Economic upturn
K.B. Thomas Jr., Emporia
Thursday, April 9, 2009
Can Emporia real estate survive? With wages and salaries treading water at best in real terms and everyone scared they may lose their job in the next corporate downsizing, is the day of rising home values gone forever?
Are we entering a new kind of real estate market in which prices drop instead of going up?
These are the questions I am hearing today from buyers. No wonder buyers are running scared. I would be frightened too, if I didn’t know better.
Two contrasting realities exist side by side today. One is that we have an oversupply of foreclosed homes brought on by sub-prime loans and a tough enforcement of the Community Reinvestment Act, which requires banks to lend in neighborhoods where they take in deposits.
The other reality is that home prices will be rising in a bad market. The reason that the Federal Reserve will bring interest rates down below 5 percent. These 1950s interest rates signal the end of the Emporia bear real estate market.
Another fantastic thing that will soon come into law is House Bill HR1245, which promotes a 10 percent tax credit up to $15,000 for every homebuyer. In the next 10 years, 40 percent of all homeowners will purchase a different home. This tax credit will make the housing market boom in a recession. The housing market that led us into this mess will lead us out with a rising stock market.
I believe we will see a 4 percent long-term fixed rate, which means the average family can mortgage a $100,000 for only $400 per month principal and interest.
Mortgage refinancing will be the stimulus that will bring us out of this economic debacle. Refinancing often involves more that just a rewriting of a current mortgage at a lower rate. In many instances, it involves borrowing extra money for home furnishings and building materials.
Another thing that will add to the Emporia economic upturn will be the 500 construction workers due to start building the Hill’s Pet Nutrition plant on June 1 and the hiring of 100 permanent employees by the end of the year. A nearly five million-dollar payroll is nothing to sneeze at.
K.B. Thomas Jr.
Emporia
slimbolen99 (anonymous) says...
I don't think House Bill HR1245 indicated $15,000 for a homebuyer credit...I believe it was $8,000.
http://www.irs.gov/newsroom/article/0...
April 9, 2009 at 2:42 p.m. ( permalink | suggest removal )
slvrnblck (anonymous) says...
$100,000 at 4% amortized over 30 years is $477.00 and slim is right about the $8000.00. It is a first time home buyer grant up to $8k and you must live there for 3 years or you have to pay it back.
April 10, 2009 at 10:53 a.m. ( permalink | suggest removal )
slvrnblck (anonymous) says...
The tax credit you will get if you qualify. It is first time homebuyer money only however. The people who already own a house and want to upgrade are SOL. Total payments on the $100,000 loan if fully paid out would be $171,869 at 4%. Assuming it is your first home you would get the $8000.00 tax credit when you file though. It is now a virtual certainty that you have to put 5% minimum down, but that plus $8,000, you are looking at being close to avoiding PMI which is good. The Obama plan is actually a really good one for first time home buyers, not so much for the people already in their homes. But, as Observation pointed out, at some point we all are going to have to pay it back. The Government has got to quit printing money.
April 10, 2009 at 12:27 p.m. ( permalink | suggest removal )