The Obama Housing Plan

I thought you would like to know this information about how the Stimulus Package will affect housing in our area. Frankly, it will tighten up an already tightening market in Northern Virginia. We have been experiencing low inventory and rising prices for the last 6 months west of the Potomac and see no end in sight. Sales are up more than 25% in Fairfax County (and nearly 100% in Prince William County) compared to a year ago. Nevertheless – the market is hot and the incentives below may create an even hotter sellers market as we move forward in 2009.

• First-time buyers are back in the game (with 0% down financing and payments less than rent);
• There’s now an $8,000 tax credit (with no payment back required!) for first timers;
• Parents are helping kids purchase their first home;
• Investors are picking up properties that create cash flow…

The challenge for many markets across the country where inventory is already starting to shrink and pending sales sour is whether the market will overheat once again.

Meanwhile, below you can see an overview of how the stimulus package will help homeowners stay in their homes

From the Weichert Insights newsletter:

"As you may know, President Obama presented a new plan this week to prevent foreclosures and stabilize the housing market. The Homeowner Affordability and Stability Plan will be funded with money from the $700 billion financial industry bailout passed by Congress in the fall.

"The plan was designed to help up to 9 million families avoid foreclosure by restructuring or refinancing their mortgages. While it may seem that the main benefactors of the initiative are homeowners at risk of defaulting on their mortgage, we will all benefit. Defaults and foreclosures result in lower home values, lost jobs and economic troubles for local communities.

"The main components of the Homeowner Affordability and Stability Plan are to:

Provide incentives for mortgage lenders and servicers to modify loans in a way that would reduce monthly mortgage payments to sustainable levels and aid up to 4 million homeowners struggling to make their payments.

Allow Fannie Mae and Freddie Mac to refinance mortgages they own or guarantee, even when more is owed on the home than what it is worth. By removing restrictions on the government-sponsored enterprises, monthly payments could become more affordable for up to 5 million homeowners.

Keep mortgage rates low for all buyers by doubling support for Fannie Mae and Freddie Mac, which were taken over by the government last year.

Said National Association of Realtors President Charles McMillan, "The administration's proposed plan, combined with provisions like the $8,000 first-time buyer tax credit in the just-enacted American Recovery and Reinvestment Act, will help minimize foreclosures, shrink housing inventory, stabilize home values and move the country closer to an economic recovery."

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