My Financial Healthcheck

Most U.S. cities saw gains in the median price of single-family homes sold during the third quarter, the national median home price was $177,900, up $7,000 from the second quarter.  It was the second quarter of consecutive gains.  Nearly half of home sales are now being made by first-time purchasers, much of the gains are being attributed to the first time homebuyers tax credit.  Critics of the tax credit call it a poorly targeted method of boosting sales. Since all first-timers get the credit, whether it persuaded them to buy or not, that would mean about $40,000 was spent by the government for every extra sale.  Most sales have been of existing homes.  New homes sales, as well as new home construction, have remained stagnant.  If the Federal Reserve stops it’s purchase program of mortgage-backed securities the low mortgage rates we see now could go up quite a bit.  It was reported that housing starts fell more than 10% to an annual rate of $529,000 in October, the lowest level in six months.  Home builders started construction of far fewer new homes in October than the month before, it was a big and unexpected drop for the downcast housing industry.  Building permits also fell in October, part of the reason for lack of building is high foreclosure rates.  Only a tiny percentage of troubled homeowners have received permanent modifications under president’s Obama’s foreclosure prevention plan.  Under the plan, delinquent borrowers are put into trial modifications for several months to make sure they can handle the new payments and submit the appropriate paperwork.  If they qualify for a long-term modification, borrowers can keep making the lower payments for five years, after which the interest rate is et at the time of that adjustment.  Some 650,000 homeowners have been put into trial modifications, a long way off from the announced 4 million the program was supposed to help.