REO Proteams: Las Vegas Real Estate News

Just like the hugely popular Cash for Clunker program the $8,000 Tax Credit program for new homeowners is winding up. Introduced as stimulus for the sputtering real estate industry, the tax credit was credited for the recent surge in home sales these past few months. But this government program is slowly winding up and is scheduled to end December 1 of this year.

Introduced earlier of this year, the $8,000 Tax Credit is part of the government’s stimulus program for invigorating the ailing housing industry. The program which promises new homeowners the maximum $8,000 tax credit or 10 % of the homes market value. Qualification for the tax credit however requires homeowners not to have purchased a home within a three year period.

A new sense of urgency is in the air as new homeowners wishing to avail of this tax credit are encouraged to close the deals before the government program ends. Home purchases on average take 90 days before closing and the December 1 window is slowly closing in. “Buyers have to get a home under contract very, very soon,” said Tom Kunz, CEO of Century 21. “They probably should get out looking.”

Recent months have shown a steady rise in new home sales as homeowners are quick to snatch the great number of bargain properties available in the market today. Finding the right home is getting more and more difficult as the numbers of bargain properties are slowly drying up especially in the prime market areas.

The large numbers of foreclosures have supplied the real estate market with unusual low cost houses. Continuing economic woes and the huge drop in home market values have pushed homeowners to the brink of losing their homes. Banks have been flooded with foreclosed properties that getting rid of their inventories has been their top priority. The situation has reached to a point where banks have to approve short sales just to dispose their non-performing assets.

The sudden rise of home sales are largely attributed to refinances. This is due to the fact that new home sales also include refinances and new home sales in their total figures. Numbers could have been higher if banks and financial services could have processed applications for refinancing a little bit faster. It is estimated that only a fraction of qualified homeowners have been able to avail of the governments refinancing programs. These efforts by banks have been described by some customers as moving at a snail’s pace.

With the $8,000 Tax Credit scheduled to end this December 1, new homeowners are in a frenzy to close these deals before the deadline. Banks usually take 3 to 6 months just to process this home sales and the looming deadline means that new homeowners have to move more quickly to qualify.

The Tax Credit has been credited for the recent surge in new home sales. It is estimated that around 1.8 million buyers will apply for the Tax Credit and around 360,000 of the new homeowners could not have qualified for mortgage.

A recent drop in the in home market values which has been estimated in the 20% range nationwide has made houses more affordable for low-income families. Low mortgage rates coupled with the $8,000 tax credit has opened up a new market. Low prices however come with a price as a majority of these cheap homes needs work and repair.

The $8,000 Tax Credit has certainly worked wonders for some homeowners. The Tax Credit acts like a discount, unlike other tax programs the Tax Credit doesn’t have to be repaid and is a straight credit to new homeowners. It has also opened up new avenues for low income homeowners wishing to avail of homes which were previously out of their price range.

There are many factors which have contributed to the recent surge in the real estate market. Historically low mortgage rates and the numerous government stimulus programs have spurred home sale growths that we see today. The Cash for Clunkers program did wonders for the ailing American Auto industry; the $8,000 Tax Credit program has brought similar positive results for the failing real estate market.

The general consensus for many economists remains one of optimism and not full-blown recovery. It is still too early for the government to pull out programs which have snatched the economy back to life. With the economy at its delicate state, a careful assessment should be made before any economic gains are lost.

Report by REOProteams

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