The U.S. Department of Housing and Urban Development is making it possible to monetize the $8,000 tax credit available to first-time homebuyers. Big whoop, right? What does that even mean?

That’s the problem with words like monetize. You hear it, probably have an idea of its definition, but don’t really understand what it means regarding the tax credit. If the tax credit isn’t about money, then what good is it anyway?

Here’s the deal. The tax credit was rolled out as exactly that: a credit on your federal income tax (or a payment to you if the credit amount exceeds your tax liability). From the start, Texas REALTORS® and homebuyers asked if there was some way to immediately apply that money to the downpayment of the home rather than wait for a “rebate” on your tax return. The answer was no.

“Monetizing the tax credit” is equivalent to changing the answer from no to yes.

This is great news if you’re a first-timer looking to purchase a home. HUD has given instructions to lenders about how buyers can use the credit as part of their downpayment of an FHA-insured home. Buyers must still come up with at least a 3.5% downpayment, which can be a gift from a family member, employer, or nonprofit, charitable organization.

You can use the money to increase your downpayment or pay for normal closing costs. HUD also has instructed that any fees associated with monetizing the tax credit not be excessive. The agency defines this as fees of no more than 2.5% of the anticipated credit. So if you qualify for the maximum $8,000 credit, the fees associated with making that money available at closing could be no more than $200.

Here’s HUD’s news release on the program. The way it actually works is that FHA-approved mortgagees and other qualified entities can buy your tax credit. You get the money now, the lender charges a reasonable fee, and you get thousands of dollars to apply to your home purchase. There are still some details being worked out before lenders in Texas offer this option. When the program is in place in our state, your Texas REALTOR® will be an excellent resource to help you with this and other aspects of your home purchase. Keep in mind that the tax credit is available only until Nov. 30, 2009. After that, there won’t be anything available for you to monetiz unless the program is extended.

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The magazine ranks public high schools annually based on the number of students who take Advanced Placement, International Baccalaureate or Cambridge tests at a school, divided by the number of graduating seniors.

Seven Lakes, ranked 403, topped the list in Katy. Other Katy ISD schools that ranked in the top 1,500 are Cinco Ranch at 458, Taylor at 1,067 and Katy at 1458.

All of the schools on the list have an index of at least 1.000 (meaning that they had as many tests as graduates), according to Newsweek researchers.

A school can reach 1.000 level only if half of its students take one AP, IB or Cambridge test in their junior year and one in their senior year.

Here’s more on how the rankings were calculated, which also takes into account the number of students eating federally subsidized lunches among other factors.

By Luciano Battistini
Times Staff Writer

Metrostudy gave a positive outlook about the Houston economy and housing industry during the Katy Area Economic Development Council meeting Tuesday.

“While builder cutbacks and discounted pricing are having an effect on reducing the inventory of homes, the tightening of credit standards has removed a sizable number of formerly qualified buyers from the market,” said David Jarvis, Metrostudy director of the Houston region.

“Nevertheless, as these issues run their cycle, demographic trends keep marching forward, creating a pool of potential buyers who will express themselves in the market when credit normalcy and calmer consumer psychology return, setting the stage for a decade of strong housing demand in the United States.”

Houston’s job growth remains strong, but has shown some signs of slowing, Jarvis said.

Houston has added an average of more than 90,000 jobs each year for the past three years.

Last year, Houston added 54,100 jobs, for a 2.1 percent growth rate. Houston continues to lead the nation in job growth and employment, adding more jobs during the year ending in June than any other Metropolitan Statistical Area (MSA) in the U.S.

According to Jarvis, foreclosures remain elevated, possibly affecting homebuyers’ mindset by presenting another potential avenue for negotiating with homebuilders.

The months of supply of lots is below equilibrium in the lowest and highest price bands, while the supply of lots for housing priced between $100,000 and $300,000 is above the equilibrium range, Jarvis said.

But despite the current economic atmosphere, Houston’s fundamentals remain among the strongest in the nation.

Job growth, especially in energy-related industries, has protected Houston from some of the negative effects of the volatile credit markets, Jarvis said.

The weak dollar encourages exports, which should also continue to benefit Houston’s economy.

And Houston is attracting workers from other areas of the U.S. with high-paying jobs, an affordable cost of living and a diverse economy.

As potential homebuyers review various markets across the country in search of a bargain, Houston will be a perennial candidate.

These challenges will continue to affect home sales in the near-term, although strong local fundamentals will eventually be reflected by strong demand for new homes.

“The market for new homes in Houston faces considerable crosscurrents, with strong job growth and a strong economy challenged by mortgage constraints and competition from foreclosures and the resale market,” Jarvis said.

“Despite the short-term uncertainty, the positive aspects of Houston’s economy and new-home market will allow it to recover more quickly than other U.S. markets beset by affordability issues and weak job growth. When national credit issues subside, Houston’s new-home market will quickly rebound.”

NEW YORK (CNNMoney.com) — There’s a nice windfall for some homebuyers in the economic stimulus bill. First-time buyers can claim a credit worth $8,000 - or 10% of the home’s value, whichever is less - on their 2008 or 2009 taxes.

A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:

“I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?”

The short answer? Yes, Billings would get back the $8,000 plus what he’d overpaid. The long answer? It depends. Here are three scenarios:

Scenario 1: Your final tax liability is normally $6,000. You’ve had taxes withheld from every paycheck and at the end of the year you’ve paid Uncle Sam $6,000. Since you’ve already paid him all you owe, you get the entire $8,000 tax credit as a refund check.

Scenario 2: Your final tax liability is $6,000, but you’ve overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.

Scenario 3: Your final tax liability is $6,000, but you’ve underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.

To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)

Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.
Lukewarm reception

The housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate’s proposal of a $15,000 non-refundable credit for all homebuyers.

“[The Senate version] would have done a lot more to turn around the housing market,” said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). “We have a lot of reports of people who would be coming off the fence because of it.”

Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors.

The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. “I think there are many homeowners who would be trading-up but they have had no buyers for their own homes,” Yun said.

Who won’t benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.

One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the downpayment. Then, when the buyers receive their tax credit from the IRS, they pay back the state. Other states may follow with similar programs, according to NAHB’s Dietz.

Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.

And it provides a nice nest egg for the often-difficult early years of homeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.

Katy Area Economic Development Council president Lance LaCour said growth in Katy’s business sector remained steady in 2008 despite tough economic times.

LaCour said the council had its second audit and finished the year “in the black” during his delivery of the annual report at a March 10 general assembly meeting.

The report highlighted the year’s top projects either under way or near the start of construction in the areas of infrastructure, retail, energy industries and services, and real estate developments.

LaCour and other business leaders say they are excited about the growth in Katy where more than a dozen projects announced in 2008 represent a capital investment of $273 million in 1.4 million square feet of space. LaCour said the ventures could create about 5,400 jobs.

“I would say that’s a pretty good year in a major recession,” he said.

But LaCour said the most important project the council helped facilitate last year was the $200 million KBR proposal to bring 4,000 jobs to the Katy area. KBR officials said plans to build the 910,000-square-foot campus along the Grand Parkway and Interstate 10 have been indefinitely postponed because of the economic downturn.

Major projects in the area during 2008 included the Miller Career and Technology Center, representing a $17.9 million investment by the Katy school district. LaCour said the council worked closely with the district to help promote the resources the facility offers local businesses.

Kraton Polymers LLC announced plans in December to relocate to the Katy area in an 85,000-square-foot building on Park Row. LaCour said the $7 million project will create 100 jobs.

Monuments have been erected for the Reserve at the Grand Parkway near Kingsland Boulevard, a 92-acre commercial development by the Vista Companies.

LaCenterra retail center, which debuted two years ago at 23501 Cinco Ranch Blvd., has begun work on Phase II, adding 160,000 square feet more space.

WoodCreek Development and BPI Realty Services Inc. are jointly developing Katy Main Street, a 85-acre mixed-use project with 500,000 square feet of office space plus retail space and a full-service hotel at the corner of Interstate 10 and Pin Oak in Katy.

Other notable undertakings the council helped facilitate include a $4.2 million Kingsland Extension project by Harris County and the Technology Center of West Houston launch of the Katy Dock incubator in October. Located in a 26,000-square-foot building at 1773 Westborough Drive, Katy Dock provides mentoring and technical assistance to technology start-ups.

The council has created a new administrative position to support existing programs and membership has increased by 22 members, LaCour said. To boost its profile, the group advertised in local newspapers and magazines, in addition to distributing press releases and newsletters to about 1,000 people.

Council members also heard a presentation from meeting sponsor Carol Adams, executive director of the Katy Heritage Society. Adams gave an update on plans to rehabilitate historical buildings and sites in Katy.

The council will focus this year on supporting education and boosting workforce programs including a joint initiative with the Katy Area Chamber of Commerce to “bring back” the Workforce Solutions office to Katy.

helen.eriksen@chron.com

Who will qualify for which programs?

If your debt to income ratio — that is —your principal, interest, taxes and insurance on your mortgage exceeds 31% of your gross income, you may be able to get help.

If you are borrower in distress, you may be eligible. First of all, you need to know program benefits apply to those in owner-occupied properties. You must live in the home and it must be your first mortgage.

You’ll also need to be patient. Experts predict a big surge to Fannie & Freddie. But they are being encouraged to act swiftly.

Key components of the plan:

1. Homebuyer Tax Credit – The plan provides for an $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser’s income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

2. Refinancing - Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. The Refinance program will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage. This will offer assistance to as many as 7 to 9 million homeowners.

3. Foreclosure Prevention/Loan Modification - Many homeowners are struggling to make their monthly mortgage payments either because their interest rate has increased or they have less income. The Modification program will provide them with mortgage payments they can afford. It is designed to help people in a distressed situation now or those that have a chance of falling behind in the foreseeable future due to job loss or a reset on their mortgage.

Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, this program will work in tandem with an expanded and improved Hope for Homeowners program. This will assist as many as 3-4 million borrowers.

Important Notes:

It’s estimated that borrowers will be able to finance up to 105% of the market value. (These loans may be subject to slightly higher interest rates than market.)

Servicers can begin to modify eligible mortgages immediately under the Modification program so that at-risk borrowers can better afford their payments.

Setting a uniform standard to modify these loans will help facilitate the process, and will help these programs go into effect more swiftly. Major Banks and lenders must be on board. Some major banks have already agreed to suspend foreclosure activity until plans go into effect.

Borrowers will need to confirm eligibility through income verification, second liens, credit card bills, recurring debt payments as well as your mortgage payments. So have those documents ready to make sure they can get you into an affordable rate.

Any plan that promotes buyers, especially first time home buyers who need the money the most to get started, will have a positive effect on the market; allowing them to invest in their future. The homes that THEY buy will then create new move-up buyers in the market that first needed to get their home sold. To ultimately stimulate and stabilize the economy, housing recovery legislation is the most important first step.

KATY, Texas—It seems people in Katy are weathering the recession better than most.

In fact, Business Week Magazine says Katy is a boomtown, ranking it as the second-fastest growing city in America.

Business Week says between 2000 and 2008, construction and salaries in the suburban community skyrocketed.

The average household income there is now $76,000 – that’s $10,000 more than the U.S. average.

Guseman presented the most recent study of growth and projections of the Katy Independent School District area during the Greater Katy Chamber of Commerce luncheon Wednesday.

“Katy ISD is one of the fastest growing large districts,” Guseman said. “It remains in to the top 20 statewide and is fourth in Houston.”

While Cy-Fair ISD has become a leader in percent-change enrollment during the last five years, Katy ISD follows closely behind.

“One of the characteristics is economically disadvantaged students in Katy have increased 10-20 percent,” Guseman said. “But on the same note, that’s a low proportion of your student population.”

Still, she said there are 11 new elementary schools and four new junior high schools planned for the next 10 years.

And Guseman projects that by 2012, the district will have at least 4,000 more students, filling the need for three new high schools.

“You folks in this room have high birth rates,” Guseman said. “But that’s changing a bit because there’s challenges as far as entry level households.”

But Katy continues to have a low unemployment rate, keeping the economy strong in the area.

Even though there are approximately 220 active subdivisions in the area, most of the residential growth has been in master-planned communities.

But as they start feeling the effects of the slowdown, there will be a rise in other housing options.

“Apartments are playing a more important role,” Guseman said. “Those apartments are going to add within the next five years about 4,800 additional housing units.”

However, apartments are only part of the projected 17,500 new households in the area, with 27 percent representing single-family homes.

“This area is in such demand because it’s a family-oriented area,” Guseman said. “School districts are so critical to determining where people live because school districts determine what are good investments.”

While the economy is expecting a two-year slowdown, Katy will continue to be spared from a lot of it.

“We’re going to see slower growth throughout the suburban areas, but keep in mind Katy will still be at a competitive advantage,” Guseman said.

A complete copy of the demographics study is available on Population and Survey Analysts’ Web site at
www.pasademographics.com.

Schedule: The bistro will be open Wednesdays and Thursdays from 11:30-1:30 as district testing and activity schedules allow. Dates of closure will be posted on the MCTC website updated weekly.

Reservations: Recommended, but not required. Please call 281-237-7580 to make a reservation. The current menu is attached for your convenience.

Terms: The Old Town Bistro accepts CASH only (no credit cards, debit cards or checks).

Parking: Park on the east side of Miller. Use the Old Town Bistro entrance beneath the awning. 1734 Katyland Drive (west of Rhodes Stadium).

Catering: Available for special events and meetings. Contact Patty Kenjura at 281-237-7580 to discuss possibilities.

We look forward to seeing you at the Old Town Bistro!