Homebuyer tax credit casts shadow on mortgage market until next year
The pull forward in housing demand created by the homebuyer tax credit will likely take the rest of 2010 to wear off completely. During a Fitch Ratings teleconference Monday titled: Can U.S. Housing ‘Normalize'?, lead homebuilding analyst Robert Curran put the earliest return of demand for homes at late winter, with any substantial improvement not expected until the spring. A national housing report from RE/MAX on Monday said the effect, though negative, could have been worse. "It seems clear that homebuyers trying to take advantage of the tax credit bought early," according to the RE/MAX report. "This could explain why September 2010 sales were 20.6% below September last year. September sales were also down from the previous month by 6.4%." RE/MAX said September numbers are also low due to the slow summer months. Fitch said foreclosure suspensions also will drag on the market as 25% to 35% of current home sales involve distressed properties. The ongoing consequences will be harder to predict now that all 50 attorneys general are investigating these practices, as they "fear something more nefarious in the mortgage-servicing industry," Curran said. Curran predicts though that homeowners involved in robo-signing scandals will ultimately lose their home, even after the internal reviews are complete "as long as mortgage title companies do not become financially entangled," he said. Both Fitch and RE/MAX are reporting a price stabilization due to the drop in housing inventory. According to RE/MAX, prices were down 2.7% last month from August, but still up 0.9% from a year ago. Prices are still higher than 2009 in many California cities and in the South and Midwest too. Some cities with large price gains include: Raleigh, N.C. (11.6%); Pittsburgh (8.2%); Detroit (7.7%); Little Rock, Ark. (6.4%); Nashville, Tenn. (5.7%); Philadelphia (5.2%); Jackson, Miss. (4.7%); and Charlotte (4.2%). Write to Jacob Gaffney.