There are a lot of volatile cross-currents washing through the financial markets right now.Â If we were not sure about things a month ago, we’re hopelessly confused now.Â The big stimulus package, a new pile of national debt, a record drop in home prices over the 4th quarter of 2008, CitiGroup, AIG, and the auto makers all needing more money…it’s enough to make you want to hide under the covers with the lights off.
However, tumultuous times present unique (though fleeting) opportunities.Â And there are two major points I’d like to bring to your attention:
1)Â We have a â€˜new and improved’ 1st time homebuyer tax credit!Â $8,000 dollars straight in your pocket just for buying a place!Â And you don’t have to pay it back!Â I know!Â It’s toÂtally mind-blowingly awesome!!!Â As with all good things, this tax credit comes with some strings attached (buy a home costing over $80,000, earn less than $150,000 anÂnually as a couple, haven’t owned a home in the past 3 years) but nothing constricting.Â The big difference between this credit and the $7,500 tax credit we had before is you don’t have to repay this one if you live in the home for 3 years.Â That’s like your boss giving you a $1.28 per hour raise for 3 years just for being a homeowner.Â Except your boss is America.
2)Â Bank stress testing is a’coming.Â As a nation, this is not one of our brightest ideas.Â The concept is that we’re going to send an army of regulators marching to all the banks in our country to comb their books and see if those banks could survive a “worst-case scenario” economy.Â If it is determined that the bank is in trouble, confidence in that bank will collapse (along with their stock price) and government intervention will be necessary.Â Basically, if regulaÂtors say a bank will fail, it will become a self-fulfilling prophecy as everyone jumps ship.Â My problem: it’s setting up some otherwise solvent institutions for failure by virtue of mob mentality.Â But such is the skittish nature of investors these days.
The moral of the story is that we are going through a very murky period.Â A single day can make a world of difference on everything, including asset values and mortgage rates.Â If you are thinking about buying a home, set up a time to talk with me so I can help you time these big market upheavals and find surprisingly good deals amongst them.Â Uncle Sam is trying to encourage homeownership in every way that he can.Â Now might be the time to start examining the options.