St Louis Mortgage Analysts Say Tax Credit Stimulus Failing

St Louis Mortgage Refinancing and Real Estate News –

News: Home Tax Buyer Credit May Not Be Doing Enough for Real Estate Sales

The country has been arguably experiencing the highest unemployment rate since the Great Depression of 1929.

So, with unemployment at around 10%, analysts hoped that the home buyer’s tax credit bailout plan was instituted to stimulate housing demand in this already decimated market.

However, to the chagrin of political experts, the Obama administration’s additional initiatives to modify loans facing foreclosure has equally failed and not met with any great success so far.

And as we talk more about this federal program designed to sell more homes, it too has met with overwhelming disappointment.

St Louis mortgage analysts fear that a huge supply of discounted homes will hit the market in 2010 and this additional supply of homes will only worsen an already horrible market situation.

As the deadline for the home tax buyer credit approaches April 30th, there is no evidence nor likelihood that we will see any increase in housing demand.

“No one is saying that they need to buy before the tax credit expires,” said Tim Surratt, a real estate agent. But that seems to be the biggest mistake going for this sinking market.

According to a recent survey conducted by Campbell Communications and Inside Mortgage Finance, the percentage of homeowners looking to buy a home was percentage wise flat from January to February, 2010.

Some experts are saying that the size of the tax credit at $6,500 is too small to influence buyers to make any kind of immediate buying decision.

Mortgage and financial consultants have stated unequivocally that the savings on account of the home tax buyer’s credit will not offset down payments and other transaction costs.

For example, the agent’s commission for a home at the national average price of $164,000 is likely to be 6 percent or $9840. The final commission is much higher than the tax credit of $6,500 or even $8,000 depending on your circumstances.

“You’ve got a really big problem that requires big guns, and the tax credit is just not big enough,” said Roberton Williams, senior fellow at the Tax Policy Center.

Perhaps more time should have been spent on making this program much more financially advantageous to buyers rather than the apparent wasted time on the controversial passage of the recent healthcare program.

Now it appears when things couldn’t get much worse, the social security system will no doubt need an emergency cash infusion sooner than later. We will have to wait and see.