“GOOD COMMUNICATION IS AS STIMULATING AS BLACK COFFEE…AND JUST AS HARD TO SLEEP AFTER.” Anne Morrow Lindbergh

And communication on the new $789 Billion Stimulus Plan has been flying fierce over the past week, resulting in late nights for Congress and probably more than a few cups of coffee. President Obama is certainly hoping the new plan will wake up the struggling economy, and breathe some life back into the Pasadena housing market as well.

The tax credit in the Stimulus Bill has been scaled down to $8,000 from its previous level of $15,000, or 10% of the value of the home for any first time homebuyers who purchase homes from the start of the year until the end of November.

It starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000, and Pasadena home buyers will have to repay the credit if they sell their homes within three years.

In addition, there’s news that the Obama administration is trying to hammer out a new program to subsidize mortgages to fight the credit crisis. The plan would seek to help Pasadena homeowners before they fall into arrears on their loans, whereas current programs only assist borrowers that are already delinquent.

There are no details yet on this plan, but I will be monitoring this news closely in the weeks ahead.

There was some unexpected good news last Thursday, as Retail Sales increased in January for the first time in 7 months, as you can see in the chart below. It could take some time for the Stimulus Plan to positively impact the economy, but if it works, the improvement in Retail Sales could continue later in the year.

The Bond market closed early on Friday in advance of the President’s Day holiday. Bonds and home loan rates had improved a bit early in the week, but lost their ground late in the week, and ended slightly worse than where they began.