The main difference between renting and buying is who gets your check– a landlord or the bank.
Weighing costs will be a big part of your decision, but there are other facts to consider.

Advantages of Home Ownership

Fact: Interest rates are still at 30 year historic lows.
Fact: Renting deprives you of large tax breaks.
Fact: A home is a leveraged investment using other people’s money.
Fact: Regardless of what you read or hear in the press, real estate has proven to be an excellent return on investment.

It’s an age old question, but one with a few new twists in today’s economy: Should consumers buy or rent?

Experts say home ownership still offers the greatest benefit to the most people, even in a bullish stock market.

The home owner’s comparative advantage stems from a pair of rewards– the mortgage interest tax deduction and the equity building boost.

Plus– while rental payments are subject to yearly increases due to inflation, owning a home benefits from inflation in the form of price appreciation.

Courtesy of Trident Mortgage

Although the crime wave is confined to a fairly limited area, the perception of it has hurt markets all over the Mexico. In the high-crime communities close to the U.S. border, the drop has been steep. Still, that means deals for adventurous souls, even in safe traditionally expatriate neighborhoods.

Lovers of Mexico, regret that the entire country has been colored by the border wars. In places like Cabo or La Paz, owners and tourists are unaffected. Even in the borders cities, it’s a turf war, rarely affecting Americans.

All the problems have slowed sales in northern Mexico a lot. A recent Los Angeles Times story about the Baja bust made the sea-side corridor between Tijuana and Ensenada sound like a ghost town. The homes here are less than an hour’s drive from Southern California and Arizona, so many Americans would buy them as weekend and vacation retreats.

But with border guards on high alert and the crackdown on smuggling and illegal immigration, getting back into the United States can tack on an extra two or three hours at the border crossing. And that surely discourages some home buyers even though a three bedroom, ocean-front condo can sell for less than $300,000 there, a fraction of its price back home.

Indeed, neighborhoods in southern Baja cities, even late at night, seem perfectly secure. On the waterfront of downtown La Paz recently, there were families out pushing strollers, lovers cuddling on benches and children eating ice cream at 11 p.m. No one seemed at all nervous.

Up and down the coastal resort communities of southern Baja the landscape teems with sale signs, mostly in English. Sales volume has dropped 40% – 70% last year. But that’s good news for Americans who have always dreamed of retiring to Mexico but could never afford it. Prices can be less than half of what an equivalent home would run in the U.S.

Courtesy of CNNMoney.com

“The homebuyer tax credit, available until the end of April, is the likely cause for these encouraging numbers,” said David Blitzer, chairman of the index committee at S&P.

But home prices actually fell by 0.9% compared with January. The dip was small enough to put prices in positive territory compared with 12 months earlier, when home prices were falling very steeply.

Indeed, 18 cities saw month-over-month price declines in February and six cities, including New York, Las Vegas and Seattle, posted new lows for this downturn.

“These data point to a risk that home prices could decline further before experiencing any sustained gains,” said Blitzer. “It is too early to say that the housing market is recovering.”

As of February, prices are about where they were in the Fall of 2003. Prices for the 20-city index are down 32.6% from their peak in July 2006, wiping out all of the gains from the housing boom.
California rising

The best performing market in February was San Francisco, which posted a double-digit gain over the past 12 months of 11.9%. San Diego home prices jumped 7.6% and Los Angeles gained 5.3%.

“California had very steep declines during the downfall and now people are rushing to catch the market on its way up,” said Lawrence Yun, the chief economist for the National Association of Realtors.

The biggest loser continued to be Las Vegas, where prices dropped 14.6% over the past 12 months.

S&P’s Blitzer warned that housing markets still have some deep problems that could derail any recovery. Chief among them is the foreclosure crisis.

“As [foreclosures] are put up for sale, we may see some further dampening in home prices,” he said.
0:00 /3:40Fortune 500: No more homebuilders

But David Crowe, the chief economist for the National Association of Home Builders, expects home prices to remain stable for some time.

“We’re in for a period of wandering around zero [price gains],” he said, “with some months up and some down but with the general trend slightly upward.”

Home builders have regained some of their confidence lately with new home sales and permits both posting big gains.

“Starter home builders in the central part of the country are most confident,” said Crowe. “They’re least optimistic in the bubble states like California, Nevada, Arizona and Florida, and the auto industry areas.”

An upturn in the confidence level of both buyers and sellers was ushered in by federal stimulus programs, according to Yun, especially the homebuyer’s tax credit and the Federal Reserve’s move to purchase mortgage-backed securities. That made it easier to obtain financing.

“The stimulus program stopped the bleeding,” he said. “What we now have to see is whether consumers view price stabilization as permanent.”

Courtesy of CNNMoney.com

To protect your privacy, your information is kept confidential.

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

* Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
* Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.



Who Qualifies for the Extended Credit?

* First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.

* Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.



Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.



How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.



How is a Buyer’s Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

1. Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

2. Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.



If the Buyer’s Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.



Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.



Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.



Information deemed reliable but not guaranteed.