Lancaster PA Luxury Real Estate

The federal government is working on a plan to stimulate the currently sagging housing market.  In the Senate, a "voice vote" has been made to propose a $15,000 tax break for homebuyers.  

More details are emerging about the amendment to the pending economic stimulus bill, which is the brainchild of Georgia Senator Johnny Isakson, a former real estate broker.    

Unlike the current $7,500 housing tax credit, the new credit would be available to all home buyers and would not have to be paid back.  The $7,500 plan that is now in place is offered only to first-time home buyers and requires a repayment plan over a 15 year period.  The new amendment would replace the current plan on the date of its enactment. 

The mechanics of the plan are that it would provide a direct tax credit to any homebuyer who purchases any home.  The amount of the credit would be $15,000 or 10 percent of the purchase price, whichever is less.  Purchases would have to be made within one year of the legislation's enactment.  

The credit is nonrefundable and can be claimed over two years, so buyers whose tax liability is less than $15,000 would have a second year to capture the credit.  For example, a buyer who owes $10,000 in taxes would be able to take a $10,000 credit in the first year after their purchase and a $5,000 credit for the year after that. 

The new tax credit amendment was modeled after legislation that was put into effect in the 1970's when the country was facing a similar housing crisis to the one we have today.  Easy credit had flooded the market with new construction and with rising interest rates and a slowing economy; we were left with a three-year supply of vacant homes.  In response, Congress passed a $2,000 tax credit to anyone purchasing a new home for their principal residence.  The result was a stabilization of home values, a drop in housing inventory, and, eventually, a recovery in the housing market.  

Aside from injecting some cash into people's pockets, how may this proposal change the way banks are dealing with homebuyers?  Perhaps some of the current restrictions will be loosened with more money flowing around.  Specifically, will a lower down payment be more acceptable to a lender if they know a $15,000 tax credit will be coming back to the borrower? 

Time will tell.  The amendment is far from being signed and delivered.  It still needs a vote from both houses then the President's signature. And, this part of the stimulus package could yet be revised.  

 

As part of the annual Swanepoel TRENDS Report that is published every year during the first week of February, the research team wraps their four month study of the real estate industry by announcing the top 10 Newsmakers, Events and Trendsetters for the year.

The second list to be released is the top 10 events that during 2008 had the largest impact and influence on the real estate brokerage industry. Events are defined as those occurrences that transpired during the previous calendar year (2008) that made headlines and captured the attention of the real estate industry.  The selection of these events was based upon their potential future impact on the industry rather than only their 2008 impact.

The Top 10 Events impacting Real Estate for 2008 are:

1.     The Bailout: September 17^th

Most notably the one single event of the year was the announcement of the "Silver Bullet" designed to save the country from the subprime collapse itself and the failure/buyout of major Wall Street firms and national banks.  Depending upon how effectively the Emergency Economic Stabilization Act's $700 billion is going to be allocated and managed it may prove to be the beginning of the turning point in the current economic recession.

2.     The Presidential Election

In one of the most competitive, contentious, divisive and yet historic political campaigns the country responded with the largest voter turnout in history to elect an African American, Barak Obama as president.  The "I have a dream" has taken a huge step toward fulfillment.  However, the new administration will have little time to reflect on victory as it faces serious economic challenges and a trillion dollar plus debt that will take years to resolve.

3.     In Memory Of: Countrywide, IndyMac, WAMU, Wachovia And Others

Barely one year ago in 2007 these companies were not only household names but were considered financial giants.  In one short year they have become a factoid of history.  Some filed for bankruptcy while others were acquired by the likes of Bank of America, the federal government, J.P. Morgan Chase and Wells Fargo.  2008 reminded us that nothing lasts forever and everything is replaceable.  

4.     Facing Foreclosure Frenzy

As a direct fallout of the subprime collapse, the foreclosure rate in the U.S. hit staggering levels in 2008.  At the opening of the third quarter foreclosures were up 25% over the previous October with a reported one in every 452 of the country's homes in foreclosure.  RealtyTrac reported last October that there was a sharp decline in foreclosure filings but it still estimated that by the end of 2008 there would be more than one million REOs on the books.

5. Home Prices Spiral Downward

The recession devastated many real estate markets across the country with the worst-performing towns and cities in places like central California, Miami and Las Vegas posting declines of 40% in 2008. The stranglehold on financing continued to drive home prices in many other places back to 2000 - 2002 levels, with predictions of continued declines in 2009 as unemployment reaches record highs and the financial meltdown spills over to other industries.

6.     NAR - DOJ Settlement

Finally the long and protracted 2½ year legal battle between NAR and the Department of Justice (DOJ) was put to rest as Judge Kennelly issued his final judgment in November.  In the end, NAR's longstanding Internet Data Exchange (IDX) policy was validated as NAR was deemed to have not admitted any liability or wrongdoing and no payments were made in conjunction with the settlement.  In addition, NAR has been cleared to reinstate an updated version of its Virtual Office Website (VOW) and the MLS has been preserved and strengthened in the process.  Now it's back to business.

7.     Brokers Go Bust

Changing names, merging, consolidating, filing bankruptcy and closing branches was on the order of the day throughout 2008 as literally thousands of real estate brokerages companies went out of business during 2008. This included many independents as well as franchises from just about every major brand including Century 21, EXIT and RE/MAX. Also filling for bankruptcy is national franchise Help-U-Sell and Web 2.0 newcomers such as Igglo. 2009 may see even more brokers closing up shop than 2008.

8.     Keeping It Short

Founded in 2006, Twitter moved into the mainstream this year as the next evolution in the social networking and micro-blogging environment.  By using short text-based posts (affectionately named "tweets"), staying in touch has been given a whole new meaning.  

9.     ActiveRain Explodes Past 100,000 Members

As we discussed in last year's report (Trend #1 - Two Worlds; One Industry) ActiveRain has moved to the head of the social networking line in the real estate industry.  With as many as 35,000 users logged on at the same time, no one else has even come close to reaching that many Realtors^® at one time.  It goes without saying that ActiveRain has proven that social networking has made a home in real estate.

10. NAR Celebrates 100 Years

In May 1908, 120 men gathered in Chicago with the goal to "unite the real estate men of America." Today the National Association of REALTORS® (NAR) is America's largest trade association representing more than 1.2 million members. For 100 years, NAR and its members have established homeownership as a cornerstone of the American Dream and advocated private property rights as one of the fundamental principles that unite us as Americans. 2008 marked NAR's centennial birthday.

How many of these events impacted you or were/are you aware of?