Has The Housing Market Hit Bottom?

Here’s a view from Las Vegas:

The foreclosure bailout is a potential boon to lenders and homeowners. Under the program, financially distressed homeowners have the opportunity to reduce their mortgages to 90 percent of their home’s current appraised value. Effectively, they minimize their current losses, eliminate the risk of future losses and share in any upside the home experiences. The program has the potential to quickly and substantially reduce foreclosures of owner-occupied homes and significantly reduce the number of homes being offered as short sales (when the proceeds from a home sale are not sufficient to fully repay the loan). Short-sale homes listed on the valley’s Multiple Listing Service represent 27 percent of all homes available. Then there’s the demand-building, first-time buyer tax credit. Under this component, first-time home buyers receive a 10 percent tax credit ($7,500 maximum) on the purchase of any home to be used as their primary residence. The credit is available on home purchases that close escrow between April 9, 2008, and June 30, 2009.

Let’s say a buyer decides to purchase a home for $175,000. The down payment on this home with an FHA loan is $6,125 (3.5 percent). Given the limited time frame, entry-level home builder and bank-owned offerings should fly off the shelf and reduce the number of available homes for sale while, in turn, stabilizing or increasing prices. This will be especially true if the foreclosure bailout is successful in slowing the number of homes that come to market.

The home building industry has drastically reduced staffing levels because of the downturn. As a result, new home inventory levels are extremely low, especially for entry-level residences.

Many prospective home buyers have been waiting on the sidelines, looking for signs that the Las Vegas housing market has hit bottom. 

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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