Senate Extends Homebuyer Tax Credit Closing Date to September 30

Home buyers who can take the homebuyer tax credit, with binding contracts as of April 30th, will have until September 30th to close under the extension passed by the Senate last night and the House of Representatives last week. All that remains is for President Obama to sign the bill next week.

As we discussed last week in our article, The Current Daytona Beach Homes Market in 142 Words, fewer Daytona Beach and Ormond Beach home buyers are eligible to take advantage of the tax credit because they are buying second homes, vacation homes and rental properties.

Up to 200,000 home buyers nationwide were expected to lose up to $8,000 in tax credits if the closing date was not extended. The problem was that many buyer’s closings were delayed by lenders for the purchase, lenders who owned the distressed properties being purchased, or the closing process itself. Let’s just say that the closing process is usually not very elegant, and foreclosures and short sales complicate the process even further.

No New Homebuyer Tax Credit Likely

I review a lot of information about what’s happening in local and national real estate. I don’t see any indication that there will be a new tax credit. This will have minimal direct affect on the Daytona Beach area market, but has an indirect affect in perception. Buyer’s from out of town are more affected by national news even if that news doesn’t affect our local market. So, if there are reports of slowing home sales nationally, people may take that to mean that they should back off their purchase in our area. We haven’t seen that to date. We are very busy working with buyers and are receiving new inquiries every day.

As always, if you have any questions, please leave a comment here. You can also call me at 386-566-7503 to discuss this article or anything else about the Daytona Beach area market and your options.

Home Buyer Tax Credit Deadline Looms – It’s Already Close for Short Sales

The Home Buyer Tax Credit that went into place at the end of last year will expire on April 30 in its present form. Homes and condos must be under contract by that date and close by June 30 to be eligible for the credit. See Home Buyers Tax Credit for more details. The tax credit can be up to $8,000.

The important point for buyers looking to take advantage of short sale opportunities is that time is running out. I’ve had many short sales that were not processed by lenders in the time left between now and the April 3oth deadline. For buyers of Daytona foreclosures and properties that are not in distress you will have a little more time, but with inspections and the length of the closing process, it’s wise not to delay too long.

Short Sale Buyers Strategy

Our recommendation for short sale buyers who want to take advantage of the tax credit in their purchase of Daytona Beach Homes is pretty simple – submit offers on multiple properties and schedule the closing well before June 30th.

This recommendation protects you both from losing the tax credit by not being under contract and insuring the closing against “surprises” from lenders and closing agents.

Submitting multiple offers will give you the best chance of taking advantage of the credit and getting a property you want. How many? Well, it’s a tough call, but you have a good chance with five to six. There’s no guarantee that any of them would be approved in time, but with five or six, you will probably be successful. Note that you must have a binding contract where both parties have signed before April 30th. Just making an offer is not enough. Make sure your real estate agent is an expert in short sales to protect yourself further (I’m certified and have closed dozens of short sales.)

Scheduling the closing a couple of weeks before the June 30th deadline will prevent requests for additional information from lenders and closing agents derailing the deal. I’ve had a lot of closings delayed, so please take this precaution to prevent losing the tax credit.

Will The Home Buyers Tax Credit Be Extended?

We don’t know whether the homes buyers tax credit will be extended for a second time. The Obama administration has been declaring that we are on the way to economic recovery. The Federal Reserve will stop buying Mortgage Backed Securities in March. Many are seeing that as a sign the administration is backing off big support for the real estate markets. If the same thinking applies to the tax credit, then it won’t be extended. However, the budget submitted by President Obama does contain additional tax credits for home buyers. Congress could remove it from the budget or it could be less; we don’t know.

There are tremendous opportunities available for buyers in the Daytona real estate market. For more information or to receive a list of properties that meet your criteria, please contact me at 386-566-7503. I’m a certified short sale specialist and have many short sale transactions successfully completed. Put me to work for you.

US Treasury Removes Limits on Public Money for Freddie Mac and Fannie Mae

There is little doubt that the Daytona Beach homes market has been boosted by US government actions. The home buyers tax credit,  FHA,  Freddie Mac and Fannie Mae backing mortgages supports the market. I seen estimates of FHA, Fannie Mae and Freddie Mac involved in 90% of all current mortgages.

CBS Money Watch reports:

More than 90 percent of all loans are bought by either Fannie Mae, Freddie Mac, FHA, Ginnie Mae, or USDA (rural development loans). That means Uncle Sam is taking on virtually the entire risk of the housing market. (Fannie Mae and Freddie Mac: Happy Anniversary)

The following blurb was published in the January 2nd edition of the Economist:

The share prices of Fannie Mae and Freddie Mac soared in response to the Treasury’s recent decision to remove limits on the amount of federal aid to the companies. America’s biggest “government sponsored enterprises”, were bailed out in 2008 amid huge public mortgages losses. The amount of public money each could obtain was capped at $200 billion (neither has received that amount), but the Treasury now wants to “leave no uncertainty” about its commitment to the firms.

What Does Uncapping Fannie Mae and Freddie Mac Public Money Mean?

In a word, the Treasury action means one thing – unlimited support with public money. These government agencies, and others, will continue to purchase and guarantee mortgages for the banks. The support was limited. Those limits have been removed freeing mortgage lending expansion now and in the years to come.

I’m not going to argue the wisdom of the action by the Treasury. I’m pointing out that real estate prices will gain some measure of support. Coupled with the current home buyers tax credit, they are stimulating home buying. We don’t know whether the tax credit will be extended. I’m doubting it at this time, but if the federal government continues to guarantee mortgages, that will allow more mortgage money into the market.

On the other side of the pricing equation, foreclosures and short sales continue to dictate pricing. We don’t see this ending until 2011 to 2012. That doesn’t mean that price will keep falling until then. We have seen more buyers move into the market at different price drop points. If there are more buyers than foreclosure and short sale properties, then prices will stabilize or rise.

Keep your eye on the market if you’re planning to buy anytime soon. If you are, talk to me to see if you qualify for the tax credit. It could mean $6,500 to $8,000 in your pocket that may not be there after April 30th.