Extraordinary Incentives for Home Buyers

Tax Credit for Homebuyers

The new stimulus for homebuyers is a FULL $8,000 tax credit, even if the buyers total tax liability is less than that amount. “Buyers may not have owned a home for the past three years to qualify.”

A buyer can get the $8,000 faster by claiming it on their 2008 Return (or amended return if they have already filed), even though to qualify for this $8,000 non-refundable credit, they have to buy a house between 1/1/2009 and 11/30/2009.

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit.  Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.  Buyers will have to repay the credit if they sell their homes within three years.

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization.  According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing [for elderly, disabled, and Section 8] to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future

Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. This, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge and impacts a number of industries. We’ve highlighted some of the major provisions that may impact you now and in the future.

–The above information is courtesy of Brian Page and Jeanine Roe of Northwest Mortgage Group, 503.439.9191.

January Residential Highlights

Although closed sales dragged to a new low in January, pending sales rose 52.5% over December’s total. Comparing January 2009 with the same month in 2008, closed sales dropped 32.5%. Pending sales also fell 26.1%. New listings decreased 15%.

On the other hand, when comparing January 2009 with December 2008, pending sales grew 52.5% (1,235 v. 810) and new listings increased 123.2% (4,196 v. 1,880). Closed sales continued to lag, dropping 25.8% (732 v. 987) – a new record low for closed sales in a month since record keeping began in 1992.

As a result of the low sales total, and a rising number of active listings (14,076), housing inventory also hit a new high of 19.2 months.

Sales Prices

The average sale price for January 2009 was down 13.3% compared to January 2008, while the median sale price dropped 10.7%.

Month-to-month, the average sale price and median sale price are both down when compared to December levels; the average sale price dropped 1.2% ($297,000 v. $300,000) and the median sale price was down 1.1% ($250,000 v. $252,900).

Year-to-Date Area Reports:

Today’s Mortgage Rates (1% Loan Fee) as of February 18, 2009

Conventional programs are based on purchase price of $500,000 with a 20% down payment and loan amount of $400,000. Credit scores of 720 for a 30-day rate lock and 1% loan origination fee. Jumbo program based on purchase price of $750,000 with a 20% down payment and loan amount of $600,000. Credit scores of 720 for a 30-day lock and 1% loan origination fee.)

“Based on 20% down payment purchase, 720 credit scores, 30 day rate lock, with 1% origination fee.”

~Lee Davies
503-997-1118

*Information above derived from the RMLS Market Action Report.

*Mortgage rates provided by Brian Page and Jeanine Roe of Northwest Mortgage Group, 503.439.9191