?There has been all kinds of help for housing. I?m not unappreciative,? said Barb Swartley, president of the Elkhart County Board of Realtors. ?But you can?t turn real estate into a government-sponsored operation forever.?
Many in Washington agree. With worries about the deficit intensifying, the government is eager to start withdrawing some of its support programs.
The first step could happen as early as next month, when the Federal Reserve has said it will end its trillion-dollar program to buy up mortgage securities. That program has driven mortgage interest rates to lows not seen since the 1950s.
Yet it is uncertain whether the government can really pull back without sending housing markets into another tailspin. ?A rise in rates would kill us all by itself,? Ms. Swartley said.
The Obama administration has offered few ideas about reforming the housing market. Proposals for the future of
Fannie Mae and
Freddie Mac, the mortgage holding companies taken over by the government at the height of the crisis, were supposed to be introduced with the president?s budget this month. They were not.
The government programs, however crucial, are distorting the market. The tax credit produced sales last fall, but some lenders here say it has troubling implications.
?People are buying to get that tax credit, to get some reserve money. They?re saying, ?If something happens, I will have a little bit of money to fall back on,? ? said Denny Davis of Horizon Bank in Elkhart. ?That?s not healthy.?
The programs favor first-time buyers, who have the fewest resources to bring to a deal. Heather Stevens, a 23-year-old nurse here, is closing on a three-bedroom house this week. Since her loan was insured by the Federal Housing Administration, she had to put down only 3.5 percent of the $74,900 purchase price.
?It was a breeze to get approved,? she said.
The sellers are covering her closing costs, which agents say is often the case here. That meant Ms. Stevens had to come up with only the $2,600 down payment, which still took all her savings.
But the best part is the $7,500 tax credit. She will use that to remodel the kitchen. ?If it wasn?t for the credit, we would have waited to buy,? said Ms. Stevens, who is getting married this year.
