New Information from National Assoc. of Realtors on Homebuyer Tax Credit

The following is information from the National Association of Realtors on the New homebuyer tax credit legislation passed last week. I am passing it along -
NAR Frequently Asked Questions
Homebuyer Tax Credit Changes
National Association of REALTORS® Government Affairs Division
500 New Jersey Avenue, NW, Washington DC, 20001
Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit
Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who
meet all eligibility requirements will qualify for the $6500 credit.
Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a
new home. I have lived in my current home for more than 5 consecutive years and
am within the new income limits. I will go to settlement on November 20. If
President Obama has signed the bill by the time I go to settlement, will I qualify for
the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment
(when the bill is signed). There is no reference to the date of contract for the new credit. The
provision looks solely to the date of purchase, which is generally the date of settlement.
Question: I am a firsttime
homebuyer but was not within the prior income limits at the time I
entered into my contract to purchase on October 30, 2009. I will be covered,
however, by the new income limits. If the new rules have been signed into law by the
time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill.
The income limit and other eligibility rules will look to your status as of the date of purchase,
which is the settlement date. So if the new rules have been signed when you go to settlement,
you should be eligible for the credit (or a portion of the credit if you're within the phaseout
range).
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I
have found a home with a nonnegotiable
price of $825,000. Will I be able to use any
of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount
above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an
absolute ceiling.
Question: I owned my home for 10 years, but sold it two years ago year and have been renting
since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the
other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you
will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000
and lived there until 2008 when he got a divorce. Whether John has been renting or bought in
the interim, he WOULD INDEED be eligible for the credit because he owned a home and
occupied it as his principal residence for 5 consecutive years out of the last 8 years. The
keyword here is "consecutive." As long as he lived in that house for 5 years straight what he
did since 3 years doesn't impact eligibility.
Question: I am an eligible firsttime
homebuyer. I entered into a contract to purchase on
November 1, 2009. Do I have to go to closing before December 1? How does the
extension date affect me?
Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as
if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30
(or July 1, worst case), the purchaser will be eligible for the credit

Letter from President of the National Assoc. of Realtors regarding proposed mortgage interest deduction changes

I claim no authorship or ownership of the following information. It is a letter from the President of the National Association of Realtors. I am posting it on my blog for informational purposes only.
Christine


Dear Fellow REALTOR®,
You may have seen news reports about President Obama’s budget proposal that was released today at 11:30 AM Eastern Time. A small section of the sweeping budget plan has the potential to become a major impediment to a recovery in real estate markets across the nation. NAR is 100% opposed to the provision that modifies the Mortgage Interest Deduction and is prepared to use its formidable array of resources against its enactment.
As currently drafted, the plan changes the Mortgage Interest Deduction by reducing the amount of mortgage deductibility on families earning over $250,000. This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values. If this proposal is enacted it will lead to a new round of price depreciation, will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved.
As you read this NAR is launching a multiphase plan of action to eliminate this provision from the budget plan. In the next 24 hours, NAR will be expressing our concerns directly to President Obama, to all members of the United States House of Representatives and the Senate, placing advertisements in the publications read by Washington, DC decision makers. Additionally, NAR will be forming a coalition with other groups affected by this proposal.
This communication is the first part of our response, we will continue to update you as the situation and events warrant.
Sincerely,Charles McMillan, CIPS, GRI
2009 NAR President

INFORMATION FROM THE TEXAS ASSOC. OF REALTORS®

The following information is from the Texas Association of REALTORS® website intended to educate Texas consumers about the Texas real estate market. It is my intention to share this information with those of you who read my blog - I do not claim authorship or ownership of this material in any way; it was created and compiled by the Texas Association of REALTORS®


Quick facts for Texas REALTORS® to share with consumers

With so many misperceptions created by the national news about the real estate market, you can help Texas consumers understand what’s really going on in your market. Explaining that real estate is local and giving consumers facts about Texas and your area will help alleviate their concerns.

Why Texas is different

Strong, diverse economy:
Texas is strong in industries that are still growing (such as professional & business services, education & health services, government) and has the second largest economy in the nation by GDP according to the U.S. Bureau of Economic Analysis.

Steady job growth:
According to the U.S. Bureau of Labor and Statistics, Texas added 153,700 jobs (1.5% increase in employment) from December 2007 to December 2008, while during the same time the national unemployment rate rose 2.3%.

Top state to relocate:
According to Allied Van Lines’ 41st Annual Magnet States Report, Texas is the No. 1 destination state for residential relocations for the 4th year in a row. New data from the U.S. Census Bureau confirms that Texas gained more residents (484,000) between July 2007 and July 2008 than any other state.

Misperceptions created by national news

What they hear......Median sales prices are down as much as 41%
What they don't hear........That 41% number is from California (Nov. 2008 compared to Nov. 2007). Median sales price statewide is flat in Texas for the entire year 2008 compared to 2007*

Average sales prices dropped $115,000 in one year
That number is from Arizona. Average sales price in Texas is unchanged for the entire year 2008 compared to 2007*

Home prices are the lowest in six years and it takes three quarters of a year to sell a house (Reuters, Jan. 2009)
Over the last six years, home prices in Texas have increased 9% in value (median home prices from Dec. 2002 to Dec. 2008) and in that time have averaged less than 7 months, sometimes much less, to sell.

*Source for Texas numbers: Real Estate Center at Texas A&M University

Statewide facts

· Texas real estate remains a strong long-term investment. The average home sales price in Texas has increased $15,600 from December 2004 to December 2008; over the same four years, median sales prices (half of all homes sold are priced higher and half are prices lower) increased $8,600.

· Texas has steady home value appreciation. Sales prices in places like California, Florida, Nevada, and Arizona have had rapid rises and drops in values, while Texas prices have remained relatively steady.

· Texas homes are more affordable. Using a ratio of average family income compared to income required to qualify for a loan, the Housing Affordability Index indicates the proportion of the population that can afford to buy the average home sold during a certain time period. The higher the index, the more affordable the housing in that area.

· Most borrowers are approved. According to a report by the National Association of REALTORS®, 91% of buyers in Texas were NOT rejected by lenders last year.

· Great rates are available. Mortgage loan rates are the lowest they have been in decades.


· First time buyer incentives. First time home buyers can still qualify for a $7,500 tax credit.