Weekly Recap (8/30/10-9/4/10)
by Tim Manni
Saturday
“Initial homebuyer tax credit numbers are in“:
The Government Accountability Office (GAO) has released its report on how many homebuyers took advantage of the credit so far, and how much it cost us:
1 million buyers have claimed $7.3 billion of the repayable, $7500 tax credit for first-time buyers.
2.3 million buyers have claimed $16.2 billion of the $8,000 and $6,500 tax credits for first-time and qualified repeat buyers.
Friday
“Obama addresses weak job growth“:
President Obama announced that he will be making further statements next week to outline plans to institute tax cuts and/or reiterate the need for a small-business jobs bill.
We know the problems, a possible solution has been identified, but making that solution work is going to be the battle. With the Congressional elections only a few months away, you can bet that lawmakers will be making a push to improve their fortunes using new initiatives. The president’s upcoming announcement may be one of many such offerings in the weeks ahead, but outside of creating new jobs — and quickly — will any actually work?
Thursday
Late last year we wrote a post titled, “Is renting the new American dream?” A few months back we wrote about how “…the American dream of home ownership turned into a nightmare of debt and foreclosure” (a quote from David Wessel of the Wall Street Journal). Each of those posts questioned the old ideal that, as Americans, homeownership is something we all should strive for and is a gauge of our overall success. Maybe most of us are better as as renters as opposed to owners.
Yet a recent Op-Ed in the New York Times shines quite a bit more favorable light upon the benefits homeownership has to offer. Karl Case, professor and co-founder of the Case-Shiller housing index, writes that owning a home can be either a nightmare or the American dream, it just depends on how you look at it.
Wednesday
“Lowering home prices won’t solve our problems“:
If you’re against another tax credit (which many are), or any other form of government intervention, how about the idea of lowering home prices? For weeks, if not months now, I’ve read articles and blog posts all across the web that say, if sellers really want to sell, they have to bite the bullet and merely lower their asking price. A recent article from Business Insider not only concurs, but says that lower prices are the key to a more stable market in general.
I don’t necessarily agree. I don’t think simply lowering home prices is going to create the amount of demand that will automatically stabilize the market. Home prices have already fallen some 30 percent from their peak, and still we haven’t seen any real boost to sales. Are further price declines really the answer?
Tuesday
“Mortgage-market divide widens as 15-year refis increase“:
It seems that now more than ever, the mortgage and housing markets are made up of the haves and have nots. While the opportunities to recast and pay down debt are plentiful for one audience (the haves), the options for the other audience (the have nots) are few and far between.
While one group of borrowers is able to accelerate their mortgage payments to a 15-year term, another is unable to afford the payments on their 30-year term. If a functioning middle class is so important to society, isn’t it equally important for the mortgage market, too?
Monday
Economically speaking, things aren’t feeling all that different now from when we were mired in the recession. Last week’s disappointing GDP report of 1.6% (2nd quarter 2010) was the exact same reading we saw one year ago.
Federal Reserve Chairman Ben Bernanke addressed the country’s disappointing economic growth at the annual Economic Symposium in Jackson Hole, Wyoming. The chairman expressed both optimism for the coming year and that the Fed still has tools it can employ to ward off deflation or even a double-dip recession.
Just as 1.6% growth is insufficient to produce much economic heat, cheap mortgage rates just aren’t enough to produce recovery in the housing market.
