Long Story Short: The Economic Stimulus & SF Housing

So there’s a helluva lot of talk these days about the Economic Stimulus Plan that Obama signed two weeks ago.  In addition, the State of California has put in some programs in place that are meant to stimulate the economy and get the “R” word (recession) the heck outta Dodge. 

The real deal though is that different parts of the Stimulus Plan affect different parts of the country differently.  And frankly, I think most of us are concerned with what’s happening right here in our frontyard, San Francisco, that is. 

So, here’s a condensed version of some of the key components of the plans that are meant to put Humpty Dumpty (our economy) back together again.   

Lower Interest Rates:  The stimulus bill is supposed to pump money into the mortgage market.  And in turn, banks are supposed to get so excited that they drop mortgage rates all across the board.  Well, rates ARE at historic lows… but frankly, we haven’t seen the drastic drops that we were all hoping for.  But – with rates hovering around the low 5% range (and lower prices than we’ve seen in years) monthly payments have become quite affordable. 

Increased Conforming Loan Limits:  Yay!  While San Francisco home prices have been dipping, they’re still much more expensive than most markets in the US.  Which is why it’s so important to note that the limit for conforming loans is (at least for 2009) going back to $729,500.  That means a purchase price of up to $911,875 qualifies for a regular loan!   

An $8,000 Tax Credit from Uncle Sam:  OK, so this one doesn’t do too much for San Francisco homebuyers.  Singles that make $75K or less and married couples that makes $150K or less can claim this tax credit.  But the reality is that only buyers in the lower price tiers in San Francisco will really qualify for this credit.  However, there are rumors that those that make more than the income limits will receive a partial credit, but no one seems to know the scoop on how that will play out. 

Help Avoiding Foreclosure:  This comes to us in a variety of forms, from refinancing between 80%-105% of your homes value if you qualify.  There’s a variety of restrictions (a loan amount of less than $729,500, be an owner occupier, proof of financial hardship, etc.) but if you make the cut, and pass a trial period of three months at a new reduced rate (that means making your payments on time), you get to keep the new reduced rate for 5 years.   

$10,000 Credit from the State of CA for New Construction:  There’s a lot of hoops that need to be jumped through to received this tax credit (which is split up over 3 years.)  But in a nutshell, if you buy a NEW and never before occupied property, you get a nice chunk of change in return.  But, there is two catches – one, lots of paperwork, but more importantly, this credit won’t last long.  A certain amount of money has been earmarked for this tax credit, and once it’s gone, it’s gone for good.  The good news – there’s a great amount of SF new developments that qualify. 

So – if you are thinking of buying, these are some pretty good incentives.  Not all of these might fit your specific situation, but several of these might be enough to get you thinking about how you can take advantage of the stimulus, and do your part to help the economy.  Is now the right time for you to make a move?  Call me at 415-307-1392 or email me at [email protected] and we can discuss your situation.

Luba