The San Jose Housing Market and The Stimulus Dud

reallyI look for something positive to occur regarding real estate every day.  For most of 2008,  I embraced the hope that a new president promised.  I started to get excited as I   witnessed sales numbers go up while interest rates lowered to 4.8% in December 2008.  I re-energized when it was official that the Housing Stimulus Plan was about to be approved.

The good news.  Nearly  4 million home owners will receive help.  Those who still have their jobs and are current on their payments, will receive help in modifying their loans.  That is wonderful news.  Unfortunately, less than 7% of homeowners in San Jose will benefit from the this plan.  The following chart was provided by Zillow.

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The good news.  The plan will provide a $8000 tax credit for new home buyers.  Unfortunately, those who qualify for the tax credit do not make enough to afford a median priced home in San Jose in this new lending environment requiring a minimum of 10% down and many times 20% down payment is required.  Those who can afford a median priced home, make more than the maximum ($75,000) income allowed to receive the credit.

San Jose Household Income

The good news. The stimulus plan sent money to the state and is promised to save or will create 400,000 jobs. Unfortunately, the Governor of California has implemented a
1 percentage point increase in the sales tax in April and the higher vehicle license fee in May. By then, about 2.4 million out-of-work state residents will be receiving higher unemployment benefits and more than 2 million Californians will be eligible for more food stamp help, according to the Center on Budget and Policy Priorities, a Washington think tank.”

The good news.  There are lots of deals to be had in the real estate market.  Nearly 40% of the San Jose housing inventory is represented by short sale listings and nearly 20% are bank owned foreclosures.  However, more and more, offers from buyers with FHA loans and 3.5% down are being turned down by the asset managers because they do not believe they will close on time; if at all. The average FHA loan application takes 5.4 weeks to close.

The good news.  Well, I am not sure exactly what the good news is anymore. Tomorrow is another day and the forecast says there will be some sunshine.  One can only hope.

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