Big news starting into the week is action following the progress announced Friday in Washington on the Stimulus Bill. While a compromise has been reached in the senate finance committee, the path to completion is far from smooth. German Chancellor Bismarck said in the 1800’s: “There are two things you don’t want to see being made—sausage and legislation.” This is certainly still true today. The senate has failed to publish any legislative language on the compromise so we are operating from news reports. We do have access to a spreadsheet supplied by Senator Ben Nelson, D-Neb who has been working for the compromise (click on link). This data is stated in thousands of dollars and shows how much it is to spend nearly a trillion dollars. Remember that a trillion is a million millions! If you spent $1 for every second of every hour of every day ($86,400.00 per day), it would take you over 31,000 YEARS to spend a trillion dollars.
One thing we already have is the language on the Homebuyer Tax Credit because it passed a Senate floor vote and will stay as an amendment to whatever bill is finally sent back to the House from the Senate. The news on the Credit is very good for homebuyers. Most of the complaints about last year’s attempt at a credit have been corrected here. The credit would now be $15,000 and be truly permanent (non-refundable if you stay in the home >2 years), it will be for all buyers and not just first time home buyers, and will not be limited on income of the buyer, etc. This really would be a benefit to homebuyers in our area and completely replaces the $7,500, refundable and limited version currently not doing much. A complete, side-by-side analysis prepared by the National Association of Realtors® is attached at the end of this blog and worth reading. Remember it will only benefit those who buy a principal residence after the legislation is signed into law by President Obama and before a sunset date of September 1, 2009.
Other real estate related proposals in the legislation includes a possible increase in the Freddie, Fannie and FHA “conforming” loan limits. This one has lost steam however, and will probably not make it through. This like so many other tempting news items (the elusive future 4% rates for example) may keep your buyers from moving forward when they would really benefit from taking advantage of the fantastic opportunities that are available today with interest rates still right at 5% and housing prices very near the bottom. There is a great write up on classic real estate buying mistakes further down in the “Mortgage Market View – Avoid This Costly Mistake!” Don’t miss it. A realtor friend said this week “Would you rather miss the market by being a day too early or being a day too late?” and I can’t agree more. Dave, if you would like our help in reinforcing that message for someone on the sideline, give me a call!
The jump to compromise was really pushed forward Friday by the increasingly gloomy employment information. The Weekly report below gives full detail on the 3.6 million jobs lost since the start of the recession (now identified as December 2007.) The most recent jobless report will come out Thursday. The other big economic news, other than the Stimulus Bill this week will be the retail sector reports on Thursday. The expectation listed below is for a month over month drop of another 0.5%, but other economists I read are looking for more than a 1% drop. Both of these bad news announcements should make for some gloomy headlines in Friday’s papers.
Even with all of that, the mortgage rates are phenomenal, the market is poised, the new and improved credit should be in place before any of your contemplating buyers can close a deal – it is time to act! Let us help you, your family and friends get the professional mortgage advice they deserve. I look forward to talking with you soon. Make it a great week! - Dave
If you want to see further detail of the House proposal for the Stimulus Bill, there is a great graphic at the Washington Post – click here. Remember though that this is only the House version which has been compromised already once by the Senate and will be meshed in joint committee later this week, but it gives a good view of the broad framework and timing of the spending.
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