C.A.R. whipping up some frenzy….
The $100 million allocated for California’s first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.’s Economics team.
California’s Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.
C.A.R.’s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.
Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become available:
REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program. Agents should encourage their clients to seek specific advice from an accountant, attorney, or other professional as they deem appropriate.
C.A.R. Housing Tax Credit Worksheet
This particular credit was amazingly stupid. The state of California is broke (and therefore can’t afford it), and this credit is so short lived as to be nearly worthless in terms of economic recovery.
Translation: Its going to be swallowed up by all those who signed before April 1st delaying closing until after May 1st, to get their double cheeseburger.
I want to know what genious lobbiest managed to get “Close of escrow” rather than “signed contract after” inserted in there.
“REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program.”
Translation #2: “REALTORS” are not actually supposed to be competente to understand the implications of the product they are selling? Whiskey Tango Foxtrot?
Nicohlas – Had the same reaction….realtors love the “i told them to seek counsel” excuse.
Average agent is a glorified carpet salesman (or woman…). No offense to the carpet.
JTR, and several others, are obviously superior and actually EARN their fees via solid advice and good practices.
Sounds like Cash For Appliances here in Texas earlier this month. 20MM Obama bucks were flowed our way for energy star appliance state rebates. It was gone in 3 hours and crashed the states website.
Tom, Cash4 Appliances debuts here in Cali on April 22nd. Actually, it’s a solidly designed program since you have to turn in an old appliance for recycling. No cheeseburger if you are a first time buyer.
~~Breaking News~~ (Updated 7 minutes ago) “U.S Charges Goldman Sachs with Civil Fraud”.
“WASHINGTON – The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was faltering.”
Full AP article: http://www.msnbc.msn.com/id/36597290
Geotpf is right. Why even do it if it lasts only 20 days? Totally worthless.
Lots of coverage on Goldman Sachs today. Naturally, they’re totally denying any wrongdoing. One portfolio manager is calling this a “witch hunt” – think he’s long GS?
I think this is the tip of the iceberg. I’m sure many readers here will be happy to see the SEC bring the hammer on Goldman.
Why do it? Because the NAR and CAR are really powerful lobbies, and make money based on inventory TURNOVER. So anything that increases turnover, going up or going down, is good for them.
Competent agents make a huge different, too. Fortunately on my recent purchase, I didn’t NEED that great an agent but got one (I mostly did the legwork myself, figured that I should learn a lot about the local market, and it took me 6 months to find the place I bought).
Her partner would be the guy I’d have SELL my house: He managed to sell some places at ’04 prices, for a good $50K+ more than comparible sales both before and after. As a seller’s agent, he is stunningly good.
Why do it? To increase sales in April and May, traditionally the best selling months. That way NAR can advertise “Sales are through the roof! Everyone is buying now! You should too.”
Nick and Jinx, you appear to be right. I just found a listing with the first sentence in the remarks: “Get your tax credit and save $40k on landscaping & finishing touches with this gorgeous 4s ranch home!”
Keep peddling that cheese . . .
Looks like the federal tax credit won’t be extended either, according to Calculated Risk!
http://www.calculatedriskblog.com/2010/04/report-no-push-to-extend-homebuyer-tax.html
What, is today bizzaro world day? Goldman Sachs getting investigated by the SEC and the end of homebuyer tax credits?! This isn’t the world I’m used to.
“Why even do it if it lasts only 20 days?”
I thought it was kind of clever, especially overlapping it with the Federal credit. Reason being that they might cause a huge rush to try to get the credit, but not everybody in the rush will actually get it. More bang for your buck.
KeithM: ACtually almost NO bang-for-the-buck.
THe only bang-for-the-buck is if it generates ADDITIONAL sales.
The previous round of the fed credit, the one most likely to do so, is estimated to have cost $40K per additional house sold!
If anything, it drives up prices, so its really an 8K gift to the seller, not the buyer.
I have a trustee sale flip that was scheduled to close this week. The buyer asked if I would take $2000 on the side to postpone the closing to May 1st. I said sure why not (my holding costs are about $700/mo on the house.) Escrow called me to say they couldn’t do it until May 3rd due to all the other people postponing THEIR close until May 1st. Gotta love all the free cheese being passed out.
I don’t see how the fund can be depleted in 10-20 days? The website says that the 100 million earmarked for 1st time buyers will NOT start til May 1st, and they will not accept applications before then.
So how is the fund projected to run out so fast if noone is allowed to even apply til then?
murf2222
murf2222-The fund will be depleted by May 20th. 20 days starting on May 1st.
So if you’re not in escrow by now, I guess you aren’t getting any CA tax credit. 30 day escrow from today puts you at May 20th already. I haven’t really seen pending sales going crazy in the past couple of weeks (seems lighter then Oct of 2009 but that’s just casual observation), actually active inventory seems to be rising in most of the zips I look at.