Posts Tagged ‘Home Buyer Tax Credit’

Intero Insider: What’s the Next Big Solution for Housing?

By Gino Blefari | September 21st, 2010 0 Comments

As expected, the countdown to the final closing days of the homebuyer tax credit has brought on more debate. Should the government create more programs aimed at boosting home sales or just stay out of it and let the market correct itself?

Many of the programs that were created to help homeowners and home buyers have been utter failures. Sure, the tax credit boosted sales while it was in place. But even now that conditions arguably are better for buyers – record low interest rates and lower prices in many areas – home sales continue to slog in many cities.

Another program may or may not help home buyers or struggling homeowners. But what happens when it ends? With the home buyer tax credit, we saw an artificial boost to the market, followed by the inevitable fall in sales as the immediate incentive went away.

So what’s next? As I’ve said in this column before, it’s all in the jobs, really. If the government really wants to help housing and homeowners then we need to think about security, incomes that are in step with mortgage payments, and a confidence in the future.

With interest rates as low as they are and the opportunities that abound for buyers today, it only makes sense that the missing key here is stability in incomes. Tax credit or no tax credit, life goes on. The reasons for buying and selling real estate always withstand the test of time – through markets good and bad. It’s a roof over your family’s head. It’s pride in ownership.

The government might do better to focus on helping those families who feel stuck – the ones who are underwater on their mortgages. They want to be owners. They have the means to pay. But they feel caught up in the waves of the mortgage mess that inflated the values of homes when they happened to buy. Another tax credit is not going to help them continue to pay a mortgage on a house they know they can’t sell without a loss.

Let’s get to the root of the problem, which isn’t necessarily home prices or the pace of sales. The real problem is a lack of stability and a lack of economic security. That’s the glue that holds together American ownership.

  • Get new posts via email
  • Subscribe

Intero Insider: Why Plunging Home Sales Won’t Kill Real Estate

By Gino Blefari | August 31st, 2010 0 Comments

The latest housing news is pretty grim: existing home sales fell 27.2 percent in July from the previous month to 3.3 million, the lowest in more than a decade. We’re definitely seeing the expected drop-off coming off the end of the home buyer tax credit.

Most of us saw this coming. The very point of the home buyer tax credit was to pump life into the market and entice buyers to move off the fence. Take it away and you’re merely peeling back the covers from the real situation, showing that many potential buyers are tepid, scared of losing their jobs, optimistic that prices will come down just a little more, or simply not able to get a loan.

Amid this news, the New York Times featured a story saying that housing is no longer considered a means to build wealth.

But that’s where I need to stop and think.

There’s no getting around the fact that the market is slow and expected to be slow through the end of the year. True.

And there’s no question that flipping houses is not the part-time moneymaking hobby it once was during boom years. Very true.

But to swear off real estate as a means to build wealth is a bit dramatic. It’s true that in most cases, a buyer cannot look at a house solely as a monetary investment. It’s simply not that – it’s more. It’s a roof over your head. It’s the place where your children grow from toddlers to young adults. It’s where you spend your days and nights living your life.

A home is shelter, but it’s also ownership. Last I checked, you can’t really put a price on the kind of pride that comes with homeownership. Ask anyone whether it’s a dream of theirs to own a home and you’ll likely hear a resounding “yes.”

Again, it’s the intangibles of real estate that will keep this market alive.

A home is not a casino slot machine. It’s not a mutual fund. But it is a relatively safe way to spend your monthly housing budget. In the long-term, homes will still return value to their owners – and while it may not be in the form of doubling your returns, it is a true asset, a thing that you own free and clear after the mortgage is paid.

At the end of the loan, it’s still yours, not the landlord’s or the bank’s. Yours.

So even amid a declining market while analysts and pundits decry real estate a non-wealth builder, a dead end, myself and 60 million+ other homeowners disagree. We decided to put our money into our homes and are proud of it. I don’t think that sentiment is going to change overnight.

  • Get new posts via email
  • Subscribe

Intero Insider: Good News for Employed AND Unemployed

By Gino Blefari | August 17th, 2010 0 Comments

In times of economic hardship, most news tends to focus on the bad stuff: unemployment, consumer spending, consumer confidence, slow economic growth. This may be why a recent economic story in The New York Times caught my eye: “For Those With Jobs, a Recession With Benefits.”

The headline says it all – the silver lining. It seems obvious, but for those lucky enough to still be employed, these are great times to be a consumer.

Just look at interest rates for mortgages. If you’re employed and looking to buy a house, you’re part of a group of borrowers who will lock in rates so low even buyers from a few months ago would cry. 4.375% percent (APR 4.579%) on a 30-year fixed!! That is something to brag about. Even an $8,000 home buyer tax credit cannot beat the savings achieved on these borrowing costs.

Further tipping the scales in favor of today’s employed are wages. According to the NYT article, “The typical jobless person has been out of work six months. The typical worker has received a raise.” Since the start of the recession in December 2007, real average hourly pay has risen nearly 5 percent.

This is obviously bad news for those who have been out of work for some time. But again, the bright side: Rising wages are good news for housing. And while the market may not see a huge pop from this right away, higher wages at least provide confidence for those buyers who are in the market today, and those sellers who are hoping for a match.

Remember: Every home sale needs just one qualified buyer. Your pool of buyers starts to increase with every job that is secured.

A lifeboat for unemployed homeowners

But even amid bad times for the jobless, there was some good news out of Washington last week. The Obama Administration is prepping $3 billion in financial assistance to aid homeowners in the states most affected by unemployment.

The assistance program will send $2 billion in aid to state Housing Finance Agencies for programs for borrowers who are struggling to make payments due to job loss. Another $1 billion in aid will come from the U.S. Department of Housing and Urban Development to provide up to 24 months of assistance to homeowners who are at risk of foreclosure.

So you see, it’s not all bad right now. Let’s hope it works!

  • Get new posts via email
  • Subscribe

Intero Insider: Life After the Home Buyer Tax Credit

By Gino Blefari | June 29th, 2010 0 Comments

It’s safe to say now that the action brought to the nation’s housing markets by the Homebuyer Tax Credit is over. Any buyers who wished to take advantage of this credit had to have been in contract by April 30 and now must close by June 30.

But please remain seated before exiting this ride and declaring the housing market D-O-O-M-E-D (as several headlines have cried this week). See, there is still a very key factor in place that is working in homebuyers’ favor:

Historically Low Interest Rates

This often-overlooked little fact is actually a really important point to ponder. That’s because when you look at today’s rates, which average around 4.75 percent on a 30-year fixed rate mortgage, according to the Mortgage Bankers Association’s latest survey, you realize what a win this is for borrowers – even for those who missed the tax credit deadline.

These low rates are far more significant than any tax credit in terms of savings and incentive to stoke demand. How is that? Well, let’s look at the math:

Let’s say today’s buyer is looking at a 5 percent interest rate on a 30-year fixed loan of $285,000. He’s disappointed at missing out on the tax credit, but since he’s able to lock in at a lower rate than he would’ve gotten two months ago at 5.25 percent, he’s actually saving $15,782 in interest over the life of the loan, which according to my math is significantly higher savings than what that tax credit would’ve gotten him ($8,000).

So today’s buyer nearly doubles his savings in interest compared with the April tax-credit buyers? Doesn’t spell D-O-O-M to me.

Let’s look at another scenario:

This buyer would be able to lock in a 5.25 percent rate on a 30-year fixed loan of $400,000 in July. There’s no tax credit to light a fire under his decision, but say the economic news circles expect a slight uptick in rates by the end of August. If he waits, he’ll risk increasing his rate to 5.35 percent, thereby adding $8,943 in interest to the life of his loan.

I’m not saying that rates will save the day. Remember: There are no quick fixes. But we also have to be sure we understand the forces that are working in the market’s favor.

Tax credits may come and go, but at the end of the day it’s things like historic low interest rates that will keep buyers interested.

  • Get new posts via email
  • Subscribe

Top 10 Silicon Valley Real Estate Trends for 2009

By Dawn Thomas | December 16th, 2009 0 Comments

As 2009 draws to a close – you’ll soon be reading lots of  top 10 lists for the movers, shakers, and trends of the year and the decade!   In the spirit of being just a little ahead of the crowd, here’s our list of the top Silicon Valley Real Estate trends of 2009:

1. Low Interest Rates – with More Strings –  Interest rates have been low this year, with periodic dips into historic record  ”low” territory.   These great rates, though, come with seemingly ever-changing requirements and conditions.  Selecting a great financing source who can get you great rates AND help you navigate through the process has never been more important.

2. We’ve Got to Keep It Together For Longer – With the changing lending guidelines, it’s been taking longer for properties to close escrow and having a signed purchase contract did not automatically mean a closed escrow in 2009.   Having a black belt negotiator on your real estate team has been critical this year.

3. “Turn Key” is Hotter than Ever – A few years ago – buyers could purchase a property & count on some quick appreciation to pay for a remodel in just a little time.  Now – buyers can’t count on home appreciation to finance a remodel in the near term & are looking for great condition, move-in ready homes to buy  (as if location and condition ever go out of style in the world of real estate!).  On the other hand – for buyers seeking to purchase a property in a high-demand area like Palo Alto or Cupertino – it may pay to look for properties needing some work.  If you can see the potential in a fixer – you may have fewer competing bids from other potential buyers.

4. Buying a Silicon Valley Foreclosure is not as Easy As It Sounds - Some of the busiest agents in any real estate office are the ones listing “Real Estate Owned” or REO properties for the banks.    Buying one of these properties means navigating a maze of bank-specific requirements for making the offer, competing against multiple offers (some properties are getting 20, 30 or even 50 offers), and positioning your offer against “all cash” investors.  Finding a deal & making sure it stays a “good deal” through the process is not for the faint-of-heart!

5. No Shortage of Short Sales – over the course of 2009 – we continued to see properties listed for less than what is owed to the lender(s) – resulting in a short sale requiring lender(s) approval to go through.   We’re starting to see short sale listings where the lender has approved a short listing price – allowing the whole process to go smoother and quicker.

6. The Year of the First-Time Buyer – with more affordable home prices, the First Time Home Buyer Tax Credit, and sweet interest rates – many of the homes sold in 2009 went to first time home buyers.   In the final months of the year – we are starting to see more and more “move up” buyers rousing the mid and higher-end price points.  Welcome!  Please bring friends!   This is a trend we want to see continue & grow in 2010!

7. Deal Hunting in Palo Alto – Where’s the deal on a single family home in Palo Alto for less than $300,000?  The media in 2009 did a fantastic job of painting the picture of real estate in free fall, and we went through a period in the spring where every day brought Internet inquiries looking for the extraordinary deal in Palo Alto.  According to the MLS – the least expensive Palo Alto single family home sold so far in 2009 went for $703,000 for a 67 year old, 703 square foot cottage with foundation issues.

8. Your Home May Have a Bigger Electronic Footprint than You Do - Social media sites like Facebook and Twitter are 2009 Trendsetters above and beyond the world of buying and selling dirt.  In real estate, though,  the savvy home seller now ensures that their Real Estate agent is marketing  their property through multiple Internet channels.    Wouldn’t  you want 30 million visitors at your open house – especially the ones who can’t leave foot prints on your new carpet?

9. Welcome to California! – We are working with an increasing number of clients who are relocating to Silicon Valley for a new job.  It looks like both our job market and our real estate market are picking up!   Welcome!

10. Less to Pick From, More Competition – And finally, in many areas of Silicon Valley – we are seeing fewer homes on the market.    In fact, for Silicon Valley overall – more homes are “pending sale” than are actively for sale.  For buyers – this means that there are fewer homes to consider and more competition to get  your offer accepted. For sellers – it means that there are fewer competing properties.  This sets the stage for an even brighter 2010!

We wish you the best holiday season & look forward to serving you and your referrals in 2010!

  • Get new posts via email
  • Subscribe

The Intero Insider: Can S.B.1678 Breathe New Life Into The Homebuyer Tax Credit?

By Gino Blefari | September 30th, 2009 0 Comments

It’s been reported by everyone. By Intero. By government entities. By every news outlet from CNN to the smallest small-town newspaper.

The Homebuyer Tax Credit.

It’s the thing that — so far — has motivated 1.2 million first-time homebuyers to purchase their first homes. It’s been a boom to the languishing real estate market, and helped stimulate our nation’s economy on the whole.

But time is running out.

The big question is, why? If there’s a program in place that can help consumers and help the still-weakened economy, why bring it to an end? Right now, the program is set to reach its termination at midnight on November 30, 2009. But several members of Congress are trying to extend that.

Enter Senate Bill 1678.

Introduced this past Wednesday by Sen. Ben Cardin of Maryland, the bill has the support of several members of the Chamber who carry some pretty heavy clout. This bill seeks to extend the credit to June 1, 2010.

The extension would give members of both houses a bit of time to work on a solution that would not only extend the credit, but open it to homebuyers in general (not just first-timers), increase the amount of the credit from $8,000 to $15,000, as well as change the income restrictions currently in place.

It’s great to know that members of our government are working to help hardworking Americans. It’s also important to realize that, as things stand right now, the Homebuyer Tax Credit is still set to expire in a few short weeks. Since the home buying process can often take an extended period of time, there’s no time to waste.

Talk to your Intero agent, as well as your tax or financial advisor, so you know the facts.

  • Get new posts via email
  • Subscribe

Intero Insider: Time to take a close look at the homebuyer tax credit

By Gino Blefari | August 14th, 2009 0 Comments

The much talked about American Recovery and Reinvestment Act of 2009 – otherwise known as the “Home buyer tax credit” – expires on December 1, 2009.

That’s just a little over three months from now – not much time when you consider that the average buyer takes six to eight weeks just browsing online for homes before even contacting a Realtor.

What’s more, we are seeing increasing signs of a market bottom. According to Altos Research, a firm based in the Silicon Valley that tracks real estate data, median sales prices for San Jose, Saratoga, Los Gatos and Cupertino all increased in the first week of August.

At Intero, we sold more than 900 homes in July – a one-month record for our company.

My point: If you are thinking at all about buying, now’s the time to take a good look at the tax credit program to see if it makes sense for you.

The National Association of Realtors offers a comprehensive guide to the tax credit on their website, but here’s a quick overview:

  • The credit is equal to 10% of the purchase price of the home, up to $8,000.
  • First-time homebuyers who purchase homes between January 1, 2009 and December 1, 2009 are eligible. To be a “first-time home buyer” you or your spouse may not have owned a residence during the three years prior to your purchase.
  • Single buyers with incomes up to $75,000 and married couples with incomes up to $150,000 may receive the maximum tax credit.
  • The credit does not need to be repaid if you occupy the home you buy for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

Do your homework. Get advice from a legal or tax professional if you need it. But don’t let this landmark program expire without taking a closer look.

  • Get new posts via email
  • Subscribe