Why the extension of the $8000 first time homebuyer tax credit is important to Investors in Bucks County, PA

Have you thought about why the extension of the $8000 first time homebuyer tax credit is important to Investors in Bucks County?

Whether you are a wholesaler, rehabber, landlord or private money lender in the Bucks County and surrounding areas, you have a vested interest in the outcome of the proposed extension and expansion of the first time homebuyer credit.

Thankfully, Bucks County and the surrounding areas has not seen as big a wave of foreclosures as other parts of the country.   Although, values have declined as much as 15% or more in some neighborhoods since last September (2008).  There are also a record number of pre-foreclosures and foreclosures that have yet to hit the market and this trend does not appear to have an end in sight just yet, regardless of what our politicians or trade groups tell us. Those of us on the front lines know first hand just how many people are still in need of help and will probably lose their home in one way or another over the course of the next few years by selling as a short sale or by bank foreclosure.  Even those who have applied for a loan modification are not out of the woods.  Statistics show only about 15% of those who apply for a loan modification get approved.  That means 85% of them have only delayed the inevitable.  Worse yet is this glaring stat, of the 15% who do get approved, 50% of them are delinquent again within 6 months.  The math is not hard to do. Even in Bucks County, PA the amount of homeowners in distress will continue to increase to all time highs.

What does that have to do with first time home buyers you ask?  

Well, who do you think is going to be buying all of those distressed homes??  Investors will buy most of them but then who is going to buy them from the investors?  

There are only so many landlords out there.  At the end of the day, the best buyer for these recycled homes is, you guessed it, a first time home buyer.  This holds especially true in the lower valued, first time home buyer communities of Bucks County and the surrounding areas.

Do you think there are more or less first time home buyers because of the $8,000 tax credit?  

The obvious answer is more, and you should be betting your bottom dollar on it.    As an investor, you should be buying these distressed properties for pennies on the dollar, rehabbing them and recycling them to first time homebuyers.   That is a win, win, win scenario for everyone involved.  The banks win by getting rid of their pre-foreclosure and REO inventory quickly, the investor wins by earning a well deserved profit while keeping contractors working and buying supplies and the end user buyer wins because they get a better home at a cheaper price and oh by the way, $8,000 from Uncle Sam as a special incentive.   If you’re not taking advantage of the opportunity that faces you as an investor or a potential first time home buyer, shame on you.

Hopefully this has opened your eyes a bit as to why having this bill extended is important to us all.   As an investor, first time home buyer, contractor or a home supply merchant it is critical in keeping the market churning, keeping people employed and recycling these homes back into home owners hands who can afford them.    

As we recycle through mass amounts of distressed inventory, ultimately, first time homebuyers play an essential role.  Without them our product would sit and sit and sit.   The case could certainly be made first time homebuyers drive every segment of the housing market.  More on that subject later.  

For now, I invite you to do your part in getting the credit extended by clicking on the below link.

Call for Action: Extend and Expand the Homebuyer Tax Credit

 Send your own message to Congress telling them to extend and expand the tax credit. The $8000 first-time homebuyer tax credit expires as of December 1, 2009.  But the usefulness of the credit diminishes daily if the credit is not extended well before that date. Without Congressional action NOW, the market may freeze again – possibly as soon as October. The tax credit has been effective.  NAR research suggests that as many as 350,000 sales this year can be directly attributed to the availability of the credit. The tax credit stimulated market activity.  The volume of housing sales has improved steadily every month since the credit was enacted.  The credit pulled people from the sidelines and created some momentum that had been absent. We will continue to need the homebuyer credit.  Congress must act NOW to be sure that the credit is available through 2010.

Disclaimer: While attempts have been made to verify information provided therein, the author does not assume any responsibility for errors, omissions, or contradictory information contained in this document. This document is not intended as legal, investment or accounting advice. The reader of this blog assumes all responsibility for the use of these materials and information.  Each state has different rules and regulations that must be adhered to so before you act make sure your representatives know and understand the rules of the game in your state.  I will be specifically talking about Bucks County, Philadelphia and surrounding Pennsylvania short sale regulations and rules.