On July 26 the Senate passed the housing bill aimed at reviving the nation’s housing market.  President Bush is expected to sign it soon. The two primary objectives of the bill are to ensure the smooth functioning of Fannie Mae and Freddie Mac, and to assist homeowners at risk of foreclosure. Here is a simple breakdown of the elements of the bill that will impact most folks who are not facing foreclosure:

The Fannie Mae, Freddie Mac and FHA conforming loan limit will be permanently increased to 115% of the median area home price from $417,000. More details will be available in the coming days as to how they will define the median area home price, but the Washington DC metro area will see a limit higher than $417,000.  You may recall this was temporarily raised in the stimulus package earlier this year.

A first-time homebuyer tax credit of $7,500 for anyone closing between April 9, 2008 and July 1, 2009 goes into effect. A first-time homebuyer is defined as anyone who has not owned a home in the past three years. The credit is reduced gradually for single filers with an adjusted gross income over $75,000 and joint filers with adjusted gross income over $150,000. The refund is actually an interest-free loan that must be paid back over 15 years in equal installments.  Logistics of this have yet to be worked out.

For 2008, the bill provides an additional $500 single filer deduction for folks who do not itemize their taxes, $1,000 for joint filers.

How much will this really help the housing market?  That remains to be seen.  The permanent increase in the conforming loan limit is the most useful for our market in the long run.

Do you think this bill will improve the housing market?  Post a comment for us to read…

I can’t tell you how many calls I get from exited buyers when Ben Bernanke and his crew cut the Fed Rate. Fed Rates tie to home equity lines of credit, credit cards, and car loans and do not directly impact mortgage rates.

Do you think the rate cuts have a physiological effect on the housing market?

From The Washington Post: Home Sales Plunge, Feed Recession Fears: “The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years.”

With headlines and stories like this one, it’s no wonder new home buyers are hesitating to entering the market. Based on these reports, the situation sounds bleak and you’d think buying a house is the last thing you should do.

The scary part to me is that nowhere above does the article say “nationally.” The author has forgotten the adage that all markets are local and when buying in real estate the only criteria you should remember is “location location location.”

The November 2007 real estate trend report for Washington, DC, shows overall sales down 12 percent but prices up more than 7 percent. But if you drill down even further to particular zip codes you’ll see 20002 had in increase in sales of 11 percent with a decrease in sales price of 4 percent, while zip code 20005 saw an increase in sales of 7.5 percent and a sales price increase of 19.5 percent.

Is the upshot not to believe the media? No, but we need to have an eye for how the media can parse statements. Know your numbers for where you want to live. Of course that’s my job to give you the information you need.