Roost: Is the Stimulus Bill really going to help move homes?
VictorLund
· 10 months ago
A stimulus package aimed at new home buyers is a mistake - it just supports first timers who otherwise could not afford a home which will lead to more foreclosures.
When the government artificially stimulates the economy - it is a short term, short lived program. Markets need to have ups and downs - it is part of the cleansing process that perfects capitalism.
Big, inefficient companies need to fail so new, efficient companies can raise up and replace them.
Tax cuts, low interest rates, reduction in foreign aid, and smaller government (fewer safety net programs) are historically proven tactics that work.
This bail out is a very risky form of guessing that our children will be paying back.
teresa boardman
· 10 months ago
My theory is that it will help people who planned to buy any way but it won't help many and it won't help much. But I guess it gives us all something to sell and that is what we do.
Sherry Chris
· 10 months ago
On it's own I do not believe it has the ability to kick start the real estate market. However, and as Teresa points out, if the 1.2M real estate agents pick up the phone and begin a calling campaign to prospects, think about the potential! Let's not be armchair critics, let's be proactive and use it as an opportunity...
Jeff Turner
· 10 months ago
I wish I could feel more positive about it. I don't. Those who were going to buy, would have bought without it, probably. So, I agree with Teresa and Sherry. The average consumer may not be aware of the specifics or how this translate to affordability. This is an opportunity for real estate professionals to translate for their clients and show off their expertise.
Kristal Kraft
· 10 months ago
All the stimulus bills in the world will have no effect until we believe they do. What we need now is confidence, consumers without confidence will not move.
So, with that said we need to look for the silver lining and make something of it.
Now.
kk
JeffX
· 10 months ago
**Disclaimer: I'm not politically aligned with one any particular party . I'm not for an unregulated 100% privately run marketplace (you can see where that's gotten us). I'm not for centralized, all things run by the government, or other '100% Socialist' agendas. These arent times of black and white, rather many shades of gray.**
Things I like: -Government subsidizing for mortgage insurance for loan amounts that exceed 80% of a homes value. This makes payments more affordable and allows lenders to lend where they currently can't.
-Incentivizing (paying) lenders to modify loans. It is what it is: traditional back door lobbyist politics...just done in a transparent manner. Lenders act using their financial compass, not their moral version. More on this in a second.
What I dont like: Writing a blank $200B check to Fannie and Freddie without very transparent oversight and accounting policies. The money is intended to lend out to increase their loan portfolio and keep interest rates low. I dont think it will pan out this way.
Eliminating the $15,000 tax credit. The $8k version has too many strings attached.
What I'd like to see: Power to properly educated Bankruptcy Judges who can force a lender to modify a practical loan scenario.
Lending at 103% (3% for closing costs) on purchases to borrowers who can document their income, have good credit, and a few months of payment reserves in the bank for primary residences.
Not sure how relevant any of this is though...I fear we are past the point of no return. The dot com bust was shored up by creating cash using financial instruments called Mortgage Backed Securities which were given to borrowers who should have never qualified for such, which caused the housing bubble bust...which is being shored up by literally printing what will amount to be over a Trillion dollars in new currency.
Making banks go back to a fractional reserve ratio closer to 15-1, and other such practical standards, is simply not an option...everyone of them, including the Federal Reserve would fold instantly.
All this money is going somewhere, to a relative few...Money and wealth do not evaporate, they simply change hands.
I do not know how we ultimately avoid an economic Tsunami where the middle class, the strength of any democratic nation, is obliterated.
With all the new money in our financial system, hyper-inflation is a matter of when, not if...
I'm getting kind of tangential here, so i'll stop :)
Michael Price
· 9 months ago
Watching the morning Fox Business report it's apparent that with the tightened credit markets and other restrictions, the number of folks in a position to take advantage of this will likely not match its intended goal. I agree with Jeff that this is a great opportunity for the type of RE professional that can arm themselves with a cohesive strategy. 1. Unmatched Knowledge. Case in point: Jay Thompson has put his sanity on the line by actually watching every nuance of the new legislation as it was coming together. He is light years ahead of his competition when it comes to understanding how to implement it. 2. Relationships. Working with the right partners in the lending industry to add more knowledge to the base and find ways to jump hurdles and get people to the closing table.
I think the folks that win are the ones that are willing to work harder and smarter, from both sides of the table. To answer your question though. I guess I would say that the 787 billion stimulus package won't do much in the end to help the housing industry, which begs the next question, will the housing specific stimulus proposed yesterday do enough? At first blush the key provisions of the legislation actually seem to make sense, at least helluva lot more than the barrel full of pork that the POTUS signed off in Denver Tuesday. We can only hope. There are too many people that need help either staying in their homes, or having a shred of hope to ever be able to own one.
CTannStarr
· 9 months ago
"When the government artificially stimulates the economy - it is a short term, short lived program. Markets need to have ups and downs - it is part of the cleansing process that perfects capitalism."
You have so many excellent talking points but this quote by far is my favorite. We need jobs, not more cuts and layoffs. We need more affordable housing, not housing subsidies because the rents are so out of control. A bail-out should be a tactic of last resort, not a policy trend...
Audrey Forshey
· 9 months ago
I don't think the $8000 credit will make much of a difference in my market, the DC suburbs.
If the average price price is $400,000 and the purchaser has to put 3.5% down for an FHA loan plus our closing fees are roughly 4.5% of the sales price . . . We need roughly $16,000 to purchase a home in my area. The $4000 tax credit is nice, but is not going to off set the the other $12,000 needed.
Personally, I think that FHA should be a 99% or 100% loan program and charge MIP accordingly. The manipulation of the mortgages to eliminate mortgage insurance has been one of the biggest problems for the banks today.
miamism
· 9 months ago
I personally don't think the stimulus bill will encourage home buying by any means - it will be an attractive added bonus for those that already have the means to purchase a home and plan to do so. Something in the back of my mind thinks that it may even encourage dishonest dealings from questionable individuals hooking people into homes they can't afford by painting a pretty picture of this bill and the monetary implications it can bring.
It's fluff - more pretty non-sense to disguise the real problem.
Lori Bee
· 9 months ago
Definitely agree with majority of what has already been said. No matter what the government mandates, consumer confidence is at all time low. But I think with time, a lot of people will look back at this time, and wish they would have gotten off the fence, government stimulus or not!
I also have seen how the banks have totally swung the opposite direction with lending (first craziness to give anyone $ & now, next to no one). Until they get some sense of reasonableness, I don't think things are gonna get better. There needs to be a middle ground.
I personally, have had bank executives, tell me those stimulus monies are sitting in their general funds, covering "loss mitigation." It's not going to "stimulate the economy" there... :-(
Mark Eckenrode
· 9 months ago
it's a tough situation and i'm by no means a brainiac but well made points from everyone. as i see it, this is really just a different approach to a problem that initially got us into this mess, people being given money that don't know how to use it. other folks will probably horde the cash.
of course, we also have the amero waiting on the sideline
Nick Bostic
· 9 months ago
I am also doubtful of how much it will help, but also agree that if no attempt is made, it will definitey fail. I would have liked it to include people like me: credit good enough to (still) qualify, access to money for a down payment later this year and bailing out my parents by trying to buy a house for them to eventually retire in since the economy has hit them so hard. But since I don't qualify as a first timer, no help for me in my attempts to keep 2 people out of government subsidized housing.
All Comments
When the government artificially stimulates the economy - it is a short term, short lived program. Markets need to have ups and downs - it is part of the cleansing process that perfects capitalism.
Big, inefficient companies need to fail so new, efficient companies can raise up and replace them.
Tax cuts, low interest rates, reduction in foreign aid, and smaller government (fewer safety net programs) are historically proven tactics that work.
This bail out is a very risky form of guessing that our children will be paying back.
So, with that said we need to look for the silver lining and make something of it.
Now.
kk
These arent times of black and white, rather many shades of gray.**
Things I like:
-Government subsidizing for mortgage insurance for loan amounts that exceed 80% of a homes value. This makes payments more affordable and allows lenders to lend where they currently can't.
-Incentivizing (paying) lenders to modify loans. It is what it is: traditional back door lobbyist politics...just done in a transparent manner. Lenders act using their financial compass, not their moral version. More on this in a second.
What I dont like:
Writing a blank $200B check to Fannie and Freddie without very transparent oversight and accounting policies. The money is intended to lend out to increase their loan portfolio and keep interest rates low. I dont think it will pan out this way.
Eliminating the $15,000 tax credit. The $8k version has too many strings attached.
What I'd like to see:
Power to properly educated Bankruptcy Judges who can force a lender to modify a practical loan
scenario.
Lending at 103% (3% for closing costs) on purchases to borrowers who can document their income, have good credit, and a few months of payment reserves in the bank for primary residences.
Not sure how relevant any of this is though...I fear we are past the point of no return. The dot com bust was shored up by creating cash using financial instruments called Mortgage Backed Securities which were given to borrowers who should have never qualified for such, which caused the housing bubble bust...which is being shored up by literally printing what will amount to be over a Trillion dollars in new currency.
Making banks go back to a fractional reserve ratio closer to 15-1, and other such practical standards, is simply not an option...everyone of them, including the Federal Reserve would fold instantly.
All this money is going somewhere, to a relative few...Money and wealth do not evaporate, they simply change hands.
I do not know how we ultimately avoid an economic Tsunami where the middle class, the strength of any democratic nation, is obliterated.
With all the new money in our financial system, hyper-inflation is a matter of when, not if...
I'm getting kind of tangential here, so i'll stop :)
2. Relationships. Working with the right partners in the lending industry to add more knowledge to the base and find ways to jump hurdles and get people to the closing table.
I think the folks that win are the ones that are willing to work harder and smarter, from both sides of the table. To answer your question though. I guess I would say that the 787 billion stimulus package won't do much in the end to help the housing industry, which begs the next question, will the housing specific stimulus proposed yesterday do enough? At first blush the key provisions of the legislation actually seem to make sense, at least helluva lot more than the barrel full of pork that the POTUS signed off in Denver Tuesday. We can only hope. There are too many people that need help either staying in their homes, or having a shred of hope to ever be able to own one.
You have so many excellent talking points but this quote by far is my favorite. We need jobs, not more cuts and layoffs. We need more affordable housing, not housing subsidies because the rents are so out of control. A bail-out should be a tactic of last resort, not a policy trend...
If the average price price is $400,000 and the purchaser has to put 3.5% down for an FHA loan plus our closing fees are roughly 4.5% of the sales price . . . We need roughly $16,000 to purchase a home in my area. The $4000 tax credit is nice, but is not going to off set the the other $12,000 needed.
Personally, I think that FHA should be a 99% or 100% loan program and charge MIP accordingly. The manipulation of the mortgages to eliminate mortgage insurance has been one of the biggest problems for the banks today.
Something in the back of my mind thinks that it may even encourage dishonest dealings from questionable individuals hooking people into homes they can't afford by painting a pretty picture of this bill and the monetary implications it can bring.
It's fluff - more pretty non-sense to disguise the real problem.
I also have seen how the banks have totally swung the opposite direction with lending (first craziness to give anyone $ & now, next to no one). Until they get some sense of reasonableness, I don't think things are gonna get better. There needs to be a middle ground.
I personally, have had bank executives, tell me those stimulus monies are sitting in their general funds, covering "loss mitigation." It's not going to "stimulate the economy" there... :-(
of course, we also have the amero waiting on the sideline