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.

Happy Thanksgiving!

 

Wishing you a Happy Thanksgiving!  Thanks for reading my Blog!

10 Reasons to Buy Now

1.  On January 1, 2009, the FHA down payment minimum will increase from 3% to 3.5%.  Lock in your loans now!  You can settle after the 1st of January, as long as your loan is in the system.

2.  Interest rates just dropped dramatically in the last couple of days.  It is the lowest it’s been since 2004!

3.  In the near future, the FHA jumbo loan limit will decrease from $729,000 to approximately $625,000…meaning it will be more expensive to get a higher loan amount.

3.  The holidays typically mean less competition for homes, and buyers can negotiate some great deals.  However, the post-election moves are going to be increasing as the new administration moves in.

4.  Prices are anticipated to go up in the next few months as the post-election moves boost the local market.  Buy low while you still can.

5.  First-time home buyers can take advantage of the $7,500 federal tax credit only until June 30, 2009.

6.  I still know of a 100% financing loan option, which includes buyer’s closing costs (NO down payment and NO closing costs)!  Not many realtors in our area know about this program.  Talk to me before it goes away!

7.  New construction developments are offering more incentives than they ever have before, and have some great financing options, too.

8.  Many sellers are willing to give concessions, such as paying for a buyer’s closing costs, giving money for improvements, and offering creative financing options such as seller-held trusts.

9.  Take advantage of the tax benefits of home ownership.  You can increase your deductions and increase your monthly take-home pay.  You can deduct your loan interest and real estate taxes. 

10.  Stop paying rent and start building equity.  Owning real estate is the key to long-term wealth.

10 Reasons to List Your Home Now

1.  Homes show well during the holidays.  Decorations draw a positive emotional response from most people.

2.  Many people have use it or lose it vacation during the last 2 months of the year.  It’s a great time for them to look at homes.

3.  Many people have to buy by the end of the year for tax purposes.

4.  Although there may not be as many buyers in the market, those that are out are serious.  It only takes one buyer to buy a home!

5.  Good interest rates, good financing programs, limited inventory.  It’s a great time for buyers to buy.

6.  Conversely, in the near future, FHA loan limits will decrease, making it harder to get a higher loan amount with a lower down payment.  Mortgage insurance will increase next year, which will increase the rate of an FHA buyer, which will lower their amount of buying ability. 

7.  If you wait until the spring market, which traditionally begins in January, you will have more competition as more houses will come on the market. 

8.  The longer you wait for more short sales, REOs and foreclosures to settle, the better chance you have of having appraisal issues when you do sell your home.

9.  The end of the year is the biggest transfer time for corporate relocation.

10.  Post-election moves are happening right now in the DC area.  There will be more buyers looking for homes within the next few months.