Many first time home buyers have been rushing to complete  purchases before expiration of the first time home owner tax credit at the end of November. Sales of homes in cities such as Los Angeles, San Diego and Las Vegas, where foreclosures are booming have been attributed to a combination of attractive prices, low interest rates and the first time home buyer tax credit.  

The current tax credit provides for a credit of 10% of the sales price, up to $8,000 for first time home buyers.  U.S. Senators recently agreed to extend this credit and offer a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least 5 years. If approved, this tax credit would be available to buyers who enter into a contract to purchase a home by the end of April and close  such purchase by the end of June. After passage by the Senate, the bill  goes to the House for approval. 

Approximately 1.4 Million homes buyers  qualified for the existing credit through the end of the summer. The National Assoc. of Realtors estimates that 350,000 of them would not have bought their  

homes without this tax credit.  

New home sales fell 3.6% last month.  Many builders said the drop was due to the uncertainty about whether the tax credit would be extended.   Since it typically takes 45 to 60 days to complete a transaction, the purchase of a home today would probably not close by the November deadline. The tax credit is so important to some buyers that they are adding  a clause to their contracts which would entitle them to cancel their sale if it is not able to close by November 30.       

Nouriel Roubini, one of the few economists to accurately predict the financial crisis, predicts that huge losses in commercial real estate loans will add to our economic woes. Although the number of unsold homes may be stabilizing,  he says prices are poised to fall further. 

While the number of home sales have risen after hitting bottom earlier this year, many economists believe that the worst is not over for home values. These economists say prices will  continue to dip because of rising unemployment. As a result, more people will be unable to make their mortgage payments.   The chief economist at real estate web site Zillow.com expects more supply to come into the market and says  “additional supply will outpace demand.”    

Despite substantial unsold inventory,  once a property on the Westside is reduced to what is perceived as current fair market value, the property can sell quickly and even generate multiple offers. Pricing in this market is critical in order to attract offers. As a seller, you do not want to chase what could be a down-trending market.  Do not hesitate to contact Bess to discuss your options.           

To find short pays and foreclosures in your area or for a free consultation  to assess your real estate or financing options, please contact Bess.  Bess Hochman is a Real Estate Broker & top producer for more than 15 years.  Bess is also distinguished by holding a law degree.  Her high-end clientele include celebrities, attorneys, and other professionals that understand the value of a real estate broker with legal expertise and experience. A native of Beverly Hills, Bess credits her success to repeat  referrals by her satisfied clients. Bess won’t let you guess. E-mail: Bess.CenturyCitynews@yahoo.com. Bess may be reached at 310.291.4111.