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.


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