Real Estate Information Archive

This just in — the tax credit for first-time and repeat home buyers has been extended by Congress.

The legislation will now go before President Barack Obama for approval. Assuming he signs the legislation and it becomes law, buyers sweating the June 30 deadline to close on homes and receive a credit can relax a bit — they will have an extra three months to finalize their purchases.

We’ve had one home buyer tax credit or another since 2008. The credit was modified and extended once and then again in November.

Under the terms of the most recent tax credit, first time and repeat buyers were required to get a home under contract before May 1 and then close on it before July 1. Qualified first time buyers could claim up to $8,000 while repeat buyers were to receive up to $6,500 — quite an incentive to purchase a house.

Ah, but some people have had trouble closing in time. The National Association of Realtors (NAR) has estimated that up to 180,000 Americans, in fact, were in danger of missing out on the credit unless they were given more time to close on their homes.

Why haven’t people been able to close on their homes prior to July 1? It seems that banks were hit with a lot of mortgage applications from people rushing to beat the deadline — just the thing to delay closings.

On Tuesday, the House of Representatives passed HR 5623 — a bill extending the deadline to Sept. 30. Bear in mind, the extension will only apply to qualified buyers who purchased homes prior to May 1.

The bill passed the House by a vote of 409-5 and then moved on to the Senate. Ah, but a problem popped up — the Senate bill was attached to a bill that would extend unemployment benefits and cost $33.9 billion.

The unemployment bill has met with resistance, thus threatening to derail the last-minute passage of the tax credit extension that the NAR and a lot of homeowners have been demanding for at least a week. The Senate passed the extension by unanimous consent, this stripping it from the unemployment legislation.

Stay tuned — we’ll have more information when it’s available.

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Motivated by falling home prices, buyers got moving  and pushed sales up 17 percent over last year, ending a 33-month homebuying slump in July. DataQuick reported that last month's sales jumped to 2,799 houses, condos and new residences, topping the July 2007 number by 408 units. The last time O.C. home sales exceeded the year-ago pace was September 2005.

At $461,000 , the median price dropped down 28% in just a year, the lowest median since President Bush was inaugurated for his second term. Orange County's median has fallen $184,000 from the all-time high of $645,000 reached in June 2007. That's equivalent to a price drop of $431 per day for the past 13 months.

Tom Moon of Pacific Moon Real Estate in Huntington Beach said, "Houses are becoming a little more affordable (because prices) have dropped 20 to 25 percent,". "There has been a pent-up demand. Buyers have been waiting to buy a house." After nearly three years of consecutive drops, sales almost had almost nowhere to go but up.

In January, sales fell to 1,286 units, the lowest in DataQuick records dating back to 1988. That was down 72 percent from September 2005, the last month before the slump began. "We've been on a winning streak since January," said Mike Hickman, president of Seven Gables Real Estate. "Pricing is finally reaching a level where there's a perceived value by the consumer."

Kerry Vandell, director of the UC Irvine Center for Real Estate, noted that in addition to first-time homebuyers, investors have been moving into the market, buying foreclosed properties at a discount, renting them out and waiting for prices to come back. Vandell adds that President Bush's signature on housing legislation that provides government backing to mortgage giants Fannie Mae and Freddie Mac may have a bit of an impact, helping to increase the flow of cash to home buyers.

"It's gradually going to come back if we can get through the inventory," Vandell said. "This is good news, but you have to drill down to see what's drawing it."

Your thoughts and feedback on this topic is greatly appreciated.  Please feel free to post your comments.

nformed about the Orange County real estate market, economy and life in the OC is what I'm committed to doing.    

For more great Orange County market insight and industry news visit Laguna Niguel Real Estate or view the Orange County Market Trends at Orange County Real Estate.  

Listen to Zen's Laguna Niguel Real Estate Podcast available 24/7.

SEARCH ORANGE COUNTY'S BEST HOMES at Orange County MLS Home Search

1. The Majority of Orange County Home prices dip to 2004 price levels. This drop in home prices combined with the FED Rate cuts (lower interest rates) and high housing inventories in the Orange County made it rip for buyers and investors to step into the market and start buying.  February was the best home sales we’ve seen in months.

2. President Bush signs the “Economic Stimulus Plan” into law which will temporarily change the conforming loan limits for one year boosting California’s limit way above the current $417,000. The final limits and guidelines to be announced in March. Tax payers will be getting an additional refund from the IRS that will hopefully stimulate some spending.

3. The FED announces that they will continue to cut interest rates to stabilize the housing market and the economy. The risks of the economy out weigh the risks of inflation even with Oil selling for over $100 a barrel.