President Obama passed the bill in February with congressional support. The $787 Billion Stimulus Plan contains some rather interesting provisions that impact the real estate market arena. A major bullet point which was designed to stimulate new sales of course, is the First Time Home-buyer Tax Credit. [National Association of Realtors lobbyist proposed $ 14,000 back to ANY home-buyer in 2009 but was finalized to be what we see today] If a first time home buyer (or someone who has not owned a home in 3 years) purchases between 01/01/09 and 11/30/09 they will be eligible for up to a $8,000.00 tax credit when they file their taxes, and depending on when the purchase closes, the credit can be applied to either 2008 or 2009 taxes. Also, a major difference between the two tax credit plans, this one does not require the buyer to return the money although the provision remains that the home cannot be resold for three years or the money then, must be returned. Additional factors put back into the Stimulus bill are: • The FHA, Fannie Mae, and Freddie Mac 2008 loan limits were put back into place for 2009. At the end of 2008, they lowered the loan limits which hurt the higher end market. Why were they set back to begin with, in a down-turning economy? • It also includes a 30% tax credit on Energy Efficient upgrades to your home (up from 10%) such as windows, insulation and furnaces. The credit proposes to be available through 2010 and does include income restrictions, so check with your accountant to be on the safe side. So, what everyone wants to know is “will this help, and is it nearly enough?” Personally, I feel that only time will tell. Buyers that were sitting on the fence, are for the most part still sitting. When a buyer does finally jump, the jump is with great hesitation. It takes just one problem to be found in the home at inspection time, leaving the buyer with a knot in the stomach and another question..'will it get worst and should we try getting the home for juuuuust a little less"? Oftentimes the deal goes south when this emotion enters the transaction. What we need are positive numbers that show values are rising, not dropping. Once we've leveled off with the numbers of homes for sale vs. the numbers of buyers, our market will again be balanced. Until then, we are in a period of market correction. Does that make sense? Bottom line, in Northeastern Ohio, we may have less inventory today than we had at this time last year [great sign] but values and average home sale amounts have hit an all time low. We are on our way back and I personally feel that there is only one way from here - that's up up up and up... I am hopeful that we will see a much healthier market in the very near future.
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