California Passes $10,000 New Home Buyer Tax Credit

The state of California just passed a $10,000 tax credit for any home buyer that buys a newly built home.

I thought the state was broke? Where is this money coming from? Why only newly built homes? These are questions a lot of Californians are asking?

The state believes that building a new home generates more tax revenues than the credit will cost the state. The CBIA (California Building Industry Association) stated that a study co-authored by a former state finance director shows that, “on average, every home built in California generates $16,000 in state revenues and another $3,000 in revenues to local governments. That means that even after providing the tax credit, the state will receive a net $6,000 in additional revenues. Furthermore, the $16,000 will be generated when the home is built, and the credit will be spread over three years.”

Now, if you are a home buyer shopping for a newly built home, this is going to help you out tremendously (along with the home builders). And if you are a first time home buyer you also are eligible for the $8,000 tax credit from the federal government! $18,000 in total tax credits!!!

Here are some of the specifics behind the state tax credit.

• The state tax credit is for $10,000 or 5 percent of the purchase price of a newly built home, whichever is less.

• The home must be the principal residence of the home buyer, and the sale must close between March 1, 2009 and March 1, 2010.

• The credit will be provided in equal amounts (up to $3,333) per year, over three successive tax years. It will begin with the year the purchase is made.

• The taxpayer must live in the home as their principal residence for at least two years…. or he/she will have to repay the credit.

• State tax credits are limited to $100 million fund and is available on a first-come, first-served basis until the funds are exhausted. So it is recommended that if you are in the market for a brand new home you may not want to wait too long as the funds may run out.

If you would like to get additional information about this tax credit and find out about some of the incredible deals some of the local builders are offering home buyers in the area, click on the following link “CLICK HERE” .

Subprime Mortgage Crisis……..Explained!

This is the best diagram that I have seen so far explaining the subprime mortgage crisis and the processes the housing market, the financial markets, and the government are going through to respond to the crisis. Diagram courtesy of Wikipedia.

(Note: If diagram is blurry, click on diagram to be taken to source page.)

Subprime Mortgage Crisis

Orange County home prices hit 5 1/2 year low

Dataquick’s November stats show Orange County median home price are now at $400K…a 5 1/2 year low and a 34.4% decline year over year. Prices not seen since May of ‘03! Single family OC homes dropped to a median of $420K and condos are now at a median of $260.5K.

On the positive side sales popped up by almost 39%! This was mainly a result of banks dumping foreclosures on the market and bargain hunters and investors swooping in and buying. This was the fifth straight month of home sales increasing on a year-over-year comparison. A good sign! If sales continue to increase this will gradually soak up the inventory as long as foreclosures don’t increase at a more rapid pace than we had in 2008.

If you want specific statistics about your city, please email me at brad@so-cal-dreamhomes.com and tell me what city you would like a report for.