Housing Prices Will Rise Greatly Over the Next Few Years, Buy Now

I saw the following commentary in RISMEDIA and felt the need to publish it for all my buyers to read.  Many of my buyers are sitting on the fence, waiting for prices to bottom out and to snag the best possible deal.  The problem is, you won’t know when the bottom hits until prices have risen!  And by that time, where will interest rates be?   My husband and I just refinanced from a 5.5% interest rate to 4.75% and that saved us HUNDREDS off our monthly payment.   Sure, prices may go down a little bit in the next few months making a nominal change on your monthly payment (add approx. $6 to your monthly payment per each $1,000 of the loan amount), but why risk paying hundreds more with a higher interest rate?  Real estate is supposed to be a long-term investment afterall, and your values should appreciate over time.  In the end, you should still profit.  So don’t get caught up in your indecision and lose sight of why you actually want to buy.

2009 Tax Credit – It’s official!

View the attached PDF to see the differences between the 2008 Recovery Act’s tax credit and the recently passed tax credit:

taxcredit-20092

Tax Credit Update

Last week at this time, there was a flurry of conversation around the fact that the Senate had announced that they had approved a $15,000 tax credit for all individuals purchasing new homes (first time buyers and previous homeowners) in 2009, and that it would be a pure credit (would not have to be paid back like the previous version).  This created an enormous wave of excitement…except for one thing…the House did not see eye to eye with them on this proposal.

Over the course of the last week, the subcommittees from the House and the Senate got together and ironed out a combined version that they could agree on, and felt would pass a vote on both floors.  Unfortunately, the House did not see eye-to-eye on the housing proposal floated by the Senate, and much to the chagrin of the many in our sector, the initial proposal from the Senate was paired down significantly.

$15,000 for homebuyers

Under the Senate’s stimulus bill, homebuyers could receive a $15,000 tax credit if they purchase within a year.

By Les Christie, CNNMoney.com staff writer
February 10, 2009: 7:10 AM ET
NEW YORK (CNNMoney.com) — If you’re thinking of buying a home, there could be a big bonus for you in the economic stimulus bill that’s now before Congress.

The Senate’s version of the plan sweetened the $7,500 homebuyer tax credit provision proposed by the House, doubling it to $15,000 or 10% of the home’s purchase price (whichever is lower). What’s more, the credit applies to all buyers – not just those purchasing their first homes.

The Senate credit also has no income limits. The House version, in comparison, allows only those with incomes up to $75,000 for singles and $150,000 for couples to qualify for the full amount. (In that bill, those earning up to $95,000 and $170,000, respectively, can qualify for a partial credit.)

Also, unlike the tax credit passed last summer as part of the Housing Recovery Act, this one does not have to be repaid. The old credit acted more like a no-interest loan than a true credit and, as a result, had little impact on home sales.

Report: Some Home Prices to Bottom Out in 2009

The following article was published 2/6/2009 in the Wall Street Journal.

By JAMES R. HAGERTY
House prices in much of the U.S. will bottom out in this year’s fourth quarter, Moody’s Economy.com says in a new report.

In some of the hardest hit markets, however, prices won’t reach a bottom until 2010 or 2011, the research firm says in a report written by its chief economist, Mark Zandi.

“Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view,” the report says.

It cites signs that home sales are stabilizing as people snap up bargains on foreclosures, a decline in the supply of unsold homes in many areas and expectations of moves by the Obama administration “that will help place a floor under the housing downturn.” Those measures could include lowering mortgage rates further, preventing more foreclosures and generating jobs through higher federal spending.

On average, house prices nationwide will hit bottom in this year’s fourth quarter at a level 36% below the peak reached in the first quarter of 2006, the report says. The price measure is based on the Fiserv Case-Shiller index.

But some areas will be hit much harder. For instance, the Naples-Marco Island, Fla., area is expected to bottom out in the fourth quarter of 2010 with prices 70% below the peak. The report projects that peak-to-trough declines for metro areas will be 66% in Miami, Fla., 63% in Riverside-San Bernardino, Calif., 58% in Phoenix, 56% in Las Vegas, 53% in Los Angeles, 38% in Washington and 33% in New York. Within those metro areas, different neighborhoods are likely to show very divergent performances; the most desirable areas near good schools and jobs are faring much better than other places.

The peak-to-trough decline will exceed 10% in nearly 62% of the nation’s 381 metro areas, the report says, and the drop will be above 20% in about 100 metro areas.

The report is based on a forecast that the recession will end late this year, followed by a “lackluster” recovery. “A number of uncertainties in both the housing and economic outlooks remain, and the risks tilt to the downside,” Mr. Zandi says.