This is just something to add to this thread.I thought i had read that the NAR was a group lobbying of for this reduction. I found an article related:
Home prices down 9.3% in 2008: NAR
Realtors lobby for housing stimulus, claim there’s no time to waste
By Amy Hoak, MarketWatch
Last update: 3:50 p.m. EST Nov. 7, 2008Comments: 115ORLANDO, Fla. (MarketWatch) — The projected 9.3% national decline in home prices this year would be the sharpest drop since the National Association of Realtors started keeping records in 1968, the group’s chief economist said Friday.
It’s also probably the biggest drop since the Great Depression, based on data from other sources, added Lawrence Yun, chief economist for industry group, speaking at the Realtors’ annual conference in Orlando.
To bring stability to the housing market, it’s imperative to work off the massive amount of for-sale housing inventory, he said. But with Americans tightening their purse strings and also feeling the shock of the huge stock market declines in October, there’s a concern that fearful consumers will scrap any plans they had to buy a home in the near future.
In response to some of the challenges home buyers are facing, the industry group is lobbying lawmakers to adopt incentives that would make buying more attractive.
“Given the sentiment in Washington, and also with a new president coming in, President Obama — and he has indicated that he is favoring some sort of economic stimulus — we believe that the stimulus package should be focused on housing because we cannot have solid, sound economic recovery without housing market recovery,” Yun said.
Housing stimulus
In order to help “Joe the home buyer,” NAR is making several suggestions:
An interest-rate buy down, in which the government would subsidize a portion of a home buyer’s mortgage interest rate. A recent analysis by NAR found that a reduction of interest rates by 1 percentage point could result in 840,000 additional home sales and reduce the inventory of homes for sale by 20%.
Eliminate the provision that requires users of the first-time home buyer tax credit, enacted earlier this year, to repay the money over time and extend that incentive to all home buyers.
Make the increased conforming mortgage limits permanent. Rates on conforming jumbo loans haven’t improved as much as was hoped, partly because mortgage investors aren’t certain whether these higher limits will remain, Yun said. Find out what next year’s conforming loan limits will be.
The Realtors also criticized the government’s use of the $700 billion rescue package funds.
“The U.S. Treasury and Congress need to work together to ensure that the American people benefit from the economic recovery plan,” said NAR president Richard F. Gaylord, in a news release. “The Treasury Department has gotten off track by focusing too much attention and stimulus money on Wall Street and banks that are in turn using the money for mergers and acquisitions. The administration needs to get back to the original intent of the plan — stabilizing the mortgage and housing markets — to help families avoid foreclosure.”
And there’s no time to waste, Gaylord said.
The statistics
Home prices are expected to reverse trend and increase 1.1% in 2009 and 5% in 2010, Yun said in his economic forecast.
That’s not much consolation to those homeowners who “purchased at the wrong time,” when home prices were at their highest, Yun said. For them, it may take five to seven years for their home values to recover — and those who can make their payments and don’t have to move can be expected to stay put until their mortgages are no longer underwater, he said.
In some of the hardest hit areas of the country — including Las Vegas, Phoenix and many California and Florida markets — prices are off by more than 20% this year, Yun said. Other areas, including Denver and Houston, are likely to see price gains for 2008.
Nationally, existing-home sales are expected to total 5.02 million in 2008, rising to 5.32 million in 2009 and 5.62 million in 2010, according to the forecast. New-home sales are expected to total 487,000 in 2008 and 413,000 in 2009, before rising to 520,000 in 2010.
But here’s a reality check: About 35% to 40% of all transactions recently have been short sales and foreclosures, Yun said. And that’s just a national average — in certain areas the percentage is much higher, he added.
The NAR projects the 30-year fixed-rate mortgage to average 6.2% in the fourth quarter of 2008, rise to 6.5% during the second half of 2009 and hit an average 6.7% in 2010.
It expects unemployment to creep up, averaging 6.4% in the fourth quarter, and 7.0% in 2009. Even so, it’s possible for home sales to rise because those who do have a steady job are able to take advantage of lower home prices, Yun said.
Amy Hoak is a MarketWatch reporter based in Chicago.
