CAVUTO & TOP REALTOR DISCUSS HOMEBUYER TAX CREDIT FRAUD AND THE FUTURE OF THE REAL ESTATE MARKET
As reported by Ken Holman
Yesterday, Neil Cavuto on Your World With Neil Cavuto at Fox News, interviewed Dolly Lenz, top Realtor with Prudential Douglas Elliman, on the state of the housing industry in general and new government waste and fraud revealed in the housing recovery plan. The housing recovery plan may have contributed to the 1% dip we had in new home sales last month.
· Tens of Millions in new government waste and fraud revealed in the new housing plan
· Gove wast, fraud in rescue plans adding to the debt mess
· Home sales still stalling despite the government rescue
· Homebuyer Tax Credit Fraud: 2010 IRS Audit: 1,300+ Taxpayers Id’d as deceased claimed $10.1 million in Homebuyer Tax Credits
· Top U.S. Realtor on worries government rescues are hurting sales.
· New home sales fall 15.8% in Northeast, fall 12.7% in West.
· New home sales rise 3.4% in South, rise 9.5% in Midwest
· New home sales fall 1% last month
· New home sales in Northeast fall to lowest level since ’73
· Median price for new homes jumps 5.8% to $235,000 in June
Cavuto: “What happened here?”
Lenz: “It’s just unbelievable. Again it might be worthwhile if we had stable prices, stable demand, if something had gone right with housing with all of these 30 billion dollars of housing tax credits, not including possibly the fraud. It’s just amazing. Home sales are still stalling despite all the government rescues.”
Cavuto: “Apparently, when you take the credits away, the buyers go away. What do you make of that?”
Lenz: “Yes, so we’re borrowing from the future. So we did nothing. So in other words whoever would have bought maybe next April, bought this April or whichever year you are referring too. We merely borrowed from the future. Demand dropped, prices continued to drop, so absolutely nothing was accomplished by the homebuyer tax credit as far as I am concerned.”
Cavuto: “Do you think people have gotten sort of a Pavlovian response, Dolly, to a, I don’t know, like cash for clunkers for cars, unless there is another incentive program to buy a home I’m not going to buy a home?
Lenz: “I’m not sure and maybe they’ll buy a home but maybe they were going to buy a home anyway. You see, I think we have to just leave it alone. Let it find its bottom, do its natural course and then I’m sure everything will at some point come back, but if we keep messing with it everybody is going to wait for something as you suggested and nobody is going to buy anything or they’re just going to buy it when we give them something.”
Cavuto: “So what happens in the interim? I notice year over year trends are never good, but lately month over month trends are better, not great but better. Do you make anything of that?”
Lenz: “Not really. It really depends on the product group in that month. It depends on so many things. If there are a lot of high end sales that could pull up a few. We’re finding that luxury sales are doing okay. I wouldn’t say well because the volume is off.”
Cavuto: “What constitutes luxury sales?
Lenz: “Luxury sales are millions, many millions. Luxury sales are doing still well in terms of pricing, however, they’re doing terribly in terms of volume. But whoever wants to buy something, the seller’s not giving up, they’re waiting, either you’re going to pay their price or they’re not going to sell to you. And it’s working for them and buyer’s are paying their price. So that kind of uploads the pricing such that all the averages go up a little bit.”
Cavuto: “How long do you see this going on?”
Lenz: “As a country-wide thing? I think it could be three to five years.
Cavuto: “Three to five years in addition to this?”
Lenz: “Yes, even if we look at the inventory numbers. People are saying it’s 9.1 months which is terrible even if it is only 9.1 months. None of that includes all of the developer inventory they haven’t put on the market. If I counted up all the New York inventory, even a good place like New York City, buildings where builders put up five or six apartments on the market when they have, in fact, four hundred to sell. Now you imagine where the numbers would be. Then everybody would say, I’m really going to hold off and not buy now.”
Cavuto: “Are buyers really affected by this whole debt mess?”
Lenz: “Without a question. Because it’s about confidence. Real estate purchases, being generally the largest purchase anyone makes, is really a confidence play. It’s confidence in the government, it’s confidence in the future of the country, it’s confidence in everything, employment, every aspect of the economy and if you don’t have confidence why are you buying into something you’re going to wait to catch the falling next story.”
Cavuto: “And you say this affects the very marginal all the way to the very mega wealthy right?”
Lenz: “There is no question. Everyone is saying to me, what am I rushing for? Unless they have a need, sometimes you have a need, you’re relocating to New York, there isn’t something suitable to rent, you have a need, you’re going to buy something. Or you’re trading up, you just had twins, there are reasons to buy. Your employment is secure and you’re financially okay, then yes, people are buying. But except for those people, most people are on the sidelines. And the rental inventory is being taken up. There is almost no rental inventory on the market which is a very bad sign for sales, people are renting, looking to rent for the next two or three years and then they’ll look into what they are going to do.”
Cavuto: “Weird stuff.”