On 12/22 Granholm vetoed MAR-supported legislation aimed at getting the housing market moving. Senate bill 77, passed both the House and Senate in the last days of the 2010 session, allowed foreclosed properties to retain their principal residence exemption for a period of up to 3 years. The bill was seen as a stepping stone in getting foreclosed properties, which are non-principaled residences, moving. Currently, a buyer may be priced out of purchasing a foreclosed property because they do not qualify for a mortgage at the higher tax rate. The bill alleviated that burden by allowing the homebuyer to immediately make a foreclosed property their principal residence.
The Michigan Association of REALTORS® worked hard through the last hours of session to provide information to legislators as to why this bill was critical for the housing market in this state. We are extremely disappointed that this bill was not signed into law, given the opportunity it provided for potential home purchasers. However, we expect legislation addressing the Principal Residence Exemption to be re-introduced next legislative session beginning in January.
Ask me how this affect you. Many who have been forced to trade down/move out/ or leave the state… needed to keep their exemption until a sale could be made in a tough market – this is a blow to fair and equitable ownership & seems like another strong hand act by a cash strapped government not unlike the property tax protest minefield process. So much for government serving the electorate., p
Not long ago it looked like the housing market was on the mend in most major U.S. metropolitan areas. But now prices are falling fast again in many. Foreclosures and vacant homes lingering on the market are depressing prices, and the home buyer tax credit that expired in July is sorely missed.
In September home prices fell in 18 of the 20 metro areas tracked by Standard & Poor’s Case-Shiller composite home price index. That was worse than August, when 15 of the top 20 cities were down month-over-month. story
No. 1: Cleveland
No. 2: Minneapolis
No. 3: Portland
No. 4: Dallas
No. 5: Phoenix
Have you read this in Business Week. My first thought, wow! harsh! But Mark Roth makes excellent points for those on the fence. Namely interest rates are at the lowest in 40 years. He noted that in the late 70s, rates hit 18%! In the 80s, when rates dropped from 12% to 9%, my parents practically danced their way to the 1st refinance. Mr. Roth points out the history of previous rates in terms of one’s purchasing power.
I happen to agree with his prediction that as the economy becomes more stable, rates WILL rise to hedge inflation. My prediction – that by this time next year, rates will have risen 1-2% at a minimum.
On a sale price of $250,000:
- Assuming a 5% down payment at 5% interest on a 30 year fixed, your monthly principal and interest payment would be $1275.
- If rates rise to 7%, your payment increases to $1580/month. Some buyers may be on the fence because they fear prices may drop further. Consider this.
- If there is a 10% decrease in price and the $250,000 falls to $225,000 in one year, but you wait to purchase and the interest rate rises to 7%, your payment will be $1422.
- You spend more money per month plus at the higher interest rate, you pay more interest over the life of the loan.
- Real estate appreciation is always a cycle and as the economy stabilizes, values will level out. Steve Harney is already analyzing data this is happening in many markets and that this will occur by 2014 in many states. Making a home purchase is still a decision that should be weight carefully and is not for everyone. One important consideration will depend on how long you plan to stay in the home.
Mark Roth summed up the article, “What I’m trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime.”
We do NOT think you are stupid or broke if you don’t buy a house right now. But if you are considering purchasing a home and would like to discuss it, we’d love to sit down and help you weigh options. 2009 may be a chance of a generation. Source