St Louis Mortgage Analysts Say Tax Credit Stimulus Has Failed

In the last 24 months the American homeowner has had to face banking and real estate

crises including unemployment rates that have been hovering in the double digits.

So, with unemployment hovering at around 10 percent, St Louis mortgage experts had high hopes that the home buyer's tax credit bailout plan that was instituted would stimulate housing demand in this already decimated market.

The biggest letdown to both political representatives as well as mortgage and real estate professionals is not only seeing this major federal stimulus package go down in smoke, but equally disturbing is the fact that this administration is equally failing at saving homes from inevitable foreclosure.

St Louis refinancing and lending experts are now further agitated by the possibility that a large number of discounted homes will soon be hitting the real estate market which may aggravate this already deteriorating market.

What is worse is that there is no sign that this country will see any type of expansion in the housing market nor is there any immediate hope that there will be a huge demand for home purchases or refinance loans. And don't expect to see any last minute extension for the tax credit stimulus program.

"No one is saying that they need to buy before the tax credit expires," said Tim Surratt, a real estate agent. But ironically, that seems to be one of the biggest mistakes going for this sinking market.

Some experts are saying that the size of the tax credit at $6,500 to $8000 is actually too small to influence buyers to make any kind of immediate buying decision.

The real problem that the banking industry seems to agree upon is this in no way takes into consideration the needed savings to offset the home buyer's down payment or commissions to real estate agents.

At current prices, the national average price for a home right now is close to $164,000. If an agent charges 6 percent for their services, the amount would be $9840. Logically, the $6500 to $8000 tax credit would not offset the commission being paid.

"You've got a really big problem that requires big guns, and the tax credit is just not big enough," said Roberton Williams, senior fellow at the Tax Policy Center.

Many lobbyists are saying more time should have been spent on making this program much more financially advantageous to buyers rather than the apparent wasted time on the controversial passage of the recent health care program.

Now it appears when things couldn't get much worse, the social security system will no doubt need an emergency cash infusion sooner than later. Perhaps past failures will be a lesson for this new conquest.

by: Floyd J. Tapia

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