Lobbying intensifies to extend first-time home buyer tax credit

Lobbying intensifies to extend first-time home buyer tax credit

Trade groups for real estate agents and home builders are pressuring Congress to continue and even broaden the $8,000 credit, which is scheduled to expire Nov. 30.
By Kenneth R. Harney - LA Times, Real Estate

August 23, 2009

Reporting from Washington - It's one of the biggest unknowns bugging would-be buyers of houses and condos this summer: Will Congress let the $8,000 nonrepayable tax credit for first-time purchasers expire as scheduled 14 weeks from now?

Or will the credit get a second life and be extended for six to 12 months, taking pressure off buyers, real estate agents and escrow companies?

That's an especially urgent matter if you're a buyer just starting to shop and you see entry-level prices bottoming out or rebounding in many local markets. The tax credit statute requires buyers to fully close on their purchases -- not just be in escrow -- no later than Nov. 30. This doesn't leave a lot of leeway for people who haven't yet decided on a specific house and who haven't nailed down financing.

The process of negotiating offers, signing sales contracts, applying for a loan and completing the closing can easily extend for two months -- or a lot longer if things get off track.

Given the rapidly approaching deadline, what's the likelihood that Congress will allow at least a little extra time? Here's a quick overview: Although Congress is on its summer break, most members of the Senate and House use part of the August recess to meet with and listen to constituents in their home districts.

This year, the two biggest housing trade groups -- the National Assn. of Realtors and the National Assn. of Home Builders -- are spending the month mounting intense lobbying campaigns to make the case for extending the credit and maybe even expanding it. The effort is targeted first at the districts of members of the two tax-writing committees -- House Ways and Means and Senate Finance -- but is expected to cover most other members as well, according to officials of the two groups.

Delegations of home builders and real estate brokers already have begun descending on district offices, delivering what Jerry Howard, president and chief executive of the builders association, calls "the hard economic facts" -- the numbers of houses sold in each Congress member's district that are attributable to the tax credit; the economic ripple effects on local businesses, manufacturers and service industries; new jobs and income; plus the additional tax revenue that all this activity will help produce for local governments.

On a national basis, according to economists at the National Assn. of Realtors, the credit will be responsible for 300,000 to 350,000 additional sales of houses this year. Each home sale generates about $63,000 in downstream "ripple effects" elsewhere in the economy, they say.

If you accept the numbers, which some analysts consider a stretch, this means the housing credit provides a powerful, immediate stimulus bang for the buck. Failure to extend what may be one of the most effective pieces of the Obama administration's 2009 stimulus legislation would cost jobs, economic growth and tax revenue, the housing groups contend.

There are some signs that Congress may be getting the message. Bills are pending in both houses to extend the credit for another year. Senate Majority Leader Harry Reid (D-Nev.), whose state has been among the worst hit by the housing bust, reportedly favors an extension of the credit. He was quoted to that effect by the Las Vegas Sun on Aug. 5.

Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, is cosponsoring a bill with Sen. Johnny Isakson (R-Ga.) that would raise the credit amount to a maximum of $15,000. Meanwhile, the Realtors and the builders are pushing not only for extension of the credit, but for broadening it to cover all home purchases in 2010.

But can any of this happen before the Nov. 30 deadline? The key complicating factor here is Congress' heavy load of higher-profile issues that will get attention before anything else in September and October. On top of that, a tax credit extension would cost billions in lost revenue -- a big negative when the federal budget deficit is in record red-ink territory.

In the end, however, given the political economics of the housing credit, the odds favor some sort of extension, probably later rather than sooner.

kenharney@earthlink.net

Distributed by the Washington Post Writers Group.

Three Months and Counting....

The $8,000 tax credit for new home buyers is set to expire December 1, 2009. With inspections, title searches, and funding approval, it can take a month or longer to "close" on a property. That doesn't leave much time to take advantage of this sizable incentive. This is a fully refundable, dollar for dollar tax credit, which means it will reduce your tax bill by $8,000. If you owe nothing or are due a refund, you'll recieve an extra $8,000!


Anyone who has not owned a home as a principal residence for three years is eligiable for the tax credit. In other words, if you've owned your home in the past, but have rented for the last three years or longer, you are considered a potential new home owner again. The house you purchase must be considered your primary residence and there is a phase-out based on higher incomes. To see more information on the program, click here.

$8,000, coupled that with 5 to 20% discounted home prices and 5.5% interest rates, and it is hard to imagine a better time to be a buyer! If you would like more information on possible homes or condos in the area, please contact me at 615-545-8611 or at jeff@jefffulmer.com. You can also search my web-site, http://www.jefffulmer.com.

Zillow Home Prices for Davidson and Williamson County

According to Zillow, at the end of June, 2009, Williamson County home prices are down 9.6% from one year ago with the average price being $297,800. Year to year, homes in Franklin TN are down 8.1% to $267,100. Homes in Brentwood TN fared a little better, down 6.6% to an average price of $463,300. (By the way, I have a great new listing in Brentwood for $374,500). If you would like to see me more prices in Williamson County (Fairview, Nolensville, etc.), you can click here
http://www.zillow.com/local-info/TN-Williamson-County-home-value/r_3080/

From June 2009 to 2008, Davidson County home prices have fallen 5.6% to $147,200. Right on par with the rest of Nashville, Oak Hill is down 5.6% (although the last month and quarter have seen a slight uptick) with the average price being $449,500. Forest Hills saw a decent uptick last quarter and has actually seen a 2.1% increase in property value year to year. Bell Meade is down 17.2%, but before you feel too badly, the average sales price was still $1,123,300. If you'd like to see more area property values, you can click here.

As always, you can do your own home search on my web-site, www.jefffulmer.com.

WCAR Announces July 2009 Housing Numbers

Aug 07 2009
WCAR Announces July 2009 Housing Numbers



August 7, 2009 (Franklin, TN)—The Williamson County Association of REALTORS® today announces the sale of homes statistics for Williamson County, Tn. for the month of July. There were 303 residential and condominium closings reported for the month, according to figures provided by RealTracs Solutions, the multiple listing service used by REALTORS® in the Middle-Tennessee area.


Compared to July of 2008, the residential home closings decreased 8 percent and the median price for residential homes decreased by 9 percent. Days on the market (DOM) for residential homes increased by 18 as compared to July 2008. Condominium closings decreased by 50 percent. The median prices for condominiums increased by 15 percent and days on the market increased by 63 days compared to July 2008.

July 2009
Closings Median Price Average Price DOM
Residential 289 $330,000 $409,599 95
Condominium 14 $242,000 $234,750 149


July 2008
Closings Median Price Average Price DOM
Residential 315 $363,500 $429,120 77
Condominium 27 $211,044 $227,407 86



July 2007
Closings Median Price Average Price DOM
Residential 437 $384,900 $449,994 66
Condominium 35 $215,000 $229,134 76



July 2006
Closings Median Price Average Price DOM
Residential 518 $373,353 $419,341 46
Condominium 36 $185,000 $215,615 50


“Housing sales continue to remain strong through the summer months as the increase in homes sold from June 2009 to July 2009 was 9 percent. Buyers should consider taking advantage of the last few months available to utilize the $8000 Home Buyer Tax Credit. This is available to first –time buyers and those who have not owned a home in 3 years. Contact a REALTOR for more information and to see if you qualify,” stated Diane Johnson, 2009 President of WCAR.

HOME SALES TOP 2,000 FOR SECOND CONSECUTIVE MONTH

HOME SALES TOP 2,000 FOR SECOND CONSECUTIVE MONTH



Home sales in Greater Nashville exceeded 2,000 for the second month in a row, and there were over 2,000 sales pending for the third consecutive month. There were actually 2,214 closings, down just 11% from the 2,488 closings in July of 2008.

The median price of a single-family residence was $171,100 and for a condo it was $142,146. That compares with median prices of $179,995 and $162,900 respectively last year.

Inventory was down slightly from last year with 24,592 properties available in July of 2009, compared with 25,023 in July of 2008.

FOR ENTIRE REPORT, CLICK HERE

Home sales numbers continue uptrend

Home sales numbers continue uptrend
July year-over-year drop smallest in two years; prices off 5 percent
Email | Print By Kyle Swenson



08-10-2009

As with many economic indicators these days, things are no longer as awful as they once were.

Last month, the Nashville area again saw over 2,000 home closings, according to figures released today by the Greater Nashville Association of Realtors. July saw 2,214 home closings — an 11 percent drop from last July's numbers and a decrease that's less than half May's year-over-year drop and the smallest such drop since August of 2007.


The latest postings bring the year-to-date closings for the Nashville area to 11,454, a drop of 26 percent from last year at this time.

There were 2,147 home sales pending at the end of July and the average number of days on the market for a single-family home is 87. The medium home value is $171,100, down from $179,995. The average condominium value is $142,146, down from $162,900.

The area inventory was 24,592, a dip from 25,023 in 2008.

“There is a good amount of inventory available, though slightly less than last year,” said GNAR President Mike Nichols in a release. “Interest rates have shown some upward trends recently and the $8,000 tax credit is scheduled to end soon. So, those who are considering the purchase of a home may want to consider acting before circumstances change and costs increase.”

5th & Main loses crucial FHA backing

5th & Main loses crucial FHA backingNashville Business Journal - by Jenny Burns Staff Writer
Friday, August 7, 2009



East Nashville’s 5th & Main condo project has lost its prime source of financing for its buyers — the latest snag for the troubled downtown project.

The U.S. Department of Housing and Urban Development rejected 5th & Main’s Federal Housing Administration approval and said no loans would be insured after June 10.

Developers say the rejection could stall the project because its condos, which start around $150,000, cater to entry-level buyers, who are increasingly looking to FHA loans for financing. FHA allows for a 3.5 percent downpayment — compared to conventional loans which can require more, often 20 percent.

The 5th & Main mid-rise fell into receivership in January. Sales contracts signed prior to that have fallen through, which led to the FHA denial, says attorney John Cheadle, receiver for the project, which is owned by Wachovia Bank. FHA rules require 51 percent of a project’s units to be under contract for buyers to qualify for the loans.

“It’s not a good thing, but it’s one that’s expected when you’ve got a low volume of sales,” Cheadle says.

If a condo project loses its FHA approval, it’s likely that potential buyers will also be unable to get loans from lenders that might sell to Fannie Mae. That limits “financing options for a non-warrantable condo that most lenders do not offer,” says Dianne Payne, production manager at the mortgage division of Magna Bank.

Payne says Magna is one of the few lenders that still offers portfolio financing, where a bank keeps a loan on its books rather than selling it. These portfolio loans typically require a 20 percent downpayment.

“There’s not as strong an appetite for the condo market. It definitely holds its own level of risk,” Payne says.

To remedy the problem, Cheadle says Wachovia and Bank of America are working together to come up with a portfolio loan product they can offer at 5th & Main. It would give buyers an option but would still require a higher downpayment than FHA loans.

Mark Deutschmann, owner of Village Real Estate, says he’s also working with Wachovia and Wells Fargo to get Fannie Mae approval. The government-sponsored Fannie Mae buys conventional loans but does not insure the mortgage for lenders like FHA does.

The modern, edgy design of the 5th & Main project was the brainchild of Nashville nonprofit Affordable Housing Resources, who originally developed the project to spur re-development in East Nashville.

Real estate agent Grant Hammond, who specializes in condos, says if Wachovia isn’t willing to extend loans on condos it now owns, “that is a large signal to me that the bank does not have very much confidence in the project.”

Until that happens, he’s advising his clients not to take the risk of buying a 5th & Main unit.

In the meantime, Cheadle says Village is offering lease/purchase agreements so potential buyers can move into their units now and close the sales when FHA financing is restored. That won’t happen until the project has sold 66 of its 129 units.

Five units were sold before the project fell into receivership. None have closed since.

But five sales are pending for buyers paying with cash, and 15 people have signed lease/purchase agreements, Deutschmann says. A recent 5th & Main lunch tour brought out 126 shoppers. The building’s units range fro m $149,900 to the $542,000 penthouse, and many units are selling at a 25 percent discount.

Deutschmann says he doesn’t know how long it will take to get the FHA approval reinstated, but the delay could affect those looking to apply for the $8,000 federal first-time buyers tax credit. A deal would need to be completed by Dec. 1 to be eligible for that credit.

Federal Programs to Modify Mortgages Helps Few Struggling Homeowners

Federal Programs to Modify Mortgages helps few struggling homeowners
by Naomi Snyder - The Tennessean - August 5, 2009

Jureen Hendrickson used to have a job collecting debts for a bank. Now she finds herself on the other side of the phone line, desperately trying to get Bank of America to modify her home loan to avoid foreclosure.

"I'm calling and I'm asking for help, and I don't feel as if they're working with me,'' said Hendrickson, a 46-year-old who lost her job in March. "I'm up a creek without a paddle."

Five months after the Obama administration launched its ambitious $75 billion "Making Home Affordable" plan to provide incentives for financial institutions to modify home loans for struggling homeowners, only about 235,000 loans have been modified, or about 9 percent of those eligible nationwide.

Bank of America modified just 4 percent of eligible loans, and Wells Fargo 6 percent, a U.S. Treasury report said. Wachovia Corp., which was taken over by Wells Fargo in December, modified 2 percent.

"We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, a Treasury assistant secretary. "We expect them to do more."

Lenders say they're working to address problem loans, and some have been modifying home loans long before the federal government's program, but local housing counselors say not enough has been done on either front.

"The whole (federal) program is rife with problems and chaos,'' said Jarmaine Betts, counseling director at Affordable Housing Resources in Nashville.

At the current rate, it would take more than seven years to reach the government's goal of 4 million loan modifications. The Treasury, however, said it remains optimistic that the program can reach its goal of handling 3 million to 4 million loans in three years, assuming modifications speed up.

Betts said he has counseled close to 100 homeowners in trouble on mortgages since April, but only 10 to 15 have seen their home loans modified. One client has been waiting seven months for an answer.

Waiting game: Spring Hill anxious about future after GM bankruptcyCity hopes plant will gain new vehicle

Friday, July 31, 2009
Waiting game: Spring Hill anxious about future after GM bankruptcyCity hopes plant will gain new vehicle
Nashville Business Journal - by Jenny Burns Staff Writer



Barber shop owner Dianne Colley cuts the hair of many workers at the General Motors plant in Spring Hill, and she worries if she’ll still have them as customers.

One of her clients is taking the early retirement package offered at the plant to cut jobs. Several others are requesting transfers to other cities to keep their jobs with the giant automaker.

Business is down 30 percent at the ABC Barber Shop, says Colley, who’s anxious about whether the GM plant will close.

“It’s going to hurt the economy down here when they close up,” she says. “Everybody is just waiting to see what happens.”

Uncertainty hangs over Spring Hill as its largest employer has shaken confidence. Real estate and retail sales are lagging as folks wonder about the future of this bedroom community about 30 miles south of Nashville.

GM workers returned to work this week after a seven-week shutdown, but they know that come November, the plant will idle unless the automaker brings another car line.

GM spent $690 million overhauling the Spring Hill plant, and its 2,950 workers were building the Chevrolet Traverse sport-utility vehicle. But during its bankruptcy, GM announced that it was moving Traverse production to Michigan, saying it will idle the Spring Hill plant in November except for about 600 workers who will make parts.

The summer closure sent Maury County’s unemployment rate skyrocketing to 17.3 percent in June, the ninth worst rate in the state of Tennessee, up from 11.8 percent in May.

Last week was the deadline for workers at the plant who were offered buyouts to take them, but a GM spokeswoman would not say how many took the offer. The automaker also has not said how many Spring Hill workers will have the option to follow the Traverse to Michigan, says Andrea Hales, plant communications manager.

The impact of GM’s woes on the area’s economy is hard to separate from the recession gripping the nation.

Frank Tamberino, president of Maury Alliance, the county’s economic development agency, says interest has picked up from retailers looking to locate in Spring Hill. But getting that interest to turn into signed contracts has been difficult.

Retail sales tax collections have dropped 3 percent in Maury County in the past 12 months to $61.9 million.

Home builders say the unknown fate of the plant has had an impact on sales.

“We have had quite a few people that have looked at buying and are telling me they are waiting to see what is going to happen with the plant,” says David McGowan, president of Regent Homes, who has a development in Spring Hill called Arden Village.

He’s built one single-family home, five townhomes and 12 condos there, but decided to lease the condos about a month ago because sales were so slow.

Sales of single-family homes in Spring Hill were half of last year’s levels in January and February, dropped 30 percent in March and April and fell 70 percent in May and June. By comparison, sales of single-family homes have been down 3 percent to 6 percent for those same months in Greater Nashville.

GM reopened the Spring Hill plant in October after a year of modernizing the plant to produce the Traverse. With the Traverse shifting to Michigan, GM says the plant “could be brought online at some point in the future should GM require additional capacity due to increased market demand.”

In June, GM chose Orion Township, Mich., over Spring Hill for production of a small car. Community leaders now hope GM will send another vehicle here.

“If we are getting another vehicle, then we’re rolling,” says Jimmy Dugger, a broker in Crye-Leike’s Columbia office.

Dugger says building in Spring Hill and neighboring Columbia has slowed drastically, with a handful of builders putting up new homes.

Spring Hill has an 11.5-month supply of homes on the market. That could shoot up if a large number of GM workers take transfers.

Trey Lewis, sales director at Ole South Properties, says builders are anxiously watching how many workers are staying or moving. A major exodus could flood the resale market with homes, he says.

Jim Smith, interim city administrator in Spring Hill, says he expects the automaker to give Spring Hill more work.

“I can’t see that they would let it sit idle for too terribly long,” he says.