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On the House: Recovery act doesn’t lure buyers

<a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://3.bp.blogspot.com/__b6Y0cLXpyI/SPuEPkJ7sAI/AAAAAAAAAHw/ndIuVEAqS-o/s1600-h/may08_inq_heavens1.jpg”><img style=”float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;” src=”http://3.bp.blogspot.com/__b6Y0cLXpyI/SPuEPkJ7sAI/AAAAAAAAAHw/ndIuVEAqS-o/s200/may08_inq_heavens1.jpg” border=”0″ alt=”” id=”BLOGGER_PHOTO_ID_5258942392823427074″ /></a>By Al Heavens<br />Inquirer Real Estate Columnist<br /><br />This may come as something of a shock, but there aren’t many people interested in buying houses now.<br />I’m being facetious – no, really. But Trulia, the real estate search engine, has just paid a pollster big bucks to figure this one out.<br /><br />When Trulia sent me the results with great fanfare, I replied that it could have saved money by just leaning out the door and asking the first person who walked by.<br /><br />There was, however, a response in the otherwise less-than-informative list that caught my eye: Only 4 percent of people who weren’t homeowners said that “waiting for the new housing-recovery act to take effect” was keeping them from buying – “indicating that this act will likely have little effect on home purchases made by those who do not currently own their own home.”<br /><br />What surprised me, of course, was that anyone would mention the Economic and Housing Recovery Act of 2008, signed into law on July 31, not that only 4 percent were hoping it would help them into home ownership.<br /><br />Many real estate agents and builders appear to have misplaced great faith in the provision for a $7,500 tax credit for qualifying buyers, believing that it would get people off the fence and into houses.<br /><br />Perhaps they and, at least at first, people interested in buying homes saw it as a gift. What it turned out to be, though, was a zero-interest loan to be paid back to the federal government over 15 years.<br /><br /><span class=”Apple-style-span” style=”font-weight: bold;”>As Philadelphia mortgage broker Fred Glick points out, buyers must come up with the $7,500 to start with.</span><br /><br />Rick Sharga, chief economist for RealtyTrac, the Irvine, Calif., company that tracks foreclosures nationally, said the zero-interest tax credit/loan has had “zero effect on housing.”<br /><br />The feedback I get from real estate agents whenever I ask about the credit is that buyers don’t even mention it.<br /><br />”I don’t think they understand it,” said Cheryl Miller, an agent with Long & Foster Real Estate in Lower Gwynedd.<br /><br />The main thrust of the Economic and Housing Recovery Act was to tackle the nation’s rising foreclosure rate. One of the ways its authors came up with was ending the use of seller-financed or “charity”-assisted down-payment programs, such as the ones used by Nehemiah Corp., for FHA-insured mortgages.<br /><br />Proponents of the legislation argued successfully that the recipients of those programs were three times as likely to end up in foreclosure, and that threatened FHA’s viability.<br /><br />After Nehemiah, the National Association of Realtors, and the National Association of Home Builders called for restoration of the practice, the bill was crafted in the House to include safeguards for FHA by limiting use of seller-financed down-payment assistance to households with credit scores in the range of 620 to 680. (The minimum FHA score is 585.)<br /><br />Efforts to tack this provision onto the bailout didn’t succeed, so the matter will have to wait till the new Congress convenes next year.<br /><br />”On the House” appears Sundays in The Inquirer. Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.

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