Richard's Real Estate Thoughts

First Time Home Buyer Stimulus helping to stabilize home prices

Encouraging news on home sales from Zillow and from S&P/Case-Shiller.

Median list price reported by Zillow - Equal number homes listed above and below.

 "The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States."

This index has been tracking the steady decline of home prices since the peak in 2005-2006 to the present.  The quarterly decline in home prices from the 2^nd Quarter 2008 to the 2^nd Quarter 2009 was 14.9%. The positive sign though is that the 2^nd Quarter 2009 shows an increase over the 1^st Quarter 2009.

This is the first reported increase in three years, and as such is significant. The question remains though if the increase is a function solely of the incentives for home purchases: the tax credit, the historically low rates, and bargain prices. Is this sustainable?

Here are the percent changes from the S&P/Case-Shiller report for the two closest metropolitan areas.

Senator Bob Corker spoke to local REALTORS® this week that extending and expanding the tax credit is a possibility in the upcoming session, but the real issue is if the results of the stimulus are enough to end the price declines that have hindered the normal functioning of the market.

Foreclosures remain a problem as also unemployment.  These combine with other factors to keep inventories up and the number of potential buyers down.

These positive numbers though indicate the stimulus is producing the intended results of increases sales, reduced inventories, and as shown here stable or increasing home prices.

First Time Home Buyer Tax Incentive leading economic improvement

We were treated yesterday and today to some significantly, even surprising, positive economic news. 

• New home sales showed a jump from 395,000, to 433,000 fro m the previous month.
• "New orders for manufactured durable goods in July increased $7.8 billion or 4.9 percent to $168.4 billion. This was the third increase in the last four months and the largest percent increase since July 2007." From the US Census Bureau report today
• Consumer Confidence  surprised investors with a large increase, from  47.4 to 54.1, breaking back over the 50% level.  This is generally thought to be a good indicator of consumer spending changes.
• These follow last week's increase in  leading indicators for the third straight month. Last month the increase was .6%.  For June,  0.8% and for May 1.2%.

It is very encouraging to see these signs of recovery. The question remains how much of this turn is driven by the massive Federal incentive programs. Specifically, the recently ended Cash for Clunkers program, the First Time Home Buyer Program, and the efforts at keeping mortgage rates at historical lows through the direct purchase of Treasury and mortgage bonds. The Cash for Clunkers program was a direct cause for the upswing in car sales and likely a major contributing factor in the increase of durable goods. That program ended this past weekend. 

The First Time Home Buyers Tax Incentive is presently scheduled to end on November 30. Although Senator Bob Corker speaking yesterday at the Chattanooga Association of REALTORS indicated that there is a good deal of support for extending and for expanding the incentive.

Will the stimulus prove successful in creating the impetus for an economic turnaround? Or are these improvements only the temporary results of the Federal interventions in specific markets?

The sudden announcement that FHA and the government had forced Taylor Bean Whitaker to shut down mortgage lending and servicing operations  shocked many people.

It left many people unable to close their pending home loans.

It also left many existing clients unable to make their payments.

Here is some payment information from the HUD website. Until existing clients receive specific information from Bank of American, with a new account number, mortgage payments should be sent to

BAC Home Loans Servicing, LP
Payment Processing
PO Box 10334
Van Nuys, CA 9140-0334

You should use your existing Taylor Bean account number.

We are putting this information out as a blog post because of the many calls that we have received. Thanks to Vickie Phillips from our office for finding this helpful information.