• The extension and expansion of the credit has left some recent buyers wondering why they were in such a big hurry. Meanwhile some would-be buyers are feeling a little less confident. All are worried they will or have paid too much.
• Housing demand is typically created by one or more of the following: Household formation, employment opportunities, attractive financing and the lure of home equity. All of these are lacking in my market.
• I sense that many if not most of the recent first-time buyers would have eventually purchased a home regardless. The looming expiration of the tax credit served to get them of the fence. This created a somewhat false demand.

In short I do think we’ll suffer a bit of a hang-over this next year. As a generality banks are holding a bit firmer to their prices when dealing with fore-closed properties. I do expect interest rates to rise at some point. Short sales are just as mixed up as they ever have been. It will be interesting to see how things turn out for the big auto companies after the “cash for clunkers” revenue stops showing up on their bottom line. Perhaps an indicator for the near future in our housing market.

That said, if you’re in the market for a home now, don’t be too concerned. Your income should be secure. The monthly payment should be conservative in relationship to your income. It needs to be the right house at a fair price. If all those pieces fall in place, I say go for it. Prices will inevitably rise & fall and I think the joy of home ownership has been relatively under-rated lately. Planting a tree or shrub wherever you wish, knocking a hole in the wall to hang the family heirloom or driving down your street to the “best” house on the street; some things are priceless.

Many buyers are still anxiously hoping to close in time for the credit. There are currently about 1890 pending sales in the Reno-Sparks area for stick built, single family homes.  Of this number about 61% are short sales which typically take 60-90 days to close. Buyers will need to consult with their REALTOR if they are concerned about closing in time.

According to Moody’s chief economist mark Zandi, by the time the credit expires it will have been responsible for sales of 400,000 new and existing homes, out of a total of 1.4 million sales.  That is about 28.5%.  Personally 75% of the buyer transactions I have closed so far this year were with buyers who qualified for the tax credit. 

As of today there are only 28 more “escrow closing” days. There are 4 holidays between now and the end of November, and with escrows only recorded Monday through Friday time is definitely of the essence. 

Currently there are over a dozen bills presented to Congress to extend the credit. If you are a buyer waiting to close and concerned that you might not close in time, I would highly recommend that you contact your Representatives in Congress and urge them to extend the credit. The National Association of REALTORS estimates that for every home sold $63,000 is pumped into the economy which is the equivalent of one new job.  This credit is a win-win for both home buyers and the economic recovery. 

A recent Zillow survey found that 70% of prospective first-time buyers said that the tax credit was the primary influence, a significant influence or some influence to their purchase decision.  Zillow stated that if the credit were extended it could account for another 334,000 home sales.  With increasing foreclosure rates, this could be a major factor in whether or not we see a good year next year or one that has continued negative pressure on prices. 

The bottom line is that regardless of whether you have enough time to close before the tax credit expires, conditions are still ideal to purchase a home – low prices and competitive rates.  If you get the tax credit – it’s a great bonus!

Here’s how it works…Eligible homebuyers who purchase between January 1, 2009 and December 1, 2009 can treat the purchase as if it had occured on December 31, 2008.  That being said you can claim the credit in your 2008 tax return. 

You have several filing options:

1. If you close escrow between January 1, 2009 and April 15, 2009 you can claim the $8000 credit on your 2008 return that is due April 15th. 
2. You can extend your 2008 income tax filing until as late as October 15, 2009. (The IRS grants automatic extensions, but you must file for the extension.) See IRS.gov for instructions.
3. If you have already filed your 2009 return, you can file an amended 2008 tax return on form 1040X which is available at IRS.gov or through your tax providor.
4. Or you can just wait until you file your 2009 return, but why would you if you can get the money now and use it to fix up your new house.

The best part is that you don’t have to pay the money back unless you sell the property before you have lived there for 3 years.  (Some exclusion apply to this as well.)

What are you waiting for???? Phenomenal prices, great selection, FHA mortgages with only 3.5% down, historically low interest rates and $8000 in tax credit.  It doesn’t get much better than this.

Here are the key highlights:

1. Maximum credit amount was increased to $8,000.
2. Qualified properties are single family residences used as primary residence.
3. Income limits, $75,000 individual and $150,000 joint return.
4. First time home buyer or anyone who hasn’t owned a home in the last 3 years.
5. For purchases between 1/1/2009 and 12/1/2009 no repayment is required.
6. If home is sold within 3 years entire amount is paid back at time of sale.

If you have questions about how you can make this tax credit work for you, please feel free to contact me.