I've been wondering about the effect that the $8,000 stimulus plan has been having on the market. The Senate has just passed its version for an extension and the House is due to deal with the issue soon. As a Realtor, most people would think that I am automatically for a continuation of the plan, but I have mixed feelings about the success of the plan.
The idea sounded great (and I was all for it when it was proposed), but now that time has passed and I've had time to see the stimulus plan in action I'm wondering if we have received our "bang for our buck". The idea was that the plan would pull many (if not all) of the home buyers who were sitting on the side line, to jump into the market. With great rates, FHA doing 3.5% down loans and an over stocked market, it would be a perfect time for Buyers to jump in, but have they?
I've dealt with my share of Buyers this year and most liked the idea of the $8,000 but the ones looking to buy a "resale property" as compared to a "short sale/foreclosure " were not falling all over themselves to buy. The people most interested in purchasing a property and getting the benefit of the $8,000 were the first time Buyers who were looking to purchase foreclosures and short sales. I have noticed that when I speak with other Realtors about their experiences, many find themselves expressing the same thing. Now I am sure that many of you out there will say that you have had great experiences with Buyers coming in to take advantage of the stimulus money, but what were they buying?
I would like to know (from NAR ) what percentage of first time Buyers purchasing property this year, where buyers purchasing foreclosure/short sales, as compared to non foreclosure/short sale properties. Why would these statistics be important, the answer is simple. If most first time Buyers purchasing homes bought foreclosure and short sales then the stimulus plan has not given the real estate market any real traction. The reason why it has not is that the owners or former owners of these homes are not turning around and purchasing something new, continuing the normal cycle of buying and selling. These home owners are now renting, moving in with relatives etc..
If what I have said is actually what is going on, then the only benefit the stimulus plan really has had is this, the amount of foreclosures and short sales on the market will shrink going into 2010. This will be a big benefit only if we do not have a continuation of foreclosures and short sales flooding the market. If we have more etc., then we will just be back where we were a year ago and the stimulus plan will have failed to do what it was suppose to do and that is give the market some real traction to grow.