April 2010: Not-so-invisible hand pushes perpetual lookers off the fence
Posted by Brandia Deatherage on April 8th, 2010
April 2010 is a decisive month for potential buyers of real estate. With the rapidly approaching Extended Homebuyer Tax Credit deadline, rising mortgage rates, an explosion of inventory and the possibility of a labor-market recovery, if you want to own property and are financially ready, April is the month to make a move.
According to the Extended Homebuyer Tax Credit, first-time and repeat buyers must have a binding, written contract by Apr. 30, and close by July 1, to qualify for the tax credits. The maximum allowable tax credit for first-time home buyers is $8,000; and $6,500 for repeat buyers. The deadline is soon, but it is very possible to locate a property and go under contract in 22 days, especially given the incredible prices and selection of property currently on the market.
The Fed's $75 billion Home Affordable Modification Program (HAMP) has only been successful in keeping half of the intended 4 million homeowners in their homes, and foreclosures are hitting the market in a wave. Across the nation, the inventory of existing homes for sale in February rose 9.5 percent from the previous month to 3.59 million units. It also was reported in February that the national median home price fell 1.8 percent over the previous year to $165,000.
To help clear this backlog of distressed properties, the Fed instituted a new Home Affordable Foreclosure Alternatives (HAFA) Program, available Apr. 5, which offers incentives to banks to write down the principle of certain loans and complete short-sales, in lieu of foreclosures. Consequentially, the market is going to become saturated with even more distressed properties via short-sales. The Fed hopes that by oiling the system and pushing the bad loans through that home prices will more quickly stabilize.
Prices will undoubtedly go down again, before they go up; but predicting even an approximate housing-market bottom is an obscure art, not an exact science. On Apr. 6, Fannie Mae's chief economist Doug Duncan reckoned that home prices will dip again before hitting bottom later this year. At that point, however, it is unlikely that there will be yet another tax credit and you may have to contend with higher mortgage rates.
Though still at a historical low, mortgage rates are currently on the rise. The national average of the 30-year fixed mortgage hit 5.31 percent last week, the highest level since the first week of August 2009, according to the Mortgage Bankers Association. One week ago, it was 5.04 percent. Economists expect rates to continue to rise, due to the improving economy and the Mar. 31 end of the Fed's purchasing of Fannie and Freddie mortgage-backed securities from the banks. While there is no need to panic, locking in a low rate improves one's purchasing power by about 10 percent for every 1 percentage point.
Purchasing power still seems to be the "fox in the hen house" for buyers. In a 'buyers market,' buyers remain hesitant to take advantage of these great purchasing opportunities due to employment concerns. Even economic analysts can't agree on whether or not a labor market recovery is underway.
Since the recession struck in December 2007, 8.2 million people have lost their jobs. New jobless claims peaked at 651,000 in late March 2009. In the first week of April 2010 new claims are down to 460,000. Continuing claims are down from the peak, as well, but this can be attributed to their rollover into extended claim status. Extended claims are also down from the peak, but this can be attributed to the numbers of the still unemployed, who are timing out of the program altogether. Whether or not more people are going to work remains to be seen.
Even some who are employed, however, resist taking on the huge responsibility of a mortgage, for fear that they might one day suffer a pay cut or lose their job. The best advice is, unless you have secure employment and roughly one year of emergency savings, don't seek ownership.
If you are financially prepared, however, THIS IS YOUR MARKET. You are perfectly poised to take advantage of once in a lifetime deals that will create even more security and comfort for yourself and your family.
This article provided courtesy, and with the expressed permission, of Beaufort County Now
According to the Extended Homebuyer Tax Credit, first-time and repeat buyers must have a binding, written contract by Apr. 30, and close by July 1, to qualify for the tax credits. The maximum allowable tax credit for first-time home buyers is $8,000; and $6,500 for repeat buyers. The deadline is soon, but it is very possible to locate a property and go under contract in 22 days, especially given the incredible prices and selection of property currently on the market.
The Fed's $75 billion Home Affordable Modification Program (HAMP) has only been successful in keeping half of the intended 4 million homeowners in their homes, and foreclosures are hitting the market in a wave. Across the nation, the inventory of existing homes for sale in February rose 9.5 percent from the previous month to 3.59 million units. It also was reported in February that the national median home price fell 1.8 percent over the previous year to $165,000.
To help clear this backlog of distressed properties, the Fed instituted a new Home Affordable Foreclosure Alternatives (HAFA) Program, available Apr. 5, which offers incentives to banks to write down the principle of certain loans and complete short-sales, in lieu of foreclosures. Consequentially, the market is going to become saturated with even more distressed properties via short-sales. The Fed hopes that by oiling the system and pushing the bad loans through that home prices will more quickly stabilize.
Prices will undoubtedly go down again, before they go up; but predicting even an approximate housing-market bottom is an obscure art, not an exact science. On Apr. 6, Fannie Mae's chief economist Doug Duncan reckoned that home prices will dip again before hitting bottom later this year. At that point, however, it is unlikely that there will be yet another tax credit and you may have to contend with higher mortgage rates.
Though still at a historical low, mortgage rates are currently on the rise. The national average of the 30-year fixed mortgage hit 5.31 percent last week, the highest level since the first week of August 2009, according to the Mortgage Bankers Association. One week ago, it was 5.04 percent. Economists expect rates to continue to rise, due to the improving economy and the Mar. 31 end of the Fed's purchasing of Fannie and Freddie mortgage-backed securities from the banks. While there is no need to panic, locking in a low rate improves one's purchasing power by about 10 percent for every 1 percentage point.
Purchasing power still seems to be the "fox in the hen house" for buyers. In a 'buyers market,' buyers remain hesitant to take advantage of these great purchasing opportunities due to employment concerns. Even economic analysts can't agree on whether or not a labor market recovery is underway.
Since the recession struck in December 2007, 8.2 million people have lost their jobs. New jobless claims peaked at 651,000 in late March 2009. In the first week of April 2010 new claims are down to 460,000. Continuing claims are down from the peak, as well, but this can be attributed to their rollover into extended claim status. Extended claims are also down from the peak, but this can be attributed to the numbers of the still unemployed, who are timing out of the program altogether. Whether or not more people are going to work remains to be seen.
Even some who are employed, however, resist taking on the huge responsibility of a mortgage, for fear that they might one day suffer a pay cut or lose their job. The best advice is, unless you have secure employment and roughly one year of emergency savings, don't seek ownership.
If you are financially prepared, however, THIS IS YOUR MARKET. You are perfectly poised to take advantage of once in a lifetime deals that will create even more security and comfort for yourself and your family.
This article provided courtesy, and with the expressed permission, of Beaufort County Now