With the $8000 tax credit almost gone, why is this STILL a good time to buy?
PRICES (More House For Less)
Some submarkets have “hit bottom”. In the Washington DC metro area, the industry professionals and economic experts believe that pricing for the lower half of the market (generally, under $500,000 in Loudoun; under $750,000 in Fairfax County) are as low as they are going to go, and many are predicting prices will start to increase, and in fact, in some areas, we’ve already seen that.
INTEREST RATES (Low Rates = Affordability)
The Fed’s rate is 0%, which is as low as it can go. To artificially deflate interest rates, the federal government has been purchasing mortgage backed securities. They intend to phase this out by the end of the first quarter of 2010.
This effectively means that interest rates are artificially low right now – hovering around 5%. After the first quarter of next year, interest rates are expected to increase to an average of 6%. For every 1% increase in interest rates, to keep your payment the same, you must purchase a home that has a price that is 10% less. In other words, if today you can comfortably buy a home that is $500,000; by next spring you may only be able to afford a home that is $450,000. That makes a substantial difference in the amenities of the home you can buy.
TAX CREDIT – Extended and Expanded
Last, but certainly not least, the tax credit dubbed the “first time home buyer credit” is being extended, and expanded.... and it's not just for first time home buyers anymore!
First time home buyers can still get a maximum of $8,000 in tax credits. However, many more will find advantages as eligibility is expanded to anyone who has owned a home for 5 of the last 8 years, and income limits are increased. To take advantage of this new program, you must be under contract by April 30th and will have until July to actual settle on the property.
Read highlights of this bill:
http://www.realtor.org/fedistrk.nsf/files/government_affairs_tax_credit_ext_chart_110409.pdf/$FILE/government_affairs_tax_credit_ext_chart_110409.pdf
No one expects further extension or expansion beyond that point.... so take advantage of the gift while you can!
***
Still not convinced? Let’s talk. Let me show you what homeownership in the long run can do for your personal wealth, the continued affordability of your housing expenses and the quality of life for you and your family.
Vicky Chrisner
www.VickyChrisner.com
703-669-3142
