patrick.net

It's (tax credit) going to linger on in communities with a military presence. The Government has extended it for 1 year for our men and women in uniform - with some restrictions.

I wonder how many short sales gone pending will fall through and cause an inventory bounce. Lots of potential buyers are counting on the tax credit and many will fail to close the long short sale process by June 30th. Many will back out I am sure.

There will be no visible impact. The tax credit only had a decent sized impact int eh low end market. Anyhting above that was hardly impacted by the credit.

We will see. I sure did see a frenzy of "pendings" in the Bay Area and Sac foothills over the last few weeks!

I agree that it will take a couple of months, and some will not be able to close by June 30th.
But lets not forget that buying/selling always pickup in late spring and summer, as kids graduate - parents move out of their bigger houses. Hence new families move in.
Of course not everyone can afford it and may benefit more by staying but besides regular summer activity, this is an added one.
Also, CA still has a state credit which starts tomorrow and until 1M runs out (right?)
Mayya

Momentum!

If there is enough momentum, very little will happen. If there isn't enough, we might see the house price - tax credit listings. If the momentum tappers off fast enough, possibly a decrease.

From every report I've read, the tax credit has had negligible impact. Most people claiming the credit would have bought anyway. In the mid to high range it probably made no difference. The government just took money from me and gave it to somebody else that didn't need it. That's all.

Fannie will require actual down payments for those out of credit jail. Who knows what form Fannie will be by that time anyway.

"To quality for the reduced waiting period, most borrowers will need to make a down payment of at least 20%, although borrowers with extenuating circumstances, such as a job loss, will be required to put down just 10%."

rmm221 says

If i owned a bank I wouldn’t be loaning money to someone who went bankrupt 4 years prior… I’d find any loophole to avoid that risk in this current market.

No need to find a loophole--if you own the bank you can loan or not loan to whomever you like. Provided it's not discriminatory based on a protected class....

Just tell your loan officers not to loan to anyone with a bankruptcy in their past.

I was one who bought and is getting the tax credit. It had zero impact on my decision to buy; it was a whole 2% of the purchase price. It will be nice to have to start rebuilding my savings though.

Moderate changes in people buying and distressed supply will be offset by people pulling their homes who aren't in those positions. They will simply remove their inventory. Banks won't over flood the market to the point they're getting nothing for the homes. They'll wait it out, and supply/demand will remain about the same.

Banks do not need a LOOPHOLE. They already have a BLACKHOLE. It's called the FHA. Dump the bad loans in there and it will disappear...For them at least.

robertoaribas says

We have artificially stimulated demand due to credits for the last six months, and artificially lowered supply of foreclosed homes due to attempted workouts. Lets see how this market fairs with say a 10% drop in organic demand, and a 10% rise in in distressed supply over the next year.

And a 20% rise in interest rates.

The tax credit had no impact whatsoever on my decision to buy. I've been actually wanting it to expire unextended.
However if either of the pending offers come back into my court, the words "You cost me $8,000 dollars" will likely be my response. Seems to me that seller paid closing costs is a fair exchange for that.

I'm more interested in what the end of gov't program for purchases of mortgage backed will do...

$8000 is only useful if you buy a $100k house, because you can use it as a "down payment".

It is useless if you buy a $800k house.

The tax credit caused an acceleration of buying. So some of the people who would have bought later this year bought during the tax credit period. This caused a rise (and last minute surge) in sales. Those sales are done. The next few months will be lower in sales because of this. We had an artificial surge in demand. And it will be followed by an offsetting artificial lower demand.

The end of the Fed purchases will cause mortgage rates to rise to their normal spread relative to treasuries. I expect a slow increase over the next year or so. So, the 30 year fixed rate will probably be somewhere around 6%.

They were running realtor commercials about the housing credit last night at 12:30 am. I guess they don't have calendars...

I, like others, am filled with outrage and fear at what the banks, the government, and – let’s face it – a lot of ordinary people have done, and continue to do, to the economy in their greed. One common thread I see in all of this is a lack of proper incentives for productive and responsible economic behavior. The latest folly we are being forced to watch is the taxpayer-backed bailout of banks combined with a series of half-assed distressed mortgage rescues, which allows extend-and-pretend accounting to artificially prop up the market while dooming us to a day of reckoning when the loans have to show up on the banks’ books (They do eventually, right? Right?) and it all comes crashing down. All this only increases the incentive for strategic default, and ultimately, the buck will stop, and park, in the taxpayers’ wallets.

I think we need to propose a set of proper incentives for housing rescue, focused on helping those who are still paying their mortgages, instead of throwing money at banks or at people who will eventually default anyway. The program I am thinking of is this: for ANY homeowner paying a mortgage, let’s have the government MATCH THEIR MONTHLY PAYMENTS up to a certain amount, say $500, for a set period (e.g., a year, maybe two). This helps the “responsible homeowner” (I have noted the opinion of many on how to not judge strategic defaulters, but I will stick to the moralistic terminology for now) for obvious reasons, banks (eventually and organically) because they are getting paid on their loans at least partially, and neighborhoods on the brink because the tipping point for Detroit-like desolation gets shifted down by that much. Because it is a limited program, NO ONE GETS OFF SCOT FREE, unlike the current situation, in which multiple parties (all of whom are culpable for the mess we are in) get off scot free – and even benefit – at the expense of the national economy in general. The mortgages that will default anyway, would still default under this program, and that is as it should be. However, because some mortgages that eventually default could be helped to PAY for a limited amount of time through this program, it buys time for banks, markets, and homeowners to unwind from their untenable positions and (relatively) safely find a decent equilibrium point, instead of getting avalanched by foreclosures as will be the case soon. I expect the results to trickle up in the economy (instead of trickle down, which has not happened, by the way).

Some additional considerations/benefits: it is an equal opportunity flat amount mortgage aid program – you pay, the government matches, up to the fixed nominal amount ($500, or whatever). The rich (or actually, those with rich mortgages) get aid, too, but it would cover a lower portion of their payments. So, it absolutely helps those paying lower mortgages more, but the rich cannot call it unfair, because the fixed amount of the aid is equal for all who are paying their mortgages. Many think the government should do nothing, and that view has merits, but in such times, the government can’t just do nothing, so something that doesn’t screw things up more is the next best thing. The cost: if the program were to be taken advantage of by 50 million homeowners (if we restrict the program to primary residence mortgages only), that is (50 million) X $500 = $25 billion per month. Over 24 months, that makes $600 billion, tops. The real cost of the bailouts so far is much greater, and has caused more harm then good. The actual number of households taking advantage of the program is probably going to be much less, and the period of the program is likely going to be set much lower, so an even lower cost estimate of $300 - 400 billion is realistic. It’s surely better than what’s going on now.

Anyway, just my 10 cents…

More like 75 cents.

Here's a plan to help suffering home debtors: R-E-N-T.

My 5 cents.

xenogear3 says

$8000 is only useful if you buy a $100k house, because you can use it as a “down payment”.
It is useless if you buy a $800k house.

Seems to me that 3.5% downpayment on $300,000.00 house is $9500.00 so this makes the downpayment on a 300 grand house 1500 bucks.

StillLooking says

xenogear3 says

$8000 is only useful if you buy a $100k house, because you can use it as a “down payment”.
It is useless if you buy a $800k house.

Seems to me that 3.5% downpayment on $300,000.00 house is $9500.00 so this makes the downpayment on a 300 grand house 1500 bucks.

Exactly. I know for a fact that this housing credit had a big effect on many people buying in the 300-400k range, keeping houses that SHOULD be closer to the 250k range, up in the upper 300k range. I see it all around me in the "working class" area of the East Bay.
It's going to take a while for people to realize that they are more and more going to have to bring more of their own money to the table, which makes it a little harder to pull the lever and sign up for a 300-400k++ house with a 50-100k a year household income..

http://marketplace.publicradio.org/display/web/2010/04/30/mm-homebuyers-tax-credit-impact-market/

looks like the impact is more than negligible...

MarkInSF says

From every report I’ve read, the tax credit has had negligible impact. Most people claiming the credit would have bought anyway. In the mid to high range it probably made no difference. The government just took money from me and gave it to somebody else that didn’t need it. That’s all.