About Long Beach's Stratford Square

Long Beach, Ca. There has been a lot of confusion in the marketplace about what are the exact tax credits that a home buyer may receive from both the State of California and the Federal government. Chuck Barger, of Prudential California Realty, has prepared the simply summary below which makes is very easy to understand. If you are a homebuyer, this makes buying a property even more attractive this year! If you are an agent, you should be screaming this from the roof tops! Everyone benefits from tax credits, and you might just qualify for both of to $18,000.00 in credits.

I. Federal Tax Credit

1. Credit is 10% of Purchase Price, not to exceed $8,000.

2. Escrow must close between January 1, 2009 to November 30, 2009, inclusive.

3. Federal Credit is a “Refundable-Credit” earned whether or not taxpayer owes Federal Tax. Example, home-buyer owes zero Federal Tax, would receive a tax “refund” of $8,000.

4. Credit does not have to be repaid to Government, unless home-buyer sells or moves to another principle residence within THREE years of purchase.

5. Home-buyer is “First-Time” or has not owned a home from July 1, 2006 to June 30, 2009. Must be Owner Occupied as Principle Residence.

6. Income Levels: Tax Credit starts to phase out for an Individual Taxpayer with a modified adjusted gross income from $75,001 to $95,000 (or $150,001 to $170,000 for joint filers). The credit is eliminated entirely for an individual over $95,000; jointly $170,000.

7. Taxpayer can claim credit for either tax year 2008 or tax year 2009. If 2008 returns already filed, taxpayer can file an amended return and receive tax “refund”. Use IRS form 5405.

8. If Escrow closed from April 9, 2008 to December 31, 2008, would fall under 2008 law.

II. State of California Tax Credit

1. 5% of purchase price, not to exceed $10,000

2. Escrow must close between March 1, 2009 to February 28, 2010

3. Property must be “New Home”; that is, must be certified that the home has never been occupied; single family residence only.

4. Must be Owner Occupied as Principle Residence; must reside in home for TWO YEARS minimum to avoid paying back State Tax Credit.

5. Tax Credit is NON-REFUNDABLE; that is, it must be taken as an offset against State Taxes owing. It is taken over THREE successive taxable years. Starting in 2009 or 2010- maximum credit is $3,333 per year.

6. Home-buyer does not have to be a First-Time buyer to receive State Tax Credit.

7. Income Levels- no maximum income levels.

8. Tax Credit year begins in 2009 or 2010, depending on escrow closing date; use form FTB 3582A.

Summary: Credit may not be given if buying from relative or as gift. Home-buyer can receive BOTH credits. Time is of essence; must close within deadlines.

Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, "The Bixby Knolls Office," and a Net Branch of, GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing. Contact him at: 562-989-4608 ext. 110

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Long Beach, CA. Will 2009 bring economic collapse or will markets begin to mend?
Two reliable predictors give hope. First, the spread between LIBOR and Treasury yields, which measures global risk. The spread ended the year tighter than when it began, and far tighter than the extreme levels of late summer. Second, volatility embedded in stock option prices is a good predictor, and is referred to as the "fear index." While still elevated, it ended the year reflecting much less fear than the worst seen in 2008. Both indicators lead us to believe that the economy has backed away from the brink.

While the economy may not collapse completely, we have some tough work ahead of us. Recessions brought on by financial crises (rather than typical business cycles) are severe, reports John Mauldin. In past such recessions, real housing prices declined 35% over six years, while equity prices collapsed 55% percent over three and a half years. The unemployment rate rose by 7% over four years and output fell 9% over two years. And government debt increased massively. By these historical measures, we have a long way to go.

The good news for home buyers is that mortgage rates are low, and are likely to stay that way. Fallout - of the 50% variety - and early loan payoffs have become the problems du jour. In spite of Barron's warning to "get out (of Treasuries) now," there is little economic reason for mortgage rates to rise. Nary a holiday party went by without someone asking when they could have their 4.50% mortgage rate (in the near future, we think). Mortgage demand is strong. The New York Fed "began purchasing fixed-rate mortgage- backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae," the Fed bank said in a statement released by e- mail.

So severe is the concern over lower rates, fallout, and refinanced mortgages, that the lack of premium mortgage pricing is as much an impediment to the refinance boom as anything else. You can pick any premium mortgage rate you want and your loan officer price struggles to get to par. This will continue I am afraid until the housing market is steadied for prices and buyers other than the Federal government begin purchasing mortgage backed bonds.

The Fed began their MBS buying program yesterday; they will announce the amount purchased each Thursday. The mortgage basis tightened off of this purchasing pressure. Oil is now at a five week high as OPEC's production cuts are starting to have an effect on the market, oil is now above $50/barrel. Right now the futures market is pricing in a 76% chance that the Fed keeps rates somewhere between 0 and .25% until at least April 29^th, 2009. Currently, the Ten Year yield is at 2.56% (2.47% yesterday)

Speaking of rates, the historical link between Treasury rates and mortgage rates is practically non-existent. Yesterday, for example, Treasury rates moved up since Construction Spending fell only .6%, less than half as what was forecast, and before the $54 billion in government securities to be sold this week ($8 billion in 10-yr TIPS today). The government's sale of notes this week is causing impacting the supply side of the equation, moving Treasury rates higher. So this morning we find the yield on the 10-yr up to 2.56%, but mortgage prices are better than yesterday afternoon by .50% and continuing to show improvement. Remember, investors have been very slow to reflect, but I would wait one hour or so and most investors should begin to reflect the improving price. However, as I have said over and over, the market is artificially being impacted and can quickly retreat.

Kirk Mulhearn, A professional Mortgage Planner, may be contacted at 866-961-8042 ext. 110