$10,000 for California homebuyers — Good or Bad?
Sacramento
If you set up a program to give away free money, would you be surprised if a large amount of people wanted to sign up for that program? Well, it seems a number of California legislators are surprised by how quick their hundred million dollar first time buyer program has been accepted.
The hundred million dollar cap on this program may be reached within another month or so. If you are interested in this program here are a few of the details: This is a tax credit that spreads across three years, in three equal payments and it only applies to new homes. One of the requirements is that the home has never been previously occupied. After purchase, it must be occupied by the taxpayer for a minimum of two years. It must be a single family residence, detached or attached, and the credit is $10,000, or 5% of the price, whichever is less.
This program was passed in February, at a time when the state of California is in essence, bankrupt. It is amazing that the state of California would set aside $100 million for such a program when many school districts, including San Diego, are having to cut music and physical education classes because of budget shortfalls.
With this hundred million dollar program almost totally allocated, guess what the bankrupt Sacramento legislators are considering? There are two new bills pending in Sacramento that would add an additional $200-$300,000,000 to this program. In my opinion the original bill was unconscionable, considering the state of the California economy. To double or triple the original giveaway is totally incomprehensible.
These actions should definitely earn California an award for the greatest “tax and spend” state in our short history. I question why this bill only applies to new homes. If the state of California really wanted to help out the real estate market, why wouldn’t this bill apply to any home purchase?
It may be cynical, but could it be this just applies to new homes because the California new home builders contribute millions to the reelection campaigns of our state legislators? What would be extremely interesting, would be to look at the public record in one year from now to see how many state legislators who backed this program, received campaign contributions from new home builders.
For California homebuyers, especially first-time buyers, that qualify for the federal $8,000 credit as well as the California $10,000 credit, this is a great deal. But, is it really fair that tax payers are picking up the tab? Would it not make common sense if California wanted to pass such a program, to have it apply to all home purchases in order to reduce the current oversupply of existing homes? This program is doing nothing to lessen the supply of existing homes, vacant homes and bank foreclosures.
With this California new buyer’s credit, the pending new bills to escalate the funding, the recent extension of the foreclosure process by 90 days, and last year’s extension of foreclosures by another 30 days, one can see that California legislators are hell-bent in meddling in the real estate industry. I’d much rather see them finally pass a credible budget, before dreaming up new programs to give away taxpayer money.
San Diego MLS home listings
Dems Push to Relax Condo Mortgage Loans
J
Made public this week, democrats Barney Frank and Anthony Weinerm, in a letter addressed to the Fannie Mae and Freddie Mac chiefs, said that they thought the 70 percent sold standard to guarantee mortgages on condominiums in buildings “may be too onerous than is warranted by credit risk levels.” The sold standard applies when less than 70 percent of units were sold.
This is just amazing, when one recalls that it was just such calls from Barney Frank and other democrates to relax mortgage loan standards that ignited the housing bust. Once again we have government meddeling in the home mortgage business without even waitting for their current created bust to bottom out.
Buffett … U.S. Economy in Shambles
Warren Buffett
During an interview on CNBC Berkshire Hathaway’s chairman and chief executive Warren Buffett said that the U.S. economy is in shambles. Buffett also said he’s sure the actions the government has taken in the past year to help the economy will result in high inflation down the road. Buffett also said that even with all the unprecedented Government spending he saw no bounce in the economy.
San Diego MLS home listings
New Home Sales Fall in May
new home sales
The Commerce Department reported today that new home sales fell 0.6 percent in May from April . Most economists had expected a much stronger rate. Also, just as important, the department revised April sales to 344,000, sharply below the 352,000 initially estimated.
On a 12-month basis, May new home sales were off 32.8 percent.
Ian Shepherdson, chief US economist of High Frequency Economics said about this report: “This is disappointing … We thought there was scope for sales to head to the 400,000 mark.”
San Diego real estate agents
San Diego Home Price Drops
In the table below, www.brokerforyou.com looked at selected San Diego neighborhoods that had 15 or more closed single family homes & condominium sales in May 2009 & May 2008. The graph shows the median sales prices.
The largest drop in San Diego home values on this chart was for Mission Valley. Mission Valley is composed of all condominiums and San Diego condominium values have been leading the value declines throughout San Diego County.
San Diego Home Price Drops
Data compiled by MDA DataQuick & published in the San Diego Union-Tribune. Chart produced by www.brokerforyou.com
One should keep in mind the above chart is just for a one year period (May 2009 vs. May 2008) and San Diego home values topped out around the Summer of 2005!
Lastly, I would note that these figures do not take into account the very prevalent seller concessions (usually payment of thousands in the buyer’s closing costs) necessitated by an ultra strong buyers market place.
San Diego downtown real estate
Housing Recovery – You May Have to Wait Until 2012
San Diego housing
As any of my blog readers already know, I’ve not been on board with the San Diego housing “bottom in 2009″ crowd. The Anderson forecast aside, a quick read of my last few post, shows many other prominent forecasters agree with me. As our seasonal up-tick in real estate activity draws to a close in another few months, it looks probable that the winter will bring another chill to the San Diego real estate market.
Below are a couple of other experts’ comments on the current housing market.
David Rosenberg, chief economist at Toronto-based asset management firm Gluskin Sheff & Associates said an interview: “Baby boomers are still in the discovery process on over-sized real estate being more of a ball and chain than a viable retirement investment asset. The high end of the market will be in a bear phase.” Standard & Poor’s Chief Economist David Wyss speaking about a housing recovery said: “We expect prices to drop for another year and then stabilize before starting to rise with incomes.”