On Wednesday, President Barack Obama signed the $787 billion Economic Stimulus Plan into law. We're not going to get into the politics, but simply discuss its impact on our little corner of the world -- residential real estate.
Last year we told you about the Housing and Economic Recovery Act of 2008, which was a tax credit for first-time home buyers. The 2009 stimulus plan also includes a tax credit for first-time home buyers, but is much improved over last year's. This new plan provides a tax credit up to $8,000, while the 2008 tax credit was capped at $7,500. That's not the key difference though. The truth is that the old tax credit was actually an interest-free loan that buyers had to pay back to the government over time. The new tax credit does not have to be paid back ever, as long as the buyer doesn’t sell the home within the first three years.
It's important to note that this is not a tax "deduction." It is a tax "credit." That means it doesn't just offset your taxable income, it actually reduces your tax burden dollar-per-dollar up to $8,000. That's right, first-time home buyers can receive $8,000 of "free money" to buy a home in 2009.
Of course, with all government programs, there are some restrictions. If you would like more information on how these restrictions might affect you, feel free to contact us.
It’s been a while since we made a blog post, partly due to the holidays, but partly because we have been busy with several new buyers. Why, in an uncertain economy, are so many buyers jumping into the real estate market? Do they know something you don’t know? It’s really quite simple - the current market condition represents an unprecedented opportunity for home / condo buyers. So what makes now such a great time to buy?
It’s a buyer’s market.
That’s because there are currently many more people trying to sell real estate than there are people willing and able to buy. That means prices are lower and sellers are more negotiable now than in the past.
Scarcity = Leverage.
Qualified buyers have the power. Not only are there fewer buyers than there are sellers overall, but banks are being more strict on their lending standards. Gone are the no-doc “liar’s loans”, sub-prime, Alt-A and other crazy loan products that created the financial mess we’re in. These tougher standards make qualified buyers even more scarce. If you are a qualified buyer in this market, you are the rare gem. This gives you the upper hand in negotiations.
Mortgage rates near 50-year lows.
Not only can you get a reduced purchase price on a home, but your cost to borrow money is also at historical lows. Many Atlanta mortgage lenders have reported rates under 5% for a 30-year fixed-rate mortgage! This also increases your buying power, enables you to buy more home for a given payment, or get a lower payment on a given home.
People are funny.
Human behavior is sometimes irrational and we often...