Real Recovery Is Still Elusive Despite Gains in Home Sales
By Daniel at 30 July, 2009, 1:43 am
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By: Albert Bozzo
Senior Features Editor
Federal initiatives to stimulate the housing market have created a shallow and narrow recovery, making it likely that Congressional proponents of an expanded homebuyer incentive program will make another push to make it law following the August recess.
The existing homebuyer program and an even larger one to contend with a tsunami of home foreclosures, as well as federal efforts to nudge down mortgage rates, appear insufficient to tip the scale in favor of a broad housing market.
Tighter credit and appraisal conditions, in particular the evaporation of the jumbo loan market, millions of underwater homeowners unable to refinance, still declining prices in some major markets and a sizable inventory of bargain basement bank-owned properties are all weighing on the conventional market.
“The problem in our marketplace is the move-up market, which is basically dead,” says Sen. Johnny Isakson (R-Ga.), who is chief Senate sponsor of legislation to expand the tax credit. “People are buying bargains. There’s almost no market for the average home. We’ve got to drive the knowledgeable buyer and willing seller market.”
In that context, recent data showing gains in home sales is somewhat misleading.
In distressed, or highly depressed, markets like Nevada, Arizona, California and Florida, 80 percent of sales are bank-owned properties, being gobbled up by investors and first-time buyers at a 40-60 percent discount.
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