California’s New $10,000 Home Buyers Credit
California real estate credit
In a state that is in every sense, bankrupt, the governor just signed another home buyers credit bill into effect!
Before we talk about the new credit details, lets review the background; Consider that California has a $20.7 billion deficit in the general fund budget over the next 16 months. California owes $8.8 billion in short-term loans that have to be paid off by June and over $120 billion in outstanding bonds and interest that will be paid over decades. The state’s pension fund, CalPers, has $16.3 billion more in liabilities than assets plus California also faces a $51.8 billion for the health and dental benefits of state retirees and future retirees.
You Think San Diego Real Estate Took A Fall … Glad You Don’t Own In Stockton CA
San Diego home values
Stockton California ( San Joaquin County Seat), an inland port city 80 miles east of San Francisco, has had one of the worst foreclosure rates in the nation – for most of the time, the worst.
At the height of the bust, about one in 10 houses fell to foreclosure. Houses that sold for more than $500,000 before the crash now go for $200,000.
New Real Estate Laws for California
Just this month, Schwartzinager signed over 700 new laws. Summaries of a few of these new laws affecting real estate are shown below:
- REO Buyer Can Select Escrow and Title: Effective October 11, 2009, the Buyer’s Choice Act prohibits an REO lender selling residential property up to four units from directly or indirectly requiring the buyer to purchase escrow services or title insurance from any particular company. A buyer, however, who has received written notice of the right to make an independent selection, may agree to the REO lender’s escrow or title recommendations. An REO lender that violates this law can be held liable for three times the charges the buyer incurred, whereas a violation by the seller’s agent may be subject to license disciplinary action. This law expires on January 1, 2015. Assembly Bill 957. Read more
California New Home Construction Falls in August
California new home construction
Demand for new homes fell in August, a decline California homebuilders attributed to the discontinuation of the successful CA home buyer tax credit program, according to a recent report by the California Building Industry Association (CBIA). “The significant drop in traffic in July due to the state closing out the successful tax credit program continued in August, holding down new-home starts and, correspondingly, job creation,” said CBIA President and CEO Liz Snow.
Homebuilders pulled permits for 2,911 total housing units in August, down 5 percent from July, according to statistics compiled by the Construction Industry Research Board (CIRB). CIRB is forecasting permits will be pulled for 39,500 total units in 2009, the lowest total on record. Read more
$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
California Housing … Is This A Bottom?
It’s estimated that 75% of mortgage applications are from refinanced loans. Realtytrac reports that banks have another 500,000 homes and are paying for servicing to keep them off the market, thus falsely inflating prices. Unemployment has risen from 8.5 to 11%, which also has an effect on housing delinquencies. Plus, Zillow estimates that nearly a quarter of the mortgages in the entire U.S. are underwater.
Another way to look at declining housing starts is the closer to zero new starts go, the sooner the unsold inventory will go, and then price stabilization should occur. At that point, we’re at restart.
A huge factor is the mortgage and commercial real estate loan sector of the economy which has just begun to heat up as it pertains to defaults. House mortgage defaults are not slated to peak until late 2010 – early 2011, with a corresponding drop in asset value. The commercial real estate sector crises is going to make the sub-prime defaults look like a cake walk! Lots more red ink is on the way.
I apologize but I’m not buying a housing recovery this year at all.
The other side of the coin is the fact that in March, in the hard hit Las Vegas real estate market, sales jumped from 1,954 to 3,626 units in a year. Real estate sales have also picked up in California cities like Sacramento and Stockton. This seems to be the first signs of a real estate housing bottom. Little Italy San Diego real estate