WP: May pending home sales tumble without tax credits

[Hubbs]

The less amount of homes on the books, the more you can ask for homes when the demand is there. You can sell at a premium, instead of a discount. That would help everyone. But some one has to take the first step.

Dude, you're not getting it.

The thousands upon thousands upon thousands of homes that the banks are sitting on aren't on the market. They're not part of "supply" right now. Just because they don't have anyone living in them doesn't mean they don't have owners. They do. The banks own them. The "market," for the purposes of this discussion, is the sum total of people actively trying to buy a house versus the sum total of houses that are actively being sold. There are a lot of bank-owned properties that aren't actively being sold. This is frequently referred to as the "shadow inventory." If the banks tried to sell their "shadow" homes right now, that would be a massive increase in supply, pushing prices further downward.

You make it seem as if the banks are somehow happy about this situation. They are not. Oddly enough, banks really, really don't want to be sitting on countless empty properties. But they can't sell them at the moment, because the very act of trying to sell that many houses would put enormous downward pressure on prices. You may have noticed that our financial system needs to make money in order to function. If you want to shut off lending, there would be no faster way than forcing the banks to sell off their shadow inventories.

[Winning Season Please!]

Look if homes sales continue to sag then it's not a trend, its a problem. If you feel that figures in May are an aberition, then so be it. What ever makes you sleep well at night.

I do not get the point about the 900 files. These are professionals. Stop with the excuses. All you have to do is run their credit, and you know if they qualify. You may have to be creative with some, but for the most part you know who can qualify for a mortgage. From their it's on to the negotiations, etc. The bar has been set high by most banks. So think about it. You have 900 people come to you. You know that they need a ceratin score to get a loan, that narrows the field. Then you look at their earnings. We are at 9.7 unemployment, so that narrows the feild even more. Then you have to look at the fact they have be able to afford the home they live in, so their LTV has to be correct. That narrows the field even more. If you have 20% of 900 able to qualify you got it made. Commissions are high on home loans for a reason. If you have that much business I am sure you can hire some people to help you get loans done. Time favors the banks. Just keep that in mind. The financial industry has to figure out a way to make banks have sound lending practice, and give people a chance to buy a home if they qualify. 700+ credit is not good, especially with unemployment so high. Its a self serving system.

:doh: You are talking about 2 different things.

Uh.... you do know that the negotiator he was talking about was a response to your question/'point' about short sales. The negotiator doesnt have anything to do with the credit of the buyer, they are not extending a loan to that person.

I don't think he gets it.

Dude, you're not getting it.

The thousands upon thousands upon thousands of homes that the banks are sitting on aren't on the market. They're not part of "supply" right now. Just because they don't have anyone living in them doesn't mean they don't have owners. They do. The banks own them. The "market," for the purposes of this discussion, is the sum total of people actively trying to buy a house versus the sum total of houses that are actively being sold. There are a lot of bank-owned properties that aren't actively being sold. This is frequently referred to as the "shadow inventory." If the banks tried to sell their "shadow" homes right now, that would be a massive increase in supply, pushing prices further downward.

You make it seem as if the banks are somehow happy about this situation. They are not. Oddly enough, banks really, really don't want to be sitting on countless empty properties. But they can't sell them at the moment, because the very act of trying to sell that many houses would put enormous downward pressure on prices. You may have noticed that our financial system needs to make money in order to function. If you want to shut off lending, there would be no faster way than forcing the banks to sell off their shadow inventories.

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[Fergasun]

Everyone realizes the tax credit is going to get extended to September, right?

[msjordanalex]

Everyone realizes the tax credit is going to get extended to September, right?

It's extended for people who have already signed contracts by april 30th and you have to close by september...

So unless you have an offer on a house that was signed before april 30th it doesn't really help you.

[Fergasun]

Oh.... I see. I was wondering why I didn't hear any uproar from places over this. I see... thought they had extended it stealthily...

[THEREALTOR1]

It's extended for people who have already signed contracts by april 30th and you have to close by september...

So unless you have an offer on a house that was signed before april 30th it doesn't really help you.

This is correct.

http://www.savingtoinvest.com/2009/02/15000-first-home-buyer-tax-credit-in.html

H.R. 5623 – Homebuyers Assistance and Improvement Act of 2010. Among other items, this bill would extend the homebuyer tax credit of up to $8,000 for the purchase of a principal residence before October 1, 2010. The current benefits apply to cover buyers who enter into contracts before April 30 and close by June 30. This bill extends the closing date to September 30, 2010.

The bill would provide any home buyer who entered into a contract on a home by April 30, 2010, but has been unable to go to closing within the required 60 days, an additional 90 days to close and qualify for the credit. This provision is estimated to cost $140 million

The approval of this bill is great news for many home buyers who signed a purchase agreement/contract prior to April 30th but are having difficulty closing before June 30th. One thing to clarify - this bill does not extend the deadline for home buyers to sign a contract for a home and hence qualify for the tax credit (still April 30th); rather it extends the deadline for closing the transaction, from June 30 to Sept.30.

The National Association of Realtors estimates that this new extension will help about 180,000 to 200,000 homebuyers who already signed purchase agreements and were likely to miss the June 30th deadline.

I'm glad they at least got this right. With June 30th now here and gone, it wouldn't have suprised me to see a huge fallout of people backing out of contracts due to the inability to settle prior to the tax credit deadline. Looking at the numbers above (180,000 - 200,000 according to NAR), that would've been another huge hit to the housing market.