First-time home buyers are playing a larger role in the housing market, but they’re finding big changes.

Thirty-nine (39) percent of home sales nationwide were from first-time home buyers during the 12-month period ending June 2012, according to the National Association of REALTORS®. That’s up from 37 percent a year earlier.

But while first-time home buyers once had a huge inventory of homes to choose from, now they’re finding tightened supplies and steeper competition for what’s left.

Housing inventories are hovering at record lows in many markets, limiting supply. First-time home buyers face increased competition from investors, who are often trying to snatch up the same bargain-priced housing deals. Investors often make all-cash offers, too, which makes it difficult for buyers requiring financing to compete against them. Also, banks have tightened up their underwriting standards, creating more hoops in just qualifying for financing.

It’s not easy to be a first-time home buyer, some say. But first-time home buyers are critical to a healthy housing market, more than one third of the buyers in today’s market are first-timers. They allow existing home owners to sell and trade up into larger homes.

Also, first-timers shouldn’t automatically settle for a Federal Housing Administration mortgage due to the low down payment requirements (usually 3.5 percent of the purchase price). The FHA can have several restrictions that makes some sellers prefer buyers who offer cash or who are using conventional loans.

First-timers also need to be able to act fast and be able to have their financing processed quickly if they are going to stay competitive. Some banks won’t sign off on mortgages for eight to 12 weeks. But many sellers won’t wait that long.

To respond to the changing housing market, first-time home buyers need agents with greater experience and strong knowledge of the local housing market to help them to compete with investors and experienced home buyers. Agnet of Accredited Buyer Representative (ABR) is certainly a very reliable indicator. Other than that, neighborhood specialist is also a good choice when it comes to hire an agent.

Buyers step back as concerns grow over higher pricing levels in metro Phoenix housing market.

Some comments from real estate agents —

• “Prices are too high and inventory is too low on good properties.”
• “Buyers aren’t motivated by the current selection of inventory and financing is still pretty tight.”

The result —

• Traffic misses expectations as prices are once again too high.
• Prices increase, but inventories and time to sell point to challenges.

Click here for the Credit Suisse’s monthly survey for metro Phoenix.

More metros were added to this month’s Improving Housing Market list, allowing the index to grow in January to 242 metros out of 361 nationwide.

The National Association of Home Builders/First American Improving Market Index identifies areas that have shown growth in housing permits, employment, and home prices for at least six consecutive months. The index was created in September 2011.

Forty-seven new metros were added to January’s list, including areas like Los Angeles; Auburn, Ala.; Des Moines; Nashville; Richmond, Va.; and Cleveland.

The IMI has almost doubled in the past two months as stronger demand during prime home buying season boosted prices across a broader number of metropolitan areas.

Metro Phoenix has been added to the list back in May 2012 after its sixth consecutive growth in permits, employment and home prices. Back then, the numbers of metros in the NAHB/First American IMI list was only 100 out of 361 nationwide. Metro Phoenix has never failed in these 3 respective measures since then.

Home prices are inching up across the country, as a housing recovery ripples through once hard-hit areas. AOL Real Estate, drawing from Trulia housing data, recently highlighted the top “turnaround housing markets” that have seen the biggest jumps in median home prices in the year of 2012.

1. Las Vegas, NV
◦ Median home price for fourth quarter of 2012: $147,000
◦ Difference in prices between 2011-2012: +27.5%

2. Seattle, WA
◦ Median home price: $299,950
◦ Difference in prices between 2011-2012: +24%

3. Phoenix, AZ
◦ Median home price: $189,000
◦ Difference in prices between 2011-2012: +21.8%

4. Oakland, CA
◦ Median home price: $384,750
◦ Difference in prices between 2011-2012: +21%

5. San Jose, CA
◦ Median home price: $589,950
◦ Difference in prices between 2011-2012: +20.8%

6. Salt Lake City, UT
◦ Median home price: $159,000
◦ Difference in prices between 2011-2012: +18.9%

7. Atlanta, GA
◦ Median home price: $159,000
◦ Difference in prices between 2011-2012: +18.9%

On January 1 both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama.
Below are a summary of real estate related provisions in the bill issued by National Association of Realtor (NAR) —

Real Estate Tax Extenders

• Mortgage Cancellation Relief is extended for one year to January 1, 2014
• Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
• Leasehold Improvements: 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.
• Energy Efficiency Tax Credit: The 10% tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

Permanent Repeal of Pease Limitations for 99% of Taxpayers

Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers.  These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000.  These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by 3%. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80% of the filer’s itemized deductions.
These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012.  Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains

Capital Gains rate stays at 15% for those the top rate of $400,000 individual and $450,000 joint return. After that, any gains above those amounts will be taxed at 20%.  The 250/500k exclusion for sale of principle residence remains in place.

Estate Tax

The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent.  The exemption amounts are indexed for inflation.

The Senate bill that finally passed the House by a 259-167 vote extended a number of federal tax code provisions that are important to homebuyers, sellers, builders and real estate professionals.

The bill also made permanent the Bush-era reduced tax brackets for all but the highest income earners in the country, along with a permanent “patch” to the increasingly troublesome alternative minimum tax (AMT) that threatened millions of middle-income homeowners with higher taxes.   Here’s a quick overview of what the legislation means for housing:

Mortgage Forgiveness Debt Relief extended through 2013

For huge numbers of financially distressed owners of homes with underwater mortgages, this was the biggest issue in the entire fiscal cliff debate. The mortgage debt relief provisions in the tax code, first enacted in 2007, expired at midnight Dec. 31.

Had Congress not acted, the tax code would have reverted to its pre-2007 treatment of mortgage principal reductions or cancellations by lenders, whether through loan modifications, short sales, deeds-in-lieu or foreclosures: All principal balances written off would be treated as ordinary income to the homeowners who received them.

For illustration, if a lender wrote off $100,000 of debt to facilitate a short sale, the seller would be taxed on that $100,000 at regular marginal rates, just as if he or she had earned it as salary.   A return to taxation of principal reductions would have disrupted short sales — a growing segment of the home real estate market — in 2013, and almost certainly would have encouraged more distressed owners to opt for foreclosure and bankruptcy.

Deduction of mortgage insurance premiums

The bill retroactively extended this benefit to cover all of 2012, plus continues it through 2013. Qualified borrowers who pay private mortgage insurance premiums or guarantee fees on conventional, low down payment home loans, FHA, VA and Rural Housing mortgages will be able to write off those premiums along with their mortgage interest on federal tax returns. The retroactive feature is crucial because Congress had allowed this deduction to lapse at the end of 2011. There are limitations, however: The write-off is available only to borrowers who have an adjusted gross income below $110,000.

Tax credits for energy-efficiency home improvements

This benefit provides modest tax credits of $200 to $500 for owners who install energy-efficient windows, insulation and other upgrades designed to cut energy consumption. The bill covers improvements made during 2012 and 2013.

Tax credits for new energy-efficient new houses

This allows builders and contractors to claim a $2,000 tax credit on new homes constructed in 2012 and 2013 that meet federally specified energy-conservation standards. The bill also extends credits for U.S.-based manufacturers of energy-efficient refrigerators, clothes washers and dishwashers. As with other energy-related tax provisions, this had expired last year and will now be continued through 2013.

Home buyers are feeling more confident that the housing market is in recovery mode and they’re realizing they better act soon if they want to take advantage of low mortgage rates and home prices before they rise more.

Seventy percent (70%) of home buyers in 18 markets believe home prices will rise in their neighborhood within the next year, according to a new survey by Redfin of more than 1,000 home buyers.

In the first quarter of the year, only thirty percent (30%) of home buyers said they believed prices would rise in the next 12 months.

Fifty-seven percent (57%) of the survey respondents said that the record low mortgage rates were a main reason to purchase a home soon.

Meanwhile, nearly sixty percent (60%) of home buyers said their chief concern about purchasing a home was the smaller number of homes to choose from nowadays.

Redfin expects the 2013 home-buying season to kick off early in January 2013 with very strong demand, which, paired with low inventory, will cause prices to continue to rise steadily into spring.

The 18 markets participating in the survey were Atlanta, Austin, Baltimore, Boston, Chicago, Dallas, Denver, Los Angeles, New York, Orange County, Phoenix, Portland, Riverside/San Bernardino, Sacramento, San Diego, San Francisco, Seattle, and Washington.

Grand Canyon University is planning to build 320,000 square feet cmpus in the East Valley that eventually will house 2,000 employees and 7,500 students. Initially, the campus will employ 1,000 people and double that by 2020. It will need anywhere from 75 to 150 acres for such expansion.

GCU issued request for proposals to Mesa, Tempe, Gilbert, Chandler and Queen Creek. Initial notices of intent are due Jan. 7, while full proposals are due Feb. 15. Already, one city has identified land for the expansion but it is too soon to identify the city. Personally, I don’t think Tempe has the capacity to offer such space in the already crowd city. Mesa’s mayor Smith is very determined to bring in higher education into the city of Mesa. So I believe there are in the talk. Chandler has become so expensive and the needs for higher education has been well served by nearby ASU East and Chandler-Gilbert Community College (CGCC). Not so sure either about Queen Creek since its high school system is yet ready to take on the cooperation with College.

With the up coming master plan of Eastmark in Mesa, resourceful pipelines of high schoolers and the aggressiveness major Smith has brought to his team, I highly anticipate GCU’s decision will favorable to Mesa. GCU expects to make a decision on the final location by May 2013, with an expected construction completion in fall 2014.

For more information, click here for Grand Canyon University – A for-profit Christian university located in Phoenix, Arizona.

A Danish architecture firm and an Arizona real estate developer are proposing a 420-foot modernistic observation tower that would be located in downtown Phoenix and billed as a tourist destination.

That would make the tower close to 39 stories and the tallest building in Arizona.

Bjark Ingels Group (BIG) designed the proposed Phoenix Observation Tower. Novawest LLC owns real estate in Phoenix and wants to locate the tower near the Arizona Science Center, Phoenix Convention Center and US Airways Center.

“This is the right place and the right time for a signature project for downtown Phoenix and we knew the design needed to be something extraordinary. Big has delivered something exceptional, blending form and function in a way that will change the local skyline forever and will give visitors a once-in-a-lifetime experience.” said Brian Stowell, a Novawest principal. The architecture firm unveiled the tower plans Wednesday evening. The tower includes an open-air spiral sphere at the top and could also include restaurants and special event space.

Novawest wants to locate the modern structure near the Arizona Science Center or the corner of 6th and Adams streets at the southwest edge of Heritage Square in Phoenix.

The BIG architecture firm specializes in a variety of unique designs and structures. It has designed buildings in France, Norway, Iceland, Denmark, Germany, Abu Dhabi and Taiwan.

Click here for the future Phoenix landmark.