Market In Review: The Wells Fargo View SM

The Making Home Affordable Program In early March, the Obama Administration announced its plan to further prevent foreclosures and assist borrowers with loan modifications and refinances. The Administration said the Making Home Affordable Modification refinance and modification options may assist as many as 7 to 9 million homeowners. The goal is to make these homeowners’ mortgages more affordable and help prevent the negative impact of foreclosures on families, communities and the economy.

After the Making Home Affordable program guidelines were released, entities such as Housing and Urban Development, Fannie Mae, Freddie Mac, the American Securitization Forum, lenders and the National Association of REALTORS® released statements of support. Since then, these groups have worked to determine how to implement the plan and create the necessary support systems. More information about the Making Home Affordable program is available at www.financialstability.gov.

New Homebuyer Tax Credit In Stimulus Package There is hope among the financial services industry that the first-time homebuyer tax credit legislation will increase the demand and create movement in the housing market from the first-time homebuyer segment.

This group of buyers has traditionally served as the genesis of the “domino effect” of home purchases. A first-time homebuyer buys a home that someone else has put on the market, so that that person in turn can buy a new or existing home. This cycle is what decreases the existing inventory of homes.

First-time Homebuyer Quick Facts Median income in 2007 of 2008 first-time homebuyers: $60,600 Median age of 2008 first-time homebuyers: 30 Median down payment for 2008 first-time homebuyers: 4% Source: NAR, Profile of Home Buyers & Sellers, Nov. 2008

The Homebuyer Tax Credit bill that was part of the recently announced stimulus package provides for a tax credit up to $8,000 that would be available to first-time homebuyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment.

Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

In many communities across the country, first-time homebuyer workshops and seminars are being held to provide tips and tools for those consumers looking to enter into homeownership.

In addition to offering consumer education workshops and resources, in mid-March Wells Fargo held a simulcast meeting for approximately 15,000 real estate and mortgage professionals across the country to help fuel first-time home purchases.

“Meeting the Market Challenge in 2009: Helping Homebuyers Make Informed Decisions” was fed via satellite to more than 55 multiplex theaters across the nation. The focus was on creating demand through education and programs designed to help first-time homebuyers and diverse segments groups to informatively purchase a home.

This is the second year WFHM has presented this event in conjunction with The National Association of Hispanic Real Estate Professionals, National Association of Real Estate Brokers, and the Asian Real Estate Association of America.

Housing Affordability Index Shows Homeownership Opportunities Exist Speculation continues about when the housing market will eventually turn and demand will increase for home purchases. For qualified consumers waiting on the sidelines for the right time to become a homeowner, it may be time to make a move.

The chart on this page summarizes the home affordability index for mid-2008 to January 2009. It measures whether a “typical family” could qualify for a mortgage on a “typical home.” The index is based on several factors: interest rates, home prices and wages. An increase in the index indicates that it takes a smaller percentage of a family’s income to make their house payment.

According to the National Association of REALTORS®, the Housing Affordability Index shows that in January a medianincome family, earning $59,000, could buy a home costing $283,400 with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. In January 2008, the typical family could buy a home costing $263,300. « Return to Newsletter