Ellis Real Estate

RealityCheck 

The time for prospective home buyers to enter the market may be right now; 

here’s why: 

• Attractive Interest Rates 

Historically, mortgage interest rates are relatively low. 

According to Realty Times’ March 31, 2009 “Real Estate 

Outlook: Sales Rising?,” “Meanwhile, mortgage rates continue 

on their sharp downward track, hitting six-decade lows last 

week.  Fixed rate thirty year loans plunged to an average 4.6 

percent from 4.9 percent with one point, while 15-year rates 

sunk below four and a half percent according to the Mortgage 

Bankers Association.” 

With interest rates remaining at historic lows, this increases 

an individual’s purchasing power and makes the mortgage 

payment more manageable. 

• Increased Affordability 

The California Association of Realtors recently released its 

First Time Home Buyer Housing Affordability Index which 

showed that the percentage of households that could afford 

to buy an entry level home in California stood at 59 percent 

in the fourth quarter of 2008, compared with 33 percent for 

the same period a year ago. 

• New First Time Home Buyer $8,000 Tax Credit 

A tax credit is available for first-time homebuyers under the 

American Recovery and Reinvestment Act of 2009. If you 

buy a home between January 1, 2009 and November 30, 

2009, you may be eligible to receive a tax credit for 10% of 

the purchase price of your home—up to a maximum credit 

of $8,000. Program highlights include: 

1. Any individual (and if married, their spouse) who has no 

ownership interest in a home during the last three years may 

be eligible. 

2. Full credit for single taxpayers with incomes up to $75,000 

Now May Be The Time 

to Buy:  What Are 

You Waiting For? 

($150,000 on a joint return); partial credit for single taxpayers 

with incomes up to $95,000 ($170,000 joint return). 

3. The program is available for the purchase of a single-family 

home (including mobile homes and condos) that will be used 

as a principal residence. Even building a home on vacant land 

(as opposed to purchasing a ready-made house) may qualify 

for the $8,000 housing tax credit. 

There are some risks in using this tax credit such as if the 

home is sold within three years of purchase or if it is not 

used as the principal residence during that time, the first-time 

home buyer may have to pay some penalties to the IRS; 

therefore it is important for you to review the entire program 

with your own tax advisor before applying for this tax credit. 

• New CAR Housing Affordability Fund Mortgage 

  Protection Program 

First-time home buyers who lose their jobs due to layoffs

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may be eligible to receive up to $1,500 per month for up to 

six months to help make their mortgage payments if at the 

time of purchase they obtained the California Association of 

Realtors® Housing Affordability Fund Mortgage Protection 

Program.  A qualified co-buyer can also participate in the 

program, for a reduced monthly benefit of $750 per month 

for up to six months in the event of a job loss. The CAR 

Program benefits include coverage for accidental disability 

and a $10,000 death benefit. CAR’s Housing Affordability 

Fund is dedicating $1 million to the program this year, and 

estimates that as many as 3,000 families will benefit from the 

program throughout 2009.  However, there are limitations 

on this CAR Program and the benefits are only available to 

buyers who use a California Realtor® in connection with 

purchasing property in California. 

• Increased Conforming Loan Limits 

The government recently reinstated the increase of FHA, 

Freddie Mac and Fannie Mae loan limits.  These limits were 

equal to the greater of 125% of the 2008 area median home 

price or $271,050 for FHA and $417,000 for Fannie Mae and 

Freddie Mac, with an overall maximum cap of $729,750. 

Reinstating the higher loan limits for mortgages in high-cost 

areas like our own is important and will help reduce inventory 

and improve liquidity in the overall mortgage market. 

• Sizeable Inventory 

After approximately 36 months of a changing market, there 

is a great deal of inventory in almost all markets. 

The bottom line is that qualified consumers may benefit from 

purchasing a home now.  Pushed by a powerful combination 

of historically-low fixed mortgage rates, the $8,000 tax credit 

for first time home buyers, and affordable prices, sales of 

existing homes recently jumped 5 percent in February 

compared with the same month last year.  The National 

Association of Realtors also released its Pending Home Sales 

Index on April 1, 2009 noting that pending home sales “rose 

2.1 percent to 82.1 from a reading of 80.4 in January, but is 

1.4 percent below February 2008 when it was 83.3.” 

With these recent positive indicators, we are starting to see 

some new gains in the market, which could be a sign that 

buyers are getting into the market to take advantage of 

stimulus incentives and much improved affordability conditions. 

If you are considering purchasing a home, don’t let this window 

of opportunity pass you by. 

I am providing you with this information so that you can make 

an informed decision about the current market. In the last 

30 years we’ve seen very few opportunities in which buyers 

can prevail and now truly may be the time.  If you’d like to 

discuss your opportunities in relation to the current real 

estate market, please contact me today. 

RealityCheck 

Now May Be The Time to Buy:  What Are You Waiting For?