Monday, June 22, 2009

Home Buyer Tax Credit Could Expand!

If you follow my blog, you are well aware of the fact that the first-time home buyer tax credit of up to $8,000 has helped to move housing inventory during an otherwise sluggish real estate cycle.

Now, both legislators and the business community are hoping to build on the incentive's success by expanding it! A number of bills have been introduced in the House and the Senate that lobby for an expansion of the measure. Among the proposed changes are:

  • Setting a new cap of $15,000
  • Extending the tax break into mid-2010
  • Making the benefit available to all home buyers, not just first-timers
  • Offering a separate tax credit to $3,000 for borrowers who refinance

Let's keep our fingers crossed! These proposed changes will benefit many home buyers and really stimulate the real estate market!

Tuesday, June 2, 2009

Pending Home Sales Are Increasing

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.

Economists are saying that buyers are responding to very favorable market conditions. Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market. Since first-time buyers must finalize their purchase by November 30 to get the credit, increased activity is expected in the months ahead

Geographic Breakdown:
Northeast: The Pending Home Sales Index shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago.
Midwest: The index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008.
South: The index slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago.
West: The index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.

There are numerous buyer assistance programs around the country. Many states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs and there are many other local government and nonprofit programs available to buyers, depending on location. Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger down payment.

This is great news for the real estate market!