One View on How the Obama Stimulus Might Affect the Tampa Bay Real Estate Market

Published by peter | Filed under Market Trends

From a colleague at TDO: For those who have been watching, the Obama Stimulus Plan seems to be moving forward for him to sign it into law now. While I am no expert on the subject, it appears to contain roughly 286 billion dollars in tax cuts and 54 billion dollars for cash-strapped states, the package contains 311billion dollars in appropriations, including 120 billion dollars in infrastructure, 14.2 billion dollars for health care, 105.9 billion dollars for education and training.It also includes more than 37.5 billion dollars for energy infrastructure, 24.3 billion dollars for those impacted by the economic crisis and 7.8 billion dollars for law enforcement and other programs. But what about a real estate stimulus you might ask…

While there is still a tax-credit program for first-time home buyers, the $15K tax credit for home buyers has been pulled from the Obama Stimulus Plan. But this is old news you say….

Well, how about this for a little different view.That’s right. Many mortgage lenders and banks around the country have been sitting on their hind quarters, waiting for “the plan” that would bail them out of all of their bad loans. They were hoping for a stimulus package that would get buyers to start heavily-buying homes and that all of their “toxic assets” (read that as loans they have on the books of which they are not receiving payments) would be satisfied in with the sale of the homes. Not gonna happen.

Now that the writing is on the walls, mortgage lenders will now need to move forward liquidating their non-performing assets. No longer will they sit back and hope that the Government will bail them out, it’s time to move on.

Another thing to consider is that short sales and foreclosures are occurring at such an alarming rate that many of these homes are actually meticulously maintained and in excellent shape. As Summer Munyon wrote in Foreclosures Having Larger Affect On Housing Market, a 2008-2009 foreclosure or short sale “looks much different than a foreclosure prior to 2008. Many of these homes have been well-maintained and economic hardships may have resulted in a seller relocating to another state with negative equity in their home, an inability to continue to make the mortgage on a home, etc”. Regardless of the reason, the rush of these properties hitting the market represents real competition to existing homes for sale in Tampa Bay.