Contact: Scott Holste, (573) 751-0290
Governor’s Office
Scott.Holste@mo.gov
Jon Galloway, (573) 751-7595
Treasurer Zweifel’s Office
Jon.Galloway@treasurer.mo.gov
FOR IMMEDIATE RELEASE
Nov. 24, 2009
Gov. Nixon, Treasurer Zweifel unveil plan to increase
home ownership and energy efficiency by paying
Missourians’ property taxes for a year
JEFFERSON CITY, Mo. – Gov. Jay Nixon and State Treasurer Clint Zweifel, chairman of the
Missouri Housing Development Commission (MHDC), today announced a proposal to pay the first
year of property taxes for income-eligible Missourians who buy a new or existing Missouri home after
Jan. 1, 2010. They will take the proposal before the MHDC at its Dec. 18 meeting.
If approved by the commission, Missouri families making less than $98,000 a year who enter into a
contract to purchase a new or existing Missouri home after Jan. 1 would have their property tax paid up to
$1,250. Those families would be eligible to have an additional $500 paid towards the tax bill if the
homeowner purchases a energy efficient home or items, such as Energy Star appliances, to make the
home more energy efficient.
The proposal is expected to pay the property taxes for 9,000 to 11,000 Missouri families using $15
million in unencumbered reserve funds at MHDC.
“Purchasing a home not only helps families achieve part of the American dream, but it also strengthens
our economy and provides good-paying jobs,” Gov. Nixon said. “Because this is so vital to our state’s
economic growth, we want to do everything feasible to encourage people to buy homes and make it easier
for homeowners to save money and energy resources by installing energy-efficient features in their
homes.”
In a report earlier this month that identified Missouri as one of 11 states most likely to recover from this
recession the quickest, Moody’s listed Missouri’s diverse economy and stable housing prices as one of
the main reasons for a potentially quick economic recovery in comparison to other states.
“I appreciate Gov. Nixon and the panel’s efforts on ways to reinvest in the economy and put Missourians
back to work,” Treasurer Zweifel said. “Putting Missourians back to work and renewing the promise of
responsible homeownership have been two of my priorities on MHDC.”
In August, Gov. Nixon formed the Home Building and Residential Energy Efficiency Advisory Panel
by executive order to study how Missouri can both help increase home ownership and home building to
improve the economy and increase homeowner access to energy-saving measures. The 19-member panel
included representatives of the home building industry, banking institutions, real estate businesses, trade
unions and community action agencies, along with experts in energy efficiency and “green” building.
The advisory panel analyzed the strengths and weaknesses of the current new housing situation in
Missouri, as well as the opportunities and threats being faced. The panel also examined the current home
building market and the reasons to encourage energy efficiency home building in Missouri. Among the
recommendations were proposals to use the MHDC to promote home ownership and incentivize energy
efficiency. The panel’s full report can be found online at www.mo.gov
Who is eligible?
Income eligibility is based on previously adopted MHDC guidelines. Depending on the county of the
home sale, household income limit guidelines for low to moderate income persons or families approved
by MHDC last spring range from $58,300 to $98,560. These grants are for owner-occupied purchases
only.
When would it start?
If approved by the MHDC at its next meeting on Dec. 18, 2009, funds would be available for contracts
entered into after Jan. 1, 2010, on a first-come, first-served basis.
Where is the funding for this program coming from?
The funding would come from a reserve fund held by MHDC earned through successful management of
mortgage loans made to low- and medium-income individuals and families. These reserve funds are not
from general revenue, nor subject to the legislature’s appropriation process.
How much of the property tax bill could be paid?
Eligible homeowners could have up to $1,750 of their property tax bills paid. According to the State Tax
Commission, the average residential real estate tax bill for a Missouri homeowner is $1,160. An incomequalified
individual or family is eligible to receive $1,250 or the amount of their first year’s real estate tax
bill, whichever is highest, when they purchase a new or existing residential home. An income-qualified
individual or family can enhance this base amount, up to $1,750, if they purchase an energy-efficient new
home or make energy efficient improvements to an existing home that is purchased. These improvements
must be made prior to closing or within 60 days of closing.
How do Missourians apply for these funds?
Forms and affidavits will be part of documents executed at the home sale closing. Additional receipts and
documentation will be required for proof of energy efficient improvements.
What energy-efficiency upgrades would be eligible for the additional incentive?
Eligible improvements would include installing high-performance windows, house wraps, programmable
thermostat controls, water-efficient toilets and faucets, and energy-efficient water heaters, lighting and
appliances; sealing heating and air conditioning ductwork; caulking; insulating water heater pipes;
increasing the R-value of insulation in crawl spaces and attics; and conducting on-site energy efficiency
inspections and tests, including a blower door test, which tests the overall energy efficiency of the house,
and a duct blaster test, which tests how much the air ductwork leaks.
Missouri Tax Credit Info
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Great Commentary the Current State of Mortgages in our Economy
Written by (and shared by permission of) David Murray 11/6/2009
Recently I attended a meeting of the Kansas City Chapter of Society of Industrial and Office Realtors (SIOR). Our chapter asked the Federal Reserve Bank of KC to give us its take on the credit markets, as it pertains to the Commercial Real Estate Market (Industrial, Commercial, Office and multifamily lending). Mr. Chuck Morris, VP and Economist for the KC Region presented a program that detailed every down turn in the economy from 1929 to date. Mr. Morris holds an undergraduate, graduate, and PhD in Economics from the University of California.
For over one and a half hours, Mr. Morris presented a very detailed presentation that covered many facets of our economy. Below, I have summarized and paraphrased what I heard in the meeting:
1. Commercial real estate funding comes primarily from the following sources: Commercial banks 45%, Commercial Mortgage-Backed Securities (CMBS) 26%, Insurance Companies 9%, others 21%. The mortgage-backed securities are currently the most problematic method of funding, due to the fact that there is no CMBS market at this time. The main concern with respect to this market is where are the replacement funds going to come from when the pool of these mortgages comes due in 2011 and 2012. In the 4th Quarter of 2007, these mortgages accounted for $60 Billion in leading! By 1st Quarter of 2008, that number was nearly $0, and now that number is negative. The absence of this type of financing has added to the market’s liquidity problems. I asked Mr. Morris what the Fed has planned to do, and he replied that this problem is currently being discussed, but there is no plan of action so far. It is my belief that this is a serious issue for the future of the financial markets, especially in the markets that were overheated, i.e. Florida, Las Vegas, Phoenix, CA, etc. While this type of funding is spread nation-wide, I do not think Springfield has anywhere near 26% of it’s lending coming from these troublesome sources. By their nature CMBS are usually associated with large-scale projects, of which Springfield only has a few. However, some of this debt is in fact present in our local market in the form of apartments and a few commercial developments. Since few of our eggs, are in the CMBS basket, I am hopeful our commercial banks will fill in the gaps as needed.
2. Current demand for loans is very weak as compared to past recessions, and thus loan growth is flat. This is stemming from the fact that the borrowers who drive loan growth are suffering from low earnings or losses.
3. Weak loan demand, however, is not causing banks to decrease the rates of interest to their borrowers. This does seem odd because the spread that the Banks are paying for deposits, versus what they are charging in interest rates, are very high compared to historical data. Morris was pressed on this issue, and he responded that every bank makes its own decision about the rate of interest charged. He surmised that the over exposure of past lending practices are reflected in the banks’ efforts to comply with FDIC regulations and liquidity issues.
4. Property sales volumes have declined nation-wide. For sales of $5m or more, sales in 2001 were $76.5B, a terrible year due to 9-11. Each following year, sales volume improved to a high of $421.2B in 2007. In 2008 sales fell to $132B, which was caused by the mortgage collapse in the 3rd quarter. Thru August 2009 sales were $23.0m estimated to be $34.5B for all of 08) or a mere 8% of 2007 numbers.
5. Morris believes we have bottomed out, due to the signs of growth the economy is showing. The reason for the economic turnaround is primarily Monetary Policy by the Fed. It takes time for this process to work as we are all painfully aware of. I asked Morris if some Fiscal Policy similar to what was used in the 80′s were to be enacted, would that be helpful in stimulating business? (In the eighties when faced with high interest rates, tax law changes that allowed depreciation on structures to be shortened and investment tax credits were used to spur investment in buildings, plants and equipment) Morris acknowledged that those changes did help during the 80′s, but being a Monetary Policy specialist he would not speculate on my question.
6. What is next? Morris stated that in the last 10 recessions, housing is the best indicator of a turn around. The average time from the bottom to the beginning of the turnaround is 12 months for housing, 24 months for durable goods, services and 36 months for commercial real estate. These numbers apply to the nation as a whole and as we all know real estate values are very much determined by local markets. In the 1980′s Southwest Missouri stumbled (Due to the Resolution Trust Corporation (RTC) days), but we never did face the severe declines of some other regions. Our region possesses the same assets as it did in the past, and thus I do not believe that it will take as long to return to a more normal market here at home as it will in some other areas of our country.
7. Mortgages will return once normal amortization takes place. As loans are paid down, interest income falls and the only way for institutions to recapture that lost income is to loan money. When institutions focus on earnings the loans will return.
8. Real Estate is still a good long term investment. As we all know there is only so much land available, and this scarcity insures that with proper planning and management, real estate will continue to provide for good returns over the long term. Some of today’s problems are caused by a few attempting to make a liquid asset out of an ill liquid tract of real estate. Real Estate never has, nor will it ever be, liquid in the true definition of the word. Much has been said about mark to market accounting with respect to the stock market, but similar tactics are being used by some financial institutions, and this is arbitrarily forcing larger percentages of equity into transactions that do not merit such penalty. Just because some assets have issues, it is unwise to penalize the entire market, which, unfortunately, is exactly what has happened. Soon, once the dust has settled and a little time as passed, the market will return, a bit smarter and wiser.
Tax Credit Extension Explaination and Comparison
Click on this link for an easy to read chart!
Tax credit extension
I am VERY excited to report that Congress has answered our call to extend and expand the homebuyer tax credit!
Please see message from NAR president below—
Both the House and the Senate have passed an unemployment insurance bill, which includes an amendment that expands and extends the tax credit. That bill will be sent to President Obama for his signature in the next day or so.
I have recorded a special edition of my President’s Podcast, with details on the new tax credit and when it takes effect. Please take just a couple of minutes to listen.
http://www.realtor.org/about_nar/presidents_report/_podcast_archive/mcmillan_taxcreditextended_20091105
We also have posted a comparison chart on Realtor.org. This can be a helpful resource as you work with buyers to take advantage of the credit in the months ahead.
http://www.realtor.org/fedistrk.nsf/files/government_affairs_tax_credit_ext_chart_110409.pdf/$FILE/government_affairs_tax_credit_ext_chart_110409.pdf
On behalf of NAR, I thank you all for your participation in our advocacy efforts on this issue. Not only did we set a new record on responses to Calls for Action, but we helped move another step closer to a brighter future for America’s families and our economy.
Sincerely,
Charles McMillan, CIPS, GRI
2009 NAR President
Portland 3 bed 2 bath 3 car garage
This is a perfect property for investor or 1st time home buyer ($8K tax credit)
Real Estate News & Commentary by Chris McLaughlin, March 19, 2009
Floods of money: Recovery or inflation?
The Federal Reserve was widely expected to hold the short-term bank lending rate at between zero and 0.25 percent, so it came as no surprise when it did. The decision to dump money into the economy to try to buy us out of the recession was only slightly more surprising, but the amount — $1.2 trillion — took everyone by surprise. Hoping to lower mortgages rates and consumer debt, the Fed will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.
Market reaction
The immediate market reaction was good: the Dow bounced 90 points, the S&P soared, and all market indicators were generally positive. Government bond prices leaped too, since mortgage rates will be going down even further than before. If, and it’s a great big if, this can help stabilize credit markets and get us all spending, the economy may start to climb out of recession this year. But is there a catch? You bet.
Inflation
Some economists — the ones with more than 10 minutes training in economics 101 — say the $3.9 Trillion slated for the budget can’t help but create galloping inflation the minute the economy starts to recover. In fact, inflation may not even wait for the recovery; the dollar took an immediate tumble against other major currencies with the Fed announcement. The Wall Street Journal’s Judy Shelton doesn’t mince words: “How can capitalism find its footing when the monetary foundation is shifting with each new government bailout — each new infusion of deficit-financed government expenditure? American families deserve better than to be punished by wasteful public spending and ruinous inflation.”
More free eco-cash
So you didn’t qualify for freebies from the mortgage bailout? Cheer up — Washington is on a spending spree, and you can get up to $19,000 in upgrades to your house. Expanded tax incentives in 2009 and 2010 for energy-efficient and renewable-energy home improvements include $1,500 in tax credits for qualifying windows, doors, insulation, roofs, heating and cooling equipment, water heaters, and even wood and pellet stoves. You’ll get a tax credit of 30% with no upper limit through 2016 for installing qualifying solar technology, small wind-energy systems, or geothermal-well systems.
AIG again
The House will vote today on a bill to levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000, who work at companies that have received at least $5 billion in government bailout money. Edward Liddy, brought in last year by the government to run AIG, told a House subcommittee Wednesday that the company was contractually obligated to pay the bonuses but added that many of them had already returned part of all of the bonuses. The saga continues.
Now on to our real estate investing education section …
Fast Facts About the Stimulus Bail-Out
Short sale investors are likely to encounter clients that want to hold out for a big fat government paycheck rather than walk away from a home. After all, the media is filled with reports about big checks, bail-outs and “free money.” Of course, scams and other fraudulent schemes abound making it tough to educate consumers about the facts versus fiction of the stimulus plan. Here to help is a quick primer about the proposed bail-out:
Fact: In order to refinance homeowners must be up to date on their current mortgage yet still demonstrate that they are “at risk” of facing foreclosure. The government anticipates up to 4 million households will fall into this delicate balancing act in order to qualify for funds…and it’s not limited to just owner occupied homes.
Fact: Mortgage modification clauses are much more difficult to obtain. Homeowners will have to satisfy the following stipulations in order to qualify:
Second lien holders must agree to waive or write-off obligations.
The home must be worth 80 to 105 percent of the current mortgage.
The primary lien holder must agree to modify principle, extend the duration of the loan and/or reduce interest rates to as little as 2 percent…or a combination of all of the above.
The homeowner must agree to credit counseling if they have extensive household debt in addition to high mortgage obligations.
Homes must be the primary residence and currently occupied. Homes cannot be vacant, in need of extensive repairs or otherwise hindered.
Up to $1,000 annual incentive payments will be made for up to five years – but only if the homeowner isn’t late on payments.
A new inspection may be required as well as the following documents:
Recent tax return and 2 to 4 recent pay stubs. Self-employed borrowers will need copies of quarterly estimated tax returns and prior year return.
Copies of all bank statements.
Proof of income from Social Security, alimony, child support or other income that you intend to use for the purpose of qualifying.
Current mortgage and liens including second mortgages.
Completed copies of Form 4506-T…a Request for Transcript of a Tax Return.
Completed copies of Form 1126 – a Borrower Financial Information form.
Proof or documentation of hardship, job loss, or other factors that may have influenced your current financial situation.
More on the $8000 tax credit
Hey, first-time homebuyer: How does $8,000 from your Uncle Sam sound?
Want an extra $8,000? If you’re a first-time homebuyer then we have a nice surprise for you
Last fall, the Federal Government introduced a financial incentive to prospective first-time homebuyers — an income tax credit of up to $7,500. The rules were simple: you must have been a first-time homebuyer (as defined by not owning a home in the previous three years) and you met certain income restrictions.
The new $8,000 tax credit is available to those who buy between January 1, 2009 and December 1, 2009. It’s not a deduction, it’s an actual credit. Unlike the $7,500 first-time homebuyer tax credit introduced last summer; this does not need to be repaid.
First timers who qualify can make no more than $75,000 in adjusted gross income if they’re single or $150,000 if filing jointly. The maximum tax credit is $8,000 or 10 percent of the sales price of the home, whichever is less. Three years residence in the property are required. As always, check with your accountant for details and be sure to submit IRS form 5405 when you file your taxes.