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$8,000 Tax Credit | Mortgage Rates Drop | Prices still falling

By Mike Rowan, www.erollover.com

The Real Estate market continues to be a driving force in undermining the economy, as politicians hope and pray the the stimulus package will provide some eventual relief. Here is a rundown of the top news stories in real estate.

First-time buyers get $8,000 tax credit in stimulus bill

Home buyers who hoped for a $15,000 tax credit to buy a new home, as promised by the Senate, will be disappointed. A proposed $35 billion credit to support home sales was jettisoned in favor of a more modest $2 billion to $3 billion provision.

The proposal would eliminate the repayment requirement in an existing tax credit for first-time home buyers, and raise the credit to $8,000 from $7,500. Congressional aides cautioned Wednesday that the credit’s size was still subject to negotiation.

Tim Shapleigh, a prospective home buyer, stated, “With all of the spending in the 2009 Stimulus Bill, I was quite hopeful that significant incentives for first time home buyers would be a priority. I guess that just isn’t the case.”

Foreclosures Push Home Prices to 5-Year Low

Prices of existing U.S. single-family homes dropped a record 12.4 percent in the fourth quarter from a year earlier to the lowest level since 2003, the National Association of Realtors said on Thursday.
The NAR said distressed sales, which includes foreclosures, accounted for 45 percent of transactions in that quarter, dragging down the national median price of existing single-family homes to $180,100.
The median is where half sold for more and half sold for less, and it was the lowest since the second quarter of 2003 when it was $177,900.
At the same time, existing-home sales rose in only six states from the fourth quarter of 2007, the NAR said.
In the fourth quarter, prices for single-family homes declined in 134 out of 153 metropolitan statistical areas from the same period in 2007, pulled down by active sales at the lower end that were driven by foreclosures, the NAR said.
The NAR said one metropolitan area was unchanged and 18 metropolitan areas reported price gains. The NAR’s data on metro area home prices dates back to 1979.

30 Year Fixed Mortgage Rates Drop to 5.16%

Rates on 30-year-fixed mortgages fell this week, offering homeowners a chance to refinance their loans, Freddie Mac said Thursday.

The average rate on a 30-year fixed mortgage dropped to 5.16 percent this week from 5.25 percent last week. A year ago, the 30-year, fixed-rate mortgage averaged 5.72 percent. Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below last year’s peak set in late July, offering many homeowners an incentive to refinance.

The new rate translates into a monthly payment savings of about $188 on a $200,000 loan.
Average rates for 30-year-fixed mortgages had been rising since hitting a record low of 4.96 percent a month ago, a decline attributed to the Federal Reserve’s move to buy $500 billion in mortgage-backed securities to spur lending by banks.

Spending cuts in the 2009 Stimulus Package

Whether we like it or not, the 2009 Stimulus Package has been accepted by both the Senate and the House, and will be heading our way soon. A coalition of Democrats and some Republicans reached a compromise that trimmed billions in spending from an earlier version of the Senate economic stimulus bill. We are still wondering where the government is going to come up with the money to pay this, but what you see is what you get.

This list, from a Democratic leadership aide, a list of some programs that have been cut, either entirely or partially:

Partially cut:

• $3.5 billion for energy-efficient federal buildings (original bill $7 billion)
• $75 million from Smithsonian (original bill $150 million)
• $200 million from Environmental Protection Agency Superfund (original bill $800 million)
• $100 million from National Oceanic and Atmospheric Administration (original bill $427 million)
• $100 million from law enforcement wireless (original bill $200 million)
• $300 million from federal fleet of hybrid vehicles (original bill $600 million)
• $100 million from FBI construction (original bill $400 million)

Fully eliminated

• $55 million for historic preservation
• $122 million for Coast Guard polar icebreaker/cutters
• $100 million for Farm Service Agency modernization
• $50 million for Cooperative State Research, Education and Extension Service
• $65 million for watershed rehabilitation
• $100 million for distance learning
• $98 million for school nutrition
• $50 million for aquaculture
• $2 billion for broadband
• $100 million for National Institute of Standards and Technology
• $50 million for detention trustee
• $25 million for Marshalls Construction
• $300 million for federal prisons
• $300 million for BYRNE Formula grant program
• $140 million for BYRNE Competitive grant program
• $10 million state and local law enforcement
• $50 million for NASA
• $50 million for aeronautics
• $50 million for exploration
• $50 million for Cross Agency Support
• $200 million for National Science Foundation
• $100 million for science
• $1 billion for Energy Loan Guarantees
• $4.5 billion for General Services Administration
• $89 million General Services Administration operations
• $50 million from Department of Homeland Security
• $200 million Transportation Security Administration
• $122 million for Coast Guard Cutters, modifies use
• $25 million for Fish and Wildlife
• $55 million for historic preservation
• $20 million for working capital fund
• $165 million for Forest Service capital improvement
• $90 million for State and Private Wildlife Fire Management
• $1 billion for Head Start/Early Start
• $5.8 billion for Health Prevention Activity
• $2 billion for Health Information Technology Grants
• $600 million for Title I (No Child Left Behind)
• $16 billion for school construction
• $3.5 billion for higher education construction
• $1.25 billion for project based rental
• $2.25 billion for Neighborhood Stabilization
• $1.2 billion for retrofitting Project 8 housing
• $40 billion for state fiscal stabilization (includes $7.5 billion of state incentive grants