Rob & Jeannie Steward

More great news for homebuyers was released this week. On Tuesday, the National Association of Realtors (NAR) reported that its Housing Affordability Index (HAI) rose 13.6% in January to 166.8, a new record high. In fact, the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

The HAI is a relative index where a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced existing single-family home. The higher the index, the better housing affordability is for buyers.

According to NAR President Charles McMillan, "The buying power of a typical family has risen significantly. With the drop in interest rates, a median-income family can afford a home costing $20,000 more than a year ago for the same monthly mortgage payment."

The American Recovery and Reinvestment Act that was recently signed into law could be the key to achieving the American dream of homeownership for many first-time buyers. The stimulus plan includes a new and improved version of a first-time buyer tax credit originally passed last summer.

The 2009 first-time buyer tax credit includes these enhancements, and applies to any buyer who has not owned a home in the three years prior to their 2009 purchase:

• The maximum tax credit amount was increased to $8,000 from $7,500.

• Buyers are no longer required to repay the credit.

• The time during which first-time buyers can benefit from the credit was extended by five months. It now applies to purchases of principal residences made on or after Jan. 1, 2009, and before Dec. 1, 2009.

The passing of this legislation is very positive news for anyone looking to buy or sell a home. Specifically, first-time buyers can now take advantage of the improved tax credit in addition to today's historically low interest rates and a large supply of homes to choose from.

Call us today to learn how this new legislation can help you achieve the American dream of homeownership.

As you may know, President Obama presented a new plan this week to prevent foreclosures and stabilize the housing market. The Homeowner Affordability and Stability Plan will be funded with money from the $700 billion financial industry bailout passed by Congress in the fall. The plan was designed to help up to 9 million families avoid foreclosure by restructuring or refinancing their mortgages. While it may seem that the main benefactors of the initiative are homeowners at risk of defaulting on their mortgage, we will all benefit. Defaults and foreclosures result in lower home values, lost jobs and economic troubles for local communities.

The main components of the Homeowner Affordability and Stability Plan are to:

• Provide incentives for mortgage lenders and servicers to modify loans in a way that would reduce monthly mortgage payments to sustainable levels and aid up to 4 million homeowners struggling to make their payments.

• Allow Fannie Mae and Freddie Mac to refinance mortgages they own or guarantee, even when more is owed on the home than what it is worth. By removing restrictions on the government-sponsored enterprises, monthly payments could become more affordable for up to 5 million homeowners.

• Keep mortgage rates low for all buyers by doubling support for Fannie Mae and Freddie Mac, which were taken over by the government last year.

Said National Association of Realtors President Charles McMillan, "The administration's proposed plan, combined with provisions like the $8,000 first-time buyer tax credit in the just-enacted American Recovery and Reinvestment Act, will help minimize foreclosures, shrink housing inventory, stabilize home values and move the country closer to an economic recovery."

ZIP Code Statistics - <$100K to >$5M Format

ZIP Code: 20878 Gaithersburg, MD
From: 01/01/2009 to 01/31/2009 Statistics generated on: 02/06/2009

ZIP Code Statistics - <$100K to >$5M Format

ZIP Code: 20837 Poolesville, MD
From: 01/01/2009 to 01/31/2009 Statistics generated on: 02/06/2009