The National Association of Realtors is back with it’s hat in hand walking the halls of Congress. Today, they are asking to extend the closing window on the tax credit. The law states that homes had to close by June 30th, 2010. But with the foreclosures, short sales, and bump in the market activity, getting to the closing time for many buyers is not going to happen.
We are already seeing many of the contracts that were signed in expectation of the tax credit run into difficulties. Now, agents and the NAR are afraid that another whole crop of sales will not make it to the table in time to qualify for the handout.
The problem, says the National Association of Realtors, is that many of those signed contracts are on foreclosures and short sales, where the lender allows the house to sell for less than the amount owed to the bank. Those transactions take longer than normal to process, and there’s some concern that many sales may not actually close in time.
“There could be a sizable number of home buyers who responded to tax credit incentives, but may encounter problems,” said Lawrence Yun, the trade group’s chief economist, in Wednesday’s report that showed a 6% surge in pending home sales during April.
The NAR and its members are asking Congress for flexibility with the June 30 deadline, but it is unclear when—or even if—something would happen. (The National Association of Home Builders says it is not asking for a deadline tweak.) Congress would have to pass such a measure quickly, which is no easy task. One possibility would be to attach the extension to a piece of legislation that’s already winding its way through both chambers.
The reality is that when a business needs the government subsidies to function, it is not in a really good place. We all want the housing market to rebound. Agents, homeowners, potential homeowners, everyone.
It is too important to our economy and our self worth. However, when it is being driven by subsidies and gimmicks, the market is not healthy.
To put matters into perspective. John bought a $200,000 home April 30th with the $8,000 tax credit and closed in time. The market dips because traffic is down, remember it got pulled forward, and real estate double dips.
In December he gets the home appraised, he may have a job offer in another city, and the appraiser says the home is worth $190,000. Demand has dried up, mortgage rates are up so people can not borrow as much, you know the story.
My question to you is, does John feel like the market is healthy and that he got a good deal on the home?
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