Home Sales Are On The Rise But How Can We Keep Up The Momentum?

REASONS SOME BUYERS ARE BUYING:
The expiration of the first-time home buyer tax credit is coming soon and is one reason buyers are buying now therefore this buying trend will most probably continue until rates change affordability for those first-time home buyers.
2. Commodity prices are up, the dollar is weakening and inflation is already being discussed so some are buying as a hedge against inflation.
3. Consumer confidence leaped up in May so this is also a contributing factor as to why pending sales are up by 6.7 percent which is the largest gain in 7 years!
4. Pending home sales are up for the 3rd month in a row based on affordability (prices, mortgage rates and income) and the first-time home buyer tax credit.

HOW TO KEEP THE MOMENTUM GOING
1. Give a tax incentive to buyers of ALL HOMES and also allow multiple purchases and consider extending it past Dec 09 but DO NOT ANNOUNCE IT NOW.
2. Raise the tax credit limit to 15,000 dollars to give incentive in higher priced marketplaces who also have desperate sellers
3. Consider raising the conforming loan limits higher than $ 729, 750 in higher priced areas and also ONLY FOR A LIMITED PERIOD OF TIME.
4. If giving buyers credits on each home they purchase is not favorable,why not offer repeat home buyers a capital gains exception for as long as they own those properties.
5. There is no secondary market for jumbo loans so perhaps the Federal Reserve could help restore liquidity in this market by buying these loans under the TALF program.

CONCERNS:
1. 1 in 12 mortgages in the U.S. are delinquent.
2. There is a stark rise in prime loan delinquencies.
3. Continued lack of financing for jumbo loans (no secondary market and lenders fears that prices will continue to come down in that market).
4. Continued job losses will negatively impact delinquencies and foreclosures.
5. Interest rates have come off their lows and if this upward trend continues many buyers will not be able to afford to buy.
6. A 40 month supply of homes above 750K currently exist and that market has virtually no tax incentive,difficult financing if a jumbo is required, and buyers are still concerned prices will continue to fall so they are on the fence.