Senate passes & expands home-buyer credit

The senate has passed an extension of the $8,000 first-time-homebuyer tax credit. It is anticipated that President Obama will sign the bill shortly.

In addition, the bill includes a $6,500 tax credit even for those who are not first-time homebuyers, if they have lived in their current home at least five years. This makes the tax credit applicable to millions of additional homeowners.

This is as close to "Free Money" as you're ever likely to find! Give me a call at 717-422-4049 if you're ready to buy or sell!

Rates to Remain Low... For now.

The Federal Reserve will keep its target rate for the federal funds overnight rate at zero to 0.25 percent, and continues to expect that economic conditions are likely to warrant "exceptionally low levels of the federal funds rate."

But low rates can't last forever! Think about buying now while rates remain at historic bottoms.

Foreclosures represent buying opportunity

In a transitioning market, a buying opportunity may have arisen. With the likely extension of the buyers' tax cred AND residual foreclosure listings, a perfect storm of buying opportunity may be the result.

The Harrisburg-based Pennsylvania Association of Realtors (PAR) forewarned Tuesday (Nov. 3, 2009) that there was “no end in sight for foreclosures” across the state or the nation.

PAR, the trade group representing the state’s licensed real estate brokers and sales people, in its “Just Listed” blog Tuesday cited statistics that reported nearly a million property owners nationwide received foreclosure notices in the 2009 third quarter that ended only four days ago.

It also said so-called strategic defaults – in which property owners purposely decided against paying their mortgages so they could pay other bills instead – had risen 128 percent over the last reporting period.

PAR offered two observations for coming months. Foreclosures in Pennsylvania, which until now have been modest compared to the rest of the country, have slowly begun to rise, it said. And because housing markets in Pennsylvania lag rather than lead national trends, it added, foreclosures in the state are likely to increase in coming months.

The "lagging" nature of economic issues in PA may represent the opportunity. If foreclosure opportunities continue to exist in PA while national programs like buyers' tax credit continue/expand, a true regional opportunity may exist.

So if you're seeking to buy a home or investment property, give me a call! It may be the perfect time!

Brookings says Central PA economy is 16th strongest in U.S., housing prices up slightly.

The Harrisburg area has the 16th strongest metro economy in the U.S., according to a report from The Brookings Institution.

The Harrisburg area includes Harrisburg, Camp Hill, Mechanicsburg, Carlisle and other surrounding communities.

The institution ranked the 100 strongest economies in the U.S., comparing employment change, unemployment change, gross metropolitan product and home price change 2008 with 2009.

Government jobs and a slight increase in house prices helped shore up the Harrisburg-area economy. 42 of the 100 largest metro areas experienced increases in inflation-adjusted housing prices, up from 36 during the year ending in the first quarter of 2009. Strong performance persisted in markets that largely sidestepped the housing price “bubble,” such as those in Texas, portions of the Southeast, and the inland Northeast.

Home Buyers Credit to Be Extended?

Congress is moving to extend the credit to buyers who sign sales agreements by April 30. Lawmakers also want to add a $6,500 credit for buyers moving into other homes as long as they have been living in their current residence at least five years.

Pending Home Sales Increase for 8th Month in a Row

Pending home sales rose for the eighth straight month in September, according to the National Association of Realtors.

NAR said Monday that pending home sales rose 6.1 percent to 110.1 from 103.8 in August. It was the largest annual increase on record and marked the longest streak of gains since the measurement began in 2001. It was also the highest level in nearly three years.

"What we're witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month," says NAR Chief Economist Lawrence Yun. "Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery."

The index surged a record 21.2 percent in September from the same period a year-ago.

Interest Rates: Why tiny little numbers mean big bucks lost

Let's take a quiz: Which is the better deal?

1. Buy a home today.
2. Wait a month for the seller to "loosen up" and buy the exact same home for $10,000 less?

Answer: Unless you're paying cash, you cannot answer without knowing the mortgage interest rate.

That's right. SAVING $10,000 dollars on a home might COST you big bucks if mortgage rates go up even a tiny little bit in the meantime.

To be specific: Let's say you, like most people, are planning to take a 30-year fixed-rate mortgage to buy the home. If you needed a $150,000 mortgage to buy that home, and interest rates increased just 00.3% while you waited, you would pay about $10,000 in extra interest - basically wiping out the $10,000 "savings" you got.

If you were borrowing more than $150,000 - then it would be even worse. You'd actually 'lose' money - you would pay more in extra interest than you saved by waiting. Alternately, if rates went up MORE than 00.3% while you "waited for a better price" - then it would be even worse. If you were borrowing more than $150,000 AND rates went up more than 00.3%, it could get scary fast!

We've all grown used to one of the few silver linings of a weak economic period: low mortgage rates. So why think about rates going up? Because a lot of signs point to an economy in recovery, which may likely lead to higher mortgage rates:

• Both housing prices AND mortgage rates are at historic lows. This 'perfect storm' convergence is unlikely to last.
• The stock market has been on a strong "bull run" rise: The Dow Jones Average just hit 10,000 again for the first time in over a year. The S&P 500 is closing in on 1,100.
• Foreclosures have slowed in hard-hit areas like Florida, Nevada and California (and never actually got that high to start with in other areas, such as Central Pennsylvania)
• Unemployment rates seem to have stabilized, layoffs have slowed and job creation is up.
• Financial companies considered "nearly dead" a year ago are making comebacks: From a stock price under $1.00 and talk of collapse, Citibank is not trading near $5.00 and has shown profit 2 of the last three quarters.

Bear in mind - there doesn't need to be a fast and hot recovery in progress for you to lose out. There doesn't have to be a big resurgence in jobs, large drops in unemployment, or other "big" changes. All it takes is a few indicators of recovery and a few tenths-of-a-percent in mortgage rate increases for you to lose money by waiting - and remember, that's EVEN if you get a "better" price. Like the headline says: where mortgage rates are concerned, "tiny little numbers can mean big bucks lost."

But here's the good news: If you wait to buy and rates go up, you're stuck. But if you buy now and rates go DOWN - then you can refinance and get the lower rate anyhow!

And the real secret behind it all? Always remember it may NOT be "free" to wait: ALWAYS consider the possible costs of higher interest rates when making a decision.