Mobile Realtoreality

President Bush signed the Housing and Economic Recovery Act last week. Among the points favorable to stimulating home sales, is the $7,500 incentive for first-time homeowners to buy a house. In the Act, a first-time homeowner is anyone who has not owned a home in the past 3 years. Local realtors and builders are pinning hopes on the package to help reduce current new and existing home inventory.

Points of the tax credit:

• The tax credit is available for first-time home buyers only.
• The maximum credit amount is $7,500.
• The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
• The tax credit works like an interest-free loan and must be repaid over a 15-year period.

In Mobile County new construction is down some 25% from a year ago with new housing starts at approximately the same number. Baldwin County new construction is down nearly 43% over the same period in 2007.

Other points of the bill include;

Foreclosure relief that will guarantee up to $300 billion in refinance mortgages where current mortgage holders agree to accept partial payment so the outstanding principal on the new loan is more affordable for borrowers.

Mortgage revenue bonds to issue an additional $11 billion in bonds to be used to refinance subprime loans, mortgages for first-time home buyers and multifamily rental housing.

For tax year 2008, taxpayers who do not itemize their deductions but pay property taxes will receive a $500 additional standard deduction ($1,000 for married couples).

For frequently asked questions and more information on the stimulus package, see Federal Housing Tax Credit.

We are all now in a wait and see mode. Most area realtors and builders are optimistic the bill will definitely stimulate housing sales, both new and existing homes. For a summary of the bill see Summary of Bill.