Bad news on the housing front: after four consecutive months of gains, home sales dropped by 2.7% in August, while home values continued to fall reaching a national median of $177,700, some 12.4 percent lower than August 2008. The drop in sales comes as a surprise to many analysts who expected the recent run up in sales to continue.
Sales Streak Is Broken
Breaking a four month streak is one thing, but doing so in the face of an $8000 federal tax credit for first time homeowners is disturbing. With the November 30th deadline looming, experts had expected that home demand would continue to rise in advance of the program’s end. Instead, analysts have been left trying to explain the dip in sales, something that they hope was a temporary setback.
Trulia, Zillow and the National Association of Mortgage Brokers had been sharing good news about the recent upward trends with Trulia also taking note of the number of home sellers who have had to drop their original asking price at least once. Those drops are likely contributing to the fall in home values, but it doesn’t explain the drop in sales.
Inaccurate Home Appraisals
The National Association of Mortgage Brokers (NAMB) explains the drop in home values by pointing to the Home Valuation Code of Conduct (HVCC) which is contributing to what they say are inaccurate appraisals leading to lower home prices. Specifically, NAMB President Jim Pair, CMC noted, “NAMB has found that many of the complaints received over the HVCC consistently describe out-of-area appraisers unfamiliar with the neighborhood being contracted to appraise homes. Unfamiliar appraisers are inaccurately appraising properties and lowering home values, severely hurting consumers.”
Pair went on to note, “Problems caused by the HVCC are slowing the housing recovery and affecting homeowners not even involved in a housing transaction. The HVCC, which was not voted on by Congress or issued by a federal regulatory agency, is seriously impacting mortgages nationwide.” HVCC is based on an agreement made by the New York Attorney General, Federal Housing Financing Agency and Freddie Mac where Freddie Mac agreed to stop purchasing mortgages from Sellers that do not adopt the Code with respect to single-family mortgages that are delivered to Freddie Mac.
Tax Credit Extension Possible?
In a related matter, Zillow reports that 18% of those surveyed said that they would consider buying a home before the end of 2010 if the November 30, 2009 $8000 tax credit was extended. That fact will likely be included in a Congressional review of the tax credit which is expected to take place well before the program’s end.
Photo Credit: Ivan Petrov
Adv. — Just a few months remain before the federal homebuyer tax credit is set to expire. Barring intervention by Congress, you could miss out on a special opportunity if you are looking to purchase your first home. For related lending tools, please visit SayLending.com today!
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