Archive for November, 2009

it’s official

November 6, 2009

The new bill extending the first time home buyers tax credit passed through both the House and the Senate.  The last stop is President Obama’s desk.  Once signed, the law goes into affect.

Several aspects of the bill are the same, but there are some new twists this time around.

  • First time home buyer tax credit of $8,000 extends through April 30, 2010. Home must be under contract by that date and closed on or before June 30, 2010.
  • As before, first time home buyers are individuals who have never owned a home OR have not owned a home in 3+ years.
  • A “moving up” tax credit of $6,500 is available for current home owners buying a new home.  To qualify, home owners moving up must have lived in their current residence for 5+ years.
  • Income levels for a single purchaser are limited to $125,000 adjust gross income (up from $75,000) and $225,000 for couples (up from $150,000).
  • Home buyers with adjusted gross income above those levels can still qualify for the tax credit, but the amount of the credit diminishes as you move above the income limits.
  • In order to cut down on fraud, home buyers must be at least 18 years old and must submit a copy of the HUD-1 settlement statement from closing.

There you have it.  New life in the tax credit and let a new countdown begin… only 175 days left before you must have a home under contract to qualify for either of the tax credits.



The recession is over… right?

November 4, 2009

The numbers are out. The last quarter saw the GDP grow by 3.5%.  That means the recession is over and it’s time to party!!

Or is it?…

GDP growth is a great way to measure the state of the economy, but unusual circumstances (such as the $600 government rebate check in Q2 2008 or “cash or clunkers” in Q3 2009) can mask actual deficiencies. Moving forward, there are some other areas that one would like to see some improvement.

  • Jobs – While job creation typically lags behind an economic recovry, seeing fewer jobs being shed month-to-month would encouraging – September had more overall jobs lost than August.
  • Home values and sales – The housing market is slowly stabilizing and home sales are increasing month-to-month, but we are not there yet.  When people feel confident in their job, they are more likely to make bigger purchases (homes, cars, etc.).  Until the job market rebounds, the housing market will continue to struggle.
  • Inflation – This has definitely not been problem during the current recession. Inflation figures are below 0% and have NOT given way to major deflation.  Ironically, mild inflation can be viewed as a good thing for the economy. It shows that people are spending/investing money.  When year-over-year inflation figures are below 0%, it means people are not spending/investing money. That is not the best scenario for an economy primarily based on…
  • Consumer Spending – Whether you like it or not, consumer spending comprises 60-70% of the U.S. economy.  There was a 3.4% growth in consumer spending in the last quarter, but some of the growth is attributed to the “cash for clunkers” program. It will be telling to see how consumers behave as we move into the holiday spending season.
  • Stocks – Wall Street has roared back after falling to decade lows in the market.  Even though the market is still volatile, the recovery in stocks has been a much needed boost.

Is the recession over?  While there have been great strides made, in the words of Obama and others… “we’re not out of the wood yet.”  These other areas need to see improvement too if we truly want to see an end to the longest and deepest recession since the Great Depression.


Seems that time is not running out

November 2, 2009

There has been a lot of talk coming out of Washington regarding extending the first time home buyer’s tax credit.  There are those that want it extended for another year.  Others that want it phased out gradually over the next year.  There are some who want it to end now.

After weeks of hearing about it, there are actual developments to report on a possible new bill that will extend the tax credit.  Note the use of the word “possible” because this is not a done deal.

  • the tax credit applies to first time home buyers (never owned a home OR not owned a home in 3+ years) and could also apply to buyers moving up to a larger primary residence (must have owned current home 5+ years)
  • the first time home buyer credit would remain at $8,000 and the trade up credit would be $6,500
  • home buyers (first home or new home) adjusted gross cannot exceed $125,000 ($225,000 for couples filing  jointly)
  • homes must be under a signed contract by the end of April and close no later than June 30, 2010
  • tax credit only applies to homes $800,000 or less

As of this posting, the bill has not been passed and no vote is scheduled.  What does that mean? If you want to make sure you get the $8,000 tax credit as a first time home buyer, start the process now and own your home before the end of November.