Unclouding the Housing Crystal Ball

Published: Tuesday, November 3, 2009 6:16 PM PST

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The local housing market observers I talked with last week for this story were watching a couple of key topics to gauge the health of San Diego's market going forward:

the future of the Federal Housing Administration, the agency that requires low 3.5-percent down payments and has captured a hefty chunk of the loan business here lately, and

the looming deadline for the first-time homebuyer tax credit, set to expire Nov. 30

Both have big news coming this week.

Tomorrow, the FHA will announce the findings of its annual audit, which will show the agency's reserves have dipped below their mandated level. That's in large part because many of the loans they made to pick up the slack from the pummeled private sector have gone bad. Some economists eye the giant housing agency's health pessimistically, projecting the agency will need a taxpayer bailout. For tomorrow's paper, The Wall Street Journal's Nick Timiraos takes this excellent look at the agency's issues.

The tax break to incentivize home-buying may be extended until April 30, among other extensions reportedly close to passing. The OCRegister's housing blog has a good roundup of the pieces that might make it in the new program, including:

extending the tax break to all homebuyers, not just first-timers, until April 30. Move-up homebuyers would get a maximum of $6,500, compared to the $8,000 tax credit for first-time buyers. (via UPI)

extending the income limits to $125,000 for individuals and $225,000 for couples (via BusinessWeek)

And some comment from lawmakers, via The New York Times:

"We would help first-time home buyers, and we would also help homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit," said Senator Max Baucus, Democrat of Montana and chairman of the (Senate) Finance Committee.

-- KELLY BENNETT

3 Comments so far on this story...

The "Move Up" incentive - I probably wouldn't have thought of that - how clever! It can help people move out of a "bad" neighborhood, improve their state of living for themselves and their children. Though the message I read (from the "Move Up" incentive) is that the Feds feel that the First Time Homebuyer is expiring; they are creating a new program while phasing out the other.

Posted by Paris Romero | reply to this comment
November 5, 2009 8:39 am

We are "move up" home buyers who closed on July 20th, 2009. Does anyone have any information on how we can get the $6,500.00 credit? We meet all requirements except the closing date is a little early. Thank you,

Posted by AL Ward | reply to this comment
November 7, 2009 9:11 am

Al, I spent a brief period of time going through the IRS' website. It appears that the IRS hasn't completely addressed that yet. They have a form for the First Time Homebuyer, but not for the "move up" homebuyer. See paragraph 4 of this webpage: link You may call the IRS to verify. Here is the front page of their contact info: link For reference - Fact Sheet from the White House: link

Posted by Paris Romero | reply to this comment
November 16, 2009 8:32 am

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