Extend the Home Buyers Tax Credit
The tax credit has been a significant boost to sales.
NAR reports that sales have jump to 5.1 million from about 4.5 million annualized home sold in the past few months prior to the stimulus. The tax credit has been a significant boost to sales. NAR reports that sales have jump to 5.1 million from about 4.5 million annualized home sold in the past few months prior to the stimulus. New home sales are also up from mid 300,000 to 400,000. The median existing home price as of August was down 12.5% compared to nearly 20% fall early in the year. Unfortunately the housing stimulus package is set to expire.
*A settlement, and not the contract signing to buy, must occur by the end of November. Consider that it was Bernanke that said one of the causes of the great depression was stimulus and Government supports being pulled too soon. We still have too big problems first bginning to show.
First the Option ARMs. These are mortgages taken during boom times and designed to allow people to pay interest only or principal only monthly payments. These mortgages will reset to market rates between now and 2012. They can double the monthly payment and more foreclosures are expected to come from this area, expected to be at least as large as the sub prime market that imploded.
Second, many shopping centers and high rise office space is also being recast between now and 2012. Same problem, evaporated equity made worse by declining rental income. When we loss jobs companys either shrink expenses or simply go out of business.
Realtytrac reports that foreclosure filings totaled nearly 938,000 in the third quarter, up 23% from the year-earlier quarter and up 5% from the second quarter. 1 in every 136 U.S. housing units received a foreclosure filing during the quarter. California accounted for more than a quarter of the country's foreclosure filings in the quarter, up 19% from the year-earlier quarter. Some commercial indexes are off 50% and the banks are not really in a position to refinance these properties.
Extend the Home Buyers Tax Credit
It Worked NAR thinks the cost is about $10 billion if it was extended trough the middle of next year. see chart This would coincide with the expected recovery of housing prices and help put a solid floor under that projection. see chart 10 Billion isnt much when you think about the amount of money thrown at the banks and insurance companies. NAR rightfully points out that this doesnt include the job growth or taxes collected from rising sales spurring more economic activity. NAR expects that the total picture is a revenue positive income source for the federal and local governments. I dont argue the need for the TARP to float the financial system, but I would like to see a little come our way too.
Thanks for Reading
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