The Market Is Falling Again; Someone Throw Us a Rope!
Posted by Lee Cameron on Thursday, September 2nd, 2010 at 10:38am.
Things were looking optimistic there for a while. The market was slowly, carefully climbing. Then it was holding steady. Now, unfortunately, those signs of life have flatlined again. Existing home sales fell more than 27% across the nation last month, hitting the lowest level in decades.
So what happened? Likely, much of the decline can be attributed to the expiration of the $8,000 first-time home buyer's tax credit. This credit brought skittish first-time buyers to closing tables across the country and seemed to really give the market a tangible - but temporary - boost. Couple that with the never-ending flood of foreclosure properties and short sales that banks continue pour into the market and we're due to watch the market decline for some time without help.
The government is planning to launch two projects in upcoming weeks to try to prop the market back up again. The first will be an FHA refinancing effort that if meant to help homeowners who are underwater on their mortgage refinance and avoid foreclosure (avoiding adding even more homes to the market). The second program will be what the government is calling "an emergency homeowner's loan program". This loan will be made available for unemployed borrowers to help them avoid foreclosure as well. The $3 billion allocated for those loans was already approved in the recent Wall Street Regulatory Reform Bill.
Both of these programs are designed to try to keep the market from getting any worse than it already is. But what about helping it back up? Housing and Urban Development Secretary Shaun Donovan has said that, while there are no immediate plans to do so, HUD may consider re-implementing the first-time buyers tax credit in the future to give the market another boost if it doesn't recover on its own.
You have to wonder how much of a help it's going to be, though. Even if they give us a parachute, we're still falling towards the ground.
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