Nicole Lahti, Austin Texas Mortgage

I'm organizing an East Austin Open House Tour this Sunday from 1:00-4:00 PM. Its specific to Area 5 in Austin, and includes trendy, affordable homes and condos.

Start at 2516 East 8th Street for your map and tour guides. Come show your support (and some GREAT homes) and stop by!

Rates opened up flat last Monday from the previous week. There was some upward pressure during the week with relief on Friday when the unemployment rate came in higher than expected.

190,000 jobs were lost in October, much higher than the $175,000 expected loss, putting our unemployment rate at 10.2%. Remember, this does not include people who have given-up looking for jobs, or those who are "underemployed" by taking part-time jobs, or positions in which they are over-qualified. If these people were taken into account, it's estimated that the real unemployment rate would be closer to 17.5% -- wowza!

On a lighter note...Pending Home Sales were up 6.1% for October, which is heavily attributed to first-time home buyers meeting the original tax credit deadline. Speaking of which, here is a brief of the tax credit extension signed into law by President Obama on Friday:

Tax Credit for First-Time Home buyers

FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Tax Credit for Current Homeowners

The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines? In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.

What's So Great About a "Tax Credit"?

The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax deduction", or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time home buyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing. Better still, the tax credit is refundable, which means the home buyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time home buyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased. Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible. Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sales price of $800,000.

Forecast for the Week

There's not much economic news due out this week other than Thursday's Initial Jobless Claims Report, and Treasury auctions. With record amounts of debt being sold via Treasury auctions, its important to see how well they are received as that has a direct affect on mortgage rates.

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You may've just heard that President Obama signed the extension of the $8,000 tax credit into law. There have been some other meaningful changes, including offering the tax credit to repeat buyers (up to $6,500) who have lived in their home at least 5 years, and an increase to the income limits. Rather than regurgitating the million other blog posts and articles about the extension, here's a link to an article that explains it all.

So here's my question. What is the $8,000 tax credit's true affect on sales? To date, an estimated 2 million people have taken advantage of the tax credit, but how many of these sales would have occurred even if the tax credit wasn't offered? How many of these sales perhaps just occurred sooner rather than later?

In an effort to answer this question (in a very rudimentary, non-scientific way) I've devised a QUICK 5 question survey for all my Real Estate friends out there.

Now, I'm no statistician, so please no comments on how I could've better framed questions. Please just take 2 minutes to answer a few questions on how the tax credit has affected YOUR personal sales. I'll post the results early next week.

Click Here to take survey

Thanks!

Happy Monday everyone! I hope you had a great Halloween weekend -- I sure did playing with the cutest 2 year olds on the planet! Here's last week's recap, and a preview of what's to come this week.

Mortgage Rates

It was another volatile week for mortgage rates, so depending on when you locked your rate, you could see a difference of about .125%. Overall, the week ended only slightly better than where it began, but depending on your lender's margins, you may/may not have seen that improvement passed on in the form of a lower interest rate. This morning's bond prices opened slightly lower than where they ended Friday, so you may see an increase of about .125% to your rate, if at all.

Last Week's News

The big news last week was 4th Quarter GDP went up 3.5%. Media outlets were buzzing with excitement saying this is a sign the recession is over. However, its important to note that Cash for Clunkers played a big role in our GDP. Some estimate once Cash for Clunkers is taken out of the equation, our GDP is closer to 1.9%.

Another big headline is the possible extension of the $8,000 first-time home buyer tax credit. The extension is not official yet, but the latest version I saw floating around would extend the $8,000 tax credit to first-time home buyers until April 2010, AND open it up to non-first-time home buyers up to $6,500 (read full details of the proposal here). The House and Senate still need to come to an agreement on the final bill, but it looks like some form of an extension will be passed.

Forecast for the Week

The Federal Open Market Committee holds a two day meeting this week with its Rate Decision and Policy Statement due out Wednesday. Friday is another big day with Initial Jobless Claims and the Jobs Report due out. Friday has the potential to have a big affect on mortgage rates as the unemployment rate will be announced (currently sitting at 9.8%) Generally speaking, bad news for the overall economy is good for mortgage rates (and visa versa). The stock market has been fueled lately by companies' higher earnings (perhaps by cost-cutting measures in the form of layoffs), and mortgage rates have risen. It will be interesting to see how mortgage rates will react to our jobless recovery.

Want to read more of my updates? Follow me on Twitter! I post real estate and mortgage news on a semi-frequent basis.

Mortgage rates suffered some volatility mid-week, but ended Friday about where they opened on last Monday. The same cannot be said about today, as rates opened about .125% higher than where they ended on Friday.

Last week showed the market is absorbing much of its housing inventory, which dropped to a 7.8 month supply, down from 10.1 months in April. This is in part due to builders' caution in beginning new developments -- Housing Starts and Building Permits came in below expectations last week. On the other hand, Existing Home Sales came in better than expected, with nearly 45% of homes sold to first-time home buyers!

PPI fell, however next month it could be higher as oil and natural gas prices have soured lately. Remember, high oil prices are not good for mortgage rates, and could send them higher.

Forecast for the Week

The Treasury Department will auction off nearly $123B in debt this week, which could cause some major volatility in mortgage rates this week, so hold on to your hats.

Other potential market movers this week are Wednesday's New Homes Sales, and Thursday's Initial Jobless Claims Report and GDP report. Lastly is another read on inflation with Friday's Core Personal Consumption Expenditure (PCE) Index.

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