As some of you know, I have been looking for a house for over a year now (since March of 2009). I refused all along to pay more than asking price and lost a few other properties to better offers or "cash" buyers. Truth is that this was a bunch of speculation and false signage. Now we have the truth. According to a report out today, with the expiration of the housing tax credit, the market has responded as I hoped and expected it would.
One full week after the tax credit's expiration, mortgage applications fell 9.5 percent; this as mortgage interest rates dropped below 5 percent.
Inventory is up, applications are down, and the prices are headed back where they were.
There have been some suspect behaviors in the past few months. An appraiser friend of mine says that banks have been asking for $10-15K more than offers when they counter. He thinks that's to cover the back taxes they owe as well as gobble up the tax credit. My realtor reported that prices were up about $10K, suspiciously near the tax credit, so that banks would essentially get the money and you would put it into your loan. She told me that offices were flooded with people desperate to buy before the credit expired facing a shrinking inventory. My realtor says that cash buyers are speculative investors who borrowed the money already from somewhere else. I have seen homes on which I made offers come back on the market a few months later in better condition albeit $30-50K above the previous price. This week I went to a new housing tract where I can buy a new and nicer home for that. The investors are crazy to think I'll pay that. A friend of mine in banking said there was no excuse for that because banks are sitting on inventory. I saw a house last Friday where there was no sign out front as many are- completely without signage. KXNT News reported yesterday in Las Vegas that we are in the 40th consecutive month at the top of foreclosures with 1 in 69 homes in the metro area receiving foreclosure notices. Consider that 1 in 25 homes are already there, and there should be TONS of inventory. Banks were holding it to inflate the price and create bidding wars. Add to that, starting 5 April there were new incentives for banks to close short sales. That didn't stop Chase from countering an offer I made on a home at $14,000 more than my offer which was $11,000 over list price. They think they can have their cake and eat it too at my expense. I don't think so; I know the law and current events.
Two weeks after that, there are new homes on the market near my price range. Some of them are new listings. Some of them are price reductions of about $10,000. Hmm... Good thing I didn't get caught up in the bidding war and overpay now that prices are headed back in my direction. Add to that, I expect that many people who were in the market a month ago will be out now that there is no tax credit to offset their purchase investment. As Vegas continues to lose jobs and tourism dollars, there will be less demand for housing. If we pass a law like Arizona, say goodbye to a large part of our population as well.
Later today the Treasury will release a report on how effective their program was. I expect they will lie and gloss over the realities. Truth is that it was an abject failure. The banks got the money in the end. The people got screwed again, because government transferred more of our money from us to the banks. I thought banks were evil. They're not stupid. They wanted a piece of the pie too.
So this week, I have made three offers on three different and rather large and nice homes. I may make another offer this weekend. I would have liked the tax credit, because I could use it, but if the price goes down another $8000, I will consider it even.
There have been some suspect behaviors in the past few months. An appraiser friend of mine says that banks have been asking for $10-15K more than offers when they counter. He thinks that's to cover the back taxes they owe as well as gobble up the tax credit. My realtor reported that prices were up about $10K, suspiciously near the tax credit, so that banks would essentially get the money and you would put it into your loan. She told me that offices were flooded with people desperate to buy before the credit expired facing a shrinking inventory. My realtor says that cash buyers are speculative investors who borrowed the money already from somewhere else. I have seen homes on which I made offers come back on the market a few months later in better condition albeit $30-50K above the previous price. This week I went to a new housing tract where I can buy a new and nicer home for that. The investors are crazy to think I'll pay that. A friend of mine in banking said there was no excuse for that because banks are sitting on inventory. I saw a house last Friday where there was no sign out front as many are- completely without signage. KXNT News reported yesterday in Las Vegas that we are in the 40th consecutive month at the top of foreclosures with 1 in 69 homes in the metro area receiving foreclosure notices. Consider that 1 in 25 homes are already there, and there should be TONS of inventory. Banks were holding it to inflate the price and create bidding wars. Add to that, starting 5 April there were new incentives for banks to close short sales. That didn't stop Chase from countering an offer I made on a home at $14,000 more than my offer which was $11,000 over list price. They think they can have their cake and eat it too at my expense. I don't think so; I know the law and current events.
Two weeks after that, there are new homes on the market near my price range. Some of them are new listings. Some of them are price reductions of about $10,000. Hmm... Good thing I didn't get caught up in the bidding war and overpay now that prices are headed back in my direction. Add to that, I expect that many people who were in the market a month ago will be out now that there is no tax credit to offset their purchase investment. As Vegas continues to lose jobs and tourism dollars, there will be less demand for housing. If we pass a law like Arizona, say goodbye to a large part of our population as well.
Later today the Treasury will release a report on how effective their program was. I expect they will lie and gloss over the realities. Truth is that it was an abject failure. The banks got the money in the end. The people got screwed again, because government transferred more of our money from us to the banks. I thought banks were evil. They're not stupid. They wanted a piece of the pie too.
So this week, I have made three offers on three different and rather large and nice homes. I may make another offer this weekend. I would have liked the tax credit, because I could use it, but if the price goes down another $8000, I will consider it even.
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