4 Ways the Stimulus Package Helps Homebuyers and Sellers

So you've heard about the stimulus package, but what's in it for you? Well, there are four important ways that the stimulus package helps homebuyers and sellers.

1. You're probably familiar with the refundable first-time homebuyer tax credit of up to $8,000. It is the centerpiece of four housing incentives found in the 2009 American Recovery and Reinvestment Act.

2. Expansion of the home improvement tax credit. The tax credit for making energy-efficient home improvements has been raised to 30 percent of the cost of the improvements, up to a maximum of $1,500. Eligible improvements -- which must meet the standards established by the federal government -- include replacing doors and windows, adding insulation, and installing new heating and air conditioning systems and water heaters.


3. Higher FHA reverse mortgage loan limits. Loan limits for reverse mortgages insured by the Federal Housing Administration have been increased to $625,500 across the country.
The previous limit was $417,000 across the country, which meant that in markets where homes are more costly --such as the San Francisco area, New York City and its suburbs, and Washington, D.C. -- FHA-insured reverse mortgages were not available for many homes.


4. Higher FHA and conforming loan limits. The maximum FHA loan limit for high-cost areas has been restored to the 2008 level of $729,750. Stimulus legislation passed by Congress in the first half of 2008 temporarily raised the FHA loan cap from $362,790 to $729,750 in cities where housing is particularly expensive. However, the higher loan limit expired in January and was replaced by a lower loan limit of $625,000.

Click here for more details. Source: Bankrate.com

Does the New Home Buyer Tax Credit Apply to Me?

If you’re like most of us, you may be a little confused about the homebuyer tax credit in the new stimulus bill. We’re going to try to clear up the confusion! (That being said, please keep in mind that we are licensed real estate professionals, *not* tax professionals so be sure to confirm everything with your accountant.)

Here are the key facts:
· The amount of the new tax break is $8,000.
· It applies to first-time homebuyers, and those who have NOT owned a principle residence during the three-year period prior to the purchase. Ownership of vacation property or rental property does not disqualify home buyers from this program.
· Homes have to be purchased between January 1, 2009 and December 31, 2009. (Yes it is retroactive! If you have already closed escrow and taken possession in 2009 you can take advantage of this credit.)
· No repayment is required for homes sold after 36 months of occupancy and ownership.

Wow! Here are a few more details:

• To qualify for the full tax credit, married couples' modified adjusted gross income (MAGI) should be under $150,000 and single filers' MAGI should be less than $75,000. Partial tax credits may be available for married couples with MAGI incomes of over $150,000 but under $170,000 and single filers with incomes over $75,000 but under $95,000. If married couples who qualify for the first-time tax credit file separately, they would both claim 5% of the home purchase or $4,000 each (whichever is less) on their tax returns.
  


• Home buyers who qualify for this program, but who do not intend to purchase a home till the end of 2009, may elect to alter their tax withholdings (up to the amount of the of the tax credit) in order to save up money for a down payment. However, if the purchase of the home does not occur, the taxes must be repaid to the IRS.
  


• The effective date of purchase for new construction (even if buyer owns title to the lot) is the date the owner first occupies the house. So even if construction began in 2008, as long as the home and buyers qualify for the tax credit, they will be eligible if they take possession any time during 2009. However, new construction bought from the builder is only eligible if the settlement date (closing) takes place between January 1, 2009 and December 31, 2009.
  


• The law allows taxpayers to elect to treat qualified 2009 purchases as a 2008 purchase so that they can receive the tax credit on their 2008 tax returns.
  


• The full amount of the eligible tax credit is refunded to the buyer, regardless of whether the buyer has paid an equivalent amount in taxes.
  
  I hope this is helpful!

Click here for more information from the National Association of Realtors. And contact christinevt@prusd.com if you're interested in receiving automatic emails and photos of properties that meet your search criteria.

Source: National Association of Realtors, NewQuestCity.com

Coronado and La Jolla Hold Stronger than Other Areas as Home Values Plunge

According to a recent study, more than 25% of the homes in the county are worth less than their mortgage balance. But the highest-priced neighborhoods thus far have been spared big losses because most owners still retain equity in their homes and can avoid foreclosure.

In just two high-end communities is the number of such properties under 10 percent: La Jolla, 8.4 percent, and Coronado, 9.5 percent. However, some economists believe these and other wealthier neighborhoods are likely to see further depreciation this year even as the bottom end of the market firms up.

Click here for the whole story.

Source: San Diego Union-Tribune

Buyers find Bargains in Areas Hardest Hit by Foreclosures

A new analysis from MDA DataQuick shows that more than 25% of all homes in the county are worth less than the owners owe on their mortgages. And nearly two-thirds of those who sold last year settled for less than previous owners had received.

Distressed sales were most prevalent in inland areas that have been hit hard by foreclosures. Of 82 ZIP codes analyzed, 55 saw a majority of homes sold at a loss last year.

All South Bay and East County communities saw a majority of home sales at a loss, as did central San Diego neighborhoods including downtown, City Heights, Normal Heights-Kensington, Serra Mesa, Clairemont and Allied Gardens-Del Cerro.

Click here for the full story.

Source: San Diego Union-Tribune

Obama to Use Taxpayer Money to Help Home Owners on the Brink of Foreclosure

Hmm...saw this today in the San Diego Union-Tribune. Obama is unveiling a plan that will use taxpayer dollars to aid homeowners about to foreclose. Not sure how I feel about this one.

WASHINGTON — President Barack Obama's administration is considering spending taxpayer dollars to cut monthly payments for homeowners on the verge of foreclosure, according to people briefed on the proposals.

The deliberations came as lawmakers prepared to enact a new tax credit of up to $8,000 for first-time home buyers that is intended to boost the ailing housing market.

Details of the plans to aid troubled borrowers were not final but were expected to be unveiled in the coming weeks, said the people who declined to be identified because the details were not yet complete. The effort would be part of a plan to spend $50 billion on foreclosure prevention and establish national standards for modifying home loans.

Click here for the full story.

Most Expensive--and Cheapest--Places to Live in the World

No surprise - Monte Carlo is No 1 in the Global Property Guide's list of World's Most Expensive Residential Real Estate Markets 2009, more than twice as expensive, at US$45,000 per square metre, as the runner up.

New York, the only US city included in the survey , is 6th, with an average price of US$15,000 per sq. m.

For global bargain hunters, there are several places where property prices are relatively cheap, for example parts of the Middle East, Latin America and Asia.

Cairo, Egypt is one of the cheapest cities in the world, with prime city centre prices at around US$600 per sq. m. Another Middle Eastern capital in the bottom 10 is Amman, Jordan, with average city centre prices at US$1,150 per sq. m.

Source: Global Property Guide

Are you renting? Smoking might be banned...in your own home

Interesting! I can see the pros and cons of this one...

Anti-tobacco groups across the county are lobbying elected officials and apartment owners and managers to ban smoking in multiunit residences for the sake of those who share walls, ceilings and floors with smokers.

The odor can permeate adjoining units, they say, posing a danger to neighbors and further sickening those with asthma and other respiratory illnesses.

“Sometimes at night, I have to put a machine on my son to help him breathe,” said Gabriela Magana, who taped over the vents in her National City apartment to keep out smoke after 7-year-old Ramon was diagnosed with asthma in May.

“He was never a sick child. He used to play football, but he had to leave all that.”
Health advocates point out that less than 14 percent of Californians smoke cigarettes, so it makes sense to adopt policies that shield the majority of people from unhealthy air.

Click for link to full story.

Source: The San Diego Union-Tribune

$15,000 Tax Credit to Buyers?

Senator Johnny Isakson, who was a real estate broker in Georgia before he left for government, added a $15,000 tax credit amendment to the 800–900 billion dollar stimulus plan. The goal is to stimulate the housing market.

Here's how it would work, according to a press release from the Senator:

Specifically, Isakson’s amendment to the pending economic stimulus bill would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislation’s enactment, and the tax credit would not have to be repaid.
The amendment would allow taxpayers to claim the credit on their 2008 income tax return. It also seeks to prevent misuse by only allowing purchases of a principal residence and by recapturing the credit if the home is sold within two years of purchase. The amendment would sunset the current $7,500 housing tax credit on the date of enactment.

**Remember that the bill has not passed so that all the parts of this tax credit are subject to change until the bill is signed into law.**

Click here for a link to the full story.

San Diego Home Prices only Down 1.6% last month

Yes, this is good news! Last month's drop in median San Diego home prices--1.6%--is pretty mild compared with the overall decline.

Source: TheVoiceofSanDiego.org

Hmmm...sound familiar?

Here is a snippet from an article in the Real Estate Examiner in 1999.

"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans."

End of snippet. Now here is another one that ran TODAY in the Union-Trib.

"As many as 300 low-and middle-income households in San Diego County will be the beneficiaries of more than $17 million in federal aid designed to clean up neighborhoods hard hit by foreclosures and to provide affordable housing opportunities.
While hardly a cure-all given the magnitude of the region's foreclosure problem, the money is expected to turn hundreds of renters into home owners as well as deeply subsidize the rents of some of the county's lowest-income households.
The funds coming to the county were allocated by the federal Department of Housing and Urban Development from a nearly $4 billion pot set aside for “neighborhood stabilization,” which was contained within the Housing and Economic Recovery Act signed into law last summer.
In San Diego County, the largest share of the money – $9.4 million – went to the city of San Diego, followed by the county of San Diego, which received $5.1 million. Also a recipient was the city of Chula Vista, which was awarded $2.8 million.
While each of the jurisdictions has a slightly different program, the idea behind each is to provide qualified buyers with zero-interest deferred loans that would cover up to roughly 25 percent of the cost of a home.

Does this sound familiar? Are we really going to repeat all of this? Comments? Anyone? Bueller?

SOURCE: TheRealEstatebloggers.com and San Diego-Union Tribune.

Sales slower in high-end homes...but hold their value (for the most part)

Research firm MDA DataQuick reported that sales of homes for $1 million or more were down 42.5 percent, hitting the weakest sales pace since 2003. Analysts attributed the decline to tougher loan standards and seller resistance to low-ball offers.

Although sales have slowed, experts guess that most high-end homes have only dropped in price by 10-15%. Not too shabby for a county where some homes have dropped in value 45%.

Some interesting tidbits:

• Of all homes sold in California last year, at least 2,052 that previously sold for more than $1 million were resold for less than $1 million.
• High-end homes weren't immune to the foreclosure trend. There were 1,612 foreclosures and 5,243 notices of default on California homes that previously sold for more than $1 million.
• For those buyers who bought homes costing more than $5 million, more than half were all-cash deals.
  

Source: The San Diego Union-Tribune

15 No-Brainer Ways to Save Money Around the House

Our latest article, "15 No-Brainer Ways to Save Money Around the House" was just published by the San Diego Union-Tribune yesterday in the real estate section. We just wanted to share in case you missed it!

You may have heard a few of these ideas before, but are you actually implementing them? Doing so can save you thousands of dollars a year—with minimal effort!

· Turn off your heater or air conditioner when you leave the house. It’s San Diego folks, nothing will freeze over.
· Use compact fluorescent bulbs. Experts say they last ten times longer than regular lights! · When washing clothes, use the cold-water wash cycle, and the coolest dryer setting you can. Only run the washing machine—and the dishwasher—when they are FULL.
· If you have a fireplace, make sure you’re keeping the damper closed when you’re not using it.
· No more expensive bottled water! Invest in a handy water purifier instead, such as the Brita water purifier pitcher. Buy a stainless steel water bottle and refill it throughout the day.
· Become an expert at in-home entertaining. Studies have shown that people spend more than $2000 a year on entertainment spending. Instead of going out to eat, invite friends over for dinner. Or better yet, host a potluck!
· Go veggie. If you can do three meatless days a week, you could save $25 a week, which equals $100 a month. That’s $1,200 a year, folks. Hooray for beans!
· Brown-bag lunches…well, at least a few times a week. Not only will you save money, but you’ll probably eat healthier and lose weight.
· If you must go out, make it lunch instead of dinner. The lunch portions aren’t usually much smaller, but they’re a heck of a lot cheaper!
· …And always use dining coupons! Save coupons from the paper each week—or take advantage of those priceless coupon books mailed to your house like the Downtown Coupon book. Or check out www.sdreader.com and click on “coupons” for bargains galore!

-Save those grocery store coupons from the mail. You know the “junk mail” you throw away every day? Well, it’s actually teeming with bargains! Check out the sales at Albertsons and Vons—and bulk up on items when they are on sale.
· Haggle. You’d be amazed at who will drop their prices, fees and interest rates: airlines, hotels, credit card companies, computer/appliance/rug salespeople.
Never pay full price. If you must shop, discover the online world of discount websites. Our favorites include Ebay and Overstock.com. Craigslist and Half.com are also great sources for lightly used goods—and new items too!

-Keep minimum funds in your checking account. Keep the bulk of your funds in your savings account where it will earn more interest. Call your bank and shop for the best rates.
Use rewards credit cards. If you’re going to charge it…might as well get something back, right? If you can discipline yourself to pay off your card each month, thereby avoiding any interest payments, you can score airline miles and other great perks!

We hope you’ve found these ideas helpful. Happy saving!