Will the San Diego Real Estate Market Slow After the Tax Credits Have Run Out of Dough?
Jul 10th, 2010 by Kathleen Behrens
Houses for Sale in San Diego – Buyers of houses for sale in San Diego who met the April 30th contract deadline for purchasing a San Diego home, but missed the June 30th deadline for closing escrow have been given a second chance to qualify for the federal homebuyer tax credit. The federal government enacted legislation at the beginning of July to extend the escrow deadline to September 30, 2010. The National Association of Realtors estimates there are 180,000 home buyers who will benefit from the extension.
The IRS has estimated as of April, 2.6 million home buyers have applied for 18.7 billion in tax credits through the federal homebuyer tax credit program. Although the tax incentive has stimulated home sales in the San Diego real estate market and throughout the nation, many real estate analysts believe the tax incentive program has been a temporary fix to a long term problem. Because home sales have been pushed forward by home buyers who wanted to take advantage of the tax credit, experts anticipate home sales in San Diego and throughout the nation will slow during the second half of the year.
The San Diego real estate market and other major California real estate markets, such as San Francisco, have fared significantly better than the rest of the nation in terms of increased home sales and improved home values. In addition to offering desirability and job growth opportunities, the San Diego real estate market has also benefited from the California first time homebuyer and new home credit tax incentive programs. However, how will the San Diego real estate market fare after the California tax credits have run out?
By the end of June and just over eight weeks after the homebuyer tax credit program began, the California Franchise Tax Board had already received over 20,000 applications from first time homebuyers worth nearly $106 million. Although the Board estimates the $100 million earmarked for first time homebuyers has been exceeded, their website indicates they will accept 28,000 applications to account for duplicate, revised, and invalid applications and to ensure they have enough applicants among which to distribute the entire $100 million. As of July 6th, the Board had received 23,680 applications. They will announce daily updates on their website after they have received 25,000 applications for the first time homebuyer credit.
San Diego and other California home buyers still have time to take advantage of the new home credit. However, it is also available on a first come-first served basis and will be capped at $100 million. As of July 6th, the California Franchise Tax Board had received 8,800 requests and applications worth an estimated $57 million for the new home credit. The Board is posting weekly updates each Thursday for the new home credit until they believe they have accepted enough applications to distribute the entire $100 million in tax credits.
Although it is too late for San Diego home buyers who have not already signed a contract to take advantage of the federal homebuyer tax credit or the first time homebuyer tax credit, there is still time for San Diegans to save money on the purchase of a brand new San Diego home with the new home credit program. With interest rates at a 50 year record low for a 30 year fixed rate mortgage, now is an excellent time to enter the San Diego real estate market.
Begin your search of houses for sale in San Diego today, or contact San Diego Realtor and Broker Russ Petrone of Petrone Properties Real Estate Associates at 858-259-1000 to have a customized search of the homes for sale in San Diego designed for you based upon the specific criteria you require for your San Diego home. With 25 years of experience in the San Diego real estate market, Russ has the experience, community knowledge, and negotiating skills to help you find and purchase the perfect San Diego home.