So after propping up housing prices by giving away free money to first time house buyers, sellers wouldn't have to decrease their sale price, now that the credit is gone sellers are beginning to cut prices once again which tells you housing prices have been propped up for the last year and half. All you have to do is take the selling price and immediately subtract $8000 off the top, which I'm sure many looking to buy will do, this $8000 tax credit has kept prices inflated over the last 18 months and without it prices of housing would most likely be down 10% across the US. Housing prices are still inflated by 20-50% in most areas, by saving the economy and not letting the free markets work the way they should have has kept housing prices inflated. Of course there isn't any limit of how high housing prices can go as you saw just 3 years ago when prices were up over 100% in only 4 years, they didn't curb that, they didn't put programs in place to slow down the credit bubble, they let it go as high as it could. Of course on the way down though they have to stabilize the entire housing market from falling apart. More US Home Sellers Cut Prices as Tax Credit Ends Reuters | May 12, 2010 | 06:34 AM EDT More U.S. home sellers cut their listing prices in April, aiming to seal deals in the waning days of federal tax credits meant to revive housing, real estate web site Trulia.com said on Wednesday. Prices on 22 percent of homes on the market as of May 1 had been cut at least once, up from 20 percent the prior month, San Francisco-based Trulia said in a report provided to Reuters before official release. More than a year of tax credits up to $8,000 ended on April 30 and $1.4 trillion in mortgage-tied bond buying by the Federal Reserve to lower home loan rates finished on March 31. "As we readjust to the free market, we expect to hit turbulence in some markets," said Pete Flint, Trulia's chief executive. Sellers slashed a total $25 billion in April from asking prices, up from $22.8 billion in March. The average discount on reduced homes held at 10 percent from the original listing. The economy is slowly emerging from recession and housing is stabilizing after its deepest plunge since the depression. But homeowners and potential buyers are still grappling with an unemployment rate near 10 percent. A stockpile of foreclosed properties yet to hit the market could also keep home prices from rising much, analysts say. Earlier this year, Trulia said home sellers were being more realistic in setting asking prices, leading to fewer later price reductions. Now that government incentives have expired, more sellers are apt to lower prices to entice buyers as the market finds its footing without the extra supports. "We won't know the true severity of the tax credit expiration until the conclusion of the peak home buying season in the summer months," said Flint. "Only then will we have a better sense if the U.S. housing market can stand on its own two feet." Qualified buyers had to sign contracts by April 30 and must close on home loans by June 30 to get the $8,000 first-time buyer credit or $6,500 repeat buyer credit. Homes sales sped up in March and loan applications to buy houses swelled in April on a last-minute dash for the credits. How much that robs from future sales remains to be seen. In a dozen of the top 50 cities, prices were cut on at least 30 percent of the listed properties. The previous month just five cities had as high a share of price reductions. Prices were lowered anywhere from 6 percent to 13 percent in those 12 cities: Minneapolis, Minnesota; Milwaukee, Wisconsin; Baltimore, Maryland; Phoenix, Arizona; Dallas, Texas; Jacksonville, Florida; Mesa, Arizona; Kansas City, Missouri; Boston, Massachusetts; Columbus and Cleveland in Ohio; and Nashville, Tennessee. Great Plains cities had some of the largest increases in the share of listed properties cutting prices. Leading the list was Omaha, Nebraska, where one quarter of the homes for sale had at least one price reduction. Sales in cities like Omaha and Tulsa, Oklahoma, have fallen a respective 53 percent and 70 percent from a year ago, Trulia said. Price-cutting on luxury homes listed at $2 million or more was unchanged in April from March, with an average discount of 14 percent, according to Trulia.
+1 prices in desirable areas are still ridiculous. Note that Fannie/Freddie inventory is increasing as is shadow inventory. Realtor says only about 30% of listings are actual 'real' in the sense they are priced to actually sell (versus halycon pricing of yesteryears). A good economy needs cheap housing. Expensive housing means people need to make more just to pay for it. That isn't going to happen in a deflationary environment. We still haven't reached liquidation phase in housing, once we are there, things can move forward. Maybe on the low end, but not on houses most people want to live in.
Housing is still very expensive in many areas and on top of that taxes are extreme. Near me if you want to live in a decent area taxes are going to run about $10,000+ a year and that's on the low end. As for liquidation in housing, we haven't even gone close to that, if it did happen when it was suppose to happen housing prices would certainly be 50% cheaper from where they are right this second. Even rents are extreme near me, a 1 bedroom apartment goes for approx $1200-$1300 and prices are still going up 3-4% a year.
^^this. People living in fantasy la-la land. Or the fact that the price is what they owe, can't maybe afford to pay on the mortgage note for the most part, which means good luck with coming up with a balance at close selling for less...can't seller finance...can't take subject-to...house continues to decline in value... yikes.
If you do a short sale, do you have to pay taxes on the amount of mortgage debt forgiven, assuming you sell the house for less than you owe? If your house goes into foreclosure, do you have to pay taxes on the amount of mortgage debt forgiven, assuming you sell the house for less than you owe? If so, what taxes are paid, federal, state, and/or social security taxes?
http://www.irs.gov/individuals/article/0,,id=179414,00.html http://www.irs.gov/newsroom/article/0,,id=174034,00.html State, well, that will likely vary by the state laws.