When I first heard that the home buyer tax credit had not only been extended but expanded to move-up home buyers, I was excited. Here in Coastal Sussex, first time home buyers are not our largest buyer group. My Realtor friends up in Newark and Wilmington have had quite a year end selling homes to first time buyers who were getting all the good breaks. But the majority of our buyers in Lewes or Rehoboth and surrounding areas, the repeat home buyer, had been ignored.
Now, for a brief time, the Repeat Home Buyer Tax Credit offers one more reason to think about buying that new home now. The criteria are fairly narrow, but if you qualify the amount of the tax credit could refund most of your closing costs. The Worker, Homeownership, and Business Assistance Act of 2009 established a tax credit of 10% of the home’s purchase price up to a maximum of $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010. When it was first introduced, we all assumed the language meant that you had to “move up” to a more expensive home in order to qualify for the tax credit as a repeat buyer but that was later corrected.
So, who does qualify and what are the deadlines?
Bill and I are in the process of purchasing a new home so I eagerly searched for the specific requirements. Unfortunately, we do not qualify for the tax credit since we only lived in our previous primary residence for about 4 years! A move-up home buyer is anyone who has owned and lived in the same home for at least 5 consecutive years out of the previous 8 years prior to the purchase date. For married couples, this applies to both the home buyer and his/her spouse.
Before we get to the additional qualifications, let’s focus on the timing issue. If you are an active buyer looking at homes now, you would have to be moved into your new home prior to April 30, 2010. Realistically that means you should be under contract no later than March 1, 2010. If you have a home to sell, it had better be on the market now with high hopes of getting it sold over the winter. I’m poring over the details and see nothing prohibiting a Contingent Contract on the house you want to purchase, but in order to proceed to settlement in the allowable time frame, you’d have to be able to remove the contingency and settle by April 30, 2010. What if your existing home does not sell but you are in a position to settle and move into your new primary residence anyway? That’s a question for your accountant.
If the home you are buying is new construction, the law does allow for occupancy no later than June 30, 2010, as long as there is a binding sales contract in full force by April 30, 2010. It sounds to me like you have to actually go to settlement no later than April 30, 2010, even if the home is not going to be ready for occupancy until June 30, 2010. Another question for your accountant.
OK, so you have owned your last home for 5 of the previous 8 years and you are actively looking for your next home, what are the other criteria to determine if you are eligible for the $6,500 tax credit?
Income Limits – A single taxpayer can earn up to $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with modified adjusted gross income (MAGI) above those limits and goes away at $145,000 (single) and $245,000 (married). I’m not going to get into how MAGI is calculated; if it affects you, you know all about it I’m sure.
What kind of homes qualify? – Any home that will be your primary residence qualifies as long as the purchase price does not exceed $800,000. That includes a manufactured home on leased land selling for $65,000 all the way up to an $800,000 historic home in Lewes.  In both of these cases, the buyer would qualify for the full $6,500 tax credit (10% of the purchase price; maximum $6,500 tax credit). Second homes and vacation homes do not qualify.
“Refundable” tax credit – This means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. It is possible to get the full $6,500 tax credit even if you owe no federal tax at all. Again – the accountant to be sure.
More Good News – The tax credit you receive does not have to be claimed as income on your next year’s tax return. This is essentially free money! And, you can actually claim the tax credit against the previous years’ income or the current year. So if you make the purchase and go to settlement in 2009, you can choose to claim the credit against 2009 or 2008, whichever is more favorable to you and gets you the largest tax credit. If your purchase occurs in 2010, you can choose to apply the tax credit to either 2010 or 2009.
One group of buyers that could be helped by this tax credit is the recent retiree. Think about it. This person is very likely to have lived in their last primary residence for 5 of the past 8 years. They may also have decided to sell the large family home and downsize to something more manageable for their future. If they’re lucky, they already did sell and are now looking for their retirement home. As recent retirees, their income may now be within the income limits where before they might not have qualified. Add this tax credit to today’s extremely low interest rates and the lowest home prices in a decade and this is a great opportunity to buy a home now.
As with any government sponsored program, the Move-Up/Repeat Home Buyer Tax Credit program takes some thought and might require a few calls to your accountant, but isn’t it worth it for a $6,500 tax credit?

Sometimes my best ideas for an article come from a client. In my last email newsletter, I referenced a recent study showing the happiness level of the different states – Delaware ranked #22! The surrounding states in the Mid-Atlantic Region were significantly less happy.

One reader sent in a question asking “I’D LIKE TO SEE THE HEALTH % OF BABY BOOMERS. In other words is it healthier to live in Delaware? & why is that?”

Very interesting question, so I started doing some research, online of course, to see what I could find. First, I discovered The 2009 Health Disparities Profiles and looked up Delaware. I was pleased to see in general that “Delaware has moderately low rates of death due to stroke, unintentional injuries, and influenza and pneumonia.” Well, that made me feel better, especially in this year of concern about the flu and H1N1!

The report continued that “Delaware ranks among the states with the best rates of preventive care and health insurance coverage, and is second in the nation in percent of population having had a routine check-up within the past two years.”

I’ll keep looking for more information and I’ll also point you to an earlier post about “retired now what” where I learned that many Boomers take far more interest in their own health and fitness when they do retire and have the time. If anyone has any data please send it my way!

You’ve dreamed about this day for years. Some days the only thing that kept you going was the thought that one day you would finally be able to retire at the beach. Well here you are, you’re free to do whatever you want and living at the beach in Coastal Delaware. Now what?

I thought I would ask some of my Boomer clients that have recently retired and moved here. Then I started looking through my database to find retirees to interview. Almost all of my clients are Boomers and I was curious to find out how they were adjusting. What I found was just how diverse this Boomer generation is because we all approach “retirement” differently. It’s not your parents’ retirement, to paraphrase an Oldsmobile commercial.

One group that has always gravitated to Coastal Delaware is from the DC Metropolitan area. If they have worked for the Federal government their entire career, the leading edge Boomer can now retire with full benefits. When they leave the Beltway behind and relocate to their dream home at the beach, what is life like?

I asked one client who made the move in 2008. When she first thought about relocating, she told me, she planned to look for another job – a government job. She thought about looking at Dover Air Force Base or perhaps one of the local libraries. That would be a good way to slow down a little and take it from there. Retire? For several years she thought about it; she wasn’t sure she was ready. “When I was really honest”, she told me, “I was ready for a change and I was really was ready to retire. It took 4 months to de-stress and realize just how burned out I was.” I have gotten to know this client quite well and she is not one of those government execs that were content to say “I’m the Director” and leave it at that. She wanted to accomplish something right up to the last minute in office and leave a legacy.

However, she didn’t want to do what she saw so many others do – jump right into volunteer activities or a part time job until she could get acclimated and find a good match. While looking for a meaningful volunteer experience, she decided to join a gym. She met a whole group of other people that had decided to take advantage of this new-found time to get into better shape. We all know that it wasn’t always easy to make time for yourself when your career was at its peak and the kids needed your every available minute. Now that you can make your own priority list it’s okay to put yourself first.

What else has this Type-A executive found time to do in retirement? She is taking a painting class and enjoying it immensely. There hasn’t been time for painting in a very long time and she always wanted to get back to it – now she can and it doesn’t even matter how good she is. She’s reading books that had piled high on the end table.

She and her husband are also exploring their new home state of Delaware. “It’s a beautiful state”, she told me. “Have you seen the Cypress Swamp at Trap Pond State Park? Have you been to Gordon’s Pond?” They have seen more of Coastal Delaware in one year than many locals. Her husband has been taking Spanish classes and recently asked me “Como esta usted?” Will either of them take a new job or decide to volunteer for a particular organization or charity? Perhaps in time, but for now they are both enjoying all the things they never had time for in the past.

I got a similar but slightly different story from another client. He and his wife relocated to Lewes about the same time – late 2008. He didn’t exactly retire, but he changed companies and became more of a consultant than a full-time executive. He’s got the kind of personality that makes friends instantly and he has done the same since moving here.

“Slower Lower Delaware”, he said, “lives up to its name. I take everything a little slower. I was in New Jersey and St Pete, Florida last week and it was good to get back. The fishing is great – I go almost every morning at day break for about an hour or so. I come home, get cleaned up and go to work. I still work (out of my home) but somehow it doesn’t feel like work. The seafood (and food in general) is great here with a lot of choices. The people are friendly. If there is any culture shock and adjustment it is all good. I have never been happier.”

Fishing seems to be one way to slow down and transition from full time career mode to semi-retirement or just a new way of living and working. Maybe that’s what all Boomers will find when they move to Coastal Delaware – a better more balanced life with more time to enjoy the important things. Sounds good to me!

Read an Associated Press article today reporting that Delaware is the 22nd happiest state in the country! People in the sunny, outdoorsy states – Louisiana (#1), Hawaii, Florida, Tenessee and Arizona – say they are the happiest Americans. Delaware ranked in the middle at #22, but that topped our neighboring states with

• Maryland – #40
• Pennsylvania – #41
• New Jersey – even unhappier at #47
• New York – the unhappiest state in the country!

Other studies that rated states on criteria ranging from availability of public land to commuting time to local taxes – quality of life and happiness tend to go hand-in-hand.

That’s good news for Delaware and probably why so many people from the surrounding states are relocating to Delaware. Don’t worry, BE HAPPY … in Delaware!

The final phase is now open at Bay Crossing with wooded and walkout lots available. This is my favorite section at Bay Crossing because I do love to back to woods with more privacy than you have in other locations. All homes now have full basements.

For right now, the builder is offering 50% off any options up to $75,000 AND 50% off select lot premiums. The Laser model is excluded from this promotion. Combine this with the $6500 tax credit for existing homeowners who buy before April 30, 2010 and you have quite an exciting opportunity to buy in Bay Crossing, Lewes’s only active adult community.

Base model prices range from @299,900 to $399,900.

There are a few Quick Delivery homes with lots of upgrades available now from $388,900 to $429,900.

If you would like to come down over the holidays, please give us a call at 302-645-4564. We will be in town and we would love to show you these homes and others that just might make your holidays bright!

Remember the “Dagwood”? According to Wikipedia, the Dagwood Sandwich is a tall, multi-layered sandwich made up of a wide variety of meats, cheeses, and condiments. It was named after Dagwood Bumstead, a character in the comic strip Blondie. Dagwood is a good name for the Boomer Sandwich – it’s multi-layered and I bet no two people make it exactly the same way.

The resurgence in multi-generational living is due in large part to the Boomer Sandwich. No two are alike but there are some common ingredients. Take a typical Boomer couple with two sets of aging parents, at least one child and careers approaching the retirement zone. Life is going according to plan and then? Your college educated child can’t find a job and wants to move back home. “It’s just temporary, Mom” he says. Next? One of your parents needs assistance and can no longer live independently in their own home. Now what? How does this Boomer Sandwich affect your decisions about how and where you will live?

Let me tell you about one sandwich I’ll call the “Madeline”. What impresses me most about Madeline is her attitude. We’ve all met the martyr who will bend your ear about how put-upon they are and how wonderful they are for taking care of everyone else. Well, Madeline is no martyr and she has a full plate. First, Madeline and her husband Mark have a teenage child with Cerebral Palsy. They live in a wonderful home in a great neighborhood and they have no intention of moving but the biggest challenge is the steps. From the street, it’s 5 steps to a landing and another 5 steps to the porch. Up another step and you’re in the front door with access to the first floor living room, dining room and kitchen. Not bad if you’re able, but very challenging for Madeline and Dave. Madeline gets Dave into the house in a kind of dance that leaves her exhausted and him chatty. Need to use the bathroom? Dave scoots up the 14 steps backwards to the second floor, site of the only bathroom, but lately he needs some help. Dave is a house walker who gets around with the help of furniture and anything he can grab onto. He uses a wheelchair, sticks or a walker, and none of them go up stairs. Dave is still growing and with every spurt he has to relearn how to do everything.

While they were talking one evening, Mark was online searching for ideas on “home modifications”, “accessibility”, and similar terms and found Gotcha Covered, our remodeling company that specializes in Universal Design. He called Bill to schedule a “Home Evaluation”. Bill uses an evaluation process that includes a systematic review of each aspect of the home and provides a thorough analysis of how to improve the home’s livability. For example, he evaluates exterior and interior doorways, hallways, staircases, kitchen and bathrooms and ends with recommended modifications.

At the first meeting, Mark asked Bill “What can we do around here that will make things easier for Madeline and Dave?” They toured the house together and clearly it was going to be a challenge. Living in town where lot sizes are small and homes are close together, there is only so much room to work with. Inside, the home has wonderful hardwood floors, quality trim and detail, but there is no first floor bathroom and no room for a first floor bedroom.

As they were going over some ideas like putting a bathroom behind the kitchen, the lack of space kept interfering. That space was not even heated, but Bill thought it was worth looking into. The main goal was to eliminate the need to get Dave up and down the steps. Ideally, building an addition that could be completely accessible would be the best solution. That’s when the subject of Mark’s mother came up in the conversation.
Pearl still lived in the home where Mark was raised. Now in her 80s, Pearl was beginning to have difficulty getting around. “What if,” Mark thought out loud, “Pearl were to sell her home, move in with us and help us finance an addition?” Mark continued, “Oh, never mind; she won’t go for it, she won’t want to move.”

By the end of that discussion, all agreed that there was no real room to put a bathroom on first floor. To add a first floor bathroom, we needed a large enough space and that meant an addition. Given the location and the challenges of the lot size, designing and building an addition that was accessible and attractive, functional and comfortable for the whole family was going to be costly.

After Bill left, Mark and Madeline talked to Pearl about their idea and to their surprise she agreed. In fact she was enthusiastic and glad to be part of the solution. With Pearl’s participation, it would now be possible to build a full blown first floor addition. Bill got the call; Mark said “we’re ready to go, Pearl is in”!

Bill sat down at his computer to begin the design while telling me all about what had happened and how the project had gone from interim fixes to a full blown addition utilizing all of the principles of Universal Design that we espouse. While Bill worked, I couldn’t help but marvel at how quickly this family had come to work together and make this project possible. I heard no whining, no martyrdom, no hint of “aren’t I wonderful; see how I take care of my family”. What I did hear was “doing what needs doing” and “OK, let’s get it done”. Maybe Madeline didn’t understand what she was getting into. It’s not just the upheaval associated with a major addition and renovation, but her mother-in-law was going to move in with them and her son would probably be living with them for a long time. Most people would be stressed or playing the martyr; Madeline was just “doing what has to be done”.

This is only one of the stories I hear on a daily basis. I hope to get it all in a book with a chapter for the “Madeline”, the “Maureen” and the “Mac”, all variations on the Boomer Sandwich from some pretty great Boomers.

That’s the key to making money in the stock market but how many can discipline themselves to actually do that? To buy when stock prices are low requires a strong stomach and a belief that things will get better. Don’t you want to wait until the stock starts going up just to make sure you should really trust the trend before you buy in? Several months ago the talking heads on TV were all doom and gloom and yet today the market has recovered much of it losses. Timing the market is tough.

Housing markets also have their cycles, moving from sellers’ markets to buyers’ markets to a more balanced “normal” market. Does that mean you should sell your home just because prices have risen to a point where you can make a great return on your original investment? If it is an investment property, perhaps; but if it’s the home of your dreams, probably not. If you did sell, would you be able to buy it back when prices eventually cycled to the bottom in the next buyers’ market? What if prices don’t go down for ten years or more or even worse, what if they keep going up?

Should you buy a new home just because of a buyers’ market? If you will be in the market to buy in the next year or two, would it be a good idea to buy now while prices are still depressed and interest rates are extremely low? YES. To take advantage of a buyers’ market, you have to be a BUYER. When the housing market cycles back to the sellers’ advantage, it will be too late. For the leading edge of the Baby Boomers – the ones who are 62 or 63, this is your last buyers’ market. Unless you are planning to stay right where you are when you retire, now is the best time to buy your retirement home and here are a few scenarios that will help you “time the market”

• You have significant equity in your current home or own it outright. At the peak of your career, you still enjoy a good income and can qualify for a conventional mortgage or an ARM for the purchase of a “second home”. You buy a home now where you want to live later and wait to sell your current primary residence until you actually do retire or until prices have recovered. Then you have the option of paying off the mortgage on your new home if the plan was to live mortgage free.

• But what if you can’t quite qualify for a traditional mortgage on a second home? The old way to tap into the equity of your primary residence was a “home equity” loan, but those are difficult to get these days. If you are over the age of 62, however, there is another option that can help you time the market – a Reverse Mortgage. Qualifications are based on your home’s value, your equity in that home and your age, not your current credit score or income.

• You’re already retired, but selling your primary residence now means taking a lot less than it is really worth. A Reverse Mortgage in your area, let’s say, would give you $250,000 cash with which to buy your retirement home now as a second home. You will make absolutely no payments with the reverse mortgage until your primary residence is sold and you will be buying the new home now for a great price when “Cash is King”. With this option, you can “Buy Low and Sell High” and have no mortgage payments for either home.

I am no expert on Reverse Mortgages, but there are well known, reputable and reliable companies that are and they can answer all your questions. Fees are front loaded and the perception is that they are pricey. If it allows you to buy in a buyers’ market and sell later when prices have recovered, how much of a difference could that make? What would your house sell for in one year or two? Do you live in a historically strong market where house prices could rebound by 10%, 20% or more? If your wealth is tied up in your current home and you plan to relocate when you retire, a Reverse Mortgage may be the answer that allows you to time the market.

You can also buy a home with a Reverse Mortgage. Depending on your age, you may need to have a 30% to 50% down payment, but you can then apply for a Reverse Mortgage instead of a standard mortgage. You pay the closing costs and live in this home for the rest of your life with no mortgage payment. Even if you live another 30, 40 or 50 years, you will never make a mortgage payment on this home. What about your estate? Any remaining equity in your home will go to your estate when it is sold.