That’s right Simi Valley home buyers, the tax credit is waiting for Obama’s signature. The tax credit legislation passed the House today in a 403 to 12 vote. The Senate vote was 98 to zero. This time around there a few additions, these are pointed out in my video blog below. One thing I did not cover was the income limitations which have been raised to $125,000 for single buyers and $225,000 for couples, from the prior limits of $75,000 and $150,000, respectively. To curb any abuse of those claiming the credit, the claimants must attach proof of purchase to their tax return.
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Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty
Ted Mackel is a top producer at Keller Williams Realty Simi Valley,
specializing in Simi Valley Real Estate
(805) 432-7705
I’m so glad agents worked so hard at getting this handout passed. It is an extremely expensive way of trying to stimulate home sales (conservatively, over $43,500 for each incremental home sale) and it is just pulling forward demand. Plus all of our taxes get to go up, oh joy.
Agents are going to wonder why sales are so low but the policies they actively encouraged are going to choke off transactions. The tax credit is going away, MBS purchases are going away (actively being campaigned by the NAR to keep going) and most of the motivated inventory is being held off market by loan mods.
How does 10 years of low sales sound? NAR was fighting the wrong battles and winning them and will be sitting there wondering why they lost the war.
Anon,
I go back and forth on this topic quite a bit, there’s part of it that almost seems like it’s needed and a lot of it that I really don’t like. Having buyers in my car every week I can see how this is important to them, while it’s probably not in the best interest of the country and for the long haul of the market; one thing regularly stressed is that the housing market always has a strong impact on the economy.
I’m from the camp that believes the banking industry is purposely controlling the release of their bad assets in an attempt to control the market. We know the numbers of defaults, we know the amount properties being foreclosed daily, yet we have historically low inventories.
There are a ton of factors that could negatively impact the market in the coming year. The first thing that comes to my mind is that most if not all the mortgage-backed securities are being bought by the federal government at this point. They’ll have $1.45 trillion invested by the end of March. I’m not sure if the government can continue to purchase all mortgage-backed securities and if these securities go to the open market, are private investors going to settle for 4%? I doubt it.
This would mean that interest rates could rise substantially. Higher interest rates means that the monthly payment buys less of a house.
The economy at this point is so messed up between huge deficits on both the state and federal level, unemployment issues in California, and the banks controlling the flow their bad assets back to the market; I see any recovery in the real estate market as extremely slow and very bumpy for the next couple years.
With that said, some of these measures, as crazy as they are, may be better than a total collapse of the housing market.
It is evident by the action in the entry-level market that affordability is real. The investors have been out for more than six months and the number of flips is increasing. Does this signal a turnaround in the market? Hardly so.
I believe the non-investor buyer looks at an entry-level purchase equating their payment to market rents. These super low interest rates are helping keep this equation attractive to these buyers. My question and concern is how long can the government keep this control project going?