Cities Allowing Tax Credit to Transition into Short term Loans

Home Values Fall Again

As home values continue to fall, people are looking to short term loans as payment options. Things are difficult in the recession and a continuous drop in home values are proof. According to the AP, home prices fell in nine out of every ten US cities throughout the first quarter of 2009. The National Association of Realtors said that median sales prices of homes declined in 134 out of the 152 cities studied. The floundering economy is taking its toll on home owners’ whose equity is quickly dwindling.

Almost half of home sales are made up of foreclosures or other distressed properties. David Resler, chief economist of Normura Securities, stated “I think we’re near a bottom, but we’re not there yet.” He believes, along with other analysts, that the housing industry will hit rock bottom soon, and then slowly begin to rise again by the end of this year. Alan Greenspan, of the Federal Reserve, agreed adding, “We are finally beginning to see the seeds of a bottoming”, but noted the huge inventory of for-same properties as a major concern.

Future hope

A consortium of real estate agents are hoping that Obama’s tax credit for first-time buyers will spur more people to venture into homeownership. The $8,000 tax credit is making it popular for potential buyers to move into homeownership. However, in higher priced neighborhoods that tax credit still doesn’t make things affordable. Leon Grammer of New York City stated, “I would love to take advantage of the tax credit and move out of my apartment. It would be great to take advantage of the market right now, but the homes in my area are still way out of my price range. Even with all of Obama’s perks.” Grammer is not alone. Many in the real estate field agree that the government should be doing more to stimulate housing sales and without some intervention, the recession is sure to linger on longer.

Shaun Donovan, of the Housing and Urban Development Commission, said that the Federal Housing Administration will begin to allow borrowers to apply for short term loans and turn Obama’s $8,000 tax credit directly into their down payment. He said the credit “is not only a tremendous opportunity for first-time buyers, but also an enormous benefit for communities struggling to deal with an oversupply of housing.”

More research

Research is showing that the mid-price of homes throughout the US is $169,900, which is down almost 14% from last year. The biggest drops were seen in Fort Myers, Florida, where homes have dipped beyond the 50% range in value. Saginaw Michigan, Akron Ohio, San Francisco, San Jose, Phoenix and Sarasota Florida have all seen housing values decline 40%. With this type of blow to the industry, it’s no wonder homeowners are worried. Homeowner Calvin Brunte said, “We had planned on taking out a home equity loan to do some major fix-ups in our home. With the recession and the economy, we can forget that for at least the next couple of years.”

Still waiting for rock bottom

Home values have still not hit rock bottom. Homeowners, realtors and investors are all waiting for the market to reach the turning point. Unfortunately, that turning point is slow in coming, even though some communities are allowing the first-time home buyer an $8,000 tax credit to be converted into a short term loan as a down payment. Hopefully, the market will even itself out soon and once again, people will be able to invest in their homes.