Tax Credit Does Little for Laguna Beach Buyers

First-time home buyers may not benefit much from the government’s tax credit program, at least not in upscale cities like Laguna Beach, according to columnist Kelli Hart of the Orange County Register.

The program, which offers an $8,000 tax credit for first-time buyers who purchase their homes between January 1, 2009 and April 30, 2010, is a bid to revive buyer activity following the real estate market crash.

The credit was later extended to include repeat home buyers who have owned their homes for five of the last eight years. This extension, valued at $6,500, is valid on homes sold between November 6, 2009 and April 30, 2010.

However, none of the two programs are applicable to homes priced above $800,000. In Laguna Beach, where home prices average $2 million and often go up to $5 million and above, there aren’t many properties that meet these criteria.

As of the latest record, a mere 20 homes in Laguna Beach were priced below $800,000. By contrast, the other two South Coast Cities—Dana Point and San Clemente—had much larger inventories of 121 and 168 properties respectively.

Another factor limiting the options for Laguna Beach buyers is the income limit set under the program. First-time buyers must make no more than $125,000 a year for individuals, and no more than $225,000 for married couples.

This makes it less likely that applicants will get approved for the “jumbo” mortgages usually required to finance these homes. With the income limit in place, debt-to-income ratios will be much higher and may not meet the 31% DTI requirement of most lenders.

 

Earlier in Laguna Beach Real Estate News:
Charge Your Electric Car in Laguna Beach
More Luxury Homes Hit Laguna Beach Real Estate Market
Oldest House In Laguna Beach To Be Rehabbed