First Time Sacramento Area Buyers Are Taking Advantage!

With the over 35% drop in the Sacramento area median home price, first time buyers are swarming! It’s so fun to talk to people who have realized that they can buy now. People who have been priced out of the market, people with good credit, money in the bank, great jobs and powerful thirst for  home ownership are easy to find right now.

With the Sacramento area’s affordability, first time buyers are competing with investors for homes in the more affordable pricranges; and with some of the great financing available, they are winning more than you’d think! With a lot more inventory to go through before this downturn in our market is over, I am telling people to “take your time and get it right”…

It could be a long time before the market rebounds enough for a homeowner to sell at a profit, after cost of sales is figured into the deal, so just make sure the home you write an offer on is one you and your family will be happy in for several years!

First-time home buyers who purchase homes before December 1, 2009 are eligible for a tax credit of up to $8,000.  To qualify the purchaser my not have owned a residence during the three years prior to the purchase.  The tax credit is only available when buying a primary residence.

The tax credit is determined by the price of the home and the buyers income.  The tax credit is equal to 10 percent of the purchase price of the home, up to a maximum of $8,000.  To receive the maximum credit income for single buyers may have income up to $75,000 and for married couples incomes up to $150,000.

I found this great little explanation of the tax incentives for a first time buyer vs. renting in a a market such as the one here in Sacramento…

“I’ve got a little analysis here that talks about the difference between renting versus owning. Say you’ve got somebody who earns say $75,000 annually, paying $1,500 a month rent, and they’re going to buy something for $300,000. We’ll use 5 percent as the rate.

They’re roughly going to be paying on Federal Housing Authority loan about $2,070 a month. That’s everything, give or take — taxes, insurance, principal and interest. The feds, as Robin has said, are giving an $8,000 tax credit.

They’d be paying about $12,500 in federal taxes and about $4,100 in state taxes when they’re renting. When they’re owning, they’re going to be paying about $8,100 in federal and $2,700 in state taxes.

What that comes down to is about a $5,800 a year tax benefit, which is $488 a month.

So, if your payment is, say, $2,070, and you’re going to wind up getting approximately a $488 a month tax write-off, not counting the $8,000 bonus incentive there, there’s only about $50 or $75 difference between renting and owning.

That’s a big, big piece in driving the market at $350,000 and under.”

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