- First Time Home Buyer's credit was $8000 from the Federal Government. This was the first in history and it went through the end of last year and ended, as planned, on April 30, 2010. A lot of buyers did not believe that this program would end; many felt as though it would continue as long as the economy had any issues, but it ended--as promised. It did what it was supposed to do--stimulated first time home sales, and then the program ended.
- The Fed has been buying US Treasury Bonds and doing things to hold interest rates to unnatural rates. This is hard to do, but if you spend enough money you can do anything. Currently, Interest Rates are the lowest they have ever been. The plan from last year was to stop buying these T-bills at the end of March. That plan happened and just before it did, interest rates jumped almost 1/2 percentage point in one day. Since mid-March there has been some world economic crisis's that have played into the US bond and financial markets, so the interest rates continue to be volatile right now. If you look at what the analysts are saying about interest rate forecasts, the majority of Economists have been saying that when the clouds begin to clear, rates are going to rise. Most expect this to start happening very soon. In the end, this low rate is an artificially sustained rate, and there is only one direction rates can go...up.
- Other state and federal programs, such as MCC and Bond 77 may not remain on the horizon. I don't know how long these programs are designed to last or how long these starter funds will be available, but I assume that at some point, all subsidy programs run out of money. Regardless of which program you are talking about, there is no such thing as an unlimited budget, and at some point I expect they will stop letting new buyers into each program. Point in case, the $8000 tax credit is over and will probably never happen again. These programs come and go--mainly when times are toughest.
- Now for the impact of a change in rates:
- For every 1% point increase in rate, you lose right at 10% of market value. So, whether you are talking about 10% more down payment, or 10% loss in how much you will qualify for, or 10% increase in payments--10% is 10% and it is moving in favor of the market, not the consumer. Some economist estimate the new interest rates to be in the mid 5's and some believe by next spring the numbers could be in the 6's. Some believe it could go higher during the next 12-24 months. No one really knows when or where the new rates will stop. Rates change, and right now the only place they can go is up.
- Programs have different financial impact, but the $8000 tax credit had a big impact on first time home buyers as is the case with MCC and the Bond 77 programs.
- Austin has been flat in pricing for about 18 months, (~1-2% depreciation a year for the past 2 years). This is rare for Austin. This too is expected to change. As the market gets stronger, prices will go up. Home prices could easily go up another 3-6% in the coming year--as this is the normalized rate in Greater Austin over the past 2 decades.
Let's start with the basics. Hardwood. A solid hardwood floor plank is made from a single piece of wood. It is cut to a size, sanded and a manufacturer's edge of some description is added to the edges so that pieces can fit together (this board has a tongue and grove edge). The edges may be unique to the manufacturer, but are not unique to solid hardwoods. What makes this material unique is the thickness of the solid wood section. Solid hardwood is thick and lends itself to being sanded and refinished multiple times--depending upo…