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Monday, February 2, 2009
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17 comments:
I was wondering if anyone has gotten any rate quotes yet? Are the sub 5% rates (zero points) just for refis?
This morning on CNN they were saying the Republicans were asking for a $15,000 tax credit for home buyers, as well as 4% government backed rates for mortgages. I can find the mortgage rate in the main WaPo article, but not the doubled credit.
Your thoughts?
Personally I want none of it. I don't want "benefits" that my future buyer won't have. $15,000 of funny money will dissappear at sale time, because it won't be available to my buyer down the road. Nor will the absurdly low rate. And I worry about what such a low borrowing cost will do to banks decisions on how to lend? Will they push all losses off onto the tax payer again, since they're not being paid enough for their money? Or will they tighten up even tighter to prevent more losses that at some point in the future the government might force them to eat? Neither is a good thing.
I just want my cheap house and my pony. With luck, this is all just talk...
Cara, I'm with you. These incentives mean nothing in the long term except more government debt. Any benefit given to me that isn't given to future buyers drives the value of what I buy even lower.
Amen, Cara!
this 22207 'tudor cape' (a few here had commented a while ago) went under contract yesterday(?), after sitting for over 6 months. i watch this listing very closely since day one and view it as a barometer of the market, for the most part because the owner is an agent. the significance of this contract is, it is the first listing that went under contract without a recent price drop after sitting for a long time. obviously its original asking price of $869,900 on 6/16/2008 was ridiculous (even more so for an owner/agent!), but the price had dropped gradually and consistently four times from Sep 08 to Nov 08, and stopped at $750K, while several of its 'competitors' kept dropping prices and some had gotten sold.
i'm eager to find out what the final sale price will be, e.g. who gets the last laugh in this stare-down. btw the largest listing/sale differential i've followed is $100K (699K/600K), and it happened to be a property on the same street sold in Nov.
contrarian,
Exactly. What they're proposing to do is make now a great time to sell a house, not buy a house. And gee, who has houses to sell? Mmmmm, can we say: banks?
But, given the existing losses and lowered prices, no one would believe that now is a uniquely good time to sell a house, so they can keep disguising this as a buyer benefit.
MM,
Interesting. Keep us posted.
Contrarian, precisely. Same with low interest rates. Great, but if I'm a buyer, so what does this do for me? Well it makes bubbled houses more affordable, and helps some schmuck sell me his overpriced house. Take those incentives away, and I'm stuck in a house that none of my peers can afford to buy from me, which is essentially the natural depreciation these stupid incentives are trying to prevent.
finally a link
CNN Money Senate housing wishlist
They're crazy, here's hoping they fail.
1. Government handout programs, once started, are never eliminated, only expanded. So, your future buyer will also have at least the incentive to buy as you do. 2. Even if 1. is not true, the incentives will prop up prices today at the expense of future appreciation as you say, but future depreciation could be wiped out on nominal terms by inflation, so a buyer who "loses" 10% to depreciation in 5 years in real terms may break even on price in nominal terms. Therefore, the bank gets it's money back.
Also, the proposed 15k credit is only for people with <$75k in income ($150k for couples), which effectively limits it to properties maxing out at $250k for singles and $500k for couples.
Nova:
I've gotten a number of quotes for a new home purchase and they are all about the same rate:
5.5% with 0 points
5.0% with 1 point.
These quotes are from both local and "internet" lenders.
I don't know how sub-5% rates w/ 0 points is possible...
Pacman: I'm seeing the same thing as far as rates go.
Pacman, NoVAwatcher,
About a month back, my mortgage broker quoted 5% for a 30 year-fixed, with no points and no origination fees.
Some other agents were willing to go a little below 5% at that time. But in the last few weeks the rate has gone up.
Today, the broker updated the same to 5.375%.
shamrock,
Good points.
Historically you're right about the subsidy, once enacted never being redacted, all the more reason to be against it now...
The government backed interest rates would be for everyone (with spotless credit).
I'm not sure how quickly the fade out for incomes over 75k and 150k would be, but in any case it's a good point that this will only help sellers in the under half a million range, and will help sellers at the bottom end of that most (since it's not capped at a percentage as of yet).
There was an interesting article in the WaPo on which incentives would get buyer's off the fence:
WaPo What Buyer's Want
While they top wishes in the NE (interest rates) and South (guarunteed financing) and everywhere (zero down) proved to me that these are not the buyers you want entering the market, and that really they want no skin in the game, it was interesting that they were smart enough to recognize that a tax credit wasn't actually a gift to them, and didn't particularly care for it.
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