We hosted a First Time Homebuyer seminar last week and the majority of our audience was primarily interested in the First Time Homebuyer Tax Credit of $8,000. I can’t say I blame them either. After all, $8,000 is real money and not just for first timers. Without getting too political I think it is safe to say that most people agree that government stimulus is getting mixed reviews – some of it is working and some of it, well, not so much. Listen up Congress: This $8,000 tax credit is something that is working and needs to get extended. Now, most people agree that will happen, but when will it happen is the question.
Mr. Congressman – This Is Not Cash for Clunkers
So the feds decided to keep Cash for Clunkers alive, which may or may not have been a good thing, but they waited until the last minute. We can’t afford to wait for the government to extend the homebuyer credit. Here is how it breaks down. If you don’t have a property under contract by early October, you are risking you won’t be able to close by November 30th and claim your tax credit. And, if you want to consider buying a short sale (they are hard to avoid) then forget about it unless you are under contract already. It would be a shame to see qualified homebuyers sitting on the sidelines because they don’t know if they will get their tax credit. What can we do? Write your congressman and tell them to act now to extend the tax credit! While you’re at it, ask that the new tax credit be increased to $15,000 and be available to everyone, not just first time homebuyers. Its worth a try.
Interest Rates and Affordability
The real crime is that homebuyers may be sitting on the sidelines and it is the perfect time to buy a home (in most markets). Interest rates are at historical lows and property is affordable again. In fact, the National Association of Realtors released their latest “Affordability Index” this morning, which is at 158.5 for July – a huge indication of how great this buyer’s market is. Basically, an index of 100 means that a family with the median income makes enough money to qualify for the median priced home. So, an index of 158.5 means that same family has 158.5% of the income necessary to qualify for that median priced home. I would argue that even without the home buyer tax credit, this is still a great time to buy. You should still write your congressman though ;0)