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A BAIL-OUT SUGGESTION
Take Some Bailout Money And Buy New Home Inventory. Diana Olick CNBC Realty Check
Given everything that’s going on in Washington, it’s not surprising that the new home sales number out today would be ugly. Sales in August were down 11% from the month before.........
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It’s also important to note the difference between the existing home sales number we got yesterday and the new home sales number we got today. The National Association of Realtors, which measures existing home sales, bases its number on closings, not contracts signed, so these are homes that actually changed hands.
The US Commerce Department, which tallies new home sales, bases its figure on contracts signed. Given the enormous percentage of cancellations in new home sales (recently around the 30-40% range for the big public builders) many of these sales will never actually come to fruition. In other words, that nasty sales level is even nastier than it looks. ..............
Now the big builders will say they are looking forward to that $7,500 tax break for new home buyers that came out of this summer’s housing rescue bill, but given what’s going on in the credit markets right now, I wonder how much that’s going to matter.
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Here’s a suggestion: Instead of dumping 700 billion dollars onto Wall Street ..... buy up the inventory of new homes (at the median price of $221,900 you could buy 450,653 ....). Take those homes and give them, with manageable low-rate FHA loans, to all the folks who lost their homes to foreclosure. ..........
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