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I think we could see a real bad situation in the RE market beginning sometime around summer 2010. The tax credit expires, taking whatever buyers that it was able to lure into the market. Then interest rates are sure to rise soon. This will be a tough double whammy. Add in the fact that unemployment will probably continue to rise from here and you have a real mess on your hands. (Not to mention the next wave of foreclosures hits right about then with the Alt-A's. Of course, we can't forget that banks are still holding a huge number of homes off the market that otherwise would be in foreclosure right now (the "shadow inventory"). Some people quit paying their mortgages and end up living there w/o making a payment for well over a year.
Did anyone see that Fannie/ Freddie is now going to let people return the deed and continue to live there as renters? OMG. Talk about "there goes the neighborhood." Does anyone think these renters are going to continue to keep the place up?
Did anyone see that Fannie/ Freddie is now going to let people return the deed and continue to live there as renters? OMG. Talk about "there goes the neighborhood." Does anyone think these renters are going to continue to keep the place up?
Exactly! For that reason alone, I would never buy in this period of upheaval. Who knows how the block or neighborhood or town will end up.
Did anyone see that Fannie/ Freddie is now going to let people return the deed and continue to live there as renters? OMG. Talk about "there goes the neighborhood." Does anyone think these renters are going to continue to keep the place up?
Quote:
Originally Posted by ordinar
Exactly! For that reason alone, I would never buy in this period of upheaval. Who knows how the block or neighborhood or town will end up.
I don't understand, if that were to happen the people that would be allowed to rent their own house aren't new to the neighborhood so why would there be a change?
1. $6.5K/8K is peanuts in NJ
2. Tax credit has NOT stopped prices going down
3. Houses remain unaffordable due to bubble in prices and property taxes
4. Unemployment and economy is going down the drain
5. Zero rates by fed means asset inflation-Fannie is insolvent
6. Need my savings for my retirement no buying someone else's retirement
Why should I buy a house worth 200K in 1999 and 500K in 2006 for 400K?
Right, no reason. I will wait for another 40% off...
I agree with you on all your points, but I think if your waiting for another 40% you're making a bad move. That type of a decline in value would make ever major lending institution in the US go insolvent. The government is not going to happen, and let me tell you that is not something you should wish for anyway.
I truly believe we have another 10% decline to go... Maybe 15% if things do not improve on the job front as quickly as they anticipate. However, by the time another 10% or 15% decline occurs mortgage interest rates will be at 6-6.5% so it won't make any difference in your monthly payment anyway.
I'm not suggest you go run out and buy. I am simply pointing out that holding off on buying *may* not yield any significant benefit.
Not to mention the people who will hold off on buying now because they smell a $20K housing credit in 2010 ... LOL
I don't think we'll see any more stimulus after April 2010. Not only is the tax credit going to expire, but the Fed's program of buying MBS to keep interest rates down is going to end.
I truly believe we have another 10% decline to go... Maybe 15% if things do not improve on the job front as quickly as they anticipate. However, by the time another 10% or 15% decline occurs mortgage interest rates will be at 6-6.5% so it won't make any difference in your monthly payment anyway.
No ghuber. If there is something you can count on is that there will be no rate increase for at least a couple of years more. 10% further discount is very little around here and you know why:
1. Unemployment
2. Unaffordable houses
3. Upcoming foreclosures
4. High property taxes
10-15% doesn't even begin to address the situation or correct the bubble. And you should hope that prices go down because this is what will move the economy, let smarter money come in, clear the market. On the other hand banks are insolvent anyway, FDIC closes down a few every weekend, and the bank problem should be solved otherwise--not artificially supporting boomer assets.
No ghuber. If there is something you can count on is that there will be no rate increase for at least a couple of years more. 10% further discount is very little around here and you know why:
1. Unemployment
2. Unaffordable houses
3. Upcoming foreclosures
4. High property taxes
10-15% doesn't even begin to address the situation or correct the bubble. And you should hope that prices go down because this is what will move the economy, let smarter money come in, clear the market. On the other hand banks are insolvent anyway, FDIC closes down a few every weekend, and the bank problem should be solved otherwise--not artificially supporting boomer assets.
Not true... The Fed's plan to buy MBS is going to end in March and there is going to be no extension of it. Without the Fed buying MBS interest rates will creep back up to 6% and beyond.
The prime rate will be kept low for an 'extended' period of time so says Bernake. However, mortgage interest rates are not dependent on the prime rate. Credit cards, HELOC loans, etc are though.
Doesn't it seem odd to you that both MBS purchases and the tax credit end in April 2010? Obviously the government thinks there will be some news between now and then that will allow them to stop the housing stimulus programs. I was personally thinking maybe they think if they can build 6 or so months or positive NAR reports, confidence will shift from negative to positive. The fundamentals may still not be there, but confidence plays a big in peoples decision to buy a home. Who knows!
Can you guys tell me what the new credit is? is it just an extension of the old one?
[CENTER][CENTER]First Time Homebuyer Tax Credit Extended Into 2010! Plus...A New Tax Credit for Certain Existing Home Owners![/CENTER][/CENTER]
It's official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.
In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time. So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.
Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible. Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.
First-Time Homebuyer Tax Credit – Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit. What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence. What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000. Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.
As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500. How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf). Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place. Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.
You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
You do not use the home as your principal residence.
You sell your home before the end of the year.
You are a nonresident alien.
You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.
Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed. Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes. Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.
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