Billy First-time homebuyer credit extended until next June as existing home sales jump 9.4%
30-year mortgage rates fall below 5 percent after rising three straight weeks

By Billy Parker CMC, CRMS, CREI contributing writer

In the latest effort to shore up the struggling real estate market, President Obama signed a bill on November 6, 2009, that extends the popular $8,000 tax credit for first-time homebuyers until next June. The legislation also includes a $6,500 tax credit provision for move-up buyers (purchasers who have previously owned a home for at least five years). Income limits for eligible home buyers were also expanded to $125,000 for single buyers and $225,000 for couples, up from $75,000 for individuals and $150,000 for couples. Qualifying home prices are capped at $800,000. “Every economist will tell you we have to steady the housing market before the economy will turn around,” said Senator Chris Dodd from Connecticut. The new tax credit program is expected to contribute approximately $22 billion to the economy. However, the tax credit extension and expansion will cost an additional $11 billion not including the $10 billion that has already been spent on the current homebuyer program.

In a separate move on November 4, the Federal Reserve held the benchmark Fed funds rate unchanged at a record-low zero-to-0.25 percent range. Ben Bernanke, Federal Reserve Chairman, also announced plans to cut $25 billion from an ongoing $1.45 trillion program of buying mortgage bonds on private credit markets. Chairman Bernanke also noted that the Fed is reducing purchases to “reflect the limited availability of mortgage debt.” The central bank has been buying mortgage bonds for months in an attempt to increase the supply of money banks have on hand to make home loans. These actions help lower mortgage rates and make it easier for consumers to qualify for loans.

Existing home sales increased 9.4% in September

Home re-sales in September recorded the largest monthly increase in 26 years. Sales rose 9.4 percent nationally to a seasonally adjusted annual rate of 5.57 million in September according to the National Association of Realtors. “We believe that the housing market in North Texas has reached bottom and it is now only a matter of time until home prices stabilize,” said Dr. Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University. Many real estate agents welcome the new law with open arms. “I believe the new law which extends and expands the home buyer tax credit will enable more families to realize the American dream of home ownership,” said Sharon Bateson, a real estate agent for Century 21 Mike Bowman in Grapevine. “Everyday I see that the tax credit is working and I am excited that the expanded program will assist current home owners who may be looking to purchase a new home,” she added.

30-year mortgage rates fall below 5 percent

After rising for three straight weeks, mortgage rates on 30-year fixed home loans dropped below 5 percent the week ending November 6, 2009. The average rate fell to 4.98 percent from 5.03 percent a week earlier according to mortgage giant Freddie Mac. The National Association of Mortgage Bankers reported that mortgage loan applications rose for the first time in four weeks reflecting an increase in demand for home refinancing loans. Many industry experts view 5 percent as a key psychological level. When rates drop below this threshold, home loan demand tends to rise, while the opposite holds true when rates rise. “Even though rates are near historical lows, lending standards remain stringent and the lowest rates are only available to borrowers with good credit and money for a down payment,” said Paul Peebles, president of Old Capital Lending in Grapevine.

D/FW home postings for 2009 projected to top 60,000

Over 5,000 D/FW homes were threatened last Tuesday with foreclosure postings. That represents a 30 percent increase from the number of foreclosure postings from a year earlier. “For the seventh time in eight months, residential foreclosure postings filed in the D/FW metro area have climbed above 5,000, said Mr. George Roddy, Sr., president of Foreclosure Listing Service, Inc., in Addison. “I fully expect D/FW residential postings for 2009 to top 60,000, which will be an all time record high for annual residential foreclosure postings,” he said. In general, about 40 percent of the homes posted are actually auctioned off at the monthly foreclosure auctions.


Billy Parker is a Certified Mortgage Consultant, Certified Residential Mortgage Specialist, Certified Real Estate Instructor, and senior loan officer in Grapevine. Parker has also earned the Lending Integrity Seal of Approval from the National Association of Mortgage Brokers. Readers can send questions to billy@parkerlending.com or visit www.parkerlending.com. Questions of general interest will be answered in future columns.