Stimulus Package Ends Without End to Foreclosure Troubles

Friday, 30th April was the final day when buyers purchasing residential units could avail of the tax credit worth $8,000. The Government has been endeavouring to hold up the collapsing housing market but now the very life support is being taken away.

Few weeks previously another measure has been halted by the Federal Reserve. It was keeping the rate of loans low by purchasing mortgage backed securities. But now, that practice has been discontinued.

It means the housing market will now have to stand on its own. Many experts opine that since foreclosures are still continuing it means the rush of troubled houses into the market would further pull down prices.

But despite the gloom, light is filtering in. One of the house shoppers is Sheila Doherty. Recently she was hunting for a condo in Waltham in Massachusetts and was surprised to learn from her broker Anita Shishmanian that most of the better houses have been booked with many offers coming in. The buyers have rushed to take advantage of the tax credit incentive. Doherty said that the condos “that are on the market that are nice go under agreement immediately.” But by the time she makes the necessary contacts with her broker who arranges for the property to be displayed somebody else has snapped it up.

There is no doubt that the tax incentives have given a fillip to the housing market but when that ends it is anybody’s guess what will happen.

Shismanian noted that all the units she had listed last April were sold fast – within a week or two. She is hoping that this level will be maintained. Connected with the housing sector is a swath of other industries – manufacturers of doors and windows, construction groups, electricians, plumber, interior decorates and stores dealing with related items. The entire section is keenly watching the climate in the real estate market.

Statistics released from the government show that the real estate market together with its ancillary industries have shown its sharpest fall since the last half a century. The drop has been by more than 50%. Recently the market has been showing signs of stability but it cannot be gauged right now whether it is because of external stimulus or because of its inner strength that is recoving.

Jonathan Dienhart of Hanley Wood Market Intelligence “It’s really only once you pull that stimulus away that the curtain is pulled back and it’s revealed whether or not you’re going to see a drop-off in sales activity.”

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