Doing the Charleston!

    I get very frustrated that all I hear is bad news on TV, the radio, news feeds, etc. Can't they simply accept that we KNOW what is affecting our pocketbooks, and try to cheer us up with some perspective.

     Utah Lieutenant Governor Gary Herbert shared some info with REALTORS® thru Broker Agent News, that I think gives us some fine perspective. Below are some excerpts.

“Bank Closures at an All Time High in 2008”. Hogwash!

• In 1989 there were 1,004 bank closures.

• In 2008 there were 30 bank closures

• On average there are 94 bank closures per year

“Foreclosure Rates Show No Sign of Slowing”. Baloney!

• During the Great Depression Foreclosure Rates were 50%

• Nationally today our Foreclosure Rates are 3% (1.4% in Utah)

• During the Great Depression Unemployment ran at 25%
  
• Nationally today our Unemployment is 7.2%

• as they unlocked the front door of their very first home
• who finally bought a home that did not require owning a snow shovel
• as they held their first dinner party in the beautiful home they had always dreamed of owning and worked hard to finally afford
• who enjoy a renewed sense of joy intheir lives after moving closer to their children and grandchildren
• as a growing family moved into a home with the space they needed for each child to have their own room, and maintain the sanity of the parents
• when they anticipate that 'ahhhh"  feeling they get during a long weekend or vacation at their "get away" place

I could go on and on. My point is, I want people to know that owning a home, having a decent job, paying your bills on time, and enjoying a life that this country allows like no other, will be a reality again ... and in the not too distant future. Hang in there, "the American Dream is still alive". And, after this nagging, but not chronic, ailment has passed, we can add the comforting words " and well". 

I plan to help make that happen -  one day at a time, one step at a time, accepting that I will be better at it some days than others, and rejoicing when plans come together just right - but relentlessly moving toward the happiness that those simple pleasures in life can bring. 

Geez, I am really rah, rah today!!  But I'm smiling, so I'm going to be OK with it.

Many people are scratchng their heads trying to understand just how the homeowner's tax credit will work. I 'm trying to figure it out too.

As I understand it, the new stimulus bill is actually changing the terms of the $7,500 tax credit that was issued as a part of the Housing Recovery Act that Congress passed last summer. Current law provides for up to $7,500 tax break for the purchase of new homes and would allow buyers — even those who purchase in 2009 — to claim the credit on their 2008 taxes (by filing an amended 2008 return after the closing on their new home). But, this tax break is “refundable” to the government, which basically means it is a 15 year interest free loan, and 1/15 of it has to be paid back each year with your tax return.

The stimulus bill now under consideration would make the tax credit a true credit that does not have to be repaid. Here are the basic differences in the housing portions of the bill:

The House version would give first-time home buyers only a nonrefundable tax credit of 10% of a home’s cost, up to $7,500. But, income caps would reduce the credit for individuals earning over $75,000, or couples earning over $150,000. A separate measure has been introduced in the House that would expand the tax credit to $15,000 but would require a 5% down payment on mortgages. The Federal Housing Administration currently requires a minimum 3.5% down payment.

The Senate plan includes a more generous credit of 10%, up to $15,000, which would be available to all homebuyers, with no income limits,  and it also would be nonrefundable. “Nonrefundable” means it is not a loan from the government & you don’t have to pay it back, with the exception being, it would require buyers to pay back the credit if they sell the house less than two years after they buy it. The tax credit would take effect when the bill is signed into law by the president, and it would last for one year.

While the $15,000 credit has fewer restrictions than the existing credit, there may be one big difference.You could only receive the credit to the extent that you owe federal income taxes. For example, a family of four that makes less than $82,000 could have a tax liability of less than $7,500 and they would not receive the full value of credit.

Current interpretations indicate if you bought a home in 2008 and use the current $7,500 home buyer tax credit, you cannot retroactively receive $15,000 credit, if it becomes law. Not sure if this will hold or not.

Important note - The tax credit cannot be used to buy a second home in either the House or the Senate’s plan.

Mary Trupo, a spokeswoman for the National Association of Realtors said "Our economists have studied the effect [of the credit] and they say there could be a 10% increase in home sales if it's implemented.  It gives people who are sitting on the fence or who have inadequate funds for closing costs an incentive to act now."

But, one thing we all must remember, the stimulus bill hasn't made it's way into being law. There is no $15,000 home buyers tax credit yet.  Since the Senate version is different than the House version, the bill will have to go to a conference committee consisting of members of both the House and the Senate in order to reconcile the differences between the two bills.  Here there would be more opportunity for any provisions of either version to be deleted.

THEN the bill goes back for voting. Assuming passage by both the House and Senate on the reconciled bill, it would be sent to President Obama for his signing into law.  Obama has made it clear that he wants a bill to sign by Feb 16. Whether he gets that or not, is yet to be seen.  

We REALTORS®, and all you home buyers and sellers out there who are holding your breath to see what is going to happen that will help you, can only hope that the stimulus bill will be effective in returning the housing industry to some semblance or normality, and soon!