First Time Home Buyer

The recently launched web site, www.federalhousingtaxcredit.com, that was developed for the newly signed tax credit law has brought over 100,000 visitors.  This shows that there is a rather strong interest of first time home buyers wanting to take advantage of the temporary incentive.  The $7,500 tax credit is available for all first time homebuyers who buy a home from April 2008 to July 2009.  The tax credit was signed in hopes of encouraging potential first time homebuyers to take advantage of the surplus of available homes and buy now.  Many potential first time homebuyers have hesitated as the economy continues to dip; however, now is a buyer’s market and a great time to take advantage of the falling home prices.

According to the National Association of Home Builder’s President Sandy Dunn, in response to the number of hits on the website, “The initial response is encouraging”.  She goes on to say, “This could be the trigger that helps move prospective first time buyers off the fence and back into the market.  But it won’t last forever.”  The tax credit that is drawing so much attention is a part of several provisions that have been enacted into law recently that was meant to get the housing market and the economy back on their feet, so to speak.  The attention and number of hits is encouraging but time will tell.

The popular web site offers useful information regarding how the tax credit will work and includes the requirements for eligibility.  So far the site has attracted nearly 120,000 hits which work out to nearly 10,000 per day.  Details, questions and answers regarding how first time homebuyers can take advantage of the credit is divided into four user friendly sections:

• Tax Credit at a Glance:  Providing an overview of just how the credit works this section is valuable to the visitors who are just hearing about the tax credit incentive.
• Frequently Asked Questions:  This section offers an easy to understand common questions and answer format and contains basic information regarding the tax credit.  This includes the definition of a first time homebuyer, the homes that qualify for the credit, the income limits that will qualify as well as the payback provision and other common questions and concerns. 
• The Law’s Other Provisions:  This section offers a summary of a number of provisions from the Housing and Economic Recovery Act of 2008 in addition to the tax credit.  This section will offer information on how to prevent foreclosures, revive the housing market and how to make the nation’s economy stronger.
• Home Buyer Resources:  This section offers links and resources that will make the buying process simpler and smoother for the first time homebuyer.

The efforts of the website and the Act come at a time when the housing market is in crisis and the number of foreclosures is increasing steadily.  The crisis casts a shadow of gloom over the economy on the whole and by stimulating the housing industry with relief and incentives there is a hope that will move that shadow away and offer a ray of hope and sunshine.

One of the country’s biggest home builders, Pulte Homes is offering dreams for many potential first time home buyers. Pulte Homes Inc. states that it will match the new $7,500 tax credit with its own $7,500 discount on homes for first time home buyers.

Pulte Homes Inc., one of the country’s largest home builders, says it will match a new $7,500 tax credit for first-time home buyers with its own $7,500 discount on homes. This comes as a dream come true for many who are looking to take advantage of all the incentives and enticements as well as the lower housing prices to become first time home buyers. According to Pulte, the goal of this offer which will be extended to any buyer of a Pulte home is “to draw attention not only to our homes but to the housing market in general,” reports Richard J. Dugas, president and chief executive of Pulte. With the decline in housing prices, the devaluation of homes due to the increase of vacant homes from foreclosures this may help those who are ready buy and take advantage of all of the incentives.

The tax credit that was signed into law last week was lobbied hard for by home builders. It is all part of a bigger housing rescue package that is beginning to spread. Currently the housing industry is working hard to get the word to consumers and is hoping the tax break will help pull the crippled housing market out of danger. President of the National Association of Home Builders, Sandy Dunn, states that many potential first time home buyers are now in a good position to buy a home but are understandable nervous about the market. In a conference call Monday Dunn says “This tax credit will help them off the fence”.

According to the NAHB, 40% of all house buyers are first time buyers. The first time home buyer is seen as the key to restoring the housing market. This is generally because the first time home buyer does not have to unload a home before they are able to buy a new one. Focusing the incentives on the first time home buyer now can help to stimulate the industry enough to make it a prime industry for all once again and eventually help stimulate and restore the economy on the whole.

Individuals looking to qualify for the tax credit can have an adjusted income of up to $75,000 a year or a combined adjusted income of up to $150,000 a year for married couples filing jointly. Under the law a person must not have owned a home in the last 3 years to qualify as a first time home buyer. Additionally, the home purchased must close between April 8, 2008 and July 1, 2009 to qualify for the credit.

The individuals who qualify for the tax credit will be matched by Pulte Homes in a discount when they purchase a Pulte home. This may just steady the nerves of the apprehensive first time home buyer who is ready to buy that first home.

All through the later part of 2007 and the first part of 2008 consumer confidence began falling. The good news is that currently the reports of consumer confidence falling has ceased. The bad news is the falling home prices have not ceased. Today there were two separate reports released that were rather conflicting. One reports that economists point to an encouraging stabilization in consumer attitudes and the other reported on a continued erosion of the value of homes. This poses two entirely different views and understandings of the economy today creating unpredictable effects in the housing market. Standard & Poor’s/Case Shiller’s monthly report states that the median price of a home fell a whopping 15.8 percent in 20 of the biggest metropolitan areas in May. This is right on the heels of a nearly equally steep drop in the prior month. Also reported by the National Association of Realtors; existing home sales for June declined 2.6 percent in May and 15.5 percent since June of 2007. Despite these reports, we are led to believe that consumer confidence is stabilizing.

In all of the 20 metropolitan areas that were surveyed, home prices were down in the month of May. Not surprisingly, the falling home prices match an increase in the nations foreclosure activity adding the over abundance of housing that is not moving on the market. This is making the prices of the homes go down. This would be great for those looking to buy homes; particularly first time home buyers, if the economy were not in a state that prevents people from purchasing new homes. Fortunate for some first time buyers, there are programs that are being created and others that are still in place to assist them in buying first homes. The first time home buyers may be the only ones celebrating, homeowners who must sell a home before purchasing a new home are not as happy.

Ordinarily home prices going down are celebrated by people wishing to purchase a home; right now it is still spelling trouble for the economy as a whole. The decline of home value means a decline in equity. Homeowners who purchased their home recently might now find themselves ‘underwater’, or owing more on the home than what the house is worth.

Over the last ten years the United States experienced a real estate boom where consumers could tap into the equity in their homes to pay for home improvements, education and other large dollar items which all served to fuel the consumer economy. Today with equity falling these loans are not being taken out and the fuel to the economy has lost its spark. But, by report consumer confidence has held for this month but according to the conference Board it raised less than a point in July. Never-the-less this slight raise was the first increase since December.