Mortgage applications drop 9.5% after end of tax credit

Is this a simple sign that the housing market was actually artificially propped up by the govt? IMHO Of course!! Now what??

id the Obama administration and the Democratic Congress rescue the home buyer market by extending a key tax credit last year, or just put off the inevitable decline? Diana Olick reports at CNBC that it looks as though Democrats played kick the can, as mortgage applications dropped almost 10% after the tax credit expired:

Selling prices have begun dropping as well. Ten percent of properties on the market as of May 1st have had at least one price cut since listing. Thanks to a rise in foreclosures and a sense of optimism from sales reports in the beginning of spring, inventories of new homes rose — and now they don’t have the buyers. Mortgage rates have begun to drop again across the board as demand declines.

Obviously, the tax credit enticed some people to buy, but we have seen no evidence that it created any more qualified or interested buyers than would normally have existed without it. What the tax credit did, much like the Cash for Clunkers program did for cars, is encourage those who would have bought anyway to do so sooner than they might otherwise have done. That allowed housing prices to artificially remain higher than they would have in a true correction from the housing bubble. It delayed but did not prevent the inevitable revaluation of housing to bring prices back into line with long-term inflation and value trends.

Instead of dealing with the pain of this revaluation last year, we have done nothing but prolonged it. The sharp drop in mortgage applications at a time when interest rates fell indicates the ongoing weakness of the housing market, and the folly of interfering with the proper market balance of supply and demand. We need buyers and sellers to make rational decisions on investment and value, not continue the bubble mentality that just puts homeowners at risk in the short and long terms.

The only way to firm up the housing market is to allow for proper valuation and to get people back to work. Had we adopted a posture of lower taxes and regulatory burdens instead of signaling exactly the opposite for the past sixteen months, we would already be well on our way to recovery. Instead, we now find ourselves back to Square One after the expiration of yet another gimmick.

hotair.com...

Enough of the games. The same old shell game clearly has had no benefit to the housing market.

Time to let the markets correct themselves for a change so we can truly see what kind of a mess we are really in!!!!! Stop blowing smoke up my rectal orifice Mr. President.

edit:
Mortgage rates are below 5% right now. You can't get much better than that if you are buying or refinancing and yet we're down nearly 10%. Hmmm...

[edit on 12-5-2010 by jibeho]

Just in time, for me. I need the housing prices to drop.

Of course I would had to have taken advantage of the tax credit-but paid more. It will be interesting to see what this does.

My wife is my real estate pro. I will have to make sure she reads this tonight.

Thank you for posting this.

F&S

My best guess is the Feds will extend this program. At least until Nov 10 and maybe if things don't get any better, 2012

reply to post by anon72


Definitely a great time to buy. Unfortunately, my parents are trying to sell so they can move to their retirement destination. It's a shame that their asking price is so low compared to what they paid 15 years ago. Real Estate was always supposed to be the golden investment. Naturally, their retirement purchase all depends on what they can get for their house even after numerous mechanical, physical and cosmetic upgrades.

We had to jump through hoops just to refinance because our appraisal was so screwed up. Needless to say we are staying put for quite some time now.

Originally posted by anon72


My best guess is the Feds will extend this program. At least until Nov 10 and maybe if things don't get any better, 2012

I think you nailed it with your above quote.

Prolong the "smoke and mirrors" till the voters aren't necessary any more.

Ha! My buddy was gonna hop on this credit under the expectation prices would increase. I don't any rush.

I bought my parents house last November expecting that tax credit... Then when filing the taxes we found out that I didn't qualify for it simply because I bought it from family.

I was going to buy anyway and it just happened to be during the tax credits, but u still feel like I got shafted pretty good because of that caveat buried in the tax code.

Right now things seem to be going pretty hood here. My house has gained value since I bought it. I wonder how long that will last.

Do not feel to bad,

That so called tax credit will have to be paid back over the coarse of years in your taxes.....It was really an interest free loan.

google it

Just like during the Bush years we received all the supposed tax rebates so people would spend. It was a loan you paid it back one way or another if you were in the middle class.

[edit on 12-5-2010 by IntelRetard]