Hitches to Programs to Contain Repo Homes for Sale
July 7th, 2009 by 
Joseph Smith
Four months after the Obama Administration launched its $275 billion program to boost repo homes for sale, the desired outcome is still yet to be seen. Real estate experts believe that improving home sales would greatly help in the country’s economic recovery.
The stalled program encountered several hindrances that derailed whatever progress it has made. These obstacles include the stringent qualifying rules for homebuyers, reluctance of banks to finance buyers who would not live in properties and an increase in residential loan costs.
So far, the country has an inventory of about 2.1 million empty, repo homes for sale on the market due to a fast foreclosure pace.
Harvard University’s Joint Center for Housing Studies executive director Eric Belsky said that the federal program to subsidize mortgage payments and the as much as $8,000 tax credit for first-time homebuyers have failed to make a dent on the foreclosure problem.
He pointed out that for the past 50 years, housing has been the primary factor that led the country’s economic recovery. He added that for the housing market to recover, more stimulus plan will be needed.
Meanwhile, leading indicators of the housing market showed some signs of improvements, although not much to say that the market is on its way to full recovery, industry experts claimed. Housing construction has been inching up, same with gross domestic product and sales which gained a four-month advance.
Belsky said that homeowners’ expenditures, including transaction fees, luxuries and necessities such as furniture, kitchen renovations and property taxes have fueled the momentum.
In May, sales of existing homes rose by about 2.4 percent to 4.77 million annually, while the median price declined by 16.8 percent compared with the same month a year ago.
Meanwhile, industry experts are identifying some factors that may contribute to the increase in the number of repo homes for sale. Among these factors are the increasing unemployment rate and the excess of 1 million homes on the inventory.
University of Pennsylvania’s Wharton School real estate professor Susan Wachter pointed out that the industry is not seeing the bottom of repo homes for sale because the foreclosure problem is not yet over.
