Podcast: | Download

The Real Story caught up with John Burns by phone last week to talk about some of the Federal government’s moves to stabilize the housing market, and whether the consumer is getting the word. John is the president of John Burns Real Estate Consulting, a firm well-known in the real estate and financial industries for its analysis of housing industry-related data across the country.

Today he talks about how tax credit programs help get prospective buyers off the fence, especially as the cut-off dates grow near. With the deadline for the Federally sponsored $8000 tax credit for first time buyers looming at the end of April for homes that will close by June 30, John predicts an increase of sales activity for the spring. And, if California brings back a revised tax benefit plan with $200 million to support homeownership, this could re-create some of the construction jobs that the state has lost during this downturn.

John has a few comments about the bipolar nature of Freddie Mac and Fannie Mae, who by charter are shareholder-owned companies—which have essentially been run by the government since 2008. He does see them becoming more solvent as the economy improves, with the ability to “earn their way back”.

His overall view of the 2009 meltdown at the FHA is that it was great for homebuyers— as subprime lending disappeared, the FHA still offered homebuyers a low downpayment on full disclosure loans. To give an idea about how important the FHA lending program has become, one quarter of all mortgages in the country are made by the FHA today. What’s more, the market share for FHA loans for people purchasing new homes has grown from 2% during the boom to 50% of all new home loans today.