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First-Time Home Buyer Tax Credit Gets Obama Nod
Tweet Share on Facebook October 29, 2009 Comment (141)An extension of the $8,000 first-time home buyer tax credit appears all but certain after the Obama administration called on Congress to give house hunters more time to claim the popular tax perk. The move comes shortly after Senate lawmakers stuck an agreement to not only push back the measure's looming deadline but expand it to allow current homeowners and more affluent buyers to claim the credit. "We welcome efforts taken by Congress to extend the first-time home buyers tax credit for a limited period," Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan said in a joint statement today. "This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide." Here are five things you need to know about the development:
[See New Home Buyer Tax Credit: 7 Things You Need to Know.]
1. Roots and impact: A tax credit of as much as $8,000 for certain qualified first-time home buyers was included in the Obama administration's sweeping economic stimulus package, which the president signed in mid-February. The measure was designed to stimulate additional demand for residential real estate and help absorb the overhang of unsold properties that was putting downward pressure on home prices. Along with cheaper home prices and attractive mortgage rates, the perk has helped reduce the glut of unsold properties. Mark Zandi, the chief economist at Moody's Economy.com, expects the tax credit to result in as many as 400,000 additional home sales by the time of its scheduled expiration at the end of November. But trade groups—like the National Association of Home Builders and the National Association of Realtors—have been lobbying Congress to push the deadline back, arguing that failing to do so would jeopardize recent signs of stability in the housing market. The NAHB, for example, blamed yesterday's weaker-than-expected new home sales report on the tax credit's impending expiration.
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Weak Home Sales Suggest a Slog of a Recovery
Tweet Share on Facebook October 28, 2009 CommentEven before housing market bulls had finished celebrating their strong September existing-home sales report and the encouraging drop in the rate of price declines, a fresh set of figures on the residential real estate market has—once again—hosed down the outlook for a quick recovery. The Commerce Department today reported that new-home sales fell 4 percent from August and 8 percent from a year earlier. The decline puzzled housing market experts, who had projected sales to increase by nearly 3 percent, and suggests that the recovery will be a lengthy, fitful slog. "Even in the strongest recoveries, [data don't] march higher month after month after month," says Zach Pandl, an economist at Nomura Global Economics. The September new-home sales report "suggests that the recovery is going to proceed somewhat slowly and that we are not definitely out of the woods yet." Here are six things you need to know about the development.
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Home Price Declines Becoming Less Jarring
Tweet Share on Facebook October 27, 2009 CommentWhile still falling at a double-digit clip, annual home price declines have eased off the breakneck pace we endured several months back. The S&P/Case-Shiller Home Price Index for 20 major U.S. cities fell 11.3 percent in August from a year earlier. That's a significant improvement from the January reading, which showed a 19 percent year-over-year drop in property values. "We have seen a very nice deceleration in the pace of [home price] declines," says Zach Pandl, an economist at Nomura Global Economics. "It really does look like price trends in the housing market have turned a corner and are improving—but I think we need to wait a little bit before calling the bottom." Here are four things you need to know about the development:
[Check out Home Building Figures Come in Weaker Than Expected.]
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First-Time Home Buyer Tax Credit: All Sorts of Sketchy Claims
Tweet Share on Facebook October 22, 2009 Comment (30)Since the Obama administration enacted it in mid February, the first-time home buyer tax credit has been immensely popular with Americans brave enough to jump into the battered real estate market. But now, it appears the tax perk may have become too popular. Using computer programs and other means, a Treasury Department inspector general has identified more than 90,000 cases totaling more than $600 million questionable first-time home buyer tax claims, while flagging shortcomings in Internal Revenue Service controls. In one extreme case, at least one 4-year-old received the credit. The IRS, meanwhile, has uncovered 167 criminal schemes, launched 115 criminal investigations, and frozen more than 110,000 refunds pending examinations. "There are possibly hundreds of millions of dollars that have been paid to taxpayers who are not entitled to the credit," Rep. John Lewis, a Georgia Democrat, said during a Congressional subcommittee hearing Thursday. "We want to, and we need to, stop this fraud and abuse." Here are five things to know about the development.
[Check out New Home Buyer Tax Credit: 7 Things You Need to Know]
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Mortgage Rates Inch Higher, Refinancing Applications Drop
Tweet Share on Facebook October 21, 2009 CommentAs mortgage rates come off their near-record lows, fewer property owners are interested in refinancing home loans. That's according to the Mortgage Bankers Association's most recent mortgage application survey, which reported a 17 percent drop in its refinancing index for the week ending October 16. The slide in refinancing applications is linked to an uptick in mortgage rates. Thirty-year, fixed mortgage rates inched marginally higher, to 5.07 percent, from 5.02 percent the previous week.
[Check out Mortgage Rates Seen Below 6% Through 2010]
Rates have been nudged higher by bond investors, who have demanded moderately higher yields on 10-year Treasury notes. Ten-year Treasury yields fell to 3.21 percent on October 7—the lowest they had been since early summer. By Tuesday, however, yields had crept back up to 3.41 percent, according to HSH.com. (Fixed mortgage rates tend to track the yields on 10-year Treasuries.)
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Home Building Figures Come in Weaker Than Expected
Tweet Share on Facebook October 20, 2009 CommentIn the face of growing optimism about a potential real estate recovery, a report on new home construction came in weaker than expected for the second straight month. The Commerce Department on Tuesday reported that September housing starts inched up 0.5 percent from the previous month but remained more than 28 percent below year-earlier levels. The results were below the 2 percent gain that economists had projected. Permits for new home construction, meanwhile, slipped more than 1 percent from August and were about 29 percent below the level of September 2008. "After a steady upward march, the housing market appears to be stopping to catch its breath," Mike Larson of Weiss Research said in a report.
Here are five things you need to know about the September new home construction report.
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Obama Expands Housing Rescue (Again): 5 Things to Know
Tweet Share on Facebook October 19, 2009 Comment (6)In another attempt to reinvigorate the housing market, the Obama administration has announced new steps designed to make it easier for state and local agencies to reduce mortgage costs for low- and moderate-income home buyers. The two-pronged effort—which includes a bond-buying initiative and a credit facility—will enable state and local housing finance agencies, or HFAs, to extend "hundreds of thousands" of new, affordable home loans, the administration said Monday. The program represents Uncle Sam's latest stab at stimulating enough housing demand to mop up the glut of unsold properties that is putting downward pressure on home prices. “Through the years, many low and moderate income Americans have been well served by state and local HFAs, but the housing downturn has hit these organizations too," Treasury Secretary Tim Geithner said in a statement. "Through this initiative, the Administration aims to help HFAs jumpstart new lending to borrowers who might not otherwise be served and to better support the financing costs of their current programs—key components in stabilizing the housing market overall.” Here are five things you need to know about the program.
[See Obama's Loan Modification Plan: 7 Things You Need to Know]
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Foreclosure Epidemic Reaching More Expensive Homes
Tweet Share on Facebook October 16, 2009 Comment (5)A recent report by a congressional oversight panel highlighted the changing nature of the housing crisis by suggesting that the Obama administration's sweeping anti-foreclosure initiative might not be suited to address the mortgage delinquency epidemic as it exists today. The initial portion of the foreclosure mess was triggered in large part by over-leveraged borrowers who got in over their heads with resetting mortgage products and homes they couldn't really afford. But today, as the unemployment rate heads for 10 percent, a growing number of borrowers with good credit are heading into foreclosure after losing their jobs. However, the Obama administration's housing rescue "was not designed to address foreclosures caused by unemployment, which now appears to be a central cause of nonpayment," the panel said in the October 9 report. "The foreclosure crisis has moved beyond subprime mortgages and into the prime mortgage market. It increasingly appears that [the Obama administration's housing rescue] is targeted at the housing crisis as it existed six months ago, rather than as it exists right now."
[Check out Obama's Loan Modification Plan: 7 Things You Need to Know]
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Why Obama's Housing Rescue Hasn't Prevented Record Foreclosures
Tweet Share on Facebook October 15, 2009 Comment (25)After taking withering criticism for the Department-of-Motor-Vehicles pace of its initial efforts to keep struggling borrowers out of foreclosure, the Obama administration proudly announced last week that it had hit its goal of 500,000 trial loan modifications almost a month ahead of schedule. But with the foreclosure rate hitting a new record in the third quarter, the government's ability to put a meaningful dent in the tally of housing-crisis victims faces renewed skepticism.
Foreclosure filings were reported on 937,840 homes in the three-month period, a 23 percent jump from a year earlier, according to a report real estate firm RealtyTrac released Thursday. Home foreclosures in September, meanwhile, decreased 4 percent from August but remained 29 percent higher than a year earlier. "REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts, and high volumes of distressed properties," RealtyTrac CEO James Saccacio said in a press release. Here's a look at why home foreclosures continue to break records even in the face of the Obama administration's expansive efforts to prevent them.
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Mortgage Rates Seen Below 6% Through 2010
Tweet Share on Facebook October 14, 2009 Comment (1)Even as mortgage rates remain near record lows, the Mortgage Bankers Association believes that the looming expiration of a key Federal Reserve program may increase home loan costs next year. Still, the MBA expects rates to remain extremely attractive throughout 2010, helping to juice home sales and insert a floor underneath real estate values. Here are five things you need to know about the MBA's 2010 economic outlook:
[See 10 Secrets of Off-Season Home Buying.]
1. Opposing forces: The MBA expects subdued inflation and high unemployment to put downward pressure on 30-year fixed mortgage rates next year. However, "there is a lot of uncertainty regarding rates immediately following the termination of the Federal Reserve's purchase of mortgage-backed securities," Jay Brinkmann, MBA's chief economist and senior vice president for research and economics, said in a statement accompanying the economic outlook's release. "No doubt the Fed will do its best to minimize adverse effects, but the elimination of these purchases will put upward pressure on all long-term rates as well as the spread between mortgage rates and Treasuries."
