I discuss an article in the san francisco gate about the federal home buyer tax credit expiring today.
Hello and welcome everybody to another episode of the Reside Daily Bite. Happy Friday to all of our viewers -love Fridays. Today, I want to talk about an article that came out in the San Francisco Gate today talking about the federal homebuyer tax credit expiring today. And, what it talks about is, “When the federal first-time home buyer’s credit expires today, it will be just the most recent example of the government scaling back its support for the residential housing market. They say, “The end is in sight”.
Obviously, properties needed to be in contract by April 30, today, and then closed by June 30. “California real estate expert said they saw spikes in pending sales prior to the first scheduled credit expiration and in recent months leading up to today’s deadline. They do not expect the federal incentive to be extended again, and some are concerned about declining federal aid.” That is in fact what’s happening; they extended the program in November and they have not extended it as of now. They could always bring it back but my guess is they’re not going to do that; they’re not going to extend it and probably have a wait-and-see period and see how the housing market reacts.
The government is pulling back. “In other recent changes (we talked about this on previous daily bites), the Federal Reserve ended a program on March 31 in which it spent $1.25 trillion to buy mortgage-backed securities.” The article continues, “Without the government support, mortgage rates are expected to rise.” We’ve been talking about that too. We’re expecting them, again, nobody knows but by the end of the year they could be up close to 6% and many people are anticipating 2011 -that the interest rates will in fact be hovering around 6%.
And then they talked about, “tax credits, California first-time buyers have struggled to compete with investors…” This is an interesting point, I think, of the article because what’s happening is first time buyers are competing with investors for some of these lower-end properties -meaning distressed properties foreclosures.