Unemployment, threats of tax increases, and foreclosures are keeping our inventory around 12 months in the books in the Mid-Willamette Valley. People need to go back to work now! CLICK HERE to view our market update video for the week.
Is there seriously more talk of another tax credit? Please… the last ones only prolonged the inevitable and ultimately dug our hole deeper. The previous tax credits cost the American Tax Payers, which are mostly middle income earners, $23.5 Billion! Out of the 1.8 Million home buyers that took advantage of the first program, 950,000 bought back in 2009 when the $6500 tax credit was in play. If you bought during that time, and was considered a “first time home buyer”, then remember that you have to pay that money back. The IRS designated that $500 per year to be paid back over a 13 year term. It was basically a free loan.
Now that the tax credits are over, we have a $23.5 Billion bill and the headache gets worse. Existing home sales are down considerably and we are heading into our typical slow period of long Winter months. Job growth is nothing where it should be and consumers are not confident with the track that we are on. As states continue to threaten to cut the budget; that specifically hurts markets like ours where many of our residents are state workers. So, take your ibuprofen and drink lots of water because the headache continues.
It is March 30th and the Federal Government has committed to purchasing Mortgage Backed Securities until the end of this month. This ends, or at least appears to end at the moment, a $1.2 Trillion program to keep Mortgage interest rates in check. Of course, we’ve been spoiled with interest rates as low as the high 4’s over the last few years; however expect things to change if the Fed really does stop purchasing these bad packaged loans. We very well could see them stop buying them for a little while, but if interest rates increase very much, then expect them to continue throwing more money at the program. If the market suffers even more because of the lack of a purchaser for these loans, then the money spent for the program in the amount of over $1.2 Trillion could be considered another wasteful attempt to pump life into the market. Sooner or later, though, this liberal government will need to realize that we can not sustain to continue spending money that we don’t have in order to carry the burdens. They need to understand that unemployment is the driving force to getting us out of this funk that we are in, and we are in one of the largest funks in recent history. This could turn out to be worse than the 80’s if they don’t get things figured out very quickly. It doesn’t take a rocket scientist to understand that spending more money than one is making is a recipe for disaster, and raising taxes in a recession is another recipe for disaster. People who have gotten themselves into too much debt and weren’t able to make their payments is one reason why this country is in the financial mess that we are in now; and you tell me that the governments solution is go to deeper into debt with China?! How ridiculously ignorant do you have to be?