Homebuyer tax credit extension finally signed by the Pres

On Friday, President Barack Obama signed a law giving consumers already in the process of buying a home three extra months to close the deal and still get a $6500 or $8000 tax credit from the government.

Buyers MUST have been under contract by April 30th. The previous closing deadline was June 30th for these buyers, but as a result of the new legislation, they will have until September 30th to close on their purchase.

Our personal experience indicates that the buyers most affected were those who had contracts in on 'short sale' properties. In our area, that is a fairly large percentage of the sales right now, so this extension will give those buyers some breathing room.

The $8,000 credit was for first time homebuyers and the $6,500 credit was for others purchasing a new primary residence (with some restrictions).

CNN Money reports 25% home price decline ahead for our area!!

Pretty scary CNNMoney chart above...and what makes it all the more scary is that for the past 6 months or so, prices here have stabilized or even increased a bit. This may sound contrary to news you see on TV or read in the local paper...but working every day in the market with both buyers and sellers I have seen pricing stability/increases myself. BUT...this is only because of the 2 big govt. market supports currently in place; 1) Homebuyer tax credits and 2) the purchasing of MBS in an effort to keep mortgage rates low.

On March 31st, the Feds program to buy Mortgage Backed Securities expires and on April 30th, the tax credits go away. On top of that, there is every expectation of an increase in foreclosures and short sales actually hitting the market as HAMP has failed and HAFA seems to be set up to increase and speed up short sales.

So, think of it this way...if CNN, through their research, is predicting an almost 25% decline in home values in our immediate area for the Sept '09 - Sept '10 year AND we have not had much, or any, decline from Sept '09 until now...all I can say is "watch out below"!

Mark my words...you are going to be reading reports in the 3rd and 4th quarters of 2010 (look-back reports) with headlines like: Huge UNEXPECTED Drop in pending home sales...Distressed Property Inventory Surges! All of the "so called' experts are going to report their "suprise" at the dramatic drops-off.

And...this solidifies what I have been preaching to owners thinking about selling, or current sellers holding out for a higher price: Your window of opportunity is closing rapidly...If prices drop even half of the CNN prediction, how long will it take to get back to the price you could get for your home today? If you could get $300k for your home today, and CNN was wrong by half...your home would be worth $263k next year...to get back up to todays price of $300k, your home has to rise in value by about 14%! Realistically, if the decline stopped completely once you reach the $263k number and home values resume an optomistic rate of appreciation...lets say 4% a year...it would be 2015 before your home would sell for $300k! (Case-Schiller Index: Nationally, the price of existing homes increased by 3.4% annually from 1987 to 2009, on average). And if CNN is CORRECT...you're looking at 2018 to get your same $300k that you could get today.

Sellers...the time is now...and the time is running out! Please call us if you'd like to discuss our current market analysis of the overall trends and for your specific Subdivision and home.

Thanks for reading,

IRS says "sorry, you can't file for your tax credit"!

NEW YORK (CNNMoney.com) -- Did you purchase a home after Nov. 6? Don't expect your $8,000 homebuyer tax credit any time soon. Since Congress passed the initial tax credit last February... more than 1.4 million buyers have taken advantage of it...But that all changed on Nov. 6...it appears that the IRS has NOT ALLOWED ANYONE TO FILE since November 6th...

Congress extended the credit to include contracts signed by April 30 and closed by June 30. It also made a refund of up to $6,500 available to existing homeowners looking to buy something new. And that marked the start of a new IRS paperwork wrangle. Those homeowners who closed their sale before Nov. 6 use Form 5405 to claim the credit right away. But those closing after that date are in limbo because no form yet exists for them to file! The IRS had been expected to come out with a revised form by early January, but it has yet to release anything.

Also, with the new fraud-prevention regulation attached to the extension/expansion credit, there is no E-filing available for those claiming the extension...adding to the already extended timeframe for the tax credit refund.

If you are planning to buy within the timeframe guidelines of the tax credit and are hoping to receive the money quickly...don't count on it!

As always, check with your tax advisor...

Senate acts to extend unemployment benefits, expand homebuyer tax credit

The Senate has voted to give the jobless up to 20 weeks of additional unemployment benefits and significantly expand a tax credit program aimed at getting buyers back into the dormant housing market.

The strong Senate vote for the legislation is a recognition that the government still needs to do more to keep the economic recovery from faltering. If enacted, workers in some of the harder-hit states would be eligible for nearly two years of benefits, a record.

The bill also provides tax relief for businesses that have been losing money. It now goes back to the House, which is expected to quickly approve it and send it to President Obama for his signature.

1st time homebuyer tax credit extension almost certain to pass this week...

After two weeks of delay, the Senate, last night, cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers... making it virtually certain that the legislation will reach President Obama for his signature this week.

The homebuyer tax credit, due to expire in 28 days, would be extended through April 30 of next year. First-time buyers who are in process of making a purchased would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation cleared last night makes move-up buyers as well as first-time buyers would be eligible for a credit. The $8,000 maximum first-timer credit will continue and will now available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.

A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years... it is virtually certain that the President will sign the legislative package, which contains an expansion of unemployment benefits as well as the tax changes.