Real Estate Information Archive

On Friday November 6th it was announced that President Obama and Congress passed new legislation that extends the First-Time Home Buyer Tax Credit of up to $8,000 through April 30th of 2010.  The new legislation also expands the credit to grant a $6,500 credit to current home owners purchasing a new or existing home.  This is no doubt great news, and it’ll be interesting to see how this affects our local market.

The 2009 First Time Homebuyers Tax Credit has received a lot of recognition nationally, and even statewide in Massachusetts for spurring home buyers to get off the sidelines where many had retreated following the banking crises of last October.  NAR (The National Association of Realtors) estimates that the current tax credit has contributed $22 billion to the economy, and approximately 2 million people will take advantage of the tax credit this year.  While there's no denying the effectiveness of the 2009 credit, the effect on our local market was not nearly as significant due to income level restrictions of $75,000 (single filer) and $150,000 (joint filers).  In our local market where the average home prices range from approximately $500,000 in some surrounding towns to upwards of $1.1 million in Wellesley, this left many homebuyers phased out.

So what effect if any will the new legislation have on our local housing market?  There are two very important details to be aware of in the new bill.  One is that the income level has been raised from $75,000 to $125,000 for single buyers and from $150,000 to $225,000 for married couples.  While there is now a cap of $800,000 on the purchase price where there previously had not been, this should still open the door to many more potential buyers in our market.  The second new incentive in the agreement would allow current homeowners to claim up to $6,500 as long as the property they are vacating has been their primary residence for at least five years.  This is significant because it incorporates a large, entirely new profile of buyer, and for those who bought at the height of the market back in 2004 and 2005 and have seen the value of their home decline as the size of their family has grown (I'm speaking from experience here) it provides an incentive as well as some breathing room that could soften the blow of the declined property values.

For people who have been weighing the idea of purchasing a first home or moving from an existing home, now is a great opportunity to take advantage of low interest rates, declined property values, and a significant tax credit.  And this would be a great time to start familiarizing yourself with the local market and gaining that market knowledge.  Click here to sign up for our Free Email Alerts that will keep you informed of homes for sale that meet your search criteria.  Or contact us today at 617-894-5278.

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

The Housing and Economic Recovery Act of 2008 was just signed by President Bush with some amazing benefits for first time homebuyers. Call everyone you know who wants to buy their first home (or who hasn't owned one in three years), this is too good to miss - it's a $7,500 tax CREDIT (not deduction but a credit).

If you have not owned a home in three years, you qualify as a first time home buyer. If you buy a home after April 9, 2008 and before July 1, 2009, you qualify for this credit. Call your friends who just bought a home since April 9th and tell them they may take $7,500 off their tax bill if they qualify. It has to be your principal residence, so rentals do not count.

The tax credit is 10% of the cost of the home, up to a maximum of $7,500. This is not an additional deduction that lowers the amount of income to be taxed, it is a tax credit. In other words, you take $7,500 off your tax bill. But there is a catch; the credit you receive now is actually an interest-free loan that must be repaid.

The loan has no interest, and will be paid back over 15 years. You get the credit on your 2008 taxes, but you start paying it back on your 2010 taxes that are due in 2011, so you get at least two years without a payment. You pay back 6.67% of the credit each year, so for a $7,500 credit the payment is $502.50 per year. If you stay put for 15 years, you pay it off with no interest.

What happens if you sell the house? You pay the balance back at the closing. So, you get $7,500 now, and pay the rest of it back if you make money on the sale of your house. What happens if you do not make enough money when you sell your house? They forgive the rest of the debt.

Other restrictions stipulate that you have to buy your first house in three years before July 1, 2009, not have super high income, not use bond financing and buy anywhere in the US.

If you'd like to learn more about this program, please call me!