More Homes and Buyers Qualify Under Tax Credit

I wanted to give a bit more information on the newly signed tax credit because it will have an impact on our local market since it now includes both first time buyers and move-up buyers. The biggest plus for the Alameda market is the legislation increases the income limit for buyers.

Under the prior credit it would have been very difficult for someone to purchase in Alameda give the income limit and the ability to qualify for a loan at the median price. Now that both first time and “move up” buyers, income limits have been increased to 125,000 dollars for single filers and 225,000 dollars for joint filers it is more reaslist for Alameda and Bay Area buyers.

The tax credit is only available on homes priced under 800,000 dollars but with the current Alameda inventory that includes that includes 82 of the current 119 properties for sale; 70 percent.

Similar to previous tax credits, first-time buyers are still eligible to receive up to 8,000 dollars, but this time “move-up” buyers are also eligible to receive up to 6,500 dollars, and income limits have been significantly raised across the board.Here are a few key points about this new tax credit:
To be eligible for the “move up” buyer tax credit, you must have been living in your principal residence for five consecutive years out of the last eight.

To take advantage of the tax credit you will need to make a qualified home purchase before April 30, 2010 and it has to close by June 30, 2010.

Given current interest rates, the tax credit and prices lower than we have seen in about eight years it may be time to start looking for a home in the non-traditional selling season.

ZipRealty put together an informationa video on the tax credit.



Inventory Data November 9, 2009

. . 11/9/2009 . Total 119 . 94501 92 . 94502 27 . SFR 72 . Condo 25 . Multi-Family 20 . Short Sale 19 . Foreclosure 11 . Price Reductions 44 . High List $1,899,000 . Low List $210,000 .

Big Day In Real Estate News

Lot’s of Real Estate News Today, so right to it . . .

The Senate Close to Deal Replacing Homebuyer Tax Credit that expirres December 1. The deal replaces the expiring $8,000 tax credit for first- time homebuyers with a smaller one that would expand access to so-called step-up purchasers, two people familiar with the matter said.

The deal would reduce the size of the tax credit to 10 percent of the sale’s price, capped at $7,290, the people said. The credit would be available on home purchases that are under contract by April 30, and borrowers would have 60 days more to close the sale. The existing credit is due to end Nov. 30.

The bigger part of the proposed credit is the change in the income levels. The income eligibility for first-time homebuyers would remain the same at $75,000 for individuals and $150,000 for couples but the big change is for the income criteria for step-up buyers. This would include a whole new set of buyers and increase the eligibility to $125,000 for individuals and $250,000 for couples.

For Alameda buyers the change in income level will allow more buyers for the first time to take advantage of the Federal housing push. Alameda’s home prices made it very difficult for a first time home buyer to qualify for a loan and the credit.

This is one of three proposal lawmakers are trying to push regarding housing. Lawmakers are trying to attach the Senate legislation, which is also being considered by leaders in the House, to a bill extending unemployment benefits.

The Case-Schiller report came out today and reported home prices rose in August for the third straight month, a rapid pace of recovery that surprised economists and raised questions about how long the trend can last.After a steep three-year descent, home prices rebounded this summer at an annualized pace of almost 7 percent, the Standard & Poor's/Case-Shiller home price index.

The upside is affordability has improved creating an opportunity for some buyers that were priced out of the market and investors. Home prices have returned to quaint 2003 levels, according to Standard & Poor’s.

We have seen locally that the Island median and average prices have fallen to $517,000 and $562,064 respectively for September, but are not even close to January’s median of $457,000 and March’s average of $502,720.

Finally a week after the National Association of Realtors reported showing a big jump in sales of existing homes last month, a government report says new home sales declined in September. Sales of single family homes fell 3.6 percent from August levels, and were down 7.8 percent from September of 2008, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. The report also says the number of new houses for sale at the end of September nationwide was 251,000, representing a 7.5 month supply. That is the smallest number of new homes on the market since November 1982, according to Bloomberg data. The National Association of Realtors last week reported sales of existing homes, which make up the vast majority of home sales, jumped 9.4 percent
Neither report breaks out sales by metropolitan area.

Locally, Alameda has seen increasing sales:
June 41
July 39
August 52
September 53

Home Buying Tax Credit Winding Down

If you are thinking about buying a home this year and want to tax advantage of the Federal Tax credit time may be running out for you. Home buyers must be occupy the home by December 1, 2009 to be eligible for the tax credit, this gives you 76 days to buy, close and move in to the home.

The federal tax credit for first-time buyers has bee a huge motivator for many buyers and has been credited for the upswing in National sales. The question is will buyers end their search if the Nov. 30 deadline arrives and they have not found a home.

The most difficult part of the Credit for Alameda Buyers is the restrictions. The tax credit is for 10% of the purchase price, up to $8,000. The eligibility requirements are defined as buyer who has not owned a home in the past three years. There are also income requirements; the current credit begins to phase out for singles who make more than $75,000 and couples who make more than $150,000.

Many in the industry, real-estate agents and mortgage brokers, are recommending that first-time buyers close no later than the week before Thanksgiving to ensure that you take possession before the deadline and a buyer is not caught in holiday-related office closings or abbreviated schedules that could interfere with the process.

That means finalizing a purchase on or before November 20 and being in contract by the first or second week of October. The National Association of Realtors reports that it is taking nearly two months to finalize a home sale in today’s market. With the clock ticking buyers will need to select a property and make an offer by the end of this month.

There are rumors in the real estate industry that there is a chance the credit will be extended. There are at least 20 bills drafted regarding the credit. Some the bill include language that would not only extend the first-time buyer credit into next year, but would also expand it to include all home buyers, remove income restrictions and raise the maximum amount of the credit, up to $15,000.

Congress Looking to Extend and Increase Tax Credit for Home Purchase

Although this is a National story it has a huge impact on local Alameda Real Estate and housing as a whole.

Congressional Lawmakers, the Real Estate industry and businesses are calling for increasing the credit's cap expansion and extending the timeline for its implementation. The tax credit for first-time home buyers that has helped spark home sales during the last three months nationally in an otherwise miserable real estate market.

Senator Johnny Isakson, R-Ga. authored and introduced a Senate Bill and with co-sponsored Senate Banking Committee Chairman Chris Dodd, D-Conn, to expand the tax credit to $15,000 for any home buyer regardless of income.

On the House side a bill to keep the $8,000 credit in place until June 2010 and expand it to all home buyers was introduced last month by Rep. Kenny Marchant, R-Texas. It also would provide a $3,000 credit to homeowners who refinance. A second bill in the House, introduced by Rep. Eddie Bernice Johnson, D-Texas, would extend the credit to all home buyers through 2010.

The goal is to get additional buyers into the market and current homeowners to trade-up. The parameters of the current tax credit does not allow singles earning more than $95,000 a year and couples who earn more than $170,000 to take advantage of the credit. Business leaders want the income caps eliminated to spur more sales..

The tax credit scheduled to expire December 1, 2009. A tax credit of up to $8,000 is available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before the deadline, but some business groups say the amount of the credit, now capped at $8,000, should be raised to $15,000 and applied to anyone who buys a home. The credit, introduced in July 2008, was expanded in February as part of the economic stimulus package.

According to the National Association of Realtors (NAR), first-time buyers account for 40% of home purchases, 5 percentage points higher than the historical average, .

The proposals may face strong opposition with growing criticism of government spending to rescue the economy and the widening budget deficit. Many economists believe that tax benefit is vital to continue the home buying trend and help stabilize prices.

Senate OKs $15,000 tax break for homebuyers

This proposal will still need approval by the House and moved into the stimulas package. The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break for the purchase of new homes only.

See the breaking story:

http://news.yahoo.com/s/ap/20090204/ap_on_go_co/congress_stimulus 

More on Taxes (Credits)

Yesterday, I wrote about Alameda’s Measure P and the transfer tax today it is what the Feds is trying to give back when you buy a home.

During the whole housing meltdown Congress included, in H.R. 3221: Housing and Economic Recovery Act of 2008, a tax credit for new home buyers. The credit is available for a limited time only, and applies to home purchases after April 8, 2008, and before July 1, 2009. The credit also has income requirements of $75,000 for singles and up to $150,000 for married couples. So if you bought a home since April and you meet the requirements you need to talk to your tax preparer.

The credit reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.

Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe. Make sure you understand the details of the credit because it has a long term effect on your future returns.

According to the government website:

The credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405. This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on IRS.gov, the IRS Web site.

If you bought a home recently, or are considering buying one, the following questions and answers may help you determine whether you qualify for the credit.

http://www.irs.ustreas.gov/newsroom/article/0,,id=186831,00.html

As you look at ways to buy a new home also look at: The City of Alameda's  Downpayment Assistance Program, the Program recently raised its maximum loan amounts so eligible first time homebuyers may now borrow $50,000 to $80,000, to help with the purchase of a home. Buyers can use the funds for a downpayment and/or closing costs for the purchase of a single-family residence (includes condos and townhouses) anywhere in the City of Alameda.

This program is being administered by First Home, Inc. For more information, please call First Home directly at (888)572.1222 x110. Click here to visit their web site.

To view the Downpayment Assistance Program brochure, click here. (5/08)

"Our House" by Madness -- I heard it on the radio this morning, and I thought it would be appropriate.