There is suspense surrounding the future of residential home sales. The driving forces include: the loss of tax credit for first time home buyers, interest rates increasing, and the new short sale guidelines known as H.A.M.P. (Home Affordable Modification Program).

The tax incentive may be ending but there are still many fantastic government programs available on a national, state, and municipal level. Fannie Mae foreclosures will guarantee 3.5% towards closing costs and appliances with a two year home warranty included.  FHA insured HUD homes can be purchased for $100 down in many cases.  There are tons of programs that are out there to help real estate recovery.  One just needs to go the right sources such as a Realtor or Loan Officer to see what they qualify for.

The treasury in the midst of the market crisis introduced record low rates with the hope to spur home purchasing again. The plan worked, our economy has shown growth. Economic strength increasing will naturally cause interest rates rise. This is not necessarily a bad thing. This gives banks a chance to rebuild. Almost all the loans that have been generated since the collapse have been through the government.  If this trend continues we can expect the U.S. dollar to lose value very quickly. Bringing private investors back into the picture (which is how banks make money) will secure a healthy market.

Also interest rates are still at unbelievable low rates at just over 5%.

The last topic is the new guidelines of H.A.M.P.  Unfortunately there are a ton of bad loans still floating around. The nation will be filtering through distressed homes for many years. The short sale process so far has been tedious for many buyers.  A buyer will make an offer on a house only to wait sometimes over three months just to get a no.

The biggest issue being seen is that every bank has a different system and these are not subtle differences. This situation has become so bad that "Short Sale Transaction" companies have been formed and thriving. These are companies that sell home buyers and Realtors on their ability to "deal with the banks". H.A.M.P. guidelines bring a uniformed method to all banks on how to process and work a short sale.  It gives banks and home owners incentives to work a short sale instead of allowing the property to go into foreclosure.

Short sales are more profitable for the bank and don't hurt the sellers credit as much. H.A.M.P. will help make short sales an easier process but there will be a lag from implementing to successfully utilizing the program.

Only time will tell how everything will work out. But trends show a recovery in the works! Prices will eventually stabilize. People will remember this time as one of the best times to buy a home and make a real estate investment.


Posted by Jolenta Averill on
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I agree, a recovery (slight as it may be) is in the near future. For one, I think that with the tax credit expiring, the free market may drive down prices temporarily but it will lead to healthy, long-term appreciation. Thanks for the post.

Posted by Maui Realtor on Friday, April 23rd, 2010 at 7:35pm

Even though the tax credit is expiring - interest rates are still very low. You have to have good income and credit to qualify though.

Posted by Austin Apartments on Friday, April 23rd, 2010 at 10:50pm

I agree Jolenta, there are many good government programs available...just have to research them. Thanks for writing about this. On the tax credit, I have to say I've been extremely busy with home buyers taking advantage of this offering. Yippee!!

Posted by Susan on Tuesday, April 27th, 2010 at 4:59pm

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