How does the economic stimulus package relate to Real Estate???

If you have been paying attention _at all_ you have heard this and that about our new administration's economic stimulus plan. On one channel you'll hear the said "positives" and on the next channel (well, maybe 10 minutes later on the same channel) you'll hear the "negatives". The package is huge - and from the stack of papers they have shown on some news reports, appears to be nearly 1000 pages (based on the size of two reams of paper). Who knows if those pages are double sided.

ANYWAY.... I've been wondering what exactly has been going on in terms of the housing industry. Although Austin is still in a great situation when compared with the rest of the country, any help we can get is appreciated. So...what's the deal? Check out this letter that I just received from Charles McMillan, the president of the National Association of REALTORS®. Remember I spent some time with this guy at the GREEN designation course last December. He has been making an effort to be sure that members of the organization hear specific, usable news directly from him. I think it's great to see some positive information, and wanted to share it with you.

How does this impact you? Give me a call and let's discuss. This is great news for buyers, sellers and investors. Will it fix everything? Probably not. Is it a fantastic start? Absolutely. Here's what Charles had to share....

Here's our take on the Stimulus Bill and Treasury announcements made this week. We look at the Stimulus package AND the Treasury's package holistically, in compliment with each other - mostly because that's how the Obama team is looking at it. Your representatives, the NAR Board of Directors, asked us in November to do 4 things (with an unspoken but clearly understood mandate to PRESERVE what we already have). Here they are: 1) get loan limits raised for high cost areas, 2) make the $7,500 tax credit NOT a loan, 3) try to find ways to push interest rates down (which are higher than they should be due to systemic risk right now) by 200 basis points, and 4) help provide solutions to the foreclosure/short sale problem.

So here's what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.

In addition, we preserved what we have - which some tend to forget is always on the table when these negotiations start up again - mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).

We did make a run at the $15,000 credit -- and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of 'what we are willing to give up to get a $15,000 tax credit' and kept the debate again, on how much it should be. It's pretty hard to complain when they give you what you ask for and you lose something you never had.

While we study the Treasury specifics on their major role in providing the rest of the housing solution -- there is much more to come and we are working diligently with the Administration to help 'unclog the pipeline' and get capital flowing into housing again.