The bill provides for an $8,000 tax credit that would be available to first-time home buyers and expands the credit to grant a $6,500 credit to current home owners purchasing a new or existing home between November 6, 2009 and April 30, 2010.

Income limits were also increased, single buyers that earn up to $125,000.00 and married couples that earn up to $225,000.00. Purchase price of the home can not exceed $800,000.00.

Contact our office for more details.

I was just telling my parents the other day if the Government extends the home buyer tax credit that it's time to sell their home and buy another. My reason is the timing could not be any better plus the limits were raised so more families could take advantage of the program.

Just as the tax credit expires in 2010 inflation will kick in a few months later or sometime in 2011. If you wait to sell your home and interest rates get above 7% it will slow the market down again and you may not be able to sell.

No one knows what the severity of the inflation will be; it may be mild and absorbed by the economy. I just have a gut feeling about this and I think rates will rise.

This is something for everyone to think about plus interest rates are still good right now so I am going to sell my parents home in Northwest Indiana and help them purchase a home in the Phoenix metro area. Home prices out there have come down 30% to 50%.

Call my office for more detailed information.

Porter County Builder's Association's                        Living Green Expo

 Come check out the latest GREEN products and techniques that home builders are using today. Plus find out more information on receiving a $1500.00 tax credit if you up-date your home with energy saving products like new windows, furnace & central air.

The event is this weekend Saturday from 10am to 5pm and Sunday Noon to 5pm. The event will be held at the Ivy Tech Community College 3100 Ivey Tech Drive in Valparaiso, Indiana 46383.

$3.00 for adults or $2.00 for food donations, children under 17 go in for free.

I will be there on both days, we have a booth set up for our Real Estate Board - Greater Northwest Indiana Association of Realtors (GNIAR). Come on by and say hi. We will have information on how to become a Realtor, membership benefits and a little about are Organization. Bring the family and have some fun plus learn about helping the environment. Refreshments and finger food will be served.

All the hype is over when will the Dow reach 10K. I personally think it's inflated. There is too much short selling no long term commitments; this to me is an unstable market. Unemployment is approaching 10% and still rising, housing market has not bottomed in spite what you here and the statistics. If interest rates get any higher and keep raising this will pull back the real estate market even more. If oil gets out of hand again it will pull back the economy even more. Folks we are on pins and needles. The fundamentals are just not there.

Inflation will be here just when, how long and what will interest rates be. The experts are predicting in the second half of 2010 or in 2011when inflation will kick in. The economy has to go in stages before you will see a recovery. Its way too early for anyone to say we are out of the recession. Its going to take time, deflation has not stopped yet. Once deflation bottoms then you will see some indications of things starting in an upward manner. What I mean about deflation. As a whole when the consumer gets to a comfort level based on their wages that is when people buy.

Like for example in the housing market when reduction in wages because of out sourcing jobs that means instead of a family purchasing a 200K home like 10 years ago can only afford a 120K home today. So prices have to come down enough to co-inside with wages for people to buy, this is for any product. This is what I mean about deflation bottoming.

Everything was so artificially inflated for to long and the consumer got caught up in it with to much debt. It's like unwinding a coiled snake. We have to unwind and deflate!

Rule of thumb plus an industry standard: 28% to 36% debt to income ration. Follow this conservative guiedline for your debt (whats reported on your credit report).

Example: Gross family income of 100K. $100,000.00 X .36 or 36% equals $36,000.00. Divide 36,000.00 into 12 months that equals $3800.00. This is what you can not exceed monthly for your debt that is on your credit report; mortgage/s, credit card payment/s, car loan/s ect..ect…

Same family wants to purchase a home or investment property $100,000.00 (gross family income) X .28 or 28% equal $28,000.00. Divide $28,000.00 into 12 months that equals $2333.33. This is principal, interest, mortgage insurance premium, taxes and hazard or home owners insurance.  

If we take $3800.00 (38% debt to income) and subtract $2333.33 that equals $1466.67 for credit card/s, car payment/s, ect..ect…

FHA loans go to 41% and during the sub prime market total debt ratio went to 55% with no money down, no asset verification (no docs), low credit scores and crazy mortgage rates. This is why the mortgage melt down happened. We are going back to the more traditional guidelines that should have been done in the first place. That is why we are deflating!

We have expanded to Downers Grove Illinois to service the I-88 Corridor.

There have been positive gains in the housing market for the last 4 months but we are still in a “Real Estate Depression”. We are not at the bottom yet especially in my market area of Northwest Indiana (Rust Belt) plus Chicago and Suburbs. The majority of the gains have been vacant properties.  

My prediction is that unemployment numbers are still going to be above 9% to the end of the year and even the 1^st quarter of 2010, possible the second quarter. With those numbers growth will also be slow.

Commercial real estate is also slow.

As buyers all real estate is still good to buy with rates staying below 6%. Currently a residential 30 year fixed for August 28, 2009 is around 5.29%.

REMEMBER THAT THE $8000.00 TAX CREDIT IS SET TO EXPIRE DECEMBER 1^ST 2009. THE TRANSACTION HAS TO BE CLOSED BEFORE OR ON NOVEMBER 31^ST.

The next thing we have to watch is inflation-when, how long and how much. This is on my mind. If interest rates get above 7% it will send the housing market back down.

Sellers this is something to think about. Inflation is expected to kick in around the second half of 2010 or in 2011. If you plan on selling in the next year or two maybe this will be the best time to sell because interest rates are historically low. Real estate is not going up in value anytime soon and if rates get above 7% good luck selling. Like I said before this is something you need to think about. We know inflation will kick in but how severe will it be.

Also keep an eye on oil prices. If oil prices keep rising this will keep consumers from spending and it will pro-long the recession. We are in a delicate period. If we do not have balance we will contract which will worsen the economy even more.

BUYERS: You should think about buying because of what may happen as I explained above, it may or may not benefit you. You can not loose either way!

Buyers & Sellers contact my office and I can explain in more detail.

Sorry I have not placed a blog in a while but there was really no significant change in the housing market or the economy from my last blog months ago. We are still in a housing depression.

We have expanded our services to DuPage County Illinois with a office in Downers Grove.

The DuPage County market like most markets in the U.S. was also affected by globalization and the mortgage market in the past decade. The difference between DuPage County and Northwest Indiana is the manufacturing base. Since the early 1900's Northwest Indiana played a major role in the Industrial Revolution along with Michigan and Ohio. Now with the manufacturing base eroding it's no longer a major player in local economic growth, retail and restaurants are! DuPage County does not rely on manufacturing for its economic growth. In Northwest Indiana the homes that are selling are 200K and less, depending on the area but on average its 70K to 150K. This is what the average person can afford that lives and works in Northwest Indiana now. In that market homes have deflated 8% to 12%. Anything over 200K the market has deflated more (12% to 20%) with the 300K plus market at 15% to 20%.

In the DuPage County market it's the 300K to 600K market that is selling than the 600K plus market. It's based on affordability and what the average person earns. You can see the difference in how a manufacturing based economy is being crushed by cheap labor overseas. With the dollar and wages declining and goods, services and taxes keep going up these manufacturing economies will be below the average standard of living from other non manufacturing economies.

DuPage County along with other non manufacturing communities in the Chicago-land area will deflate but will have a higher standard of living because of higher wages.

Home prices trough out the area in most cases are going back to what homes sold for in the year 2000.

Unemployment

We are still in a deep recession and a housing depression. In my opinion we will still be in a down real estate market the rest of the year and into 2010 unless interest rates get to 1% (more later on this). We continue to go through a deflationary period in home prices to co-inside with reduced wages in the Northwest Indiana and parts of Chicago-land

Please do not think we are out of the woods yet, we are far from it. You see that May unemployment numbers were at 345K which in the last couple months has dropped from the 600K ranges. Unemployment still went up to 9.4%. In the rust belt were manufacturing is the economy it's in the double digits. What the biggest misconception is that the jobs people had lost and have found new ones are paying far less. This number sky rocketed to 16%. This to me is the true unemployment rate. Hourly wages continue to go down so will the standard of living.

10 Year Note Yields

In the last few weeks the 10 year yield has gone up to around 3.8% from 2.2 % or so. You see it in 30 Year fixed mortgage rates rising (5.45% from 4.75%). This has put the housing market 2 steps back. If we do not get interest rates down we will have a pro-long and painful recession with more foreclosures and possible inflation. The economy will not recover with higher interest rates. Please write to all your local/state politicians to get interest rates down to 1% for a 30 year fixed rate. Yes its sounds crazy but remember we bailed out and continue to bail out the financial market which is even more crazier!!!!!!!

Here is what up sets me and does not make sense. The commercial banks were the only institutions that were allowed to borrow from the “Discount Window” (Federal Reserve). Last year the investment banks were also included. All these institutions borrow money from the discount window at a 0.50% interest rate (Discount Rate). Why is the American Tax Payer that is bailing out all theses institutions (which we have to pay for decades to come) paying 5.4% for a 30 year fixed loan??????? We are paying over 10 times the amount that these institutions borrow. Why can not Freddie Mac and Fannie Mae borrow from the discount window at 0.50% and lend us the money for a mortgage at 1%. Or create a fund just like TARP for homeowners since we are flipping the bill.. I think that is fair. They are still doubling their money in profit. If you want to stop the bleeding in the housing market, the economy and get a bottom to this mess get interest rates for a 30 year fixed at 1%. This will allow the market to stabilize and keep people in their homes. The more people in their homes the more tax revenue. I can not believe that the politicians can not figure this out! This interest rate will also help people that lost 20% to 30% or more in wages due to out sourcing of jobs overseas (globalization). It will make up the difference for some of the wage loss.

We are not benefiting at all with what's going on. Its still one sided.

Respectfully,

Dave Kuno

Kuno Real Estate and Consulting Services

I placed recory.org on my last blog and its recovery.gov. Sorry for the inconvenience!