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%.