Thursday, September 24, 2009

$8,000 Tax Credit. Will it Expire? Does SC Real Estate Care?

From The NYT's Online Sept. 15th.

"When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it.

As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February.

In the view of the real estate industry and some economists, all that money is well spent. They contend the credit is doing what it was meant to do, encouraging a recovery in the housing market that is gathering steam. Analysts say the credit is directly responsible for several hundred thousand home sales.

Skeptics argue that most of the money is going to people who would have bought a home anyway. And they contend that unless it is allowed to expire on schedule in late November, the tax credit is likely to become one more expensive government program that refuses to die.

The real estate industry, including the powerful 1.1 million-member National Association of REALTORS®, wants Congress to extend the credit at least through next summer. The group hopes to expand the program to $15,000 and to allow all buyers, not just those who have been out of the market for at least three years, to qualify. The price tag on that plan: $50 billion to $100 billion."

Two out of my ten residential sales this year were eligible for the tax credit. So for me, I am at about half of what the national average is, but we are a second home market. Will the expiration do anything to our market? It's hard to tell. If it expires, and there is a dip in national numbers, it will affect people who are getting ready to test the waters again. However I have not seen a last second rush of people trying to buy something before the end of November.

I guess we will see. I think overall it was good for the housing market. Both of my "first time" buyers would have bought anyway, but the credit enabled them to look in a higher range.

NAR is feverishly trying to get the plan extended, so in their eyes it has helped the agents and brokers nationwide. Well lets see...if they are estimating five million home sales this year. Forty percent is two million. Times that by $8,000, you get 16 billion--the amount the tax credit cost the tax payer. Now take 5% of that) the national average of a real estate commission). That comes to 80 million (very roughly) in real estate commissions. I guess we can see why NAR wants this so badly. That is a healthy chunk of change.

Again locally, I don't think it is going to make much of a difference, but we'll see.

Thursday, September 17, 2009

Summer is Gone

It really didn’t hit me until this week how quiet it has gotten up here in Sullivan, post Labor Day. I drove to downtown Callicoon last night and there was only one car parked on main street. I had gotten used to driving through at least once or twice to find a good spot. And then again driving into the office this morning, the roads are all very quiet. The leaves are changing, the fall crispness is in the air. I love this time of year.

But what does this mean for my sellers? A few are not happy. They are worried we have missed the selling season, and with school tax time fast approaching, there are a few that are re-examining their strategies.

In my short real estate career it has historically seemed like the fall is not a bad time for activity here in Sullivan. Now granted if you go by the sold numbers in the fall, those are all deals put together in the middle of summer, and for some the search may have begun around Memorial Day. However, my phone is still ringing, and people are still making appointments.

I think for smart buyers, now would be the time. When is it the best time to by an air conditioner? Certainly not the first eighty-five degree day in June. And we all know the best time to get Christmas decorations is Dec. 26th.

It will be interesting to watch the pending list over the next couple of months. I think the fall will continue the upward trend of activity.

For now though I will enjoy the quiet sidewalks of our little towns, and watch the leaves do their thing. Fall really is the best time of year.

Wednesday, September 9, 2009

Gas Drilling Seminar

I attended the natural gas seminar last night put on by the Independent Oil and Gas Association.. It was a pretty packed house, standing room only, and the first part of the night was somewhat informative. However the q and a portion turned into a bit of a donny brook, with some pretty off the wall questions and accusations.

It really didn’t answer too many of the questions people have had in this county since this whole thing came up. We were assured that the D.E.C. will be closely regulating all drilling activity, that there has been no instances of contaminated drinking water anywhere in New York State, since the first well was drilled years ago. It sort of reminded me of Alien Invasion. “We come in Peace.” There were vague promises of road repair, and examples where they had built bridges in the past. They also made references to other areas of New York, where wells were present in the back yards of schools, and in wineries.

They explained the fracturing process, which is 99.5 percent water and sand, the other .5 percent being a lubricant, and some sort of soap. All very benign sounding. There were graphs of comparative water usage. (Apparently golf courses use much more water then gas drilling.) And promises of rigs being silenced at dusk.

However any specifics, and they became vague. I paraphrased a few below.
What happens to the contaminated water? “Well, there are a few possibilities, one of which is setting up a treatment plant, another is re-using the water in a different well.” (Again promises of D.E.C. involvement.)

How many wells will be drilled? “Well right now there are 650 rigs in the entire U.S. so the reports of thousands of wells is untrue. It will probably start off with a few, and if they are successful, more over time.”

How can you be sure that there will be no drinking water contamination? “In 2004 the EPA after looking at 452,000 wells in the U.S. concluded not a single case of water contamination from gas drilling.”

One of the most interesting spins was the promise of local tax revenue, and how the companies were going to pay these taxes directly to local municipalities. However when it was explained more, it is actually an ad valorem tax--a real property tax, which is directly linked to the amount of gas pumped from a well. In essence a property’s assessment will rise due to the fact it is more valuable because of natural gas. However they made it sound as if the gas companies would be paying the tax, when actually it will come from the land owners.

Without question, since it was put on by the Gas Association it was a bit slanted, and some was out right propaganda. However they are coming, its just a matter of when. I guess we can only hope our state and local officials police them enough to keep us safe. I do have a gut feeling that this will actually be good for the county once it is up and running. I attached some links below.