In April the first time home buyer tax credit expired and met mixed reviews. Yes, it helped increase home sales for a short period of time but after the tax credit expired, sales dropped again.
Now the government has announced two more homeowner relief programs beginning next month. The first will help current qualified homeowners refinance if they owe more than their home is worth and the second will help unemployed homeowners make their mortgage payments.
While there are certainly benefits to such programs, is this government aid truly helping the real estate market? Although prices have dropped significantly from 2006 prices, some markets are still estimated to be inflated by 15% – 20%. Even record low mortgage rates haven’t spurned more housing sales.
But is it wise to let the market correct itself by letting prices free fall? Even more people would be losing money as their home values plummet and sales would slow down even more.
Some experts believe that when this new government aid ends, homeowners will still find themselves in foreclosure. And experts also think by supplying aid, it gives homeowners permission to remain in a house they can barely afford, which led us to this debacle in the first place.
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[…] era of record-breaking deficits, it’s time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners.” If the plans are closed down about $38 billion could be saved because of the remaining and […]