Will the First-Time Home Buyer Tax Credit Be Extended?

By Luke Mullins
As we mark the one-year anniversary of the financial meltdown's most gut-churning period—Uncle Sam's takeover of Fannie Mae and Freddie Mac, the downfall of Lehman Brothers, the hasty sale of Merrill Lynch—signs of optimism in the housing market are everywhere. Existing home sales rose in July for the forth time in as many months, something the market hasn't seen since 2004. Inventory totals are off their record levels of a year ago. And prices, while still declining sharply, are no longer in free fall. However, the looming expiration of a popular federal tax credit has some worried that the housing market may give back its recent gains, and the real estate and home building industries are pushing lawmakers to extend the incentive. Here's a look at the impact of the $8,000 first-time home buyer tax credit, and the political outlook for its extension:
1. The specs: In an effort to stimulate housing demand, President Barack Obama included a tax credit of up to $8,000 for certain first-time home buyers in the $787 billion economic stimulus package he signed in February. Only buyers of principal residences who make purchases before December 1 and have an adjusted gross income of $75,000 or less (or $150,000 for married couples) are eligible for the full credit. "The thinking about this tax credit is that it helps to support sales when the job market is still a mess," says Mark Zandi, the chief economist of Moody's Economy.com.
2. Impact: The tax credit is one of a number of factors that have worked to bolster the housing market in recent months. Even more important than the government's incentive has been the increasing affordability of real estate, says Mike Larson of Weiss Research. Rates on 30-year fixed mortgages fell to just above 5 percent this week, according to Freddie Mac. Meanwhile, home prices at the national level have plummeted more than 30 percent from the second quarter of 2006. The first-time home buyer tax credit "is the icing on the cake, not the cake itself," Larson says. "Falling home prices have worked their magic. That's why we are where we are." Still, Larson believes that the tax credit has played a key psychological role in pushing buyers off the sidelines and that its expiration would take some of the wind out of the market's sales. For his part, Zandi estimates that the credit will add nearly 400,000 new and existing home sales by the time of its scheduled expiration.
3. Extension efforts: Although the credit's deadline isn't until the end of November, buyers may need to make an offer on a house by the end of September to take advantage of it, according to the National Association of Realtors. (That's because it's taking longer to complete transactions these days, the trade group says.) In the face of this looming deadline, housing and real estate interest groups have stepped up their efforts to convince lawmakers in Washington to extend the credit. Sen. Johnny Isakson, a Georgia Republican who worked in the real estate business before turning to politics, has been pushing for an expansion of the credit for some time. "December through February is historically the worst time for home sales anyway because of the winter months, so with the credit ending November 30, you have a double whammy" on the market, Isakson says. On Wednesday, he and several other lawmakers—including Senate Majority Leader Harry Reid, a Nevada Democrat—introduced a bill that would extend the tax credit for an additional six months. (Isakson had previously introduced legislation to extend the credit by a year.)
4. Opposition: Supporters of an extension of the credit will have to overcome mounting concerns about budget deficits and rising government spending. "There is no doubt about it that, compared to when we were working on this last winter, people are asking questions about the cost, when before it was not as much of a factor," says Jerry Howard, the president of the National Association of Home Builders. Zandi estimates that it would cost between $15 billion and $17 billion to extend the tax credit for another six months, which he considers money well spent. "If you extended it to mid next year . . . by then the job market will be stable enough that we can allow the tax credit to expire and it won't totally submarine the housing market," he says.
5. Odds: Senator Isakson believes lawmakers will eventually move to extend the credit in one form or another. "I don't believe either this administration or the current leadership would look November 30 in the eye and let this thing die," he says. White House spokesman Robert Gibbs said this week that the administration is evaluating the credit's impact and will make a recommendation to the president, the Associated Press reported. The outlook for an extension appears to have brightened. Scott Talbott, a top lobbyist at the Financial Services Roundtable, put the odds of its extension at 50-50 earlier this week, but he said that the chances improved to 75-25 after Reid endorsed the six-month extension. Still, as lawmakers remain consumed with other matters, such as healthcare reform, action on the tax credit is unlikely to take place until the expiration date nears, Talbott says. "Congress works best on deadlines and crisis," he says. "And we sort of will have both with this one."

REALTORS® Develop Wisconsin Foreclosure Assistance Web Site

Madison, WI - July 15, 2009 - (RealEstateRama) — A new online resource developed by the Wisconsin REALTORS® Association can help consumers take steps to avoid foreclosure or navigate through the process for a better outcome.
The nation’s economic downturn has created financial challenges for many homeowners and experts say extended periods of unemployment, mounting debt and medical expenses brought on by a loss of insurance are contributing to today’s record wave of foreclosures. These factors, along with a decline in property values and predatory behavior by some lenders, have made it difficult for many homeowners to meet their financial obligations and stay current on their loans
“The possibility of going through foreclosure is the last thing consumers think about when they buy a home, but unfortunately it’s the situation thousands of Wisconsin homeowners are facing today,’’ says Bill Malkasian, President of the Wisconsin REALTORS® Association. “As a trusted source of advice and counsel, we created this resource to help homeowners achieve a better outcome when faced with difficult choices. The reality is that banks don’t want to have to go through the time and expense of the foreclosure process, so there is much more opportunity to negotiate new terms and hold on to your home.”
The Wisconsin Foreclosure Assistance Resource Center provides answers to frequently asked questions about Wisconsin’s foreclosure process and features a variety of credible resources, including expert advice and contact information for trusted advisers throughout the state.
The site’s three main sections – a survival kit, prevention kit and public information kit – include video clips with experts from the Wisconsin REALTORS® Association, Wisconsin Bankers Association, Consumer Credit Counseling Service of Greater Milwaukee, the Wisconsin Housing and Economic Development Authority and more. In addition, the site explains the foreclosure timeline and provides a glossary of terms to help homeowners ask the right questions and get the answers they need.
Malkasian says one of the biggest mistakes homeowners make is to do nothing when confronted with a financial problem. Whether they are buoyed by a false sense of optimism that things will get better, or feel a sense of embarrassment or fear, many are reluctant to reach out and make contact with their mortgage provider.
“Often, stress and emotions are running high for homeowners in this situation,’’ Malkasian says. “The purpose of the online resource is to provide a ready source of credible help that takes emotion out of the equation and replaces fear with a clear course of action. Homeowners in this situation are particularly vulnerable to predatory schemes and we wanted to provide professional contacts – often at nonprofit agencies — who are trained to help.’’
The site includes a thorough discussion of what to do if you are unable to make a scheduled mortgage payment, when it might be time to sell your home and tips for avoiding foreclosure scams.
For more information, visit the Wisconsin Foreclosure Assistance Resource Center at http://www.wisconsinforeclosurekit.org/.

Results of Oshkosh Vision Survey

Oshkosh, Wis., residents recently took a vision survey designed to help chart a common community path for the years to come. The community survey elicited approximately 2,400 responses, a majority of which called for sustainability and a renewed focus on the city's downtown and riverfront. Consultant Tony Nelessen of A. Nelessen Associates, who conducted the survey, remarked, "The set of recommendations that came out of all that input probably creates one of the most visually interesting, greenly aesthetic futures for a town that I've ever seen." When Oshkosh initially embarked on the visioning process earlier this year, local officials had some grandiose plans in mind but lacked a cohesive vision. Thanks to the survey, City Manager Mark Rohloff stated, "Now we have some vision to go with the plans. Now we can marry those two and move forward." More than 90 percent of respondents stated that future development should be focused on downtown Oshkosh. Not a single respondent, meanwhile, advocated more development along the U.S. Highway 41 corridor. On the north side, respondents called for additional multifamily housing and mixed-use retail. Finally, the survey showed strong support for development south of the river that focuses on parks and green space.

Summer BBQ'ing Tips

Everything tastes better off the grill or barbeque pit, and nothing could be simpler, right? Well....... there is more to barbeque than tossing a steak or burger on a grill. Experience is a great teacher but it's always nice to learn from other's mistakes.

1. Wash everything after handling raw meat, and don't reuse the plate that you used for uncooked meat.
2. Have a spray bottle full of water nearby your grill in cause of flare-ups.

3. Using charcoal briquettes for your barbecue's heat? Then light the coals about 30 minutes before to cooking.

4. If you're a charcoal fan, first line the inside bottom of your cooker with a couple of sheets of aluminum foil before you put your briquettes in.

5. Cooking chicken? If you intend to eat the skin, rub the outside with a little butter or oil and then lightly season it.

6. Leaner steak cuts possess more flavor but will be a little tougher if cooked past medium.

7. Use these cooking times for grilled fish: Salmon fillets, 6 - 8 minutes per side; Salmon or halibut steaks, 5 minutes per side; Trout fillets, 4 minutes per side; Small whole fish, 7 minutes per side; and Large fish, 15 minutes per side. If your whole fish are stuffed, give it a few extra minutes per side.

8. Don't add any salt until the meat is cooked to prevent it from getting dry and tough.

TODAY IS MAGGIE'S BIRTHDAY

Today is my 9th birthday!!! My mom is taking me to Petco to get a treat and she's also baking me a cake later!

"Sellers Offer Incentives to Help Lure Homebuyers"

Home sellers, particularly those who do not need to pay off mortgages, are offering creative financing to attract buyers. REALTORS® say these sellers might offer lease-to-own agreements, or they could provide mortgages to cover the purchase. Sellers benefit from being able to secure higher asking prices and unload the properties faster while generating a monthly income without taking on a lot of risk. If the buyer defaults, the seller simply assumes ownership of the property and resells it. Meanwhile, agents say buyers benefit from being able to negotiate the interest rate and terms with the seller. Those who do not qualify for conventional financing have a better chance of becoming homeowners.

Pending home sales rise 6.7%

The number of U.S. homebuyers who agreed to purchase a previously occupied home in April posted the largest monthly jump in nearly eight years, a sign that sales are finally coming to life after a long and painful slump.
The National Association of Realtors said Tuesday its seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts' forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.
Economists were encouraged by the report, and stock indexes advanced modestly.
"This is yet another positive indication that the bottoming process is forming," Jennifer Lee, an economist at BMO Capital Markets, wrote in a note to clients. "Now if only prices would stabilize."
Economists surveyed by Thomson Reuters expected the index would edge up to 85 from a reading of 84.6 in March. Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing home sales.
In early trading, the Dow Jones industrial average added about 20 points to 8,741, and at times traded above 8,776.39, its finish for 2008.
Still, some economists wonder whether rising mortgage rates will dampen home sales. Nationwide average rates for 30-year-fixed rate mortgages are around 5.3 percent this week compared with about 5 percent a week earlier, according to Bankrate.com.
And analysts cautioned prices will take longer to stabilize, because of the glut of unsold properties on the market.
"Even if sales volumes rebound, home prices will keep falling under the weight of the massive inventory overhang," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The Realtors' index was 3.2 percent above last year's levels and has risen for three straight months after hitting a record low in January. A nearly 33 percent sales increase in the Northeast and a 9.8 percent jump in the Midwest led the overall surge. Sales contracts rose 1.8 percent in April from a month earlier in the West, but fell 0.2 percent in the South.
The big boost likely reflects the impact of a new $8,000 tax credit for first-time homebuyers that was included in the economic stimulus bill signed by President Barack Obama in February. Since buyers need to finish their purchases by Nov. 30 to claim the credit, "we expect greater activity in the months ahead," Lawrence Yun, the Realtors' chief economist, said in a statement.
Still, Yun cautioned that the pending sales data is more volatile than in the past because many sellers need banks to agree to take less than the original mortgage -- a so-called "short sale." That process is often difficult, time-consuming and can wind up falling apart before the deal closes.
The Federal Housing Administration last week released details of a plan in which borrowers who use FHA loans can get advances from lenders that let them effectively receive the credit in advance, so they don't have to wait to get the money from the Internal Revenue Service.
Completed home sales rose 2.9 percent to an annual rate of 4.68 million in April from a downwardly revised pace of 4.55 million in March, the Realtors' group said last week.
Sales of inexpensive foreclosures and other distressed low-end properties have even sparked bidding wars in places like Las Vegas, Phoenix and Miami. But the market for high-end properties remains at a virtual standstill.
The national median sales price in April plunged more than 15 percent to $170,200, from $201,300 in the same month last year. That was the second largest yearly price drop on record, according to the Realtors' group.