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Mar
06

Increased Demand?

Posted by Mary Burke

One of the Key Indicators of the rules of investing is supply and demand. Refer back to my previous blog in December!

DEMAND? Demand is surging!Some local Orange County areas have doubled their sales numbers compared to last year. Multiple offers are becoming common place and the surprising new development is how many offers are cash! If history repeats itself, and it usually does, when stock markets go down people look for someplace else to put their money. Combine this with the instability of banks right now and where can you put your money? Real estate has been a proven asset for the long term investor. It will not disappear and it can provide income! What more could you ask for!

SUPPLY? Supply of available homes for sale is decreasing. Several factors are contributing to this such as the moratoriums on foreclosure, sellers unwilling to sell in adverse market conditions, and banks are more willing to help troubled borrowers stay in their homes. Supply is at an average of 4 months in the low to mid price ranges. However, multi million price ranges are still seeing a very long market time-up to 12 months!

Last week’s newly revealed stimulus plans haven’t even factored into the market yet. Impact is hard to predict but this is the basics as I understand them so far. More details will be revealed when the programs officially launch but here is how the President’s Economic Stimulus Plan for 2009 is shaping up so far!

Tax Credit - $8,000 tax credit for anybody that purchases a home and  is a “first time home buyer” technically anyone who has not owned a home in the prior three years.  This credit is good on any primary residencere from January 1st through the end of November, 2009.  Income limitations do apply and the tax creditt begins to phase out for two income families above $150,000 and individuals above $75,000.  Another requirement is to live in the home for two years.

Conventional Loan Limit - the conventional loan limit for high cost areas will increase for high cost areas to last year’s $729,750 level.  The limit had dropped to $625,500 on December 31, 2009.  This should restore buying activity in the $700,000 and $800,000 price range.

California New Home Tax Credit.

California if offering a tax credit worth up to $10,000 to any home buyer, first time or not, of any income level, who buys a home between March 1, 2009 and March 1, 2010.

This credit is only available if you buy a newly-constructed home that’s never been lived in. This credit is only good for the time frame mentioned above and only deductible on 2009 and 2010 tax returns. Also the state has only allotted $100 million for this program and once it runs out it is over. So I guess the moral would be to be sure and purchase and file on your 2009 tax form if you want to be relatively sure you will get it.
Taxpayers must live in the home for two years or pay the credit back. The state tax agency will pay out the credit over three years; thus, taxpayers would receive the credit in 2009, 2010 and 2011, or in 2010, 2011, and 2012.
Even though this might give unfair advantage to new homes it seems like a good idea to get this market moving.
It takes a good while to build a home from start to finish so I would guess this will most likley affect current standing inventory or Close Out inventory. Many builders are already sitting out this market and I doubt this will give them enough incentive to jump back in! Or enough time!
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