Information provided by California Association of Realtors.

Schwarzenegger Extends California Homebuyer Tax Credit
by JON PRIOR
Friday, March 26th, 2010, 1:18 pm

Gov. Arnold Schwarzenegger signed a new bill this week that would extend the $10,000 homebuyer tax credit to Californians.

The state legislature on March 22 passed assembly bill (AB) 183, which gives the Franchise Tax Board authority to extend $200m in tax credits to homebuyers in the Golden State. Buyers of new, unoccupied homes are allocated $100m in credits, and first-time homebuyers of existing homes get another $100m.

The credit is extended from May 1, 2010 to Dec. 31, 2010. The credit is available to buyers on a first-come, first-serve basis, and it’s applied in equal amounts over a three-year period.

According to the governor’s office, the initial $100m tax credit approved in February 2009 lasted just four months.

To find out more information on how you can take advantage of the new tax credit visit the California Home Buyer Tax Credit page.

Mortgage Rates Climb
By Chris Kissell • Bankrate.com

Mortgage rates crept higher this week.

The benchmark 30-year fixed-rate mortgage climbed 4 basis points this week, to 5.15 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.45 discount and origination points. One year ago, the mortgage index was 5.41 percent; four weeks ago, it was 5.13 percent.

The benchmark 15-year fixed-rate mortgage edged up 1 basis points, to 4.52 percent. The benchmark 5/1 adjustable-rate mortgage rose 2 basis points, to 4.53 percent.

WEEKLY NATIONAL MORTGAGE SURVERY
Results of Bankrate.com’s Feb. 24, 2009, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

                                                     30-year fixed                  15-year fixed                        5-year ARM
This week’s rate:                   5.15%                                  4.52%                                       4.53%
Change from last week:     +0.04                                 +0.01                                       +0.02
Monthly payment:             $900.94                            $1,263.93                               $838.97
Change from last week:    +$4.06                               +$0.85                                     +$1.96

BUYERS vs. SELLERS
Home sellers and buyers have just two months — until April 30 — to agree to a deal if they want to qualify for the federal homebuyer tax credit. As the calendar creeps closer to that fateful day, who will be in the catbird seat: buyers or sellers?

Jim Sahnger, a mortgage consultant for Palm Beach Financial Network in Stuart, Fla., says an abundance of housing stock tips the scales toward buyers. “Buyers should gain the advantage,” he says.

David Kuiper, a mortgage planner at First Place Bank in Holland, Mich., also believes excess home supply strengthens the hand of buyers, at least in his market. “Sellers really aren’t in a position to negotiate,” he says. “Buyers will simply move along to the next home.”

However, he concedes, other markets may have stabilized enough that he can imagine “some of the advantage shifting to sellers” as shoppers feel pressure to purchase before the deadline.

Jeff Lazerson doesn’t believe either side has an edge. “I think it’s a neutral situation,” says Lazerson, president of Mortgage Grader, a mortgage broker based in Laguna Niguel, Calif. “We have such a logger jam in the system now, with just trying to get a loan into the system and out the other end.

“I don’t see anybody having an advantage in this situation because the system is still on life support.”

FORGET FORECLOSURES
Meanwhile, homebuyers hoping to qualify for the tax credit — up to $8,000 for first-time buyers and $6,500 for move-up buyers — should forget about purchasing a short sale or foreclosure on the cheap, Sahnger says. It takes time to close on the sale of a distressed property, making it difficult to meet two important tax credit deadlines — April 30 (for having a home under contract) and June 30 (for closing the transaction).
Sahnger says it may be possible to wrap up a short sale before the deadlines if the seller has been preapproved for sale at a certain price and the buyer agrees to act fast. But such success stories are likely to be rare, he says.

“Buyers should stay away from short sales right now,” he says. “The time required to get all the negotiations in is quickly waning.”

Lazerson agrees: “The foreclosures and short sales — those are taking months and months to get a resolution.”

Instead, Lazerson urges shoppers to focus on finding “clean inventory,” homes unattached to a short sale or foreclosure process. “The clean inventory is the stuff everyone wants now because those transactions can happen pretty quickly,” he says.

In today’s market, finding such a property may be a challenge. “There’s not a lot of clean inventory out there right now,” Lazerson says.

To increase the odds of success, Sahnger urges buyers to work with a real estate agent who will “show them properties only where there is a likelihood of getting a deal done.”

“This is not a time to be working with an agent that does not know the landscape,” Sahnger says.

SUMMERTIME BLUES?
The window of opportunity also may be closing fast for sellers, Sahnger says.  Once the credit expires, he says, the housing market could experience “a real hangover” of soft sales that mirrors the slide in auto sales following last fall’s Cash for Clunkers program.

“Anyone that sits on their hands thinking they are in control as a seller could end up woefully disappointed this summer,” he says.

However, Lazerson believes buyers and sellers may get a reprieve this summer. He thinks chances are good Congress will either extend the homebuyer tax credit again or try something else to boost home sales.

“The guys sitting in office right now, they don’t want to get thrown out,” he says. “There’s going to be some other subsidy or stimulus to keep that whole thing going.”

If you’re in the market for a mortgage or refinance, you can look for the best interest rate by searching Bankrate’s rate tables.

By Rex Nutting, MarketWatch

WASHINGTON (MarketWatch) — Home buyers in November rushed to qualify for what they thought would be an expiring federal tax credit, boosting resales of U.S. homes by 7.4% to a 6.54 million seasonally adjusted annual rate, the National Association of Realtors reported Tuesday.

The sales pace was the highest since February 2007 and was the third-straight large increase in existing home sales. Sales are up 28% since August. 

Sales are up a record 44.1% in the past year, reflecting a recovery in the housing market after the sharpest downturn in decades. Sales are now off just 10% from their peak.

“U.S. homebuyers are continuing to take advantage of the (still) very affordable housing conditions and the various tax incentives in place,” wrote Millan Mulraine, an economist for TD Securities.

“While low mortgage rates and the homebuyer tax credit will support housing demand into the early part of 2010, further gains in sales will depend on improvement” in the job market, wrote Gary Bigg, an economist for Bank of America’s Merrill Lynch.

Buyers were hurrying in November to finalize sales ahead of the Nov. 30 expiration for the tax credit, said Lawrence Yun, chief economist for the real estate lobbying group. The tax credit was subsequently extended to June and expanded to include repeat buyers.

More than half of the sales in November were to first-time buyers, Yun said. About 2 million first-time buyers have taken advantage of the tax credit, Yun estimated, adding that he expects an additional 2.4 million to take advantage of the expanded and extended tax credit. 

Economists surveyed by MarketWatch were expecting existing home sales to rise to a 6.28 million annual pace in November. Sales in October were revised down to 6.09 million from 6.10 million.

Sales of single-family homes jumped 8.5% in November to an annual rate of 5.77 million, the highest since April 2006. Condo sales were flat at 770,000.

The median sales price in November was $172,600, down 4.3% in the past year, the smallest year-over-year decline in two years.

The inventory of unsold homes on the market declined 1.3% to 3.52 million, representing a 6.5 month supply at the November sales pace, the lowest in three years.

The inventory data are not seasonally adjusted; inventories typically decline in the autumn months.

Yun said he expects sales to weaken slightly in December and January as payback for sales that were pulled forward into October and November to meet the deadline.

The keys to a sustainable recovery in the housing market are stable prices and reduced inventory of homes for sale, Yun said.

Distressed sales — foreclosures and short sales — accounted for about a third of sales in November.

Most analysts expect high levels of foreclosures to persist for the next year, at least, with more troubled loans recasting to higher payments and more homeowners losing their jobs.

View the Existing Home Sales Overview provided by the National Association of Realtors.