The First Time Home Buyer Credit

Good morning everyone! I hope your Friday is off to a good start.

The stock market selloff continues today over fears of trading instability as the S&P is down over 2% this morning and almost 4% from Monday. If you have not heard about the Reddit led gang of investors driving up the prices of Game Stop, AMC and other companies – Here is an Explanation. At the heart of it, the rest of the market is getting nervous because of the demonstrated force that a large group of young investors have used to drive certain stocks up over 1000% in a matter of weeks. It’s a very interesting topic.

Many people are getting excited as the White House looks like it may pass the $15k dollar credit to first time home buyers. However, there is a good chance that instead of achieving the goal to help grow a healthy housing market, it could do the opposite. Currently, the US does not have a shortage of buyers, it has a shortage of inventory. That is the reason that homes are receiving a record number of offers, offers that are not contingent on appraisal and housing inventory is the lowest it has been since the beginning of the Great Recession. This $15k credit is not going to solve the inventory problem, it will likely add to it. This will encourage more people to submit above asking price offers on the low inventory of homes, pushing prices even higher and inventory lower. We will follow this bill closely.

Mortgage backed securities continue to fall today after yesterdays strong locking bias. With the stock market suffering, the MBS market should benefit. We are still holding a locking bias unless you are able to monitor the market.