Sunday, February 8, 2009

A Ray of Sunshine in The Shore?

Well, it looks like the $15,000 homebuyer tax rebate is going to make it into the stimulus bill. Come on, admit it, all this money being thrown around makes fence-sitting a little more difficult to justify.

According to the ever-informative Calculated Risk:

The tax credit is 10% of the purchase price up to $15,000.

The tax credit is for one year (from date of enactment).

The credit is available for both new and existing home purchases.

This is for primary residences only, and the home must be owner occupied for two years after purchase.

There is no income cap (the $7,500 tax credit had an income cap of $150,000 per year).

Unlike the $7,500 tax credit, the new credit does not have to be repaid over time.

The credit is limited each year to the amount of taxes paid in any one year (with the $7,500 tax credit, buyers received the entire credit and a refund if the $7,500 was greater than taxes for the year)

Buyers can split the $15,000 into two separate tax credits to be taken in successive years.

Some are lamenting the "real" cost of this cash giveaway, some argue that the loss of equity between buying now and the eventual (inevitable) bottom will make $15,000 look like a fourth grader's milk money, some say sellers will simply up their asking prices by 15k to compensate for this "free money," but I'm choosing to look at this optimistically. Despite its flaws, ultimately this is a good thing for buyer psychology.

Regardless of what this will cost my kids and grandkids (and me), if they can also jam through the 4.5% government-backed interest rate on a 30-year mortgage, you'd quickly run out of excuses for not contemplating buying in the next 12 months. Hell, it's our money anyway, right?

So, to continue with my optimistic outlook, I want to show you a newly-listed property in Belmont Shore that should give anyone who believed they would be "priced out forever" a glimpse into the future.

Address: 210 Park Ave, 90803
Asking Price: $470,400
Size: 2 beds, 2 baths, 1242 sq. ft. (built in 1925)
$/Sq. Ft.: $379
MLS#: S562197
On Redfin: 6 days
Down Payment: $94,900
Monthly Payment: $2,600 @ 5.5%
Income Requirement: $134,000
Description: Great 2 bedroom 2.5 bath home includes a fireplace in the living room and separate den. Wood Flooring throughout the entire home, with granite counters in kitchen. Walking distance to the Beach.

I wish there were more photos. The wood floors and granite makes it sound like it's updated inside, but we have absolutely no way of knowing that. And judging by the rough exterior condition, it's a crapshoot.

But what I want to point out is that a house (albeit a shabby one) with a garage, 1,200+ square feet, and a few upgrades is listed for $379 per square in Belmont Shore! I mean, come on...that's pretty exciting.

It's still not even close to fundamentals from a rent vs. buy or household income perspective, but it's a hell of a lot closer than some other beaters I've seen in the Shore.

Assuming the interior isn't a complete horror show, I think this will be snapped up pretty quickly. And if it is, it will lead the way down for nearby sellers of less desirable properties. Naturally, there are going to be some pissed off neighbors when this place sells, and I have a feeling I'm not the only one anxiously waiting to find out the final sales price.



    at least the bank is being more realistic that the neighbor who missed selling into the peak by a couple of years, but hasn't heard about it at 229 Park:

    But let's get serious here. First, $15k is 3% of even the less ridiculous price! you will lose that $15k in a month or two of depreciation. Second, no way no how a small house like this doesn't drop into the low 300s.

    I really hope they kill this house buying bribe, and the car buying bribe at the same time, when they reconcile the house and senate versions this week.


  2. FreedomCM,

    I hope they kill the house and car bill too. I mean, really, they will only help people who can afford a house and/or a car anyway! I don't NEED the 15k but I'll take it--and doesn't that sort of defeat the purpose?

    But, alas, I have all confidence that both will make it into the stimulus bill with ease. And I'm trying to find silver linings (admittedly, I'm hard-pressed).

    I kind of dig that little house at 229 Park! But no price change since August of 2008? Puh-leaze. We're obviously dealing with greed-faced idiots. I wish them luck, but what they really need is a dose of common sense.

  3. regarding the 15k credit:

    I want to buy a place. I really do. But prices are still a little higher than what I intend to pay. Little things like the tax credit might make it so that people like me are more motivated to buy BUT seeing things like this credit also make people like me sit on the fence *even longer* to see how much more they'll sweeten the deal. The real question is just where the breakdown between the two mentalities lies.