Lisa Simpson
Nov 23,2009
In: Finance

Federal Tax Credit Enthuse Buyers; But no Good Houses Around

Times are depressing. Many Americans want to buy homes and the buyers are enthused by the tax credit of $8,000 that the Federal government has promised to the first-time buyers. However, many of them are not getting the home of their choice. Take, for instance, investment banker Brian Smith. The 35-year old professional at a financial investment company felt that it was the right time to buy a house what with plunging prices and “on sale” notices splashed across homes.

However, after a thorough search of 40 houses, he finally gave up in frustration. He says that the condition of the houses is so bad that he would wait for some more time before getting the house of his choice. Smith is not alone. There are many others like him who wanted to take advantage of the plunging home prices and lower mortgage rates but are shocked at the decadent mansions that are on sale. Even lenders have now become very stringent.

Orlando has been the hardest hit by the real estate meltdown. The market is replete with foreclosed properties. However, each buyer has to compete with others as there are multiple offers on each property. Many are resorting to short sales. They are selling homes at lower prices than what they owe to their banks. What is really putting off buyers is the state of the foreclosed houses.

Very often the monthly fees for staying in condominiums are more than the mortgage payments. Smith says that most of the houses are “junk” needing many repairs. Some do not even have electricity and buyers are shown the properties with the help of a search light.

The Equilliance LLC loan officer, Judi Northrop, says the world out there is very different. She says that although Smith should have got the house because he had a good credit score but the situation has really changed now. Now banks want supporting documents for every note in a loan application.

The Federal government had hoped that the loan modification program and the tax incentive will restore the fortunes of the real estate sector. The scenario has definitely improved and studies have shown that overall sales have improved by 45 per cent. However, the road to revival and growth is treacherous and long-winding. In Orlando, itself many home buyers are being left behind by investors who are snapping up properties by making all-cash deals. Unless these issues are addressed, growth would be difficult.

banner_bankownedproperties2