My Blog

6 Reasons the Housing Market Hasn't Recovered

I just read and article titled, 6 Reasons the Housing Market Hasn't Recovered by Luke Mullins , U.S.News. I believe his reason are a little off and quite frankly all of them are a byproduct of one thing and one thing only, the economy is not in good shape. I have to laugh when headlines read “Housing Market continues to Drop” or something along those lines. Not too long ago we were in a recession, some people would say we still are or are heading into another. Here is my take on why housing continues to drop:

1. People lost their jobs

2. People were forced to take pay cuts to keep their job

3. People were told they will be losing their job in the future

4. People can not find jobs

5. People are not confident with their current employment situation

The above items are the main reasons why housing continues to slump. The above reasons create a domino effect the trickles down to the housing market. The housing market is the tail and the economy is the dog. The housing market is not going to get better until the job market improves. Period.

All I can say is hang in there. If you have problems paying your mortgage. Call the bank and try to get a loan modification. I know that it can be very frustrating and time consuming, but it is worth a try. I have done it and I know that it can be done.

Good Luck!

I find it disturbing that every bank owned property is not treated like a normal real estate deal. What I mean by this is when a buyer buys a house from a home owner (that is not a short sale). The home owner is responsible for providing the buyer certain items (i.e. survey, correcting village code violations, etc). Why are banks treating the buyer like the Black Knight? They are the White Knight coming to their rescue by taking an asset off their books that no one wants! Now banks would say they can’t afford the additional expense of a survey and other items and that the price they are selling it for is below market and the buyer is getting a great deal. First, the other items are minimal in cost. Second, there is no below market level in this market. What it sells for is what the market bears for that property. A lot of the properties are unlivable and the buyer has to spend a lot of money to get it to a livable level.  Not all banks own institutions are all bad. Fannie May is fair and reasonable to work with in my opinion (at least with the deals I have done with them).

Banks should be doing just the opposite of what they are currently doing. Banks should be offering buyer incentives to buyers for their properties. You can catch more bees with honey than you can with vinegar.

Banks, it’s time to start using HONEY!

Question:     Existing homeowner credit: Must the new house cost more than the old house?

Answer:        No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Question:    I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?

Answer:        Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

Question:    I am a first­time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?

Answer:        Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase­out range).

Question:     I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non­negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?

Answer:       No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

Question:    I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?

Answer:      Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.

Question:    I am an eligible first­time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?

Answer:        You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

The Senate passed the home buyer credit paving the way for President Obama signature as early as this week. 

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. 

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.