By Christa Buchanan
C & G Staff Writer

Incentive money, low interest rates, houses galore and nearly bottomed-out prices — all these factors coming together spell good news for buyers.

“The combination of the tax credit, low interest rates and low prices has created a perfect storm for buyers — the values are just incredible across the board,” said Realtor David Reese of Real Estate One in Troy, noting that these deals won’t last long, as the market is beginning to stabilize.

“We think the under-$100,000 market is finally bottoming out. … As for mid-range homes — $100,000 to $250,000 — there hasn’t been a huge, huge calling for those homes, but we are starting to see shrinking inventory and a slower rate of depreciation in some areas of that market,” he said, adding that values for high-end homes are still eroding.

So, what does that mean for buyers?

According to local Realtors, it means that now is a great time to buy for not only first-time buyers, but also for “move-up” buyers, even if they have to sell their old house for a loss.

“For move-up buyers, this is the best scenario ever,” said Kelly Sweeney, CEO of Coldwell Banker Weir Manuel Realtors in Birmingham. “Let’s say you purchased a home five years ago at the peak of the market for, say, $250,000. At that time you would have loved to acquire a home for $400,000, but you simply couldn’t afford the $150,000 difference. Today your $250,000 home is only worth $125,000 so you think you’re stuck. But wait, even though the value of your home has shrunk, so has the value of that house you wanted for $400,000. It’s now only worth $200,000. … The difference in cost to move up to that more desirable home is now only $75,000, not the former roadblock of $150,000,” Sweeney explained.

If sellers can get over the emotional pain associated with taking a loss on their current home, Sweeney continued, they can take advantage of the opportunities the current market provides.

All of the other traditional reasons for home ownership remain in place — i.e., tax advantages, control over your living environment, security, equity buildup, etc. — but the tax credit, great selection, low prices and interest rates are temporary.

To that end, move-up buyers not only could potentially purchase a much bigger and nicer home, but also could potentially have close to the same, or due to low interest rates, possibly a smaller mortgage payment.

“Right now, prices are down across the board, and you can buy a much better home. … In some areas, you’re looking at 50 percent off right now,” said Realtor Gary Patrosso of Keller Williams Realty in St. Clair Shores.

“You can move up into a much, much larger home and probably keep the same payment,” said Patrosso. “If you could sell now and break even, or even lose a little, you should take advantage of that.”

That’s especially true now that the federal Housing and Recovery Act of 2008 first-time homebuyer tax credit — 10 percent of the purchase price, up to $8,000 — has been extended until April 30 and expanded to include move-up buyers.

“Right now the applicable tax credit applies to a huge segment of consumers with actual tax credits, not deductions, of $8,000 for first-time buyers and (10 percent up to) $6,500 for other buyers. That means even if you don’t pay anything in income taxes, you still get a check back,” said Sweeney, noting that complete details can be found at CBWeir Manuel.com by clicking on the scrolled banner under Buyer Tax Credit.

While many people may think that the best deals are found in foreclosures, that’s not necessarily the case.

“As far as what I’m seeing with most buyers in the market right now is all they want to see are bank-owned properties — that’s all they want to see until they start looking at them and see that they’re not really such a bargain,” said Realtor Joanna Darmanin of Century 21 Town & Country in Royal Oak regarding the sorry state of many bank-owned properties. “People afraid of buying those houses are turning to fair-priced, private-owned properties — homes with realistic pricing that’s competing with bank-owned homes.”

Sweeney concurred: “A lot of buyers can’t or won’t deal with distressed properties, so we’re seeing a bit of a shift toward traditional home sales. You never know with certainty, but … that should help stabilize the traditional market more quickly.”

That, said Reese, along with the fact that investors and speculators are beginning to purchase more and more distressed properties, is a good sign.

“When investors start buying, you know the market is hitting the bottom, so it’s a good time to buy,” said Reese.

There is one caveat to that, however, said Darmanin: Investors only make up a small percentage of buyers.

“It follows the 80-20 rule: Right now, 80 percent are first-time buyers and 20 percent are investors,” said Darmanin. “We need to clean up some of that (distressed) inventory to make room for traditional houses to sell, so sellers won’t continue to get hammered on low, low comps.”

The good news, Patrosso said, is that part of that problem is being alleviated as banks begin to streamline the short sale process.

“A positive thing is that short sales are getting easier to do. I’ve been seeing a trend, a very small trend, of short sales becoming easier to get approved — they’re getting easier to complete and getting done faster,” said Patrosso, noting that this will help further stabilize the market.

For more information, contact a local Realtor: Century 21 Town & Country, Royal Oak, can be reached at (248) 642-8100; Keller Williams, St. Clair Shores, at (586) 541-4058; Real Estate One, Troy, at (248) 813-4900; and Coldwell Banker Weir Manuel, Birmingham, at (248) 644-6300.