Five things I’m looking forward to in 2010 | Changes that will Affect the Corvallis Real Estate Market

Five things I’m looking forward to in 2010 and Change in the Corvallis Real Estate Market

As 2009 comes to a close, it will be nice to put a cap on it and move onto a better 2010.  I, for one, am looking forward to some positives in the economy and the Corvallis real estate market.  Recent economic activity would lead one to believe that the country is coming out of an extremely difficult economic period — some say the longest recession in decades.

What I think we’ll see in the coming new year:

1. Slightly higher, but still very appealing interest rate environment, at least for the first half of the year.  Not the really extra-ordinary rates hovering at five or slightly under, but more like the low sixes, which historically (and if you can remember the early 1980s really very much better than seventeen percent or higher.)

2. Buyers, both first time and move (up,over,down) buyers taking advantage of tax incentives (written contract must be in place by 4/30/2010; closing by 6/30/2010)

3. Locally good levels of inventory without the impact of extreme high levels of foreclosed properties. Basically, a more balanced market.  Making it a better market for everyone.  As the markets that tend to feed Corvallis and the mid-Willamette Valley continue their recovery they will provide a little “stimulus” to our economy.

4. Better employment rates as the economy crawls out of the recession hole.  Employment is the one factor that will really change the course of the current economy.

5. Along with higher interest rates, may come a more relaxed, perhaps I should say, sound, approach to underwriting.  Not the take a pulse, give a loan attitude that helped create the mess, but realistic and reasonable, as banks re-enter the mortgage business and become less fearful of risk.

All in all, no matter what the economy does, how the real estate industry deals with ups and down, we are all just and we will continue to adjust and do what we need to do to live our lives the best way we can.

Wishing you all a happy, healthy and prosperous 2010.

Related posts:

Questions and Answers about the Expanded/Extended HomebuyerTax Credit

Homebuyer Tax Credit De-Mystified

Richard Smith CEO of Realogy on CNBC about the Tax Credit

How Would You Spend Your Tax Credit?

How Would You Spend Your Tax Credit?

COLDWELL BANKER REAL ESTATE STUDY FINDS CONSUMERS’ ANTICIPATED ‘SMART SPENDING’ OF HOMEBUYER TAX CREDIT WILL AID ECONOMIC RECOVERY

83 Percent of Current Homeowners Surveyed Say They Would Spend Tax Credit on Repaying Existing Debts, Home Improvements, Savings/Investments and Household Expenses

Coldwell Banker Real Estate LLC today announced the findings from a new survey that looked at how the recently expanded federal homebuyer tax credit, which opened up the credit to existing homeowners, might impact the economy.  Of the more than 1,000 homeowners surveyed, 83 percent responded that if they were to purchase a home and qualify for the tax credit, they would engage in “smart spending” or put the money toward paying off existing debts, home improvements, savings/investments, or everyday household expenses.  Only 6 percent of respondents indicated that they would spend the money on what are commonly referred to as luxury items such as a vacation or a shopping spree.

According to the survey, the top way homeowners would spend their $6,500 tax credit in a “smart” way would be to pay off debts (34 percent), followed closely by making home improvements (29 percent) and putting it into savings and investments (28 percent).

In addition, Coldwell Banker Real Estate found that 20 percent of homeowners indicated they were more likely to consider purchasing a home than they were six months ago, after learning about the $6,500 federal tax credit. The tax credit, which previously only was for first-time homebuyers, is now available to existing homeowners who sign a binding contract before April 30, 2010 and close on the purchase of a home before June 30, 2010. To learn more about the details of the expanded homebuyer tax credit, go to www.coldwellbanker.com

If you’re considering purchasing a home in Corvallis, Albany, Lebanon or Philomath (and surrounding areas of the mid-Willamette Valley); I’d like to help you meet your goals.  I work with buyers and sellers at all price levels. Please get in touch and we can get started today.

Other resources for information about the tax credit:

National Association of Realtors frequently asked questions about the tax credit

I.R.S. information abut the tax credit

Richard Smith Comments on Homebuyer Tax Credit Expansion/Extension

Richard Smith checks in with CNBC regarding the current condition of the real estate market, projections about the economy and mortgage interest rates, the condition of FHA (Federal Housing Administration). A very insightful and calm discussion about the anticipated response to the tax credit extension/expansion.


Richard Smith is CEO of Realogy (parent to Coldwell Banker Corporation and others) and the world’s largest brokerage operator.

Home Buyer Tax Credit De-Mystified

Agent with Key

The extended/expanded tax credit is getting a lot of press and a great deal of mis-information is being spread around.  Here’s a Questions and Answer Session provided by the National Association of REALTORS® that may help provide some clarity.

 

NAR Frequently Asked Questions Homebuyer Tax Credit Changes
National Association of REALTORS® Government Affairs Division
500 New Jersey Avenue, NW, Washington DC, 20001

The following are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit. 

Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

Question: I am a first time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phaseout range).

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

Question: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as he lived in that house for 5 years straight what he did since 3 years doesn’t impact eligibility.
 
Question: I am an eligible first time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30. 

If you are thinking of buying or selling a home in Corvallis, Oregon or the surrounding cities of Albany, Philomath or Lebanon or anywhere in the Mid-Willamette Valley.  I’m here to help.

As I’ve said before and will no-doubt say again, if you want expert advice about the 2009 Tax Credit, or the Expanded/Extended Tax Credit, consult with a qualified, tax expert.  Typcially a real estate agent and/or mortgage lender do not have that expertise.

House of Representatives Approves Tax Credit | Bill Signed by President

Update:  Bill signed into law by President Obama this morning. 11/06/2009


Now, it’s on to President Obama for signature in the next few days.

Here’s a chart of the differences between the existing tax credit and the revised (primarily there’s provisions not just for First Time Homebuyers but also for those that have owned a home and are purchasing a replacement property.)  There are many fine points to the changed tax rules.  It is in your best interest to get advice from qualified tax professionals and understanding your options in relation to these “new” tax guidelines.

The Home-buyer Credit is an amendment (S. A. 2712) to the Unemployment Compensation Extension Act (H.R. 3548)
Tax Credit Comparison Chart (Jan 1, 2009 compared to Decebmer 1, 2009)

(click on chart for a larger view or use your zoom tool on your browser)

This should prove to be very helpful for buyers and sellers in the Corvallis, Oregon and surrounding markets of Albany, Oregon; Philomath, Oregon; Lebanaon, Oregon and Linn and Benton County by creting movement throughout the market, not just in the “first time homebuyer” segment.

Senate Passes Homebuyer Tax Credit…

Today the US Senate passed the Homebuyer Tax Credit witha 98 to 0 vote. The credit is included in the Unemployment Bill. In order for it to be effective The house must still pass this legislation and then President Obama must sign it into law. It is generally expected to be to The President by the end of the week.

In essence, the bill extends the $8,000 first-time homebuyer credit through April 30, 2010 and provides a $6,500 credit to new purchasers who have lived in their current residence for five or more years.

In Corvallis, Albany and Philomath, this should help create movement in the housing market by assisting the mid-range of the market to move-up into the currently slow upper range; assisting owners of lower cost “entry level” homes to move into the mid-range; thus, freeing up entry level housing for first time homebuyers.

Exciting news for the real estate industry in Oregon; and good news for buyers and sellers in Corvallis, Albany and the surrounding communities in the Willamette Valley of Oregon.

The extension was expected in late October, but has been slow in coming…

“People are going to wonder, how is it, that something that is just common sense and fairness should take so long to make its way through the United States Congress,”‘ Oregon Sen. Ron Wyden said after the vote.

Key Provisions of the Bill Follow (Provided by Teresa “Terry” Estergard, Wells Fargo Bank):

HOMEBUYER TAX CREDIT SUMMARY
S.A. 2712 would:

  • Extend through April 30, 2010 the tax credit for first-time homebuyers (up to $8,000 or up to 10 percent of the purchase price of the residence), allowing 60 days to close, provided that the homes are under a binding contract by that date;
  • Provide homebuyer tax credit of up to $6,500 to owners who have been in the same principal residence for five consecutive years during the previous eight years;
  • Increase the income limitations to $125,000 for individuals and $225,000 for joint filers;
  • Phase out the credit for individuals with incomes above $125,000 for individuals and $225,000 for joint filers at the same rate as current law (over the next $20,000);
  • Limit the credit to purchases of principal residences equal to or less than $800,000;
  • Eliminate the 36-month recapture requirement for military personnel, including members of the Foreign Service and intelligence community, forced to sell as a result of an official extended duty of service; and
    Extend the tax credit for one year for military personnel serving outside the United States for at least 90 days in 2009 or 2010.
  • S.A. 2712 would also include anti-fraud language. The measure would not extend the credit to taxpayers under the age of 18 on the date of purchase unless that person is married to a taxpayer above the age of 18. The amendment would also require a properly executed copy of the settlement statement to be attached to the tax return. Moreover, the substitute would expand the restriction on a residence acquired from a family member to include a residence acquired from a spouse’s family member.
  • S.A. 2712 would also extend math and clerical error authority to the Internal Revenue Service.