Yahoo News and the AP report that home prices fell in eight out of ten cities across the nation in the third quarter of 2009. The national median price is right around $177,900 the article reports, which is a mere 11% below the same quarter last year.
But it’s not all doom and gloom around the Northwest. Homes sales have increased over second quarter of 2009 and the sales price has increased over 2.5% over the same time last year (2008) according to the Olympian.
The Northwest has always stood alone, *typically* we aren’t affected (or for the sake of arguement, we aren’t affected with the same severity) as the rest of the country.
Even more locally speaking, as of the month of October, the median home price in Spokane Washington was $170,000 (down about 8.1% from 2008). The most astonishing (and powerful) statement is looking at “New Home Sales” down an amazing 34.9% YTD over 2008!
In an effort to help more homeowners stay in their homes and stabilize communities across America, Fannie Mae is getting into the Landlord business.
Qualified homeowners (with mortgages backed by Fannie Mae Loans), can sign away all the interest in their home and enter into a 1-year-lease with fixed payments. The homeowner can stay in their home for the entire term of the lease, afterwhich the lease goes month-to-month at which point experts expect Fannie May may begin to sell these homes. The program is aimed at those who cannot afford or sustain a loan modification according to CNN Money.
I don’t think I’m alone when I say: I believe this will ultimatly delay the sale of a distressed property into the future, and homeowners, will be signing away valuable equity and stability that may only be 1-2 years away from stabilizing.
I also have other concerns:
How can Fannie May possibly manage all of this inventory. There are 50 states with differing Landlord Tenant Acts. My thought is they will work similarly with Property Managers as they do with Agents who sell their REO properties. Giving large pools of rental units to Property Management Agencies.
What about routine maintenance and homes that do not already meet minimum standards as set by local Landlord Tenant laws?
What happens after a year and the tenant is month to month. Perhaps even the market has stabilized and Fannie Mae can turn a profit on the home, or sell it at par rate with relative ease?
From a business standpoint for Fanine Mae – I think it’s a brilliant idea and with a little elbow grease, it’ll be wildly successful. From a standpoint of Increasing Home Ownership –> one of the fundamentals of the Home Buyer Tax Credit, this does not help that effort.
Home ownership is highly important. We need to find ways to keep people in their own homes.
At long last – I can’t even tell you how many calls I’ve gotten about this the last week-and-a-half. Most of them were false information from false claims that the bill had been passed when in fact it had only been voted and passed by a portion of those entities needed to make the bill a law, now the fate of the law rests on Obama’s shoulders.
Long story short, here’s the down and dirty (simply my interpretations only, please verify with a competent Tax Accountant or Tax Attorney – I’m happy to give you a referral).
‘(2) EXCEPTION IN CASE OF BINDING CONTRACT- In the case of any taxpayer who enters into a written binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010, paragraph (1) shall be applied by substituting ‘July 1, 2010’ for ‘May 1, 2010’.’.
What I think: The current Home buyer Tax Credit expires sharply for properties not purchased AND closed prior to 12/1/2009 – which means on 11/30/2009. The new modifications allow for buyers to have a little leeway to write offers UP UNTIL 05/01/2010 and close before 7/1/2010 – which will give a longer lasting effect to the credit which virtually died once we all realized we couldn’t close any more deals prior to 11/30/2009.
‘(6) EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time home buyer for purposes of this section with respect to the purchase of such subsequent residence.’.
‘(D) SPECIAL RULE FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of a taxpayer to whom a credit under subsection (a) is allowed by reason of subsection (c)(6), subparagraphs (A), (B), and (C) shall be applied by substituting ‘$6,500’ for ‘$8,000’ and ‘$3,250’ for ‘$4,000’.’.
What I think:Owners having used a principal residence for 5 out of the past 8 years (consecutively) may qualify as a first time buyer for lesser amounts ($3,250 – $6,500).
Other modifications include:
Single income limitations raised from $75,000 to $125,000
Married income limitations raised from $150,000 to $225,000
A minimum age limit of 18 years of age, unless married.
The bill also includes provisions to extend unemployment up to 13 weeks (among other unemployment benefits)
Also included is allowing businesses to carry back losses up to 5 years for losses incurred in 2008 & 2009.
Extension for home buyer tax credit for qualified military, intelligence and government operatives overseas until 2011.
Increase in some fines for filing S-Corp and Partnership tax returns up to $195.
I’m not an accountant or attorney, the intended information is merely an opinion. You are strongly encouraged to consult an attorney or tax professional for any and all tax incentive issues. I’m happy to provide great referrals!
