Florida Land Trusts: How to Keep Your Name Off Public Records When Buying Real Estate

Florida Land Trusts Provide Confidentiality and Privacy of Real Property Ownership

Written by:

Bill Exeter

The Florida Land Trust

The Florida Land Trust is an easy and inexpensive method for buying and holding title to Florida real estate in order to own real estate confidentiality and privacy. It is authorized under the Florida Land Trust Act (Section 689.071 of the Florida Statutes) originally adopted by the State of Florida in 1963 and then revised in 2006. 

The Trustee of the Florida Land Trust holds legal title to the real property under the terms of a Florida Land Trust Agreement.  The beneficiaries of the Florida Land Trust retain 100% of the ownership rights and control over the real estate held inside the Florida Land Trust. The Trustee merely holds legal title to the real property. 

Creation of the Florida Land Trust

Anyone or any entity can establish a Florida Land Trust, including individuals, a group of individuals, partnerships, limited partnerships, limited liability companies, and/or corporations. The Trustee of the Florida Land Trust acquires and holds legal title to the real property, while the beneficiary(ies) of the Florida Land Trust retains the ownership rights and has the power of direction. The Trustee of the Land Trust cannot act without the written authorization of the beneficiary.

Advantages of the Florida Land Trust

Florida Land Trusts allow real estate owners and investors to acquire, hold, manage and dispose of Florida real property on a confidential and private basis. There are many reasons why you may want to keep your real estate ownership out of the public record, including: risk of litigation, business risks, general liability, harassment, stalking, acquisition and dispositions, etc. 

For example, Walt Disney acquired all of his property in Florida via a Florida Land Trust. This prevented sellers of real property from taking advantage of him by unfairly increasing the asking price just because of his intentions. 

Management of the Property

The beneficiaries manage the real property held inside of the Florida Land Trust and/or hire investment property managers to oversee the real property on their own behalf. The beneficiaries collect the rent or income and pay the expenses. The beneficiary insures, develops, finances, leases or sells the real property as deemed appropriate.

Always Fully Revocable

You are not stuck with your new Florida Land Trust if it turns out that this was not the most appropriate holding strategy for you and your real estate holdings. The Florida Land Trust is always fully revocable. You can terminate your Florida Land Trust at any point in time. However, if it turns out to be the best strategy for you, you can also add additional real estate to your Florida Land Trust at any time.

 

 

 

 

 

 

 

 

Self-Directed IRA Diversification

Using Alternatives to Stocks in Retirement Accounts

 

Written by: Trista Winnie

What do boat slips, fishing rights for sablefish in Alaska and seahorse farming have in common?

Water, for one thing. More importantly, they are all investment possibilities within a self-directed IRA (individual retirement account).

"Initially I had my funds in a pension and 401(k)....When I retired, I didn't know what to do with those funds," Tony Moreno, a self-directed IRA holder who is planning a seahorse farm off a private island near Honduras, said. "When I learned about the self-directed IRA...and found how much flexibility there was in what I could invest in, that seemed to be the most logical place for me to put that money."

 

Moreno said he began to do research into international real estate, looking for sandy beachfront property. Eventually, he decided to try to purchase a private island.

"I was thinking of doing something like creating a subdivision and selling lots...but when I went there and saw [the island], I realized it wasn't really suitable for that," Moreno said, because much of it is government-protected mangrove forests. "One of the things I came up with was to use the island for creating a seahorse repopulation effort...by creating a habitat area on the outskirts of the island."

Visitors to the day resort Moreno is building on the island will be able to view the seahorse farm. Moreno said he expects an influx of visitors to the area because Carnival Cruise Line is building a $50 million terminal on nearby Roatán Island. (See our article on Top 5 Places to Buy Caribbean Real Estate for more information on Roatán Island.)

Traditional IRAs are limited to investments in stocks, bonds and mutual funds. Self-directed IRAs, on the other hand, are specialized accounts that allow their holders to invest in anything except for life insurance, collectibles and investments that would personally benefit them or close family members, as restricted by the IRS.

Real estate and businesses, among other things, are common investments within self-directed IRAs.

"As a general rule of thumb, the IRA is going to be prohibited from being invested with or in a way that benefits an individual that is [in] a close, personal relationship to that IRA holder," David Nilssen, CEO of Guidant Financial Group, a self-directed IRA facilitator, said. "For example, I can't buy a rental inside my self-directed IRA and rent it to my mother."

As millions of baby boomers approach retirement, pensions are on the wane and Social Security is poised to become unreliable. That leaves many people depending heavily on their retirement accounts to fund their retirements.

"As people live longer, you know, retire at 65, live to 85, that's 20 years they've got to provide for themselves," Tom W. Anderson, CEO and founder of PENSCO Trust Company, a self-directed IRA custodian, said. "No longer can you just park your money in a retirement account and expect to get by."

"People have got to start managing these retirement accounts, and I think the self-directed industry is a great way to do it," he said.

 

These shifts are causing many people to take charge of their retirement funds through a self-directed IRA, sometimes known as a real estate IRA. "We're seeing [participation] really pick up, especially within the baby boomer generation," Nilssen said.

Self-directed IRA awareness

IRAs came into existence when the Employee Retirement Income Security Act of 1974 (ERISA) was passed. "The whole point behind ERISA was to transfer the responsibility of retirement investing from the employer down to the employee," Nilssen said. "Because of some of the mismanagement and abuse within some of those pension funds, Congress actually passed the responsibility from the corporations to the individuals."

And while people tend to be familiar with the retirement funds created by ERISA, relatively few seem to be aware that they can have freedom in addition to responsibility when it comes to their retirement accounts.

Many people don't have self-directed IRAs simply because of "a lack of awareness, there's absolutely no question about it," Anderson said. "98 percent of the IRA market, which is approximately $3.7 trillion, is associated with the traditional providers." Anderson said he attributed much of that to the sheer number of marketing dollars the traditional providers have at their disposal.

Nilssen said he agreed. "The banks and brokerage houses...with heavy marketing dollars created a misconception that all you could do was buy stocks, bonds and mutual funds, which is not true," he said, and "although the [self-directed] industry is gaining a lot of traction now, it has taken a long time for that to...catch up."

"90 percent of the IRA market is dominated by firms that don't give you the full bandwidth of opportunity to diversify. They basically will allow you to diversify within whatever set of investments they offer," Anderson said. "People should have the choice."

Diversification

One of the main advantages of a self-directed IRA is that they allow their account holders to achieve diversification; account holders can make both traditional and alternative investments within self-directed IRAs.

"If there's any lesson to be learned from the crash the stock market went through in the late 1990s, early 2000s, it's that having all your eggs in one basket can be problematic," Nilssen said. "The self-directed IRA allows people to diversify into many different assets, but also to be flexible with following the market trends."

 

"We're seeing a lot of clients pursuing all forms of real estate: residential, commercial, industrial," Nilssen said. "We're seeing a significant trend of people going offshore and purchasing foreign real estate." Nilssen said that many clients choose real estate so that they can have a portion of their retirement funds in a fixed, tangible investment that also has a potential for profit.

Many people who purchase real estate within self-directed IRAs are buying in cash, Nilssen said. "So what ends up happening is that the rental income that they're generating is pure profit back into the IRA, and so that allows them to have consistent cash flow off of these retirement investments. And that's not something you see traditionally."

Although popular, real estate is just one of many investment options available to holders of self-directed IRAs. Because of the wide range of investments available, self-directed IRA holders can ensure that their retirement funds are spread across diverse investments and markets, making them more secure.

"We're seeing a lot of people engaging in lending practices. They're originating mortgages for homeowners or they're lending money out to peers for business activity or things of that nature." Nilssen said he also seen a surge in entrepreneurship. "We're seeing a lot of people buying businesses or franchises."

Leverage

Account holders are even allowed to use leverage, which is "a great benefit of the self-directed IRA," Nilssen said. "It's a tremendous wealth-building tool."

Banks will make non-recourse loans—meaning that the account holder does not have to make a personal guarantee—to lend money to IRAs. "It's only been in the last four or five years that any banks would actually loan to an IRA," Anderson said.

The North American Savings Bank is one of the lenders now willing to provide non-recourse loans "to anybody in the United States to buy property anywhere in the United States through an IRA," Anderson said. Because the loans are non-recourse, "The lender can't look towards the IRA owner...if the IRA fails to make the mortgage payment. All they can do is take the property back. Because of that, the lender wants more down."

 

If a self-directed IRA holder wanted to purchase real estate, Nilssen said, a bank would typically require a down payment of 40 to 50 percent.

"This would allow a person to effectively double their buying power, so if they've got $100,000 in their retirement plan, they could effectively purchase $200,000 in real estate," Nilssen said. "I think that's a tremendous benefit because it allows them to participate at a greater level."

"The whole idea of using leverage in an IRA is the same as using leverage outside the IRA: You can accelerate your gain. You're going to make more money using leverage," Anderson said. "You're going to probably net a higher yield after tax than you would have if you didn't use leverage."

One ramification of such investments, Nilssen said, is that any profits made on the money lent to the IRA will be taxed. Self-directed IRAs are subject to the unrelated business income tax (UBIT).

Still, "You get to deduct the same deductions you get when you buy real estate outside of an IRA, namely depreciation, mortgage interest, repairs," Anderson said.  

Responsibility and choice

Investors who have expertise in a particular area are especially well suited for self-directed IRAs because they can make educated investment decisions when given control of their funds.

"If your son just turned 16 and he's never driven a car, are you going to give him the keys to a Ferrari? Probably not, because he might crash," Anderson said. He recommended that only seasoned investors participate in self-directed IRAs because they "have to be prepared to make the decisions."

"It is a little more complicated....It's not like sitting at home at night at 11:00 and clicking on 100 shares of IBM," he said. "It's really for the person who's...knowledgeable about the particular type of investment they're going to pursue and has the ability to self-direct."

Moreno said he found control over the investment process to be one of the main benefits of a self-directed IRA. "It gives me a little more control over my money and more flexibility about how I can invest it," he said.

Self-directed IRAs require extensive due diligence and knowledge, because the account holders themselves make each investment decision, unlike with traditional IRAs. For Moreno and others with experience in researching and investing, this is a welcome change.

 

"It allows people to invest in their core competency....If they understand stocks, then they can invest in the securities market. If they understand real estate, then they can use that knowledge to make money," Nilssen said. "This industry will allow people to pursue the investments that they know and understand."

Self-directed IRA custodians

As far as setting up a self-directed IRA, "I imagine you can do it yourself, but you have to know what you're doing, and if you don't do it right, then you've basically compromised the integrity of your IRA, so I didn't want to take that chance," Moreno said. "And I felt that the cost of setting it up would be worth it."

Because there is a lot of paperwork and processing involved when investing with a self-directed IRA, custodial companies have employees who project manage and process investments from start to finish, Nilssen said. "Because of that, the cost to participate with a custodian can be fairly high."

"A custodian is essentially...a bank, a depository," Nilssen said. "You request them to make the investment on your behalf."

Anderson said that investors should do thorough research and exercise caution when choosing a self-directed IRA custodian. "People should be advised to deal with a regulated financial institution," he said.

"The industry is largely unregulated at this point, and thus there are areas of abuse to look out for," Nilssen said. "There are a lot of discount services available; however, it's my belief that you get what you pay for."

Still, he said, for those who have done their due diligence, "the opportunities are tremendous, and so I definitely would encourage people to investigate this further."

 

10 Tips For Investing In Commercial Real Estate

Published on:

Friday, February 12, 2010

Written by:

Alan Brymer

 

Having the right perspective, and plenty of patience, are necessary traits for investing in commercial real estate. Experts say that success in commercial real estate investments requires the willingness to spend a lot of time and effort upfront in researching, developing the right relationships and identifying the right type of investment. See the following article from REIClub for more on this.

Most real estate investors get started buying single-family houses, probably because it's what we're the most familiar with. But whether you're going straight to the big time or are ready to advance from houses to larger (and more profitable) deals, here are 10 time-tested guidelines to follow that will help you have more success.

Tip #1: Think Big

If buying a 5-unit apartment requires you to get commercial financing, which is more of a hassle, then why bother? I would recommend buying properties with at least 10 units. Remember that the more units you buy, the cheaper they are per unit. Also, Dave Lindahl has been quoted as saying, "It's no harder to manage 50 units than it is 10."

Tip #2: Take Your Time

Commercial deals take longer than single-family houses do. They take longer to purchase, renovate, and get sold. This is not necessarily a bad thing, but something to keep in mind so that you don't get impatient or rush into a bad decision. Think of commercial deals as big bonuses or your retirement vehicle, not a way to create quick cash to pay the bills.

Tip #3: Don't Choose Apartments By Default

There's nothing wrong with investing in residential apartments per se. I'm just pointing out that since most investors are already comfortable with residential property, they tend to look for apartments without considering the other types of commercial property, such as office buildings, industrial, mobile home parks, land, etc. Weigh all of these property types and choose your own niche based on whatever will help you reach your unique goals, regardless of your comfort zone.

Tip #4: Be Prepared to Spend a Lot of Time at First

Fight the temptation to get discouraged if you haven't done your first deal yet, or if you are spending more time per deal than your previous ones. Houses are so similar that it's easy to make a cookie-cutter system for buying and selling them. When I begin looking for commercial properties, I was surprised at how long it took me in the beginning to screen deals and make offers. Just remember that there is a learning curve, like with anything else, and that things will go faster over time.

Tip #5: Learn the new formulas

If you're buying houses, you may use certain formulas, like buying at 75% of After-Repaired Value, minus estimated repairs. Commercial property will have new and different formulas to get used to, such as Net Operating Income and Cap Rates. Learn what is considered good in your area and get familiar with them when making offers.

Tip #6: Relationships Are Even More Important

Relationships with other investors and private lenders are important when buying houses, but they are even more so when buying commercial properties. For one, properties costing a million dollars or more are probably within the financial wherewithal of most of us individually, so you probably have no choice but to get to know and work with partners. Also, many commercial properties are sold without being listing first, so the more people in your network who know what you're looking for, the more deals you'll find.

Tip #7: Find Good Financing In Advance

Commercial loans are a different animal than residential loans, and in some ways better. The down payments needed are usually a higher percentage than loans on single-family houses, which means you’ll have to put more down (or get your partner to put more down). However, there is often no personal liability if the deal goes south, and they are more lenient about letting you borrow the down payment money from someone else. Nevertheless, before making offers, ask around and find out who the best lenders are in your area to use when buying commercial properties, as it may make the difference between qualifying for one or not.

Tip #8: Be Prepared to Lose Due Diligence Money

After your offer is accepted, you have a period of time (just like with houses) to do your due diligence. You should get an appraisal, property inspection, and other tests and inspections required by law. The only problem is that these cost a lot more than they do for smaller deals. You might spend $5,000-10,000 on a deal, only to find out you don't want to buy it after all. While this is always better than buying a bad deal, you should still be prepared for these kinds of expenses.

Tip #9: Partners Are Your Bridge to Wealth

As I said before, buying million-dollar properties is not something most people can qualify for on their own (in fact, getting a loan to buy a house is hard enough!) So make sure that you spend a lot of time finding private lenders or deal partners to help you out. A partner can provide the cash and/or credit needed to purchase a property, and you can compensate them by paying a fixed interest rate or a percentage of the cash flow or proceeds from the sale.

Tip #10: Know Where to Get Tough Questions Answered

Lastly, it's imperative that you associate with experienced commercial investors who can answer questions that come up while you are evaluating properties. There's no sense in losing a deal or buying a bad property because you didn't understand certain environmental regulations or estimating what trash collection really costs. Know who you can ask to get fast answers when you need them, and make them your new best friends.

By following these guidelines I can't promise instant success. However, you will have the right perspective about investing in commercial property that will help you start right and stick with it for the long haul. Good luck to you in "moving on up" from single-family houses to the big time.

 

 

 

 

 

What is a Short Sale?

A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.

But to be technical, here's a more official definition:

• A homeowner is 'short' when the amount owed on his/her property is higher than current market value.
• A short sale occurs when a negotiation is entered into with the homeowner's mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then 'sold short' of the total value of the mortgage.

For homeowners to qualify for a short sale, they must fall into all of the following circumstances:

• Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
• Monthly Income Shortfall – In other words: "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
• Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

This seems simple enough, but it is a complicated process that takes the expertise of experienced professionals. Together, we can identify all possible options and, when possible, a CDPE such as myself, can assist you in the quick execution of a short sale transaction.

 

 

 

 

 

 

 

Federal program to streamline short sales in 2010 By Joel Cone   Like many of her colleagues, Chicago Realtor Carol Grobman has been wondering for a long time why the real estate community at large, and the federal government in particular, have not made a move toward relieving the prolonged short sale process that has been trying the patience of their sellers and buyers alike.   Since the real estate bubble burst back in 2007 many Realtors have been avoiding short sales altogether, either due to lack of training, or simply to avoid the hassle involved.   “Why are they taking six months to make a decision? By then the original buyer is gone. A lot of people can’t afford to wait because they have to move,” Grobman said.   Well, the federal government has finally answered back, adding another acronym to its list of government-sponsored programs. This one is called HAFA (it stands for Home Affordable Foreclosure Alternatives) and is part of the Home Affordable Modification Program (HAMP).   HAFA: The Government Response Hoping to positively influence the nation’s housing market by shortening and simplifying the short-sale process, the Treasury Department released new guidelines for servicers late last year.    Under those directives, HAFA offers servicers and borrowers incentives for utilizing a short sale or a deed-in-lieu to avoid foreclosure on any loan that is eligible under the HAMP program thereby reducing the need for a potentially lengthy and expensive foreclosure process.   Key features of the program include:   --Sellers/borrowers can receive up to $1,500 for relocation expenses   --Lenders will receive $1,000 for each completed short sale   --Up to $1,000 for investors who allow up to $3,000 in short sale proceeds to be distributed to subordinate lien holders. Borrowers can receive pre-approved short sale terms prior to the property listing   --Borrowers are fully released from future liability for the debt   Shifting Short Sale Strategies Both the popularity and thorniness of short sales are evidenced by the existence of Short Sale Pros, a San Diego Web-based company promoting itself as a solution for real estate professionals, investors and homeowners trying to navigate the short sale negotiation process.   “Homeowners are starting to realize that loan modifications aren’t as great as they thought they were going to be. From the loan modification end, if you can’t help with that then the short sale is the next logical thing,” said the company’s president, Michael Corradini.   As Corradini explained, negotiating short sales comes down to how a potential homebuyer, investor or real estate professional approaches the bank and presents the numbers. One tip he suggests when negotiating a short sale: show the bank the difference between your offer and an estimate of what they will net if the property goes to REO.

 

Half of homes in South Florida sell for a loss

By Kimberly Miller

Palm Beach Post Staff Writer

Updated: 8:28 a.m. Wednesday, Feb. 10, 2010

Posted: 6:44 p.m. Tuesday, Feb. 9, 2010

Nearly half of South Florida homes sold in December did so at a loss, a 4 percent increase from the previous year and a "disturbing" sign for anyone with a home on the market.

The data, released this morning by analysts at Zillow.com, evaluated sales by region, county and ZIP code — a measure that showed 53 percent of West Palm Beach homes sold at a loss in December, while 68 percent of Port St. Lucie homes were purchased at prices lower than the previous sale.

Statewide, 47 percent of homes sold at a loss in December, nearly equal to the 48 percent in Miami-Dade, Broward and Palm Beach counties combined.

"This shows how deeply home values have fallen in South Florida since the peak of the market," said Amy Bohutinsky, vice president of communications for Zillow. "It is certainly a disturbing number as far as what is happening to home sellers."

Ken Johnson, a Florida International University professor and real estate economist, said the statistics don't surprise him. They reflect how inflated prices had become during the boom, he said.

Also, high foreclosure rates naturally lead to lower sale prices as banks try to unload inventory. More than 500,000 Florida homes received some type of foreclosure notice last year.

"This is the market clearing," Johnson said about the Zillow study. "It's bad medicine and we either swallow it a little at a time or a lot at a time. This is a lot."

Nationally, 28 percent of homes sold for a loss in December.

Zillow's study also measured negative equity in home loans by region. At the end of December, about 41 percent of South Florida borrowers owed more on their mortgages than what their home was worth. That's a small improvement over the 46 percent seen in the fall. About 55 percent of Treasure Coast loans were underwater, also lower than the 62 percent from the third quarter of the year.

Bohutinsky attributes the improvement to home values flattening out toward the end of the year.

The Zillow Home Value Index showed South Florida values had decreased less than 1 percent in December from the previous month to $164,400.

But Zillow Chief Economist Stan Humphries called the stabilization a brief respite "from a larger market correction that has not yet run its course."

"While the next few months are likely to bring further home value declines in most markets, we do expect to see a national bottom in home prices by the middle of the year," Humphries said.

 

 

Homebuyer Tax Credit Could Be Extended Again

Published on:

Friday, January 29, 2010

Written by:

Austin Kilgore

Despite an expansion and extension of the homebuyer tax credit in November, home sales declined in December 2009. Analysts believe that unless the US economy shows increased stability by late spring of 2010, the government will extend the homebuyer tax credit again. See the following article from HousingWire for more on this.

 

While many project the economy will be on stable footing by this summer, real estate consultant John Burns believes if it’s not, Congress may once again extend the homebuyer tax credit.

“A lot of people are not buying homes right now because they’re worried about their jobs,” Burns, president of John Burns Real Estate Consulting (JBREC), said in an interview with HousingWire. “If the economy’s not on stable ground in May or June, I wouldn’t be surprised to see it extended again.”

Despite the November extension and expansion to the homebuyer tax credit, an extraordinary government stimulus measure enacted to boost housing activity, new home sales took a 7.6% drop in December, according to data released by the Commerce Department’s Census Bureau and the Department of Housing and Urban Development (HUD). The results come on the heels of National Association of Realtors (NAR) reports of similar December declines in existing home sales.

Sales of new single-family houses hit a seasonally adjusted annual rate of 342,000 in December 2009, down 7.6% from the revised November rate of 370,000 and 8.6% below the December 2008 estimate 374,000.

“The fact that the tax credit was extended helped new home sales,” Burns said. “Without the tax credit extension, this number would have been in the 200s.”

The median sales price in December was $221,300, down from $217,400 in November. The average was $290,600 in December, up from $280,300 in November.

At the end of December, the seasonally adjusted estimate of new houses for sale was 231,000, representing an 8.1-month supply of homes at the current sales rate, up from 7.9-month supply in November.

For all of 2009, the report estimates 374,000 new homes were sold, 22.9% fewer than the 2008 estimate of 485,000.

The homebuyer tax credit extended for first time homebuyers and expanded to include existing homeowners requires buyers have a contract in place by April 30 and close by June 30. The problem, homebuilder insiders and real estate agents tell HousingWire, is that consumers who tried to take advantage of the tax credit too late in the fall before realizing there wasn’t enough time to close a deal by the original Nov. 30 expiration date have yet to reengage themselves in the home buying process.

“With new homes, the homebuilders ran out of everything they could close by the end of November,” Burns said. “There were people that wanted to buy in these communities that didn’t because they couldn’t close in time.”

December’s cold weather not only slowed construction for builders, but also kept prospective buyers from shopping. It remains to be seen when those prospective buyers will return to the home shopping process.

Wednesday’s results follow last week’s joint Census-HUD report that housing starts and completions were down, but building permits were up in December. As HousingWire previously reported, the JBREC December monthly builder survey showed optimism among 264 home building industry executives from public and private companies. The belief that builders will have increased community count, better orders and slightly higher prices has 57% of respondents planning for more revenue in 2010 than in 2009.

Another confidence booster is the tax refund many builders are receiving from the temporary extension of the terms of net operating (NOL) carryback laws, which let builder recoup losses from taxes paid in profitable years.

“It’s given them more confidence in their cash balances and they’re wanting to start more speculative homes because of the extra cash that they now have,” Burns said.

Both new and existing home sales dropped in December. NAR said December’s drop in existing homes sales was “expected,” because of a late surge of buyers looking to get into a home before the tax credit was originally set to expire.

Another lingering question is what the industry learned from December’s sales results and what the industry could expect after buyers won’t be able to take advantage of the tax credit, if it’s not extended.

NAR doesn’t project a repeat of December’s results in May. Despite December’s results, NAR believes the traditional summer selling season will be strong enough to absorb any drop experienced by the sunset of the tax credit.

“We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010,” said NAR chief economist Lawrence Yun.

Burns agrees, but said it depends on whether the widely-held assumption that the economy will be growing again by this summer pans out. If not, it’s possible lawmakers will extend the tax credit, if for only self-serving goals.

“The tax credit extension, and all of politics this summer, is going to be about officials getting reelected in November,” he said. “It’s going to come down to if the economy needs a boost, the elected officials are going to give it one because they can’t afford for the economy to go into the tank before the election.”

This article has been republished from HousingWire