6 Key Facts About the First-Time Buyer Tax Credit

This is nicely written overview of the tax credit being offered as part of the House and Economic Recovery Act.  While $7,500 might not seem like a lot of money relative to the cost of a home or condo in Santa Barbara,  it is something to consider when trying to determine what you can or can’t afford.

The tax credit may be enough of an incentive for potential buyers to jump off the fence. That is, if they know about it.   By Robert Freedman  November 2008

The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool to encourage potential buyers to jump off the fence and get into the real estate market.
When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place to buy now. But tax credits can be confusing. To help you understand how the credit works and why it may help you, you must learn the details.
Here are 6 key facts to understand about the Buyer Tax Credit:

1. Buyers have until July 2009 to make a purchase that qualifies.
The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you wait to buy in the first half of 2009, you can still take the credit on your 2009 tax return. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9.
2. Buyers don’t really have to be “first-timers.”
The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years. [Read more]

The Real State of Mortgage Lending (or, yes you can get a jumbo loan)

This is a very helpful rundown on what types of loans are still available.  If one were to rely on the media for this information, you would think that no loans over $417,000 are being made.  But this is definately not the case, as it made clear from the following posting.  (written by a local Santa Barbara mortgage broker)

Jumbo above $729,750

Contrary to recent media reports and public perception, there is very decent money available in the low to mid sixes all the way up to $5,000,000.  The larger institutional lenders do not have this as there is currently no secondary market for this kind of paper and their liquidity concerns are keeping them from making these loans to hold on their portfolio.  However there are a number of smaller, healthier banks that we have access to that are making good loans.  Yes it sometimes takes longer and the pendulum has swung to a more conservative side of the spectrum but these loans are achievable and available to normal people.

Some of the highlights of these different lenders include the following:
* Stated income to $3,000,000
* 20% down to $2,000,000
* Longer termed loans including fixed for 10 years, even 30 years and a 40-year hybrid that is fixed for 15 years

Stimulus Package-Jumbo Conforming up to $729,750 [Read more]

Santa Barbara Foreclosures and Short Sales – Mapped Out…

Last month,  I posted a map of short sales and forclosure for Santa Barbara, Goleta and Montecito.   Since I am currently working with a couple of clients who are interested in purchasing a distressed property,  I decided to run the same search today and see if the map had changed.  I also thought that it might be of interest to you, our loyal readers.  As you can see,  if you compare it to my post on September 5th,  not a lot has changed.

The Dow Dropped 800 Points? That Didn’t Stop One Santa Barbara Property from Attracting Multiple Offers over the Weekend.

By Kelly Knight
Broker/Attorney

Every now and then a property comes on the market that makes average people forget their Wall Street woes and take action.  One such property is 2999 Kenmore, located in lovely Mission Canyon.  The completely remodeled home sits on almost ½ acre with jaw dropping coastline views, in a great school district.  Even though the 3 bedroom, 2 bath home is a bit small, the intoxicating ocean views makes the living area seem larger.

The action taken by sideline buyers was swift – - the listing agent received 4 offers to purchase the property, listed at $1.195 million, even before it had been open to the public for tour.  Two of the offers were all-cash.  My understanding is that the prevailing buyer is an investor coming out of a 1031 exchange, who had to reinvest his money or lose his preferential tax treatment.

So while Wall Street may be in the dumps, Main Street Santa Barbara is looking more and more attractive to investors and the homeowners alike.  What do you think?

The Word on the Street – What’s Happening in Santa Barbara Real Estate…

Here is some anecdotal information on what has happened on the ground in Santa Barbara real estate this past week:

1.  Are people pulling money out of the stock market and putting it into the local real estate market? – We have had multiple reports of buyers who are moving money out of stocks and bonds and buying Santa Barbara real estate.  In certain cases,  they are deciding not to finance the purchase at all, but are instead pulling the required cash to cover the full purchase price.

2.  A new listing on Via Chapperal (photo above), near the 154 highway,  that was newly listed late last week at $3,500,000 sold this weekend with multiple offers.  This is an interesting sale as many agents that I spoke with thought that this property wouldn’t sell at that price, (myself included).  One explanation that we have heard for the high level of interest as that it offered an amazing value when one compares it with a similar home in Montecito or Hope Ranch.  So while Via Chapperal doesn’t offer a high end location, it does offer high end amenities and was thus seen as a great value by at least 2 ready, willing and able buyers.

3.  31 properties went into escrow this past week, which is consistent with what we have been seeing over the past few months.  In light of all of the negative economic news regarding the Wall Street Bailout, this is quite notable.

Senate Approves Plan To Help Stabilize Nation’s Financial Markets

Below is a recap of the bail out plan that was approved by the Senate Wednesday night.  The article was written by staff at the California Association of Realtors.  Do you think the House of Representatives should ratify the Senate vote?
”The Senate this evening approved a revised version of the Emergency Economic Stabilization Act of 2008 in a 74 to 25 vote, clearing the way for full consideration by the U.S. House of Representatives. The House voted down an earlier version of the plan on Monday.

The revised plan, which is designed to shore up the nation’s financial markets, includes a temporary one-year increase in Federal Deposit Insurance Corp. (FDIC) caps for bank and credit union accounts. The cap increases are critical because they increase the funding backstop the public relies upon should their banks fail. The plan also includes extensions on several business tax breaks and adjustments to the alternative minimum tax (AMT) for individual taxpayers. These, as well as the FDIC cap changes, are amendments lawmakers believe will help bolster a smooth approval by the House.
Once approved, the financial rescue plan would allow the government to buy residential and commercial mortgage-related assets, including mortgage-backed securities and loans, in an effort to ease current credit constrictions impacting businesses across all sectors, including the housing market. Provisions to help struggling homeowners avoid foreclosure; increased oversight of the plan; and a limit on compensation for executives of the troubled financial firms that receive assistance; also are included in the revised plan.”