Today's housing report from NAR (National Association of Realtors) should put smiles on some faces around the dinner table on Thanksgiving Day. The 10.1 percent surge in existing home sales likely reflects fears of first-time buyers losing their $8,000 tax credit that was scheduled to expire this month, but has since been extended until April 30. This increase translates into a year-to-date of 6.10 million units for October.
Being that one-third of sales is from distress properties is both good and bad news. It is an encouraging sign when properties facing or in foreclosure sell, but it is also a warning that downward pressure on home values is still a lingering factor in the industry's recovery. Until troubled properties are a negligible percentage of inventory-we can not expect price-stability to engender a balance between buyers and sellers leading to an eventual appreciation of values.
As the Federal Government considers dumping the "toxic-assets" of Fannie Mae and Freddie Mac into a central bank, we should question whether that money would be better spent buying a strategic amount of foreclosure properties to establish a floor in the housing market. Such an approach may be more expedient than waiting for money from TARP to trickle-down into a neighborhood close to you.
York Van Nixon III
Licensed Real Estate Broker, Appraiser and Mortgage Broker
Nex Millennium Realty and Financial Services
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