May Home Sales Plunge 33 Percent To Record Low

[thundley4]

Sales of new single-family homes collapsed in May, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer receive government tax credits.

The bleak report from the Commerce Department is the first sign of how the end of federal tax credits could weigh on the nation's housing market.

The credits expired April 30. That's when a new-home buyer would have had to sign a contract to qualify.

"We fear that the appetite to buy a home has disappeared alongside the tax credit," Paul Dales, U.S. economist with Capital Economics," wrote in a note. "After all, unemployment remains high, job security is low and credit conditions are tight."

NPR

Haven't we seen this before with the Cash-4-Clunkers program?

[NHSparky]

Yup--and IBD had a great article on why the house program was even worse--basically getting suckers to buy houses that were immediately worth $8K less as soon as closing went through.

[DumbAss Tanker]

Yup, and it's pretty much what everyone outside the Administration said would happen with short-term credit programs.  The fact that the market hasn't fallen off a cliff over it pretty well shows that the effect was anticipated and already discounted by the astute (A group to which Administration economic planners definitely do not belong). 

[debk]

Yup--and IBD had a great article on why the house program was even worse--basically getting suckers to buy houses that were immediately worth $8K less as soon as closing went through.

That's not exactly true.

The problem is....at least here....there were soooooo many houses on the market, that sellers were dropping their prices, significantly, to make sure that their house got snapped up.

Buyers were required to have 3.5% of the sales price for the downpayment, and as a result, most did not have either enough or any, left over to pay buyre closing costs....which is approximately 6% of the sales price of the property on an FHA loan. (The stimulus was only applicable to FHA and VA loans.) So sellers were paying them for the buyer if they had enough to cover the cost....if they didn't, buyers walked and went to their next choice, and the next...until they found a seller that could pay their closing costs....OR.....the closing costs were added on top of the offering price, so that there was enough "extra" to pay the buyer's closing costs out of the seller's equity.

In order for the closing costs to be included....the offer may exceed the list price, the mortgage amount was higher, AND the house had to appraise for the higher amount.

After the first of the year....I think it was in February?....lenders woke up and realized that sales prices were being manipulated by seller, buyer, agents, and appraisers, and suddenly the lenders didn't like it. While this has been going on for as long as I've been in real estate, it was much more palatable for a lender when the market was better.

Appraisers had to start explaining in more detail how they reached their appraisal price, and whether or not, closing costs were added into the appraisal value of the comparables they were using to compare and determine if a property was worth the contracted price.

Appraisers started calling list agents of sold properties wanting closing details on their sales within the last year. I had a couple call me, and they didn't like it when I told them that was confidential information that I was not willing to disclose. I complained to our Board of Realty, which also governs appraisers, and I'm sure many real estate agents did too....because from what I understand...it has stopped.

Where before the housing crisis....closing costs were just matter of fact and included in the "valuation" of a property ....they are now removed.

That is causing an immediate reduction...on paper anyway....of the property. However, unless the property is back on the market in a relatively short amount of time, it's effect will be diluted over time.

[Chris_]

Inmates get $9 million in homebuyer tax credits

The government's homebuyer tax credit was a boon . . . to about 1,300 prison inmates.

A report by the Treasury Department showed that 1,295 inmates filed fraudulent claims totaling $9.1 million, The Asociated Press reported. More than 200 of the inmates were serving life sentences.

All told, more than 14,100 taxpayers wrongly received tax credits. The report estimates that at least $26.7 million in tax credits went to people who did not qualify. One home was used by 67 taxpayers to claim credits, according to the report.

http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1773615&_blg=1,1773615

Yay, free money

[thundley4]

Inmates get $9 million in homebuyer tax creditshttp://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1773615&_blg=1,1773615

Yay, free money

Yay, another piss poor run government program.  The same will happen to the $20B extorted from BP by the Thug-in-Chief.

[debk]

Inmates get $9 million in homebuyer tax creditshttp://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1773615&_blg=1,1773615

Yay, free money

Neal Cavuto is talking about this right now.

14K+ total with over $26.7 million has been paid out.... HOW in the hell?  

67 people used the SAME address to get the money!!

[Hawkgirl]

Deb, what are the chances of a bank accepting an offer on a short sale that is below market value? Seller also has 2 loans.
Reject offer, counter offer, accept?

[debk]

Deb, what are the chances of a bank accepting an offer on a short sale that is below market value? Seller also has 2 loans.
Reject offer, counter offer, accept?

No way to tell...as there are too many variables. Plus, I don't know your market at all.

Short sales are usually below market value and below the amount of the mortgage amount still owed.... hence the word "short". If the house was listed at market value it would be a "fair-market" price/sale, regardless of whether or not the price was enough to cover the amount owed on the mortgage.

It's all going to depend on the prices on the BPO's and how much "weight" the lender will give those BPO's.

Each BPO has 3 current lists, and 3 sales - usually within the last 180 days, unless the requestor has specified a different time period. I've had them request 90 days. Which can be extremely difficult, in some cases!

The BPO has on it 30-day quick sale, 0-90 day sale, 90-120 and 120-180. When I do them, my 30day price is 80% of the 0-90 day price. Foreclosure property list prices usually - in my market area -come in at a max of 75% of the 0-90 day price. Sometimes it is 75% or less of the 30day price.

 

[Hawkgirl]

Each BPO has 3 current lists, and 3 sales - usually within the last 180 days, unless the requestor has specified a different time period. I've had them request 90 days. Which can be extremely difficult, in some cases!

The BPO has on it 30-day quick sale, 0-90 day sale, 90-120 and 120-180. When I do them, my 30day price is 80% of the 0-90 day price. Foreclosure property list prices usually - in my market area -come in at a max of 75% of the 0-90 day price. Sometimes it is 75% or less of the 30day price.

 

That's way over my head....I guess I will just have to be patient and wait.

[Carl]

Can we all say "double dip"?

Borrowed money pumped into the public sector has inflated some economic numbers but did nothing to help a sustaining economy.
It made some one year unemployment numbers stay at the 10% level instead of the 15-20% level they would be.

Now the simple fact remains,the public whether private or publically employed have no faith in our economy so as the government infusion runs out and is coupled with promises of greater tax burdens we are reentering Carternomics.

[Hawkgirl]

we are reentering Carternomics.

I believe it will be worse.  Remember 12% interest rates on home loans?  They are coming.

[debk]

I believe it will be worse.  Remember 12% interest rates on home loans?  They are coming.

12%? when we moved here in '83, ours was right around 20%!

[ROCKURWORLD]

Inmates get $9 million in homebuyer tax creditshttp://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1773615&_blg=1,1773615

The government's homebuyer tax credit was a boon . . . to about 1,300 prison inmates.

A report by the Treasury Department showed that 1,295 inmates filed fraudulent claims totaling $9.1 million, The Asociated Press reported. More than 200 of the inmates were serving life sentences.

All told, more than 14,100 taxpayers wrongly received tax credits. The report estimates that at least $26.7 million in tax credits went to people who did not qualify. One home was used by 67 taxpayers to claim credits, according to the report.
Yay, free money

Of course people like me are still fighting the IRS to get my credit because they can't understand their own rules or tell the difference between mortgage interest on a schedule A and a schedule E form.  I think I am finally going to get mine but I have to wait 16 weeks from when I last sent them all the info they already have. Bunch of freaking morons. Also you get a different excuse/answer every time you call them.   

[Randy]

Of course people like me are still fighting the IRS to get my credit because they can't understand their own rules or tell the difference between mortgage interest on a schedule A and a schedule E form.  I think I am finally going to get mine but I have to wait 16 weeks from when I last sent them all the info they already have. Bunch of freaking morons. Also you get a different excuse/answer every time you call them.   

My wife got her half in 3 weeks, Mine took 6 months. They told me hers was a freak and mine was because of the lockdown on the program because there was a boatload of fraud going on. Someone really needs to set up an enforcement provision when they propose these giveaway programs.  But then again there's no telling how many of those bogus credits were to cronies. I also wonder if someone received a credit on his new residence that he received in 2009. 

[vesta111]

  I have found that the Realtors will not for a very good reason turn people into buying affordable homes.

I live in a beautiful park, don't own the land but what the heck the rules are no different from buying into a condo with a home owners Association.

Why do people want to start out buying a home with little land, paying mortgage, taxes and upkeep that puts them behind the 8 ball when one partner cannot pull their load due to health problems or divorce.

My Park has dozens of homes for sale due to people retiring and moving south, we are an older comunity perhaps 2 dozen kids in the park and there are 300 of us.

I live in the new end of the park, all double wides and expensive.  What is expensive in this park, a 4 bedroom home 2 full baths, fireplace, wall to wall wool carpeting, those windows that tilt in to clean, ------a used mobile home can if really up graded get  $160.000,000 add in park rent and town takes that tax you around $500 a year unless you buy into a Donner town that puts a extra $1,000 on your tax ---heck you got it made in the shade.

For less then $600 a month one can have a lovely home,  brand new or if used $400 a month.

One thing to be careful about, when going into a park get everything in writing.  When we decided to buy a new home in the park we made sure the lease included the right to have dogs for as long as we owned the home.  The park has since changed their rules but we are grandfathered in.  New buyers cannot have dogs but they get around that rule all the time.

Some of the old single wides with built on additions and hot tubs are a steal for $75,000 the additions add big time square footage and  decks are remarkable.

One can save up enough money starting out in a park to some day buy the land and home they want.

[Randy]

And for $73 a month more than your 600 I have my own real house. Made of stucco over concrete block. It's got a real hip roof and everything. Plus I own the property it sits on. Me, well the bank too but I'm the one on the paperwork. No landlords, no neighbors sitting an arms length away in a box you can hear them walk and fart in. I spent wayyyyy to many years in a trailer. I'm in a house to stay.

[NHSparky]

And trailers will never, EVER appreciate.  EVER.

I bought the house here in 2006, and figure with the improvements I've put in, I'm about even, maybe 10K down at most.  That will come back eventually, but I have no plans of going anywhere anytime soon anyway.  A SFR on land will always come back FIRST.  In fact, existing home prices have gone UP over the past year (only 1 percent, but still better than nothing) as opposed to areas like CA, Vegas, and FL which are still hemorrhaging, and will hit a second dive when the next wave of ARM foreclosures hits.

Yeah, my mortgage isn't cheap (over $1500/month) but I could rent the place out for that.  I know if I can rent it out for what I'm paying in, I'm still okay.