First Time Homebuyer's Tax Credit and Yorba Linda Real Estate
First Time Homebuyer's Tax Credit... We Don't Need No Stinking Tax Credit in Yorba Linda! Or Do We?
Unless you live on another planet, then you're aware that the First Time Homebuyer's Tax Credit is set to expire on December 1st, 2009. Will they extend it? Will they improve it? Will they let it expire? This issue is getting a lot of press, and not all of it's good.
I, like many people, have mixed emotions about whether or not to extend, and possibly expand the tax credit, and I thought it would be prudent to consider the facts, since I tend to be a "just the facts, mam" kinda gal. So, here is what the experts say, what the facts are, and what I think based on this information and my own experience (for what it's worth). This and $4.00 will get you a grande cappuccino at your local coffee house.
The current $8,000 tax credit includes the following guidelines:
Single first time buyers with up to $75,000 in income and married first time buyers with up to $150,000 in collective income qualify to receive a tax credit equal to 10% of the purchase price of the home they buy, up to a maximum of $8,000. The purchase must be complete, with escrow closed, on or before November 30th, 2009 to be eligible. Click here to review the full details of the tax credit.
According to the National Association of Realtors Real Estate Insights Report, the First Time Homebuyer's Tax Credit has helped to generate sales and that 1.2 million first time buyers utilized this incentive.
There's no doubt that this is true to some extent, but in my personal experience, this is not a deal breaker. I'm currently working with several first time buyers and they are not concerned about the tax credit. I know this because I've asked them. They're more interestd in buying a home at an affordable price which, 2 to 3 years ago, was an unattainable dream for them.
As we all know, most first time buyers have been waiting anxiously for an opportunity like this for years, especially in California, where prices trend higher than most of the U.S. Yes, the tax credit would help with purchase related costs, but what seems to be more important is the potential cost of waiting and possibly missing out on this buyer's market. One which may not come around again for another decade or two! What if the market has hit bottom and slowly starts to climb again? This could 
mean price increases of $5,000, $10,000 or more in the near future. Obviously it doesn't make financial sense to hold off on buying, even if they miss the November 30th deadline for the tax credit.
Right now interest rates are low and housing prices seem to be scraping the bottom, so tax credit or not, buyers would be missing a golden opportunity to finally get their foot in the door (literally) if they allowed an expired tax credit to stop them! With multiple offers on every well priced property and overbids becoming prevelant, it's not far fetched to think that the market could make a comeback sooner than expected. There's a Chinese proverb that reads"he who hesitates loses" and I believe it to be true in all areas of life, even when it comes to real estate.
Now, on the other hand, I believe that (almost) anything that spurs market activity is a good thing, and the newly proposed "Home Buyer Tax Credit Act of 2009" would definitely stimulate real estate activity and 
may even get me to throw a "for sale" sign in my yard! This proposed act, introduced by Republican Senator, Johnny Isakson, that is being reveiwed by the Senate Finance Committee, could have a dramatic effect on sales in the upper end of the market. This would be welcome news to areas like Yorba Linda, California, where the median home price is still well above average and tends to attract a great deal of move up buyers.
The proposed "Home Buyer Tax Credit Act of 2009" includes the following changes:
- No Income Cap for single or married buyers
- All buyers qualify, NOT just first time homebuyers
- Increased maximum- up to $15,000 tax credit
An area such as Yorba Linda, that touts one of the highest median income levels in the U.S., would greatly benefit from these changes for obvious reasons. So... maybe some areas like Yorba Linda DO need the tax credit?
Sellers may consider this a way to recoup some of the costs associated with selling their home such as escrow and title fees, or agent commission. These inticements coupled with the FHA 203K Rehab loans may get an otherwise timid buyer or nervous seller off the fence.
Of course all of these incentives come with a price tag and the government can't afford (again, literally) to be short-sighted. It's a tough balancing act to stabilize the current economy without jeopardizing future generations and the overall national debt. To read about this side of the coin (so to speak) take a look at a fellow Californian's take on this issue on Brian Brady's blog. Hopefully we'll all look back at this time in history with a small sigh of relief and a huge amount of wisdom and say "remember when you could get a first time homebuyers tax credit? That was crazy!"
