works best for: Borrowers whose loan amount is equal to or greater than what the home would sell for.

Bankruptcy:
Personal bankruptcy is generally considered a last resort because the consequences are far-reaching and long-lasting. A bankruptcy stays on a credit report for 10 years, making it difficult to get credit, buy another home, purchase life insurance, or even get a job.  Still, for some, this legal procedure offers a fresh start to someone who cannot repay their debts. If a homeowner has regular income, a Chapter 13 bankruptcy may allow them to keep their property.  Works best for: Insolvent borrowers who cannot pay their debts.

FHA and VA alternatives:
Homeowners with an FHA or VA mortgages may have other foreclosure alternatives.  Contact FHA (www.fha.gov) or VA  (www.homeloans.va.gov) to learn more.

Be aware of scams:
The Federal Trade Commission also advises homeowners to be aware of the following scams: 

• The foreclosure prevention specialist: A phone counselor charges high fees to make phone calls or complete paperwork that the homeowner could easily do for himself. Some of these companies use the words HOPE or HOPE NOW in their names in order to confuse borrowers who are looking for assistance from the free 888-995-HOPE hotline. (Buyers interested in this program can learn more at http://www.coloradoforeclosurehotline.org. The Colorado hotline is 1-877-601-HOPE.)

• The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they can remain in the house as a renter and eventually buy it back. Usually, the terms make the buy-back impossible, the homeowner gets evicted, and the purchaser walks away with the equity.

• The bait-and-switch: Homeowners think they are signing documents to bring their loan current.  Instead, they discover too late — usually when they receive an eviction notice — that they have signed over the deed to their home.

More information:
Homeowners facing the possibility of foreclosure should be proactive in contacting their lender, accountant, and/or attorney to discuss their situation.  More information on Short Sales and Foreclosures is available on Land Title’s website, www.LTGC.com, under the “Topic of the Month” link in the left-hand column.

Disclaimer:  This publication is designed to provide accurate and authoritative information in regard to the subject matter covered.  It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service.  If legal or accounting advice or other expert assistance is required, the services of a competent professional should be sought. 

© Copyright, 2009, by Land Title Guarantee Company